Kalmar Oyj ($KALMAR)

I hope you can hear us from the meeting room. Good afternoon, and welcome to our Pre-silent call for the first quarter of 2026. My name is Carina Geber-Teir, and as most of you know I'm heading the Investor Relations at Kalmar. And today, as always, Sakari Ahdekivi, our CFO, will start with a short summary, and then we will answer any questions that you may have at the end of the session. And please also note that this session will be recorded and the recording will be available later at our Investor Relations website. With these words, Sakari, I'll hand over to you.

All right. Thank you, Carina, and good afternoon from Helsinki, and welcome to our Pre-silent call also from my side. So -- if we look at the agenda for today's call, it is the typical one. So we'll have a recap of the previous quarter and in this case, also a little bit on the full year '25 highlights. Then we will cover the orders booked and communicated during Q1. And then we'll speak about the latest market indicators for 2026 and onward. And then we'll have a Q&A at the end. So that's the very straightforward agenda for today's call. If we move forward and look at the Q4, just to remind us where we left off last time, we had a record high order intake and solid sales growth in the quarter. Orders received reached a record level of EUR 511 million. which was higher than the comparison period, even though also that quarter was a very high one back in 2024. Overall, we said the market demand remains stable. However, the uncertainty and trade tensions were, of course, present also during that quarter. Our services orders increased to a record high level across the entire service portfolio, which was another positive in the quarter. And the equipment orders were then boosted by a couple of sizable orders. Our sales growth was 11% in the quarter and reached EUR 487 million. We also had a strong operating cash flow in the quarter, and that was positively impacted by a decrease in inventories as we were able to deliver the high sales number. And then what's not visible on this slide is that the profitability in the quarter was 12.4%, and that was compared to 12.1% in the comparison period in 2024. Then moving on to look at the orders received picture a little bit more in detail by region. It was the Americas that drove the growth in the orders. However, I would say that in -- across all of the geographies, the situation was quite good. So although in EMEA, there was a decline in orders that was mainly due to the timing of larger orders in the comparison period, whereas in the Americas, the order intake was boosted by some larger orders. In APAC, the orders received was stable in the quarter. And regarding the demand environment, just to elaborate a little bit on that. So demand remained good with imports and terminals, sequentially stable in manufacturing and heavy logistics. The uncertainty still prevailed in the distribution end customer segment in the Americas, impacted by trade tensions and some decision-making timing there. But otherwise, overall, a good demand environment in Q4. Then having a look at the full year. So for the full year, we delivered an orders growth of 8% and orders growth came from both the equipment and the services side. So we were able to grow actually faster than market growth in 2025. When it comes to the eco portfolio, also there, a good growth. So the eco portfolio grew slightly faster than the overall orders. And profitability-wise, we were able to grow the absolute comparable operating profit by 3%. And relatively, we reached 12.8% compared to 12.6% in the previous year. And cash flow, thanks to the strong fourth quarter was also good for the overall year. And actually, our net debt at the end of the year was only EUR 5 million. Then if we move on to the next page, 26, we have guided that we expect our comparable operating profit margin to be above 12.5%. And that was -- that's compared to the 12.8% that we reached last year, but let's remember that the guidance is over 12.5%. All right. Then just to recap the orders that we have booked and published in Q1. So there's a couple of straddle carrier orders, one in Antwerp in Belgium and the other one also actually in Antwerp in Belgium. So that's what we have published so far for Q1. Then on the economic indicators, no big change. So if we look at the -- and this is -- the latest ones are from March. So whether we look at the global GDP or the container throughput or the global manufacturing output development, very stable compared to the previous months outlook. However, there's a slight uptick in the global retail output development. So that has somewhat improved from the previous forecast from 2.2% to 2.8%. But otherwise, relatively unchanged, which I guess is a little bit surprising even in a way, given all the turbulence that is going on in the world. It hasn't impacted these numbers. Then -- we -- in connection with the Q4 and full year statements, we also said that our demand outlook for the first 6 months of 2026 would remain similar to the second half of 2025. We also said that trade tensions and increased global instability could affect market demands or market and end customer demand. And of course, I think we can all say that turbulence has continued and it is a turbulent and interesting world every day when you read the news. So of course, that may impact also our activities. But overall, demand expected to stay similar to the previous 6 months. Then on the 30th of March, so last week, actually, we published some news on leadership changes, one concerning myself. So Katri Hokkanen has been appointed Chief Financial Officer and a member of the Kalmar leadership team latest on the 1st of October 2026. I will continue in my position until the end of September and also will remain with Kalmar until the end of the year in order to ensure a smooth transition and no specific drama here, if I can comment on that. I joined Kalmar back in the summer of 2023 in preparation for the demerger and listing and was part of that and also setting up the team and getting Kalmar on the right course as an independent company. And I think we can conclude that mission accomplished. Then there is also another announcement, Thomas Malmborg, the President of Services, will also step down from his position at the end of September. He will also continue with Kalmar until the end of the year. The search for a new President is ongoing as we speak. Then maybe I'll hand over to Carina here to say a few words about our upcoming Capital Markets Day.

This is just a reminder of the date that we sent out on the Kalmar's second actually Capital Markets Day if we take the first one that was during the listing period. And the site visit in conjunction to that Capital Markets Day that will be held in Copenhagen on the Monday, the 2nd of November, there will be a site visit to Ljungby the next day, the 3rd of November. So just save this date, and we'll come back with a formal invitation then after the summer. But that's, I guess, all about on the...

I think that concludes our presentation, and we're ready for Q&A.

[Operator Instructions] Tom Skogman, you are first in line here.

I would like to ask first, how big business do you have as a share of sales in 2025 in the Middle East? And what has happened to that during the work?

Yes. I would say that, of course, it has some impact, and we have activities in the region. However, of course, it's a fairly small part of the total Kalmar. Then, of course, the -- I would say that the possible impacts are more on the cost side of logistics and things like that and how inflation and demand will be possibly impacted by the situation rather than the direct impact in the region. So especially when you put it into perspective of the total Kalmar volume.

And Tom, as an addition, the first thing or the first priority, of course, has been to make sure that our people, especially service people are safe that are in the region. So the focus has been on safeguarding that on top of what Sakari just mentioned.

But can you give a number? Is it less than 2% of sales? Or how small is it?

Yes. We're talking low single digits in percentage of total sales.

And then continuing just on the theme you brought up yourself, have you seen any hesitation among customers to -- I mean, [indiscernible] yesterday said that in trucks, they start to see hesitation in the logistics area in Europe. Have you seen anything similar that some customers are postponing orders or so?

Not really directly. I mean, of course, there might be some isolated cases, but not as a general big trend in any way.

Yes. And on the other hand, also, there is a deviation. You might have some that are hesitating. But on the other hand, you have heavy materials and flows of material that need to be kind of moved from one place to the other. So some other customers might have a need to invest in order to make sure that the new trade routes and trade flows keep up and running.

And then last year, you said that there was an impact of the U.S. tariffs also in Canada and South America. It's quite understandable that people postponed orders or canceled orders when they see that export from the countries to the U.S. could decrease. Do you see any signs of a normalization here and maybe people get used to the tariffs and business keeps on moving now?

I think so, Tom, yes. But then there's, of course, the impact of the ever-changing tariff landscape then that we need to continuously adjust to, but that's not so much on the demand side. I would say that, yes, I think the world is getting used to the tariffs, and therefore, it's becoming more part of normal life.

But do you see that as a positive in signing deals generally that people have started to accept this new situation? Or is it just on a more high level...

Yes, I think so. But I wouldn't say that, that is any kind of big boost in any direction. But I think everybody is getting used to the fact that this is the new reality.

And then perhaps an update also on the costs, the savings that we should have now in Q1 and Q2, you have these ongoing programs, but if there have been any changes and new bridges.

Well, we reported at the end of last year that we had reached a run rate saving from our driving excellence of EUR 34 million, and we'll have to come with an update of the figure then at the end of -- well, when we publish the Q1.

Thank you, Tom. Any further questions? Mikael Doepel from Nordea, please.

So just firstly, coming back to the Middle East, you just could remind us of how big of a total the energy share of cost is for you?

You said energy share of cost?

Yes, energy...

We are not very energy intensive, as you know, because we're not in process industries. So that's not a big driver. But logistics cost is, of course, quite a big part. So that's more potential impact than energy. We run 4 plants, as you know, and it's not energy-intensive production.

No, that was basically my next question. So could you care to give any number on the logistics, the scale of that cost compared to the total of your revenues, sir, or something?

I think we'll have to come back to that then also in connection with Q1.

Okay. And then in terms of the aftermarket business, so is there anything you can say about the connected units, I mean, the operating rates or the utilization running hours here in the beginning of the year?

I was just actually...

Couple of points...

Yes, I was looking into the data and surprisingly, we do not see kind of any huge changes there. We have to come back to the exact numbers, but the activity levels have remained stable compared to the previous quarters.

On a year-over-year basis, are we up, down, flat?

I will come back to the exact, but we -- I think there is no kind of huge changes on that.

And does this cover -- I mean, does this go for all the regions or same in the U.S., for example, as in Europe?

Well, as we said in the end of the year that there was an uptick in the kind of North Americas. And then we didn't see as strong in the beginning of the year, but now it seems like the activity level is fairly good there, too. But let's revert back to that in our Q1 call then.

And on the service business, can you just remind us -- I think there were some issues with the margins, I would say, in the latter part of last year. So maybe you could just remind us of what kind of and how we should think about the margins here going into the first half of the year? I think you booked some -- a lot of additional costs in Q4, if I remember correctly, distorting kind of the margins to some extent. Maybe some comment around the service margin.

Yes, it wasn't really additional cost as such, but there was a little bit of discrepancy between Q3 and Q4 in the tariff impact. So you should actually view those 2 quarters together when you look at our service profitability.

Okay. And then just finally, in terms of the pipeline -- in terms of your equipment project pipeline, how would you describe the situation currently? Do you see a lot of active quoting activity there? Are there any differences across the regions, currently, if you could talk a bit about the pipeline that you see and that you have and how that looks across the regions?

Yes. I would say that the -- what we said about the demand in connection with the Q4 still holds. So basically, quite stable demand or similar demand as overall for the second half of last year is what we continue to see.

Okay. And then just a final question in terms of pricing. How should we think about pricing? I mean you have done tariff adjustments, right, across the service business, across the equipment business. But I'm thinking beyond that, there is, of course, underlying inflation as well. So just wondering how should we think about pricing going into 2026? Is it a normal average 2%, 3% increase or something else?

Yes. I think the way you should think about that is, of course, we try to compensate the tariff impacts as best possible. In addition to that, it's normal inflationary price increases. And then, of course, the other side of the equation is then the driving excellence and the sourcing savings, which are there to also support the margins and to counter inflation.

All right. Any further -- Tom, you have an additional question?

Yes. Reading docs in this industry, for instance, you can see that there's a lot of discussion about Chinese truck manufacturers opening up assembly in Europe also, and that the European truck manufacturers are now kind of trying to prepare for this. What do you see in your markets about SANY and BYD, et cetera? Do they move assembly to Europe in these products where they compete with you as well? Or what do you see in the field?

There's nothing I'm aware of in terms of new assembly from SANY or others in Europe. At least I have no information.

So they make all products they sell in your industries in Europe. They are made in China basically.

As far as I'm aware, yes.

And what -- and there must be some data on what is happening to market shares. I mean, are they gaining market share? What is the market share of the Chinese companies in electric machines, et cetera? There must be some data that you follow basically.

Yes. Well, yes, maybe to say that the share of our electric orders has been, as you've seen from our Q4 has slightly been increasing. Overall, the electric market, of course, has continued to grow as well. So maybe that's a couple of indicative data points on that one, but I can't be more specific than that. Carina, anything you would want to add?

Yes. And what we've also previously said, so the situation on the emerging markets where we've seen this kind of strong competition of the Chinese more than in kind of the traditional markets.

But is it so that you do not know? Or is it so that you do not want to provide this very important information? I mean the future is electrical. You said in your Capital Market Day that in 2028, 40% of the market is expected to be electric. And at least I struggle to get data. Just wondering, is it so that you don't have data? Or is it so that you do not like to give out data?

Of course, we are disclosing the fully EVs, the order intake, the share of fully electric equipment on kind of our behalf, how our numbers and orders are developing, then disclosing kind of other market share numbers. That's something that you need to ask from our competitors, but we are trying to provide you both with the eco portfolio numbers with the hybrid equipment and then the fully electric. So that is what -- how kind of the market is kind of ordering fully electric from us.

But do you have any kind of -- you said in the Capital Market Day that 40% is expected to be electric of the market in basically 2028. You are pretty close and you have, is it 11%, 12% of orders, but what is now electric machines out of the market, just to have some reference point?

It depends a little bit on also the equipment and what we are going to do, we are in the process of updating our market study, the one that we did with the KPMG in order to provide you with updated numbers also then in the Capital Markets Day in November as such. But no signals that there would have been major changes in the appetite or development of electric equipment.

So what do you mean by that? That will -- 20% to 40%, we are on that path towards 40% in '28 basically.

That the market is on the path of becoming more and more electrified. And then it depends a little bit on the product. So if you have lighter products, the market where we do not play, they are further electrified than, for example, some of the heavier equipment, whereas, for example, in straddle carriers, we think that we are doing quite a good job in the electrification and how kind of customers also are buying fully electric equipment for us.

And then there's, of course, when we think about the U.S., then, of course, there's a little bit less appetite due to the circumstances there in electric equipment compared to what we assumed back then. But more or less, we are -- the market is on the track that we spoke about back in our CMD.

Mikael, please, an additional question.

Just a very brief follow-up on Tom's question about the Chinese players. I mean you mentioned that -- I mean, in emerging markets, you do see strong competition here from these players, but not so much in the developed world. So I was just wondering what is your view on that? I mean, what would you say are the key hurdles for the Chinese players to really get a better foothold in the bigger European markets like Germany, France or Spain and Italy. So what's kind of your view on that?

Well, I think you have to turn it back to what is the strength of Kalmar, and it's providing not only the equipment, but also the services, so complete solution. And I think that's where we still continue to be stronger than the Chinese competition. And so we're not competing purely on price.

But would you say that there are also some regulatory hurdles, for example, in terms of reporting requirements or something like that, that could be an obstacle or not?

Not necessarily, no, no.

An additional thing that I would mention is data throughout the years when we've done the EV development and how much data we have collected together with our customers and the partnership thinking. So in order to get to the same level and depth of data, it takes time. It's not anything kind of magic, but you really need to work on that. So that's where we think and believe that we are strong.

Sorry, Carina, you were breaking up a bit there in the beginning. So did you say that the fact that you are gathering data through connected units and kind of sharing that with clients? Is that what you're saying?

Yes. I'm just that process -- yes, exactly process of developing and collecting data. Can you hear me now?

Yes, yes, absolutely, loud and clear, yes.

Yes. So the process of developing and together with the customer partnering up, collecting the data, and that has been done for tens of years already together with the customers. And I believe that's a stronghold that Kalmar has and something that we're continuing on developing together with the customers.

And also the long-standing customer relationships, of course.

Okay. That's clear. Thank you very much.

Tom, you have a question?

Yes. I was just -- would like to continue a bit on this subject. Can you give some kind of updated information on your prices compared to the prices of Chinese competitors for similar products? How close are you now? I mean is it -- is the difference less than 10%? Or is it a very large difference? And the second question is, what kind of financing do you see that they provide? Do they get access to cheap financing to help emerging market customers somehow from the Chinese government or Chinese banks or so?

Yes. I think, again, on the price differential, maybe not coming -- getting into detail in this call on that one. And on the financing, of course, I can't really comment on the competitors' financing.

But do you feel that it's like kind of fair business? I mean, Kalmar cannot start giving big credits to customers. But what are the Chinese doing just generally in this industry?

Well, I mean, what we do see is competing on payment terms and things like that. But I would say that, as I said, I think it's probably not my job to comment on their financing.

Yes. Okay. But it's, of course, very important for you that your customers, if there are like different ways of providing financing, it can be very decisive for whom they buy basically.

For sure. But also when we think about how we've been developing our service offering, we also can offer Equipment as a Service, Charging as a Service and things like that. So that's what we can provide as solutions as Kalmar.

And how do you arrange that then? Who owns the equipment?

It depends on the contract.

But it can be you as well. So it's in your balance sheet then.

It could be.

Yes. And then finally, on batteries. So how -- I mean, you use mainly Chinese batteries to my understanding, but you can also use other suppliers, I guess, and it's the customer's kind of choice, I assume, what battery they want to have. And do you think you get batteries at competitive terms compared to your larger -- I mean, if you have BYD, they make batteries themselves. So it's -- I guess it's difficult to know how they book the cost of batteries, but other companies in Asia that buy Asian batteries. Do you think you get the same prices as they do?

Well, first of all, we can procure batteries, of course, from several sources. Then on the pricing, I believe the pricing is competitive, whether it's exactly the same as someone else, that's difficult to say, of course.

Thank you, Tom. Any further questions from anybody? It doesn't seem like that for the moment. Then I think we are about done with the Pre-silent call and looking forward to meeting you all online on the May 5, on our quarterly -- first quarter reports call.

Thank you. See you then.

Thank you.

Have a good day.

Bye.

Bye.