Kalmar Oyj (KALMAR) Earnings Call Transcript & Summary

Hello, everybody. We're just hold on for a few seconds still waiting for everybody to join the call. So just hold on.

All right. I think it's on the hour. So warmly welcome to Kalmar's pre-silent call. My name is Carina Geber-Teir. And with me here today, I have both Sakari Ahdekivi and Katri Hokkanen. And I would warmly welcome also Katri to this -- to join the team. But today, the call will still be hosted by Sakari due to that this is the second or third day that Katri is with us. But maybe before Sakari starts wrapping up kind of where we are, Katri, would you like to say a few words to the team here?

Thank you, Carina, and hello, everybody, on my behalf as well. My name is Katri Hokkanen. And as you heard, I started as CFO last Thursday. So I'm in the middle of my onboarding. And I might be a familiar face for some of you at least in the call, and I joined Kalmar from Valmet, where I was CFO for 4.5 years. But maybe with that, I'm looking forward to see you all in CMD in November. Thank you.

Well, by that, Sakari, over to you. This is your kind of last call as Kalmar's previous CFO.

Thank you, Carina. Thank you, Katri. Yes, it's a pleasure to host this call. And so one more time. And so as usual, then we'll have a look at the agenda, which is a familiar one. We'll recap where we left off in the second quarter, so the Q2 highlights. We will cover the orders which have been booked and announced for Q3. And we have an update on the market indicators for 2026. And then we have a few other announcements at the end and as usual, a Q&A. But let's just remind us how we left off after the second quarter. So second quarter was characterized by strong sales growth and also a strong cash flow. The order intake was resilient and stable, same level as the corresponding quarter in the previous year, so around EUR 450 million. We had a strong sales growth on the back of the strong order backlog that we had. So sales grew 14% compared to previous year. And also within the sales, the eco portfolio sales grew by 27%. We also had an improvement in the fully electric equipment order intake in the second quarter compared to the previous quarters. The comparable operating profit in absolute terms increased by 9% from EUR 55 million to EUR 60 million. We also had a sequentially improved performance in services, rebounding from a lower margin level in the first quarter and also the fourth quarter of 2025. We continued a good execution with the Driving Excellence, and we had a strong operating cash flow and also our guidance for 2026 was unchanged. Then on the order side, we had a stable order -- overall demand for equipment and services across the different end customer segments. And the order intake was resilient despite the fact that we had fewer sizable orders in the second quarter of -- than in the second quarter of '25. So equipment was in line with the corresponding or the comparison period, services was where we had a slight decrease. And the order book remained close to EUR 1 billion, so at a very, very good level. And then one thing, we had no impact from currencies in the second quarter. So it was comparable from that point of view as well. And then we said that our direct impact from the Middle East conflict was limited, however, did have an impact on logistics costs in the quarter. And then when we look at by market, what happened, the order intake in EMEA decreased because we had fewer sizable orders than in the comparison period. In Americas, we had a growth in the order intake as the gradual recovery in the distribution end customer segment continued. Services customers, however, were still cautious. And then the APAC growth was driven by Oceania. And regarding the demand environment, customer demand in the second quarter remained stable and resilient across all of our customer segments. On the sales side, we had strong growth, both on the equipment and the services side on the back of the strong order backlog from the previous orders, and we delivered our projects successfully. And again, currencies had no impact on second quarter. In EMEA, sales growth was strong due to the previously received sizable orders and the successful deliveries of those. In Americas, sales increased in the Equipment segment. So the 3% came from that side. And in APAC, sales decreased as the growth that we had in Oceania was offset by a decrease in equipment sales in Asia. And then maybe the highlight from this slide was the improved services performance, which I already mentioned before, the equipment profitability remained on a good level. And then as I said, our guidance for 2026 remained unchanged. We expected our comparable operating profit margin to be above 12.5%. Then we have the orders that we have booked and announced in Q3, a large order in straddle carriers, [ 12 hybrid ] straddles for the International Container Terminal Services in the Philippines. We also won Kalmar Care service agreement in Algeciras in TTI. And then also to mention the 2 Kalmar electric reachstackers for the Port of Helsingborg. So very different kinds of orders represented here in the orders that we have booked. Then the market environment, and these are now mostly updated. So the global GDP is still the Q2 graph. However, the others are now updated for Q3. GDP was not available yet for this call. One positive sign here is clearly that the global container throughput outlook for 2027 has increased quite noticeably from the previous level to 5.6% growth before then returning to about 3% in 2028. The global manufacturing output development has also inched up slightly, both for '26 and '27. However, on the global retail side, things are a tad down, but I would say, largely unchanged. And then the demand outlook as per the second quarter was that we expected our total market demand for the next 6 months to remain approximately at a similar level compared to previous quarters. However, of course, as there is a lot of turbulence and geopolitical instability, of course, that could affect Kalmar's markets and then customer demand from time to time. Then we had a big event in September as we opened the industry first fully automated test center in Ljungby, Sweden. This is designed for 24/7 fully automated accelerated lifetime testing of our equipment in extreme circumstances, so varying from very cold temperatures to very hot temperatures. And this -- maybe the thing to remember about this is that this will speed up our R&D work as we are able to efficiently and continuously test our equipment in the facility. And we had a grand opening of the facility attended by a very nice audience of our customers, suppliers and other stakeholders. On September 3, we announced that Kalmar plans to simplify its operating model to accelerate growth, enhance customer focus and optimize operational efficiency. What we are doing in practice is that within our Equipment segment, we are combining 2 divisions, the Horizontal Transportation and the Terminal Tractors. This is a simplification of the organization and it is also there to drive customer focus and service focus. This will not have an impact on our reporting structure. So our external segments being equipment and services remain unchanged as a result. And planning and consultation began immediately after the announcement. What we are targeting here in terms of cost savings is EUR 10 million of cost savings, and the full run rate is expected to be achieved by the end of 2027. The change has no impact on our 2026 guidance. And then as a reminder, there are quite a few changes in the leadership team. So as of January 1, 2027, you see the leadership team here. So Katri as new CFO. And then as a result of the divisional changes, Thor Brenden will be the President of Counterbalanced and Arto Keskinen will be the President of Horizontal Transportation and Terminal Tractors. And then, of course, also our recent joining, Tamara de Gruyter as President of Services. Then as a reminder, Kalmar is hosting its Capital Markets Day on the 2nd of November 2026 in Helsinki, Finland at the Flik Event Studio here in Ruoholahti, Finland. And you see the timetable for the presentations and the program on the slide. And here is a slightly more detailed agenda and the topics that will be addressed at the Capital Markets Day on the 2nd of November. And with that, we are ready for Q&A.

Yes. And I see at least Antti, you already raised your hand earlier here. So maybe you want to start. If you are talking, we cannot hear you. So maybe you should open your mic.

Now it should be working.

Yes, now we hear you.

Lovely. Great. And Katri, nice to see you. Great to continue the cooperation. But at this time, maybe it's fair to point the questions towards Sakari. So maybe let's start with the equipment profitability outlook. And I mean, on the second quarter, you had a strong sales growth, but the margin was a bit muted compared to year before. So Sakari, maybe could you remind us, was there something that you would want to highlight regarding the different business units within the equipment or geographically Americas versus Europe on the profitability development? Or what caused the margin contraction year-over-year?

Yes, Antti, what we said in connection with the Q2 report was that we had some cost headwinds, namely in logistics in some of the oil-based products and some other components as well. And then there was a mix impact also between the -- because there are some differences between the margins of the different equipment. So there was also a mix impact. So those were the drivers that we cited and quoted at the time.

But just looking at kind of the book-to-bill development, if you look at past 6 or 9 months, which I guess is a good proxy for your delivery times, I mean, it's a strong book-to-bill in the Americas, but obviously weaker in Europe because of these larger deals not being on the orders right now. So should that be something that impacts kind of the equipment mix going forward? Is the logistics or any tariff impacts or anything like that more profound on the U.S. sales that we should be wary of when we do our estimates going forward?

I would say that largely the same. Of course, the -- as we know, the oil prices have remained high. So logistic costs have remained high as well. So that is, of course, an impact that will have continued. But other than that, I wouldn't see any larger things to read into.

So the change in geographical mix, if that is to be occur, doesn't have an impact on profitability?

I don't expect so.

Okay. And then maybe, I mean, you touched upon the oil price and obviously, the interest rates have continued to creep up during the quarter. Is this impacting any way your client decision-making, whether it be smaller projects, larger projects, smaller clients, bigger clients, anything you want to share?

I think in the big picture, no, because, of course, the investment cycles are quite long and what has been ordered is delivered. So maybe in some smaller cases, it might have an impact on decisions. But I would say that our customers typically don't change their course so quickly.

Maybe, Antti, to add on that. So the only thing is more on the freight and the availability, there are some problems on availability of shipments and so forth that is there a kind of ship ready to deliver, so due to the high pricing and so forth. So that might affect a little bit of the timing.

That's a good point, especially in Asia. So freight availability can be a bottleneck and could impact some deliveries.

Okay. Good. And then maybe last question at this point from me would be seasonality. If we think about your demand is fairly stable for the rest of the year sequentially. Is Q3 typically a much weaker quarter because of the summer season in terms of orders and maybe also on deliveries, would you expect to deliver typically less on Q3 versus other quarters?

Not due to seasonality. So if there are any reasons, there would be then other reasons. But we don't really have a seasonal business.

Okay. Any further questions? Mikael, please.

A couple of questions as well. Firstly, on the service side, I mean, you mentioned demand being a bit sluggish, especially in the U.S., right? And just wondering, back then, you talked about perhaps this could be a bit of a time lag effect between the kind of equipment orders and service orders, maybe Cass Freight numbers point a bit upwards. Just wondering if you are seeing any signs of improvements here.

Yes. We often refer to the Cass Freight Index. And of course, there, the development up till now has still been quite slow. So I think that -- and as you rightly point out, it's -- the U.S. plays a big part, of course, because when you think about services, a big part is spare parts and then a big part of that is the U.S. market. So of course, that has an impact on the overall numbers.

Okay. But you haven't really seen any changes there then, right?

No.

And the Cass Freight Index for Q3 was still down the kind of -- what it points is upwards towards kind of the Q4, a little slightly, but it's still sluggish if you look at the Cass Freight Index development.

Okay. And then on Europe, how would you describe the aftermarket demand situation in Europe or EMEA?

I would say, normal. So no dramatic changes.

Okay. All right. And then just actually a question on the -- you showed the updated chart on container throughput and you pointed to the fact that the estimates have been raised quite a lot into '27. What is driving that?