Hiab Oyj (HIAB) Earnings Call Transcript & Summary

Welcome to Hiab's Second Quarter 2026 Results Call. My name is Aki Vesikallio. I'm from the Investor Relations team. Today's results will be presented by CEO, Scott Phillips; and CFO, Mikko Puolakka. As a reminder, please pay attention to the disclaimer in the presentation as we will be making forward-looking statements. Before handing over to Scott and Mikko, let's take a look at the highlights of the quarter. Book-to-bill was again positive in all 3 geographical areas and that was the second consecutive quarter. Our sales were at the comparison periods level. However, comparable operating profit increased to EUR 61 million. We also specified our outlook for full year comparable operating profit margin from 13.5% to above 14.5%. A milestone acquisition of Labrie Environmental Group was announced in 1st of June. And just in the beginning of third quarter, the acquisition was completed. Let's then take a view on today's agenda. First, Scott will present the strategic development and group level topics. Mikko will then go through reporting segments, financials in more detail and the outlook for 2026. After Mikko, Scott will join the stage for a key takeaways before the Q&A session. With that, over to you, Scott.

Thank you, Aki. And good morning, everyone, from my side. First, I'm pleased to have the opportunity to share with you how we're progressing relative to deploying our strategy and highlight some of our key investments, if you will. Starting first with some of our own -- our innovations, building on our core portfolio. Pleased to share with you that we continue to introduce pioneering innovations within the on-road load handling solution, a few of which are highlighted on the page. Starting from left to right, I'm proud to announce that we've introduced a new range of MULTILIFT Optima hook range. This gives us a new solution that should allow us to expand our market share in critical geographies, in particular, in the EMEA region, giving us a great solution between the 20 and 25 ton carrying capacity range. So great work by the team from our MULTILIFT organization. Then second, in the middle of the page, proud to announce that we were awarded both first and second prize in our -- in Germany from the VAK organization, delivering innovative solutions that allow for more sustainability within critical resource, water management and waste management. So at the IFAT event in Germany, our HIAB wspr+ was awarded first prize. And second prize, we also were awarded from our MULTILIFT semi-automated driver support solution, our L2 solution for MULTILIFT demountables. And this is our third award that we've received over the last 3 years. So really proud about that. And finally, on the page, really pleased to announce that we've rebranded our government business operations in Hiab Defence Logistics, which better characterizes the focus of the business. And concurrent with this and during the Eurosatory event, which I was fortunate enough to attend myself, we introduced 2 new innovations concurrent with the event, starting with our HIAB 1622 ATF Loader Crane. Now this combines a heavy-duty lifting carrying capacity at the same time and a low profile, allowing for a much longer outreach. And this matches nicely with our HIAB JMIC Top Handler, which is designed for handling these type of containers, which are a standard in defense and military logistics. So excellent work in the quarter by the teams all the way around on the innovation front. Now in addition to the innovations, I'm pleased to announce that we invested in growing in a critical segment for us in line with our strategy, and I'll come back to that in just a few minutes. So pleased to announce that we were able to close the acquisition of Labrie Environmental Group, which is the leading provider of refuse collection vehicles in North America, and this is a major milestone for us in terms of both growth in North America and as I mentioned a few seconds ago, growth in waste and recycling. Now a bit of highlights about the company itself has an excellent financial profile. If you think about the sales within 2025 of USD 491 million, comparable EBITDA margin of 23% or USD 113 million, comparable operating profit margin of 17% and came into the 2026 with an order book of USD 435 million. 100% of the sales are in North America. And in addition to an excellent lineup of innovative solutions in refuse collection vehicles and a great financial profile, I think perhaps I'm even most proud about the fact that also this organization comes with a fantastic team led by Michael Eastabrook. So a warm welcome to Michael on the Hiab leadership team. He will become our fourth business area President to leading Environmental Vehicle Solutions. And in addition to Michael, he has a terrific team all the way around. So we're really excited about this acquisition. Now much like Hiab, Labrie competes on a multi-brand strategy with 4 different brands, 3 of which are Equipment, 1 for aftermarket. The Equipment brands are side loaders under the Labrie brand, Wittke for front loaders, Leach for rear loaders and Labrie plus for the aftermarket and service and parts. Now there's a great opportunity that we think the combination of the 2 companies to expand coverage in terms of selling to the installed base. But currently, the business has a revenue profile of approximately 90% Equipment, 10% parts and services. And in terms of the customer profile, the majority of the sales are to municipalities and independent regional customers. Then there's a segment of national accounts as well as rental companies. The solutions serve 2 different applications, one of which is dominant in residential and the other in commercial. Now a bit of details about the transaction itself. As Aki highlighted on his opening slide, the purchase price was a little bit over USD 1 billion. which represents a multiple of 9.2x. The financial impact will be significant for Hiab, and we expect the deal to be both margin and growth accretive with increased cash generation, and it gives us much more diversification within the critical waste and recycling end markets. And we expect a synergies case, of course, both on the sales side as well as the cost side. In terms of financing, it was 100% cash consideration, facilitated by a EUR 900 million debt facility. And had the acquisition been completed at the end of Q1 2026, then the resulting financing would have resulted in approximately a 70% gearing. Now we'll provide more detail about this concurrent with our Q3 earnings call. And we still expect our long-term target for gearing to be below 50%, and this should be supported nicely by strong cash generation. And of course, as I said earlier, the closing occurred on July 1. Now in terms of the strategic fit, we've put this into our profile that we shared with all of you back in 2024 in our Capital Markets Day. So in terms of our 6 dimensions and what we seek to be an attractive investment choice, this acquisition, we feel, ticks nicely all 6 of those dimensions. So a great fit within the overall offering and competitive positioning of Hiab. So now I will switch gears a bit and go into the overall development of the group level financials, starting with order intake, of course. Now our orders received for the quarter were EUR 437 million, and that's up 16% versus the comparison period of EUR 377 million. And from a first half perspective, our order intake is up nicely by double digits, EUR 839 million versus EUR 755 million last year. Organically, in the quarter, orders received were up 13%, and our order book is up nicely by EUR 33 million to EUR 589 million versus EUR 556 million. So that's 6% positive variance year-over-year. Now as you see in the organic order intake development, currencies had a negative impact of EUR 4 million. But ING was a nice offset to the softness in the U.S. market. And so ING Cranes' orders received amounted to EUR 17 million in the quarter. Additionally, our profile in the quarter, a little bit dissimilar to the first quarter, was supported nicely by a few key account larger orders and one of which we announced earlier in the quarter was EUR 37 million truck mounted forklift order from a U.S. home improvement segment customer. And as Aki mentioned earlier, we had sequentially for the second quarter in a row, positive book-to-bill in all geographies. Now looking into the details geographically, 50% of the order intake was in EMEA, 44%, so up 2% year-over-year in the Americas. And APAC was then the remaining 6%. Now in terms of the figures, EMEA represented EUR 220 million of order intake versus EUR 188 million the prior comparison period. That's a 17% positive variance. And for the first half, a nice 9% positive variance of EUR 426 million versus EUR 391 million in the previous comparison period. In the Americas, we had a nice increase of EUR 191 million versus EUR 159 million, so a slight recovery in those end markets. So -- and for the first half of the year, 18% positive variance, primarily driven by the second quarter, EUR 357 million versus EUR 303 million. And in APAC, we had 11% negative variance quarter-over-quarter and a negative 7% variance for the first half of the year. Now characterizing the operating environment, we still continue to see a gradual market recovery continue in EMEA. supported largely by the replacement cycle, not yet so much by the construction segment, but all other segments are nicely steadily recovering. In the second quarter, we did see a positive variance in U.S. market. So we see a modest recovery within the quarter, again, still a quite uncertain environment. And we had a positive book-to-bill in APAC, which is really nice to see. And of course, balancing that out on the negatives, we still see with the gradual recovery and the good results within the figures, we still see a high level of geopolitical and trade tensions that still exist, which is having an impact on customer decision-making. Now moving into our sales. Sales were roughly at the comparison periods level, however, increased nicely sequentially. So we had no change from a relative perspective in terms of the sales quarter-over-quarter, so EUR 403 million and EUR 402 million the year before. For the first half of the year, we were negative 3%, primarily driven by quarter 1, of course, EUR 786 million versus EUR 814 million. On an organic level, within the quarter, we were negative 3% variance. Our share of Services increased slightly to 30% versus 29%, similarly for the first half of the year. Now we had a nice impact from ING Cranes of EUR 15 million, which had 4 percentage points positive impact. Currencies hit us negatively by 1 percentage point in Q2. And then as I mentioned earlier, our share of Services increased nicely. So on a last 12 months basis, our rolling 12-month sales level is at a little over EUR 1.5 billion. Now looking at geographic split of our sales for quarter 2. EMEA represented 54%, which matches, of course, prior periods order intake development versus last year at 50%. In the Americas, similar story with the decline in the order intake in prior periods, our sales are 40% versus 43% in the prior period. And in APAC, we had a slight decline. Numerically speaking, in the quarter, we had a 7% positive variance in EMEA, a negative 7% negative variance in the Americas. and a negative 4% variance in APAC. For the first half of the year, a relatively similar story. In EMEA, we had a 6% positive variance, EUR 419 million versus EUR 395 million or up 6%. In the Americas, EUR 316 million versus EUR 368 million or a negative 14% variance. And we were up slightly in APAC on rounding, EUR 51 million versus EUR 51 million or up 1%. I'm really pleased to report from an Eco portfolio perspective, boosted primarily through our Lifting Solutions and Services business. We had a 17% positive variance in our Eco portfolio sales in the quarter, EUR 181 million versus EUR 155 million in the prior comparison period. On a percentage basis, that's 45% versus 38%. And on the first half perspective, a similar variance year-over-year, EUR 357 million versus EUR 297 million or up 45% versus 37%. Now in the Americas, our sales decline came 100% from the U.S., as we've talked about in prior reporting periods, and this is partially offset nicely by our ING acquisition in Brazil. Now turning your attention to our residual earnings based on the sales results. As you can see over the time series, we've continued to have quite a nice development coming from a base of 12.2% for Q2 of '24, 15% last year. And then as you look into the quarter this year on a comparable operating profit basis, 15.1%. Now this reporting period, we're introducing our comparable EBITDA as well as the comparable EBITDA percentage. As we move into consolidating the earnings of Labrie, then we'll continue to provide this view of our profitability as well. So looking into the comparable EBITDA for the quarter was EUR 62 million or 15.4% on a comparison basis, and that's up slightly year-over-year, 2%. For the first half of the year, we're negative 10%, 14.6% versus 15.7%. Now looking into the comparable operating profit, a similar variance, if you will, EUR 61 million this year Q2 versus EUR 60 million on relatively the same sales last year or positive variance of 1%. So that's 15.1% versus 15%. And for the first half of the year, we had a negative 11% variance, EUR 112 million versus EUR 126 million or 14.3% versus 15.5%. Now our increase was primarily driven by 2 of our 3 business areas, Lifting Equipment and our Services business. Now that was driven primarily by the low order intake in the U.S. Delivery Equipment business in 2025, which had negatively impacted sales, which then translated into a negative variance in comparable operating profit. But we see within Delivery Equipment excellent performance across the board, in particular, in our demountables business as well as a nice development by the order intake development in prior periods. Now consequently, our operating -- our operative return on capital employed decreased. Now this is mainly driven by the lower last 12 months comparable operating profit and items affecting comparability, and Mikko will give you a bit more detail into that later in the presentation. Now turning your attention as we have done in each of our prior reporting periods, how are we doing relative to some of our longer-term target profile that we shared in our Capital Markets Day in 2024. Relative to our 7% across the cycle CAGR, our rolling 10-year average has now decreased sequentially to 4%. On the comparable operating profit basis, our target at 16%, we're at 13% in the last 12 months, trending positively, of course, in the last 2 quarters. And our return on capital employed target of above 25%, and we're right on that level following Q2's results. So with that, I'll turn it over to Mikko Puolakka to give you the view on the segments.

Thank you, Scott, and good morning also from my side. Let's first have a look on the Equipment segment's financial performance during quarter 2. The Equipment segment's order intake was EUR 310 million, really nice 21% growth in quarter 2 and 15% for the last 6 months. The quarter 2 growth was equally big, both in Lifting and Delivery Equipment. Lifting Equipment order growth was supported mainly by the ING Cranes acquisition, while then in Delivery Equipment growth, the -- the growth was supported by the previously mentioned EUR 37 million truck mounted forklift order in the U.S. Equipment grew clearly in EMEA and in Americas, the APAC order intake declined for Equipment. Thanks to the positive book-to-bill in quarter 2 as well as in quarter 1, the Equipment order book is now EUR 49 million higher than what we had in December. So that sets a good starting point for the second half of this year. Quarter 2 sales for Equipment was EUR 281 million and sales declined slightly. Delivery Equipment sales declined in the U.S., as Scott mentioned earlier. And this is due to the lower order intake, what we saw, especially in the first -- sorry, second half of 2025. This decline in the Delivery Equipment was mostly offset by the sales growth in Lifting Equipment, mainly coming from the ING acquisition. So these both businesses then balanced each other, resulting to a flattish sales development. Comparable operating profit for Equipment segment was EUR 38 million or 13.6% margin. There was a small decline from the comparison period. And I would say that this decline is mainly attributable to the previously mentioned lower sales in Delivery Equipment in the U.S. As described earlier and what can be also seen on the right-hand side bridge chart, the slight decline in profitability in the Equipment segment is due to the lower sales in Delivery Equipment. The lower sales impacts also the gross profit margin due to lower production overhead utilization. Part of the lower gross profit margin in Equipment is also due to the mix effect. As you recall from the previous page, the U.S. sales decline was offset by the ING Cranes revenues, which started from 1st of January this year. ING Cranes has, at the moment, a lower margin compared to the rest of Hiab due to the lower share of Service business compared to the other Hiab businesses. We had a small EUR 1 million negative impact in Equipment segment coming from the currency translation. And I would say that most of the volume impact was actually offset by the lower fixed costs, supported by our cost savings program, which we basically have been working since the beginning of this year. Services had an all-time high quarter in terms of sales and also in terms of profitability. Sales was EUR 123 million. This is a 4% increase. And if we would eliminate the currency impact, the growth was 5% in consistent currencies. The growth came from recurring Services, spare parts and maintenance, very much in line with our Services growth strategy. The installation services sales was slightly lower versus the comparison period. Services delivered a very strong profitability, EUR 32 million for the quarter. This is a 26.1% margin. Also in Services, as you can see from the chart on the right-hand side, the profitability was very much driven by the top line growth. It's also good to note that the Service sales growth has come now during the last quarters from higher-margin recurring Services rather than the slightly lower margin installation services. So this has had also a positive mix effect on Services gross profit margin, as can be seen on this chart. There was also a small less than EUR 1 million FX impact in Services during the quarter. And as you can see also from the chart, Services has very well managed the costs. And if we count all those previous bridge elements together, those are resulting to this 26.1% really nice comparable operating profit margin in quarter 2. Next, let's have a quick look on Hiab's total financials. And a couple of notes about our consolidated quarter 2 financials. Sales were EUR 403 million. In comparable currencies, sales grew 1%. There was a small decline in Equipment sales, and this has been offset by Services growth. Our gross profit margin has been impacted by lower utilization, especially in Delivery Equipment as a result of lower volumes in the U.S. Like also Scott mentioned, we have now introduced in the slides the comparable EBITDA margin to better illustrate the future profitability of combined Hiab and Labrie without the purchase price amortization or allocation amortization. The comparable operating profit for quarter 2 improved slightly from last year. I would say that the negative impacts coming from FX single-digit million amount and then the lower utilization were basically offset with volume growth mainly coming from Services and then lower fixed costs. Cost savings program has been progressing according to our plans. And I would say that most of the impacts start to become then visible now in the second half of 2026. We have booked EUR 11 million items affecting comparability during quarter 2. EUR 6 million of this is related to cost savings program, EUR 9 million is related to Labrie transaction costs. And then we have had a positive one-off item, which we also report in items affecting comparability. That was EUR 4 million gain from an asset sale and all these negative and positive elements in the one-off costs are in net EUR 11 million. Our year-to-date items affecting comparability is EUR 23 million. Out of this, EUR 9 million is related to Labrie and the rest is related to the cost savings program. Going forward, our intention is to report the Labrie order book related purchase price allocation amortization in items affecting comparability as that will be amortized in roughly 2 years' time. The rest of the Labrie purchase price allocation amortization will be then above the comparable operating profit. Our cash flow was EUR 25 million. This was weaker than in the previous quarters, what you have seen. I would say that the main reasons for lower net cash flow is coming from the net working capital. Net working capital increased in quarter 2. Inventories grew in Lifting Equipment to support volumes in the second half, while then in the other net working capital, the growth is mainly related to growth in accounts receivables in Delivery Equipment due to the timing of invoicing for the deliveries. So basically, those accounts receivables, we anticipate to collect then during quarter 3. When we look at our balance sheet metrics, the net cash decreased from EUR 219 million in March to EUR 155 million in June. And this is basically due to the EUR 75 million dividend payment, which we made in April. The Labrie acquisition-related debt, EUR 900 million was raised on June 30, and the purchase price was paid on July 1, 2026. So now you will see in Hiab's interim report EUR 1.3 billion cash at the end of June. And then basically on the other side of the balance sheet in the corresponding liabilities, the EUR 900 million debt. The real effect from the Labrie acquisition, for example, on our gearing will be visible when we report the quarter 2 -- quarter 3 interim report in October. The average interest on our interest-bearing debt was 3.4% at the end of June. We have today decided to specify the outlook for 2026, and this is due to a couple of factors. Firstly, we have now, after 6 months, we have a better visibility for full year 2026. We have 2 quarters behind us now. Our year-to-date comparable operating profit was 14.3% and also the order book has increased to EUR 525 million. Secondly, as mentioned already earlier, impacts from the cost savings program, which has started in early 2026 are gradually becoming more visible in the second half. And then thirdly, the consolidation of Labrie's financials into Hiab's financials from July 1, 2026 onwards. So these are the main reasons for us specifying the outlook. And based on the specified outlook, we estimate the 2026 comparable operating profit margin to exceed 14.5%. This outlook assumes the consolidation of Labrie from July 1, 2026 onwards. And as mentioned earlier, the Labrie's order book related purchase price amortization will be reported as items affecting comparability, i.e., this is excluded from the comparable operating profit, so below the comparable operating profit line. The outlook of higher than 14.5% comparable operating profit would be Hiab's all-time high full year comparable operating profit margin. So another step towards our long-term targets. And with those words, I would then hand the presentation back to Scott for the final remarks, please.

Thank you, Mikko. So in summarizing the Q2 2026 earnings report, I'd say, first, really pleased with the first half performance. I think we're on a good level, supported nicely by our double-digit order intake growth in Q2. It was characteristically, it'd quite similar to Q1 with the exception of 3 sizable orders, which provided the variance in Q2 versus Q1. And as mentioned, positive book-to-bill in all 3 regions. Our increased order book as well as our target cost savings program of EUR 20 million lower fixed cost should support nicely our H2 profitability. And then, of course, Labrie will be consolidated into our results, as Mikko indicated earlier, starting with our October earnings call for Q3 2026. So with that, I'll invite Aki back to the stage.

Thank you, Scott, and thank you, Mikko. With that, we are ready to take the Q&A, and we can start from the telephone lines.

[Operator Instructions] The next question comes from Mikael Doepel from Nordea.

Congrats on great results. I have a couple of questions on the demand side of things and looking at EMEA, firstly, very strong orders, it was -- quarter. Maybe you could talk a bit about that, which segments were strong? Did you have any defense-related orders in the quarter? And how do you see the pipeline and sales funnels ahead? We can start there.

Yes, sure. So thank you for the question, Mikael. And I'd say the demand overall environment was quite similar in Q2 as compared to Q1. So we saw a nice level of activity in the smaller and midsized order intake or orders, if you will. So continued steady improvement in terms of the activity there, both in terms of the upfront pipeline in terms of leads, lead conversion, but then also translating into one order intake. Main difference in quarter versus quarter sequentially were we had a few more larger key account orders in Q2 than we did in Q1, one of which was in Defence Logistics for approximately EUR 15 million, split between our Lifting Solutions as well as our Delivery Solutions businesses. In terms of overall percentage-wise, we were roughly 6% in the quarter on orders for defense and on the sales side, about 7%, if you will. From a sector perspective, I give you exactly the same answer that I did in Q1, where many sectors, good steady improvement. And I'd say overall in Europe, waste and recycling is probably the strongest. Special logistics is going along nicely as well. We still see construction as fairly soft. And of course, in the Americas, we have a nice development in terms of the offset of the ING acquisition for, let's say, the inflationary environment driven softness in the U.S. market.

Okay. That's fair. And just a brief follow-up on the EMEA and looking at Germany specifically, I think you also mentioned replacement demand in your opening remarks there. I think in Germany, specifically, there have been many years of underinvestments there. I'm just wondering what are you seeing in that specific market right now? And what do you expect going forward?

We do see -- we saw some positive momentum in Q2 versus Q1. Early to tell if that's a trend or is it something that's short term. But certainly, much like I would tell you about defense, there's massive policy shift, which should bode well in terms of increased orders, but yet not yet on the investment side. And I'd say, overall, I'd characterize the market similarly where there are green shoots of steady recovery. But I'd say too early to tell if that's a trend yet or not.

Okay. No, that's fair. And then just finally, on the U.S. market, maybe you could talk a bit about the dynamics you see in that particular market. So I mean, looking at the truck orders we've seen there in that particular market since the end of 2025, been quite a strong recovery, right? And I would assume that at some point in time, that should start to flow and show also into your orders and deliveries as well. We haven't seen much of that yet. Just wondering what is your take on that? And how should we think about that development going into the second half of the year, considering your kind of demand and order outlook?

Yes, certainly. So you see, of course, nice recovery of order intake, significant increases in production capacity. And of course, the truck OEMs that are reported have reported quite strong results. What we do see and now I'm speaking slightly out of school, but it is more skewed towards the largest classification of truck chassis, so let's say, Class 7 and 8, if you will. So that does impact a certain portion of our offering as well. And then as previously communicated, we expect to see anywhere from a 6- to potentially a 12-month lag between what you see reported in the truck OEM side versus when that should start to translate into a positive variance of order intake or a negative variance in order intake on, let's say, our side. But as of yet, we haven't seen quite the same level of recovery in the smaller classification of truck chassis.

[Operator Instructions] The next question comes from Panu Laitinmäki from Danske Bank.

I have one, which is actually kind of twofolded. So on the guidance, how much of the upgrade is due to kind of stand-alone Hiab performing better or kind of related to that one? And how much is due to the Labrie acquisition consolidation? And then the second part is that could you run through the numbers of Labrie consolidation, like what kind of comparable EBIT margin should we model for the second half? I mean, we know the reported numbers of the business -- but can you remind us on the kind of purchase price allocation and what should we kind of model in that one?

Yes, sure. Thank you, Panu. So in terms of the outlook, as you look at the overall revenue profile to be, certainly, then the -- by far, the majority of the outlook raise would be the continuing Hiab business, of course, just on a percentage allocation basis. And just to restate some of the rationale there, we have -- as we've stated before, we're nicely a short-cycle business. So then as we progress through the year, we start to get better visibility through the quarters ahead. So now that we're halfway through the year, we have much better visibility. We have a EUR 33 million overall positive variance in the order book. So that supports the case nicely in that's legacy Hiab business. Then we have, in addition to the increased order book and the increased visibility, you have then the results of first half of the year at 14.3%. So then if you think about then the next variable of progressing according to plan relative to our cost savings program. And with the visibility of that order book, there is an expectation then that we should have at least a slightly positive variance in the second half of the year on the continuing Hiab business. So that's the majority of the rationale. And then, of course, the addition of Labrie and the nice financial profile that they bring to the equation, serving a relatively stable and countercyclical end market segment. Then those -- combination of those variables is what gives us the catalyst to then raise our outlook to the 14.5% comparable operating profit level. In terms of how then Labrie would be consolidated into the results, we'll give those details concurrent with the Q3 report. And then as indicated earlier by Mikko, that should be 23rd of October this year. And then just to remind you a bit of the financial profile, let's say, through 2025, and we'll share more details to follow with the Q3 report. So we had a revenue in U.S. dollars-wise of EUR 491 million. And then on a comparable operating profit basis was 17% comparable operating profit. And so we should see a relatively similar profile for Labrie that we share with the consolidated results for both Q3 as well as Q4.

Basically, to add what we have provided in our interim report that we have currently modeled that the Labrie-related purchase price allocation amortization would be approximately EUR 23 million for the second half of this year. And out of that, EUR 14 million would be reported in items affecting comparability and the other EUR 9 million, which is related to the kind of long-term amortization like brands, technology and so on, which could be amortized in 15, 20 years even, that would be booked above the comparable operating profit line. So if you take Labrie's, let's say, last 12 months EBITDA, what we have been communicating at the closing, that has been slightly north of 20%. And then you deduct the roughly EUR 9 million, what Scott indicated earlier, that would convert more or less to that kind of 17% what Labrie has been reporting also historically, but then it was basically impacted by the U.S. GAAP goodwill amortization. And now this PPA amortization would be more or less replacing that U.S. GAAP goodwill depreciation. Of course, these PPA numbers, I want to emphasize here that these are preliminary numbers and the PPA allocation will be now defined during the second half of this year. And once it's completed, then also these numbers will get more accurate.

So in simple terms, it's like around [ 17% ] EBIT margin where it will be consolidated?

At the moment, with this purchase price allocation amortization assumptions, yes.

The next question comes from Mikael Doepel from Nordea.

Just a brief -- a couple of brief follow-ups here. So firstly, on the Service margins. Now you mentioned -- I mean, they were very strong in the quarter, and you mentioned some of the reasons there. Just wondering how should we think about that going forward into the next quarter and the rest of the year? What is your thinking there? And also related to profitability, a second question. In terms of the cost savings, the EUR 20 million that you expect, I think you said that you expect incremental benefits of that into the second half. So maybe if you could just quantify a bit what the benefits were in the first half and what the delta is going to be into the second half, please?

Yes, the Service margin. So as I mentioned in the Services segment slides, we have been very much growing in Services in the recurring Services where the margins are somewhat higher than, for example, in the installation services. So depending a bit how the new equipment sales develop and how the installation volumes will develop going forward, one should not necessarily take this quarter 2 as a kind of new normal. Services operating -- comparable operating profit margin is also dependent on this recurring Services versus installation services mix. And then what comes to cost savings, like I said, the cost savings program is progressing according to our plans. Most of the actions have been -- or a big portion of the actions have been implemented towards the end of quarter 2. So we had now if we look our fixed cost development, and you are not able to see that fully in our kind of external financial statements. But if we look at our fixed cost development, year-to-date June this year versus year-to-date June last year, our fixed costs were roughly EUR 6 million lower as you could see also from those Equipment and Services cost bridges.

Okay. So I mean, and the delta into second half compared to first half, how much should we expect in benefits here?

All in all, what we have said already earlier that for the full year, we anticipate EUR 20 million lower fixed costs compared to 2025.

Okay. And maybe just a brief comment still coming back to my earlier comments or questions around demand. So in APAC, I saw that your orders were down a bit. Just wondering what you're seeing in that market or what you saw in that market in Q2 and what you expect into the third quarter?

Yes. In terms of -- sorry, was that APAC that you asked about, Mikael?

APAC, yes.