Kalmar Oyj ($KALMAR)

Good morning from Helsinki, and welcome to the webcast on Kalmar's interim report for January-March 2026. My name is Carina Geber-Teir, and I'm heading the Investor Relations at Kalmar. Today's results will be presented by our President and CEO, Sami Niiranen; and CFO, Sakari Ahdekivi. At the end of the presentation, as usual, we will have our Q&A session where you can ask questions. I would like to remind you that this webcast is recorded. It will be available on Kalmar's webpage later today. And please pay attention to the disclaimer as we will be making forward-looking statements. We are now ready to start the presentation, so I will hand over to Sami. Sami, please.

Thank you very much, Carina, and good morning, everyone, from Helsinki. It's my pleasure to present Kalmar's first quarter 2026 results. I'm starting with an overview of the first quarter of the year. Overall, we saw stable demand, although geographical instability has increased in the past months. Firstly, our order intake continued on a sequentially stable level, although when looking at the year-to-year figures, it decreased 6% due to a high comparison period. On the other hand, our sales grew by 5% to EUR 420 million and by 10% in constant currencies. Our eco portfolio sales was on a good level, but fully electric order intake was soft. I will revert to this in a bit. And our overall profitability improved, although there were some operational shortfalls in our Services segment. Our driving excellence initiative continued well. Sakari will cover this in more detail in his part of the presentation. Operating cash flow for the quarter was good and our balance sheet is strong. Looking at 2026, we keep our guidance unchanged. We expect Kalmar's comparable operating profit to be above 12.5% in 2026. Let's now have a closer look at the orders received. As I mentioned, overall demand for our equipment and services was relatively stable across different end customer segments. Orders received were sequentially stable. They decreased 6% year-on-year, but only 2% in constant currencies. The decrease was due to a strong comparison period. In the Equipment segment in the first quarter of 2025, there were some sizable orders from customers in ports and terminals. And in Services, there were a few large service agreements. We'll have a look at the geographical breakdown of order intake on the next slide. Finally, our order book remained essentially unchanged. Looking at the overall demand environment, there was continued high interest in our sustainable solutions across different customer segments and regions. Here, you can see the geographical split of orders across our reporting segments. EMEA, 48%; the Americas with 36% and APAC 16% of orders received. Essentially, we got more orders from Americas and APAC, while in EMEA, order intake decreased, which is explained by some sizable orders in the comparison period. In Americas, the distribution end customer market showed gradual recovery and our order intake grew by 6% year-on-year. And in APAC, order intake grew 16% and the growth came mainly from Oceania. Then to sales per segment in the first quarter. Sales grew by 5% year-on-year to EUR 420 million. In constant currencies, our sales grew by 10% from the first quarter of 2025. Equipment sales increased by 7% and Services by 2% year-on-year and Services share of sales was 35%. Now let's have a closer look at our sales in each geographical region. We saw a positive sales development in all regions during the quarter. In both EMEA and the Americas, sales grew, driven by growth in the Equipment segment. In the APAC region, the Ports and Terminals end customer segment performed well, driving the sales up by 9%. Our eco portfolio sales grew by 10% year-on-year to EUR 187 million. The share of total sales for our low-carbon solutions covering electric, hybrid and sustainable services increased to 45%. Fully electric machines share of equipment orders for the last 12 months decreased to 9% from 11% a year ago. In the coming quarters, we will expand our electric portfolio further. This will increase our competitiveness and meet the customer needs in the different end markets. Let's now take a closer look at the profitability for the first quarter. Our comparable operating profit increased by 8% year-on-year to EUR 52 million from EUR 48 million a year ago. As you can see in the comparable operating profit bridge on the right, the main driver was higher volumes. Additionally, good commercial execution contributed to improved profitability in the quarter. We maintained a solid comparable operating profit margin at 12.3%, which is 3 percentage points higher than the comparison period despite the negative impact of tariffs. Kalmar has a well-diversified business portfolio globally with 4 end customer segments. As I've already mentioned, Services share of sales was 35%. Our eco portfolio remains an important driver towards our climate target, which is part of our performance targets until 2028. The sales of the Eco portfolio increased in the first quarter and was 45% of total sales. We have a team of approximately 5,300 passionate employees worldwide who are dedicated to executing our strategy. We have continued to demonstrate a strong ability to adapt to changing circumstances and we are executing our core strategy by staying close to our customers' evolving needs regardless of the geopolitical weather. The current macroeconomic uncertainty driven by geopolitical tensions leads to increased volatility in economic data, making it difficult to provide long-term forecasts. IMF didn't make any changes to its forecast in April. Global GDP is still expected to increase 3.1% in 2026, slightly down from previous years and then stabilizes at 3.2%. Drewry downgraded their 2026 forecast as a result of the U.S.-Iran conflict and they expect global port container growth to slow to plus 1.7% in 2026 and then rise to 3.1% in 2027. Oxford Economics has released an update regarding their manufacturing and retail forecast and the key takeaways for the 2026 outlook are as follows: in manufacturing, the 2026 growth forecast has been slightly revised upward to 3.2%. Despite this upgrade, the growth rate is expected to slow slightly compared to 2025 levels. And in retail, the 2026 forecast has been revised upward to 2.8%. Building on the external market estimates from the previous slide, let's look at the current demand outlook for Kalmar. We anticipate that the total market demand for the next 6 months remains approximately at a similar level as in the previous quarters, with the caveat that trade tensions and increased geopolitical instability could have an impact on our markets and the demand from our 4 end customer segments. Next, an update on the status of Kalmar's connected fleet. In the first quarter, despite the increased geopolitical unrest towards the end of the quarter, our connected fleet activity stayed on a stable level. The ongoing conflict in the Middle East is creating disruptions in logistics routes and results in extended transit times, which also creates a shift in fleet activity between different customer operations depending on the locations. Our installed base has grown steadily to over 70,000 machines from 68,000. At the end of 2025, we had over 16,800 connected equipment globally compared to 14,500 equipment at the end of 2024. Here, you can see new orders announced and added to the first quarter order book. Firstly, we received an order for 2 hybrid straddle carriers for the training center for Harbour Workers OCHA in Antwerp, Belgium. We also booked a large order from our long-term customer, the Port of Tauranga in New Zealand. They ordered 6 hybrid straddle carriers and 1 electric straddle carrier from us. And we got a significant order for 14 hybrid straddle carriers to PSA Antwerp in Belgium. Let's then continue to our actions driving sustainable growth. Our 5-year Move2Green programme, co-funded by Business Finland has been running for 1 year now. Since the launch, we have 68 new ecosystem partners and we have started more than 20 internal R&D projects with a focus on future growth horizons. In the second year, we will leverage our ecosystem and launch new ecosystem projects. We also earned top recognition from EcoVadis and CDP and this reflects our collective effort to embed sustainability across our operations. We were awarded the EcoVadis Gold Medal, placing us in the top 5% of all companies evaluated worldwide. In addition, we secured a place on the CDP A list for climate change. And in the first quarter, we also launched the TT7 terminal tractor to the European market. The TT7 is specifically designed for the demanding requirements for customers in Europe. It's a robust and reliable solution for port terminal, yard, distribution and logistics operations. We believe that sustainable growth is driven by our own operations, but in addition to that, by deepening strategic cooperations and partnerships with leading players and institutions. An example of this is that in March, we donated EUR 100,000 to Tampere University to accelerate the development of key technology areas that are vital for sustainable innovations, especially focusing on electrification, automation, AI and digitalization. Moving into a short summary of financial highlights before handing over to Sakari. All in all, if you compare the performance between the 2 segments, it was clearly mixed. Our sales grew and overall profitability improved, but at the same time, we faced operational headwinds in our Services segment. Orders received decreased year-on-year, but that was mainly due to the high comparison period. Comparable operating profit improved in the Equipment segment, but the Services segment's profitability continued to be burdened by tariffs and challenges in the spare parts sales in North America, partly due to the sluggish market activity in the region. We continue implementing proactive sales growth, commercial excellence and cost optimization actions and we are confident in our ability to improve the profitability of our Services business. Finally, I would like to wrap up my part by highlighting that we remain committed to our strategic priorities and driving sustainable growth by leading the industry with innovations towards automation and electrification, expanding our Services business and presence and pursuing operational excellence to ensure long-term value creation in line with our 2028 targets. I'm sure you have all noticed the recent announcements concerning Kalmar leadership team, but here is a brief recap of the announcements that we have made. We have announced that Sakari Ahdekivi will leave his position as the CFO as of 30th of September 2026 and that Katri Hokkanen was appointed CFO and a member of the Kalmar leadership team no later than 1st of October 2026. Sakari will remain with Kalmar until the end of this year to ensure a smooth transition. We also announced that Thomas Malmborg will step down from the role of President of Services and member of the Kalmar leadership team. Tamara de Gruyter was appointed President of Services and a member of the Kalmar leadership team as of 1st of September 2026 and Thomas Malmborg will remain with Kalmar until year-end to ensure a smooth transition. I want to thank both Sakari and Thomas for their contributions for Kalmar and the future growth of the company. I will hand over now to Sakari. So thank you for listening.

Thank you, Sami, and good morning to everyone on the lines. I'd like to start my presentation by pointing out that Kalmar's financial profile has remained strong, providing us a solid basis for future growth. Our order book has stayed at a healthy level of around EUR 1 billion. Orders received for the last 12 months were approximately EUR 1.8 billion. Due to the good operational execution and successful management of costs, our comparable operating profit margin on an LTM basis moved up a notch and was 12.9% at the end of March. Our balance sheet has been further strengthened. And at the end of March, our leverage ratio was actually negative, which is well below our long-term goal of a maximum of 2x. Finally, our cash conversion on an LTM basis was 80%. Moving into the segments and starting with Equipment, where the development was stable. In the first quarter, orders received decreased by 6%, but from a strong comparison period with some sizable orders, which Sami already mentioned and on top of that, also some FX impact. Order intake decreased in the EMEA region, while orders increased in Americas and APAC. Equipment sales increased 7% year-on-year. Profitability of the Equipment segment improved both in absolute and in relative figures. Comparable operating profit grew by 17% year-on-year and 1 percentage point in terms of margin. On the comparable operating profit bridge on the right, you can see that it was a result mainly of higher volumes. Of course, good commercial execution also contributed to improved profitability. Comparable operating profit margin was 12.6%. We proactively mitigated the majority of the tariff-related impacts, although there were still some small negative impacts on margins within the segment in some of the product lines. Then moving over to the Services segment. It has to be said that in the first quarter, Services order intake was soft. Orders received decreased by 6% and totaled EUR 149 million. This was -- the drop was mainly because of the comparison period, which was high due to a few large service contracts. Services sales increased by 2% despite market turbulence and totaled EUR 148 million. Services profitability decreased year-on-year and this is against a strong comparison quarter in '25, where we had a COP margin of 19%. Comparable operating profit decreased by 14% in absolute terms. The decrease was driven by various external and internal headwinds. There was a negative impact from tariffs and there were challenges in spare parts sales in North America. We continue cost optimization as well as targeted sales growth and pricing actions and we are very confident in our ability to improve the profitability of our Service business going forward. Then a brief glimpse on the tariff landscape. We see that the tariff landscape is currently unchanged. However, we continue to monitor the landscape closely. As in the previous quarters, our responses to tariffs have included mitigating actions with price increases, supply chain actions and other operational excellence initiatives in our operations as well as some documentary requirements. The ongoing conflict in the Middle East is driving cost increases in fuel prices and is creating disruptions in logistics routes. This results in potentially extended transit times, increased freight costs and also potential component shortages. However, so far, direct impacts to Kalmar sales have been limited. But in the first quarter, there were indirect impacts through increased freight and fuel costs. The share of Middle East in Kalmar sales is a low single digit percentage of our total sales. This map shows the ports and terminals that can be used to bypass the blocked Strait of Hormuz. And why I'm showing this is that, of course, while there are certain ports which are impacted negatively by the conflict, there is also some opportunities which arise in the other ports, which are not directly impacted and are used to bypass. Then shifting gears and moving into the driving excellence initiative. And as you remember, our target is to reach EUR 50 million of gross efficiency improvements by the end of 2026 run rate. This is proceeding as planned and the status is that by the end of March, a run rate of approximately EUR 40 million of annualized gross efficiency improvements have been secured. As before, the majority of the improvements secured originated from successful sourcing activities and then to a lesser extent, from process improvements. Our capital -- return on capital employed has also increased or improved rather and at the end of the first quarter, this was at 24.2%. And there has been quite a stable upward trend since the beginning of -- well, for a while, several quarters now. And our target here is over 25%. So we are getting closer to the target. Our balance sheet was further strengthened during the quarter. Our leverage was negative at minus 0.1x, well below our long-term target of a maximum of 2x and our gearing stood at 5.2% negative. And this is before dividends were paid in April. The decrease in interest-bearing net debt, which improved our leverage ratio was primarily a result of solid cash generation from operations. Our debt maturity profile remains unchanged. Our liquidity position is strong at EUR 521 million and this includes an undrawn EUR 200 million revolving credit facility, which matures in 2030. On this slide, you can see our cash flow. And in the first quarter, we had a very solid cash flow from operations before financing items and taxes amounting to EUR 67 million. And as said before, our cash conversion for the last 12 months was at 80%. Finally, as Sami mentioned in the beginning of the presentation, our guidance for 2026 remains as follows: Kalmar expects its comparable operating profit margin to be above 12.5% in 2026. And finally, here, you can see the summary of our interim report of the first quarter. I won't repeat the points here. I will finish my presentation so we can move to Q&A. Thank you for your attention. And now welcoming back Sami and Carina for the Q&A session.

Thank you, Sakari and Sami. And I think the audience is eager to ask us questions. So I'm handing over to the operator, and you may open the lines.

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

So a couple of questions from my side to begin with. So first on the Service business. And I think you mentioned some problems with the North American spare part sales. Maybe you could just talk a bit about that, what's happening here and how you expect this to trend going forward?

Yes. So let me start and continue what I mentioned in the presentation as well on the sluggish market, the market demand was soft. So that was the primary reason for, I would say, rather low spare part sales in North America. And of course, when we are losing the spare part sales, of course, it's changing the mix in our Services portfolio or Services sales in total, of course, impacting the profitability as well. But I would say the slow market in North America, of course, it has been sluggish, a little bit longer period already. So it's nothing new as such. But of course, the uncertainties, the crisis that we faced and faced in Q1 as well and increased uncertainty levels in different parts of the world, of course, impacting quite a lot in North America. And the tariff situation as well changed during the quarter. So that has been very volatile and fluid overall. So of course, the overall uncertainty level, it impacts our customers as well as the dealers, of course, the buying sentiment. And that's what we faced in North America and impacting our spare part sales. And when it comes to the -- if I elaborate a little bit, okay, now it's too early to say about big change maybe in April compared to Q1, we can say. But of course, what we are doing already since long time ago, so this is nothing ad hoc that we have invented in Q1. But of course, we continue our services focus all over the world, of course, not only focusing on North America, but everywhere basically growing services in different areas, improving the profitability, but we will be even more targeted with our sales actions, more proactive with our customers and dealers. And then, of course, working on the strategic pricing as well. I mean, the commercial excellence part that I mentioned. And then, of course, cost optimization is important as well because we are in Services as well as in the whole company, volume-driven, pretty volume-driven operations. So therefore, it's important that we have the cost team fitted for our demand.

Okay. And on that point, I think you mentioned that -- I mean, obviously, the margins were quite weak here now. And I guess part of the reason has to do with the mix in the business, which based on what you're saying is unlikely to improve very much. You also mentioned tariffs still having an impact. I'm just wondering about these mitigation actions. I mean, maybe a bit more concrete comments there, exactly what are you doing? And perhaps more importantly, how fast do you expect to see the results, i.e., I mean, when should we expect the margins here to, let's call it, normalize? Is it in the second half of the year or earlier, later?

Yes. What I can say is that I'm confident that the margins will improve. And what I can say on the timing is that in coming quarters in plural, I mean -- so definitely, we have a lot of actions, good actions in place. And one thing, of course, related to North American market is the distribution center, the world-class distribution center that we put up or changed the location last year. So now it's fully up and running, of course, and now it's time to leverage that Greenwood distribution center and provide our customers, dealers with the fantastic availability of the parts. So that's something, of course, that we are continuously working on. And then the proactivity as such, of course, visiting dealers, customers and we have a large fleet, operational fleet in North America, of course, a lot of them related to terminal tractors. So of course, going to those customers and dealers on a constant basis and offering them our valuable solutions, of course, that is the base as well. So -- and then, of course, we can be even more targeted with certain sales activities and that's what we have put together now in Q1 as well. So I think those are pretty concrete actions on the offensive side. On the defensive side, of course, we need to look at our cost as well because we have invested in new services in the distribution centers in both Europe as well as North America during the last year, of course. So the costs have increased a bit. So of course, we need to be cautious with them as well.

So it's very much the volume and pushing the sales to be order -- in order to be able to then leverage the infrastructure that we have.

Right. But on that point, I think, I mean, pricing is obviously one tool as well here, but you're not mentioning that. So is it fair to assume that the competitive landscape is pretty tough, you won't be able to mitigate, for example, cost inflation slowly or tariff with the pricing, so you need to compensate through volumes and internal cost takeout. Is that the right way to read it?

I think you mentioned strategic pricing and commercial excellence activities that was in the presentation as well. So yes, absolutely, that is part of it. And I think we have improved the mitigating actions in Q1 compared to last year when it comes to Services in North America, of course. But of course, like the tariff landscape, when it changed now in Q1, of course, we need to adapt to different situations. So it has taken some time to adapt to the new price levels and increase the prices. But of course, there are limits also with our customers and dealers, how much you can increase the price. But of course, the aim is to mitigate as much as possible. But I'm quite happy with the situation what we have now in Q1 when it comes to mitigating actions still, we face some dilution because of tariffs. That's the reality. And that was the same with equipment as well.

Yes. Okay. And then just finally, just switching gears a bit here. So looking at the Equipment business, how would you describe the sales funnels here going forward? I mean, if you look at the various regions, the various segments, I mean, what are you seeing heading into Q2?

Yes. I think for the next 6 months, next 2 quarters, I think the market demand pretty similar, stable compared to the previous quarters. Similar type of statement what we did a couple of months ago in the previous reporting as well. So that's what we see. The demand is stable, I would say, worldwide in different end customer segments. I think ports and terminals is still pretty active. The distribution end customer segment has been the slowest one. Now we saw a bit of a gradual improvement like last year, exactly at the same time for terminal tractor business in North America. Let's now see depending on the conflict situation, uncertainties, of course, how that will evolve in the coming months. But I think the stable market demand, I would say, overall. Then, of course, Iran-U.S. conflict, if that starts impacting more largely the cost of money inflation, Asian business or Asian operations, I mean, in the global scale, of course, that might have an impact. But as we see today, I think a stable market outlook.

The next question comes from Panu Laitinmaki from Danske Bank.

Firstly, going back to the service topic. Just thinking about the U.S. spare part demand, is it that the customers are kind of delaying buying spare parts? Or is there lower activity, so they need less spare parts? Or is it that they can buy third-party spare parts if you have increased pricing due to tariffs? So just thinking kind of what is driving the lower demand?

Yes. Good points, Panu. And I think overall, of course, if you look back a little bit and even look at the connected fleet and the operating activity last year, last years, of course, it was quite a decline in the fleet activity in the past, okay? Now last couple of quarters, it has been flattening out so that we have seen even some low single digit positive indications, percentages in the fleet activity. So I think overall, the activity is still very slow and that's what we referred to with our sluggish market environment statement as well. Then, of course, the tariff situation at the same time, price increases, it's not helping the situation and it creates uncertainties that even with customers, dealers, of course, it creates thinking about, okay, what will be the pain point on the spare part pricing. So I think it's a combination of all this. But the market despite having 1% increased activity year-on-year or quarter-on-quarter is not changing the big picture that much. It's still quite a slow market in North America.

And maybe adding to Sami's answer there, if you look at the -- he was talking about the mix and looking at our dealer network. So they are very highly using our kind of web services and buying online and the online share of sales is high in U.S. and also a very profitable part of the spare parts business. So that's good to keep in mind.

Secondly, on costs, so actually 2 things around that one. Just on the group costs, it was down in Q1. What should we kind of model for the coming quarters or the full year? And then on the excellence program, so you now have reached EUR 40 million run rate. How much of that should we expect to have a net impact on your EBIT in '26 and next year?

Yes. If I cover the group cost question first, then I'm not expecting any major changes in that compared to what we have in the first quarter. And then maybe something which was interesting is that our associated company turned a profit in Q1, which, of course, helped compared to a loss 1 year ago. But then on the driving excellence, well, we haven't actually given out exact numbers on that. And of course, you have to remember that we started this program at the beginning of '25. So the increment from full year to current was from EUR 34 million to EUR 40 million. And then you have some carryover from the activities that were done last year and then the new actions, which always then hit the P&L with a lag because first, you have a new price with a new contract, then it comes into force a bit later, then you have some inventory and before you actually use the new price and new revenue, it takes some time. But I think you should see similar impacts to what you see -- saw in '25.

Okay. Then as a follow-up. So should we think that the kind of net impacts are like half of that is still ahead of us? Or have you already achieved most of that or kind of where you are now given that you mentioned you have a lag from implementing this and seeing this in the P&L?

Yes. As said, I think you should continue to see similar for now. So if the run rate now is EUR 40 million and we're going for EUR 50 million, then of course, it means that we still have impacts coming from back end of last year into this year's P&L. But it's complicated because then you have the tariffs and the pricing and then you have the sourcing savings and then that all shows up then finally in the margin. So it's a mix of many things.

Okay. Maybe a final one on capital allocation. So you had net cash in Q1. Do you have any comments on the capital allocation as you are now clearly below your own balance sheet targets?

Not really new comments. The only thing I would say is what I mentioned in the presentation that, of course, the cash position didn't include yet the dividends, which were paid out after Q1. So that, of course, has then an impact. But other than that, no new comment.

Yes, full focus on our organic strategy that we have in place, of course, being or staying as a good dividend payer and then focusing on R&D innovation in total as well as Services, of course, and keeping our factories and innovation centers in a good shape.

And then we did announce a share buyback, which, of course, has to do with our incentive programs.

The next question comes from Tom Skogman from DNB Carnegie.

This is Tom from DNB Carnegie. Looking at the details, I can see that there's a pretty big step-up in depreciation in Q1, explaining perhaps a bit of the EBIT kind of challenges. Can you open up what this is about? Is it about the new service centers, for instance? Or what is the reason? And is it kind of continuing in coming quarters?

Well, I would say, Tom, that it has to do with certain CapEx that was done or implemented, of course, now in the recent past. But other than that, of course, then there's nothing exceptional in that. So that would -- should -- we expect to continue.

And is it more on the Service or the Equipment side?

Well, the CapEx is more on the Equipment side.

Okay. And then the PPAs, they are not big, of course, but can you just give guidance on how long they will continue?

Sorry, Tom, can you repeat that?

The PPAs, they are, of course, not that large, but can you just give an update on how many years they will continue?

I don't have a number of years for you. We'll have to come back, Tom.

Okay. And then about the new electric machines, I saw that the share of orders last 12 months is down to 9% from 11%. So I mean, how big impact should we expect from these new products? Can you open up a bit more? I mean, how big part of your products will get new models now in the next couple of quarters that could turn this trend around?

Yes. That's a good question. And yes, exactly right, 9%, that's the level where we are as of today. So we have been hovering around 10% in the last couple of quarters, of course, I'm not completely happy with the situation. And therefore, of course, we will act accordingly in the future and launch some new products. But I would like to maybe go a little bit back to last year, what we did with the next-generation batteries already and which have been implemented to both our counterbalance equipment as well as the horizontal transportation equipment. And now in April, okay, after Q1, of course, we saw an order coming from Brazil, for instance, including those next-generation batteries. So I think that was one of the major product upgrades or launches what we did last year already, which we expect to really deliver more positive results in electrification and fully electric machines. So that was one that we did already in 2025. Now the coming ones, I would say, in the next couple of weeks or months that we will talk about a little bit more, of course, we are -- we will be completing our portfolio and expanding to certain regions, other countries as well. So no numbers about how much that will impact, but they are very important product for us. Of course, we have a wide portfolio already as of today, but it's a part of our white spot strategy, as we call it, territory management to look at where we can grow. And of course, the interest in electrification, that is very high. The decision-making takes time still. So it's not quick decisions. But I think by putting together our well-performing portfolio and the customer feedback on the electric machines, I think that will give a good base, the Services part as well. And always when we are selling the electric machine, we try to attach some kind of service offering there. I think those actions together with the new launches, product launches will, of course, give a positive impact going forward. So I'm positive with the electrification going forward, absolutely. And I think the customers' interest has remained high up until today.

Yes. And as a reminder, for the clarification, quite often when we talk about the electrification, the light forklift truck market is the one that is the furthest in fully electric equipment. The heavy machinery is behind that. So when you compare numbers, you always have to remember that it changes if you deduct the light forklift truck market from those numbers.

But can we just get some kind of feeling, I mean, how is the line performing? How -- what -- are your market shares higher or lower in electric machines if you look at then lighter and more heavy product? I think this is very important for investors to understand whether you are like a winner from electrification or whether you struggle to keep your market shares and the technology is shifting.

No. I think when we talk about medium, heavy machines, of course, we are strong there as we are with our eco portfolio and diesel machines as well. Of course, the lighter we go in the range, of course, towards 5-ton machines and so forth, then there are more players around, of course. Then the competitive landscape, it varies between different regions. We have previously talked about, I think, a tougher market in Asia, for instance, even in the emerging markets because there are more competitors around there. But I think our strongholds, North America, Europe and so forth, I think we are well situated there. And when we look at the portfolio as of today and then when we add a couple of more products there, including the next-generation batteries that we launched last year already, I think we have a sound portfolio to grow further.

Okay. And then finally, about the spare parts in the U.S., do you see that the challenge is bigger in kind of spare parts where you compete with the likes of Volvo and Cummins or in kind of more Kalmar-specific spare parts in hydraulics?

I think it's building from the lower or low market activity as such on different equipment, of course, but we have a lot of terminal tractors out there and that market has been down for quite some time. We talk about maybe 2 years -- previous 2 years. So I think that has not really picked up. And we saw a bit of gradual improvement last year at the same period, which slowed down again. And now we saw a bit of a gradual improvement with terminal tractor sales, which is great. But let's see how it continues now going forward. So those have the relationship there. And then it's both commercial parts as well as, of course, Kalmar-specific parts. But the higher the captivity or capture rate on Kalmar parts we have on our machines, of course, the better likelihood we have to sell them more.

[Operator Instructions] The next question comes from Antti Kansanen from SEB.

I wanted to still come back to the U.S. spare parts situation currently. I mean, looking at kind of the activity of your connected fleet in the past 12 months, it's been a bit up and down, but fairly stable in the U.S. I just wanted -- maybe you could provide a little bit more color on the magnitude of the volume drop in the spare parts business in the past couple of quarters where you have seen the negative impact on the margins? And also, how much is pricing impacting on, let's say, Services sales and orders that you have taken so far? Just trying to get kind of the volume figures so I understand better the impact on margins.

Yes. Let's say, if I elaborate a little bit here, not very accurate numbers probably, but we can talk about in the part sales in North America, maybe 10%, 20% lower demand. I would say then the pricing part of -- pricing side, of course, that is something different, I don't know. Of course, we have tried to mitigate, of course, the tariff impact as good as possible. And now we are narrowing down the gap between the customer pricing and the tariff levels. But still, there is a bit of mitigation to be done.

And then what hasn't been mentioned is there's also a little bit of FX impact in the Service margin.

Yes, comparing to the Q1 2025, of course, there is a bit of difference there.

Yes, sure. And maybe on the pricing side, I guess, both on the Equipment and Services, if you look at the tariff landscape changes in the past year and the recent ones in April, is there any kind of a surcharge or the net pricing impact that we should think about that is now kind of visible on the orders that you are taking right now compared to, let's say, the pre-tariff environment, how much is the price hike?

Yes. I think the latest changes that we face now, when was it, a couple of weeks ago, basically, I think on the Kalmar level, I think the tariff impact will be pretty similar to last year. So no major change on the Kalmar level. But then when it comes to different products like the counterbalance equipment, forklifts and empty container handlers, there, the tariff -- the current tariff because of the different interpretation of the steel tariff, so the tariff will be higher, whereas there might be a little bit lower tariff on the spare parts as well as some other product categories as well. But on the Kalmar level, I think the tariff landscape remains approximately the same as 2025.

And it's good to keep in mind that the Section 122 on the -- that came instead of the reciprocal tariff, that's valid until the end of July. And basically, we don't know what's ahead. So that's why the situation remains fluid and we have to adjust accordingly.

Okay. And then -- yes, sorry, did I interrupt somebody?

No.

No.

Okay. So yes, yes. Then the final one was on a maybe more positive note on the demand and the U.S. distribution segment. So you mentioned that some improvement, some signs of improvement. So is this something that we can build upon going into Q2? Was this something through the quarter improvement? Was it substantial? Is it just the pent-up demand kind of ending and replacement cycle starting? Or how should we think about it?

Let's wait and see. That's my comment. And let's say, the impact or the improvement, maybe it was in the same magnitude what we had last year in Q1 2025 as well. So not very major, but some kind of -- a bit more light in the end of the tunnel, a little bit more activity and orders in Q1 this year. But now depending on the uncertainties, conflicts in the Middle East, for instance, and how it impacts the North American market or the U.S. market, for instance, when it comes to inflation and pricing and so forth, I think it's better to wait and see, yes. So a little bit too early to say. So we will come back to you in our report -- with our report in July.

Okay. Was it maybe some of your bigger key accounts ordering coming back? Or was it kind of broad-based from smaller and midsized lines or...

I think it was both. There were a couple of a little bit larger orders as well as then the bread and butter orders as well. So it was a good mix in a way.

The next question comes from Mikael Doepel from Nordea.

Just a very brief follow-up on the Middle East. So you talked about your revenue exposure there, you talk about experience some cost increases. Are you able to quantify those cost increases? I mean, what's the magnitude that you're seeing or have seen in Q1? I mean, and what do you expect into Q2? And do you have any clauses or hedging in place that's going to affect you? Or how are you dealing with the situation?

Good question. So in Q1, very minimal impact on the cost side, I would say. So on the negative side, on a positive note, I can mention that we have won some orders in that region as well. So it's not only bad for our business. And that's what we have been saying that when the geopolitical changes occur, of course, there might be new business opportunities as well. But on the cost side, nothing major in Q1 when it comes to coming quarters and our contracts, I think we are quite well protected with our contracts. We have different kind of freight contracts, of course. And then we need to look at both our contracts with our suppliers as well as with our customers. So it's a mix of different things and including maybe pass-through pricing mechanism as well. So -- but we follow up on the situation and should the crisis conflict prolong, of course, then the risks will increase definitely.

There are no more questions at this time. So I hand the conference back to the speakers.

Thank you all for active participation and good questions. I think we are heading towards the end of this session and going forward to see you online and also face-to-face in the coming quarters. I would like to remind you that our first -- our results for the first half of 2026 will be published on the 22nd of July. And thank you for now from Helsinki, and have a nice rest of the day. Thank you.

Thank you.

Thank you.