Konecranes Plc (KCR) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to Konecranes Industrial Service and Equipment Investor Update. My name is Kiira Froberg and I'm the Head of Investor Relations at Konecranes. Presenting today is Fabio Fiorino, Head of Business Area Industrial Service and Equipment. He will give us an update on what has happened at Konecranes in the IS&E business since our last year's CMD. After the presentation, we will have a Q&A, and you can send us questions in the event chat throughout the presentation. Before we start, just a kind reminder, the presentation today includes forward-looking statements. With that, Fabio, the stage is now yours.

Thank you, Kiira, and good afternoon and welcome on my behalf as well. As stated, we'll try to give you an update from the last CMD. I'll try to focus on some pertinent topics. Let's get started. So with service first, we, of course, continue to provide industry-leading lifecycle services for all types and makes of industrial cranes and hoists. But why don't we dig a little deeper into our agreement base and some of the agreement-based metrics. We've updated some of those on the presentation. Let's start with the agreement-based coverage, Demag and Konecranes coverage. If you remember, since the MHPS acquisition, there has been a lot of interest in what is the Demag agreement coverage. If you remember, there was quite a discrepancy between what the Demag coverage was and what is the Konecranes coverage. I do have some good news for you today. We have made quite a bit of progress over the years in really bridging that gap. Today, the Demag agreement coverage is, let's call it around 50%. Konecranes is around 55%. And, of course, once you get outside the warranty period, both of those 2 numbers do tend to go up. So the other number that I would -- let's focus on is this, the percentage of the agreement base that's covered by Konecranes family assets. It is now getting closer to 50%. It used to be that 45% was our own and 55% the third parties. Now it's more 50-50. Part of the reason is the Demag coverage increase, of course. The other part, we've had a couple of acquisitions and additions to our brands, which was Whiting and Munck. Those have added to the installed base. So those 2 also have helped in bringing up that percentage. So it's always good to be adding brands to our Konecranes family. We look at the overall number of assets. And I guess before we jump into the numbers, it's always good to remind ourselves, what do we mean by an asset? It's number of assets is not always the best metric. An asset could be anything from a chain hoist all the way to a waste-to-energy crane. And of course, the lifecycle value of those 2 could be an order of magnitude apart. So the quality of the asset or the type of the asset is very, very important. Right now, our latest number is around 570,000 assets. We have cleaned up our asset base, as we continue to do with our 1KC rollout. Our latest rollout has been focused in Latin America and a couple of other places, as well as the Middle East and so forth. So as we continue that rollout, we always do have some cleanup on the asset base. We also have divested of the industrial products business of MHE, as you well know, last year that also -- of course, also those assets are off the asset base as well. But in addition to that, we have been focusing on the quality of the agreement base or of the assets, focusing on those critical assets, the larger assets, those that bring the most value to our customers as well to ourselves. So that is something to be cognizant about, and we'll talk a little bit about that a little bit later on. In terms of the number of technicians, we're showing 4,300. That's about up 100 from CMD. And that's about the right amount of increase, given the growth. And that's about that extra 100 is where we kind of need to be at a pace to deliver the growth. Another area maybe that we've updated is this yourKONECRANES adoption. It is now up to 70%. I think it was in the low 60s when we spoke in the CMD. So that's, again, another positive thing. The part sales through e-commerce are around that 50%. We've also updated the number of TRUCONNECT connections that enable predictive maintenance. I think that was 17,000 up to 20,000. Now switching gears, pardon the pun, for industrial equipment. Of course, we continue to be the global leader in sustainable lifting solutions, covering a full range of industrial applications. I would say probably the widest range that's out there. One area maybe to pay attention to is we look at the sales by channel and the number of hoists. We used to be 60-40 indirect to direct. Now we're moving more to the 65-35. So 65% of the hoists we sell have a brand other than Konecranes, whether it's Demag, R&M, SWF, Donati, Verlinde. And part of that movement has been with focusing Demag more into the alpha. That also has moved those numbers. But also a lot of these brands have also shown some good growth. Aside from that, generally the rest of the figures are, let's say, remain unchanged. And the overall picture of the business is as presented. The megatrends and the underlying demand drivers, again, I think are positive for our business. They continue to be very much the same as we spoke in the past. And we foresee that those to continue going into the future as well. Now if we look at the market size and market share, again, not a lot has changed in the CMD. We're calling the total market at around EUR 25 billion for both service and equipment. This is no perfect science. We do have some countries where we have a lot of really good data. In other countries, we have to kind of build this from the ground up or extrapolate and compare between countries. But we feel pretty good in terms of the general size, equipment being EUR 10 billion, service being EUR 15 billion. I think at the last time we were showing service somewhere between EUR 10 billion to EUR 15 billion. We now feel comfortable using the EUR 15 billion number. There has been, of course, labor inflation and also some development in the service markets. So we feel good about that number. When we look at market share, both EMEA and Americas are around that 15% of that total market. Probably a little higher when you look at the addressable market. Maybe about 30% of the market is usually in-house in some of those developed markets. Service and APAC, a smaller percentage. But of course, those numbers do get skewed by China, which, of course, is a large part of that market size. When you look at the addressable market, we're much higher than that 5%. And we do quite well in areas outside of China and in China as well in the addressable portions of that market. And in equipment side, EUR 10 billion again. Light lifting, there's a lot of opportunity there. We're at 10% depending on the region. Some areas were quite strong. In other areas, there's plenty of opportunity. When it comes to standard cranes and wire rope hoist, it's probably our strongest and more, let's say, traditional area of Konecranes, 20% to 25% market share. Again, it varies by regions. But in a lot of places, still a lot of opportunity for growth as well. And process cranes, the 5% to 10%. Once again, that market size does get skewed a lot by certain developing markets. And there are areas in those markets that we choose not to participate. We are more selective when it comes to the process cranes projects that we do take on. Now, looking at the, let's say, performance of the 2 segments. Service, we've had pretty proven profitability performance. As you well know, over the years, we have, on average, kind of increased 100 basis points, expanded the EBITDA margin. And last year was no exception. In fact, we went a little bit beyond that, 130 points. We finished at 19.9, just shy of that 20. But I guess we made it up in Q1 where, if you look at the last 12 months, we broke that 20% barrier, at 20.1%. So we're now in the range of our target range. And we're confident that we'll continue to build on that with the actions that we do have. And, of course, though, here the focus is on growth. Go back to 20%, our sales growth has been around 8% on the reported figures. Last year, it was double digit, especially when you looked at the fixed currencies. So we feel pretty good about the direction and we're building momentum also on the growth side. Again, the areas of focus is the base, the continuous improvement, the customer experience, the digital services, building that ecosystem. And of course, the bolt-on acquisitions. Industrial equipment, the focus there, of course, is profitability improvement. We're also quite fortunate. We've had a good strong orders recovery and it has continued to have a strong order book. As you know, for many years, we were in that 2%, 3% kind of range. And EBITDA margin, we now crawled out of the basement and have gone up to the first or second floor. We're in that new level of around that 7%. And once again, we are pretty confident that all the actions that we're building and everything we have will drive us towards the target range that was already announced. A lot of what's driving that profitability, of course, is the simplification of the go-to-market, this price management, commercial excellence actions. This continued platform harmonization and offering renewal, supply chain optimization, operational excellence. And of course, the divestment of industrial products from MHE has also helped in that direction. Now, if we look at our operating model, we presented this last time as well. Just a bit of an evolution, nothing drastic. We talked about having some decentralization. Anders has spoken about that in the CMD as well. We're trying to move more resources closer to the customer and closer to the business. And we've had one decentralization round earlier in the year. We have established the business units. The business units are focused kind of on the end-to-end, on the product platform, on the delivery of the products and services through the front lines. The front lines own the customer relationship and own the front-line resources. So we continue to evolve the model. I think it's working quite well. Bringing together service and equipment into one BA has been really successful. It has really helped, I think, in front of the customer, but also has really helped the teamwork and helped us to become also more efficient and drive us forward. So we're really pleased at how that's gone. Now, if we go a little bit deeper, look at the various business units and also the business lines beneath those business units. Let's start with warehouse automation. Warehouse automation is kind of at its infancy. It is of course, relatively smaller than any of the other BUs. Currently, it's mostly what we would call our Agilon product line. We haven't done a lot of development on that product line, a lot of work on the distribution of the product. So a lot of good work has gone into that. But it's one small piece of the entire puzzle. This warehouse automation market is a very large market with a lot of growth and a lot of opportunities. But we're really in the infancy. We're really now looking at how to structure that, what is our strategy, what are the building blocks that we need to put in place, et cetera. When it comes to BU Solutions, which really has 2, let's say, product lines or business lines rather, our nuclear cranes and our process cranes. The focus is on improving profitability. And we have done so. It is on a good pace. Nuclear is ahead of process cranes. Nuclear is a real good business for us. And also, the Whiting acquisition has added to our nuclear business. So that's at even stronger position than it was before. But of course, this business is the most complex in terms of technology and application and also has the longest both sales and delivery cycles. So while we are making a lot of progress, we have a lot of focus programs, and we're pleased with the direction. It does take time for the profitability, all of these actions to really show up in profitability. BU standard equipment, which really has 2, let's say, business lines, the components or the alpha business and the industrial cranes or maybe otherwise known as standard cranes, which is on the beta side. Standard equipment has probably benefited the most from our transformation, really step change. Our components business today with the Demag brand being part of that and the new focus and the new platforms, it is a very good business for us. Our focus here is just to grow it. It is a very profitable business. And the focus, again, we're shifting that to growth because most of the actions there have been completed. And, of course, it will continue to benefit from the future products as we launch them as well. Industrial cranes is not that far behind. But, of course, industrial cranes requires the delivery of the cranes on top of the components. But also, we have -- they're benefiting from a lot of the simplification actions, both in platforms and go-to-market. We're still working on that end-to-end and the crane deliveries and improving that. But, again, it's in an area where we feel very comfortable about focusing it on growth as well. And last but not least, of course, the service. We know how great a machine that is. It's very well positioned for growth, great leverage from that business. So if we can continue to expand the margins, both the gross margin level and the EBITDA margin, but at the same time drive growth, then we will see some great benefits flowing to the bottom line. So our ambition continues to be to set the benchmark among industrials. And once again, we feel pretty good about the actions where we are. Sales growth clearly faster than market. And we define market by nominal world GDP growth. Our comparable EBITDA margin of 20% to 24%. As you know, we have now entered that range. And we will continue to focus on building that. And then in equipment, again, the focus is more on the EBITDA margin, 8% to 10%. We're now in that 7% level, let's say. And so the focus is to get us into that range as soon as possible. And the sales growth in line with the market. And as you saw from before in the BUs, there are different levels where standard equipment we're very comfortable with being very aggressive on growth. Whereas with the solutions business, we want more about quality and focus on profitability. But it's always good also to remind ourselves the solution business does drive a lot of also business for service. And it's also part of the whole lifecycle services and lifecycle approach, particularly with our larger customers that have critical applications and complex applications. So maybe we can dig a little deeper and go into service. So just maybe reviewing the actions that we presented last time. You can see them on the screen, what we had and then what's the status update. In terms of service programs and the renewal, we have launched a lot of the revised programs. A lot of the tools have been launched. But the implementation continues around the world, focus on enhancing the customer experience. We have just launched our customer, what's called Unified Customer Portal. And we started both for alpha and beta. That will continue the months ahead as we continue to go through the various units and continue to add functionality and build it to the area we want it to be. But that will be a great addition to the digital customer journey. Commercial access and price management. We did a lot with the spare parts pricing harmonization and could call it largely complete. But there are still opportunities there. A lot of commercial excellence programs are ongoing. Continued optimization of sales and service delivery. Again, the areas of focus are predictive maintenance, planning, tech tools. A lot has been launched. I mean, this is an area we do it on a continuous basis. Just every quarter we have something new. And we continue also to strengthen the underlying, let's say, technology of our systems and updating those as well to improve both the performance, to improve the user experience, et cetera. So again, it's continuous improvement is really at the heart of service, part of the DNA. Equivalent Parts; that also is a continuous thing. We continue to expand that offering, adding brands, adding items. Again, there's a vast array of brands and parts dating back decades out there. So this is almost a never-ending work. And bolt-on acquisitions. We are building the funnel. We feel good about the prospects that are out there in various markets. And perhaps before we go a little deeper, it's always good to remind ourselves of the service model and also what is the agreement base because it is such a key platform for growth and asset management through the lifecycle. So the agreement base is really made up of inspections and preventive maintenance, predictive maintenance, and remote monitoring. So largely it is labor and digital services. And from that base, basically, a lot of the business flows. A lot of the service orders flow from that base. In particular, corrective maintenance where we have the inspectors, technicians, and site sales working hand-in-hand on the same technology platform. We're able to drive that corrective maintenance based on the findings and the condition monitoring. A lot of focus here is on speed, on lead generation, and fixing the customer's issues as soon as possible and before they may even happen. Then when we look at the next areas, retrofits, consultation services, mods, lifting equipment. Retrofits are basically when we replace a component. It could be that we're updating technology, updating ergonomics. We may be adding radio remote controls. We may be adding variable speed controls on a hoist. We may be replacing a hoist entirely with something that's more modern, et cetera. Kind of a one-to-one. Then the consultation services, that really could be an engineering study and a life study. It could be kind of a geometric service, non-destructive testing. And they're usually a prelude to modernization or making a decision whether they should be buying new equipment. And of course, through the service network, we do sell lifting equipment, particularly light lifting equipment since we have such a large network out there seeing our customers every day, there's a lot of opportunity for looking for to also sell lifting equipment. And spare parts, that's 25% of our sales. That's basically just parts without labor. And within that includes, of course, the parts for both our direct channel, our indirect channel, our distributors, and anybody else that wants to buy parts from us. A lot of this is very transactional. The focus there is on convenience. So the model is very much what it is, and we continue to improve in terms of the, let's call it the end-to-end process. Now, achieving organic service growth. As I said last time, maybe it's as easy as 1, 2, 3. Expand the agreement base. Again, here we're really looking at focusing on comprehensive agreements for critical and production assets with larger accounts. Again, that's where Konecranes brings the most value, and that's where we also garner the most value from our customers. And the other area is enhancing the customer experience, and that will also drive customer retention. Improving retention, of course, makes it easier for us to grow. Then the other area is to continuously improve sales efficiency, planning, as well as service delivery. So once we have the agreement, servicing that customer in the most efficient way and improving that experience is what we're talking about. We're continuing to evolve our sales model, leveraging more inside sales and customer support, working on smart planning tools, automated quotations, configurator enhancements, the next generation of field mobility tools, and part delivery concepts. Again, this is all continuous improvement. We have just about, like I said, every quarter, something rolling out somewhere, either addressing the user experience, addressing the end-to-end process. And once in a while, we do have some pretty, let's say, large improvements that come. So that's another area. The last area here is to expand on third-party equipment. As you know, now we're about that 50-50, but there is a huge installed base out there of third-party equipment. How to better address that in the most efficient manner? Equivalent replacement parts, being able to provide our own parts for these third-party equipment. Then, of course, is hoist and component replacement, retrofits, and mods. So being able to replace, whether it's the hoist, the controls, maybe it's the whole crane at some point, with our own equipment. And again, as we do that, that percentage of the agreement base that shifts through the Konecranes family gets higher, right, as we replace that hoist with our own that originally may have been somebody else's. Once again, to emphasize this agreement quality and focus on agreement profitability, the base has grown at about 5%. If you do remember, going back to 2019, we want to forget the COVID days, I guess. But the base has not really dipped at that COVID period necessarily. So it was quite resilient. It does not mean that in those early days, we were able to get all the invoicing we wanted out of the base. But the invoicing has rapidly come back through those years, and quite frankly, the invoicing is outpacing the base growth, the invoicing growth. So that's also a good feature. We want to make sure that we deliver the base. That's one of our metrics. And also, if you look at the agreement value per asset, so while the base may have grown 5%, their agreement value per asset has grown at 7%. Again, focusing on the right customers with the right assets, continuously looking at where do we bring the most value is part of our focus and our plan. Here's just a good example of predictive maintenance. And this new predictive maintenance engine that was launched, let's say, back to last May over this period, and again, it hasn't been launched right away throughout the entire world and we continue to launch it and develop it. But within that period, we were able to develop 7,500 predictive sales cases. And with that, we won offers in the around EUR 7 million. So we're very much encouraged by the technology and how it fits well into our process and then deliverable to our customers. Again, the data may come from remote monitoring. The data may come from also the age of the equipment and other things, and then the engine will make its predictions in terms of creating either sales cases and also service requests in the future in terms of call to action. And we continue, again, to develop the predictive engine, to continue to add various components from basic things from brakes, coupling, contactors, looking at oil changes, overhauls, continue to add the various brands, obviously, starting with our own, also then going towards the third-party hoists and so forth. So this is just a work in progress and -- but it's very, very encouraging in its capability and its potential. Then when we look at acquisition opportunities, I mean, pretty much the same focus as was mentioned in the CMD for service, the bolt-on acquisitions. We of course would love to acquire companies that have already an installed base and proprietary parts and technology like Whiting and Munck, so those were very good acquisitions. But then there are also acquisitions we would do just to add customer base and then add field resources. And we're able to really very quickly integrate those, and there's significant synergy potential. We have pretty much built the infrastructure, so it's very easy to integrate and service these days. Technologies and capabilities, industrial automation, systems integration, material flow simulation, these are areas that we look for. We had a recent acquisition, a smaller company, Crane Automation Technology Systems in Germany. We were using already their technology in some of our applications, for example, in automated die handling in automotive, so we wanted to secure that technology. Also that technology was being used by our competitors as well, so we felt it was a good opportunity to take that technology in-house, to secure it for our own customers, but also to be able to expand its use in modernizations and maintenance and other areas, so that was a good opportunity. Market entry, there are a couple of spots that may interest us for expansion, and then there's complementary products and services, not our highest priority, but we will certainly look at those as they become available. Then just in recap here on the service growth plan, pretty much the actions are well underway. This is the plan we presented at CMD. You've seen the focus areas. I spoke about them. Those are all well underway. It is a proven business model, real focus on continuous improvement, and now really it's all about sales acceleration and just driving the model faster. So we feel pretty good about the service plan. Now maybe switching over to industrial equipment and its focus on profitability. Here again, what's the update on some of the actions that we had? As you remember, again, the go-to-market and operating model simplification was a big part that impacts equipment. So this is largely completed. You saw the operating model and bringing together the service and equipment. Also the Demag has been moved to alpha, I would say, quite successfully. So that's pretty well on its way. Platform harmonization, we've ramped down several platforms already. We have others that we look at. The commercial excellence and price management, we've got various programs going on in that area, both across channels and within certain channels. Our offering renewal is ongoing, and I'll speak to that here shortly. We're launching new wire of hoist platform and electric chain hoist platforms, expanding light crane systems, so that's also we feel very excited about. Supply chain efficiency and operational excellence, our supply transformation in our Wetter factory in Germany has very much been executed. A lot of good things going on there, and we still got work to do, but we feel very good about that. Two crane factories have been shut down. One has been rightsized, and of course, as you know, we divested IPD. So most of the things that we put forth are well on our way, so we're feeling pretty confident and pretty good about the direction. Just here, just to emphasize now that we have, let's call it clean alpha-beta sales channels, Konecranes very much being the global brand for end users, and then we have these market-specific brands that cover the crane builders, distributors, component integrators, who then in turn sell to end users. So I mean, when you look at these 2 channels, our coverage is really quite extensive, and also, we could all ramp it up quite quickly as well. But again, I think one of the areas of the evolution of this go-to-market strategy is to have a little more focus on beta, as we talk about in the top segment. It doesn't mean that we will not sell to other segments, but with the focus on those customers that really have critical assets, maybe global customers, regional customers have a lot of assets really interested in safety, productivity, sustainability, looking at the whole total cost of ownership and the whole lifecycle approach. This is where we shine, and this is where the most value is obtained. So we'll focus more on that area for beta, and alpha is a fantastic sales channel when it comes to delivering volume, whether it's wire rope hoist components, crane packages, chain hoist-like crane systems, jib cranes, spare parts, drives, digital services. Again, we have some very strong, recognizable brands that are some global, some very strong regional brands with a fantastic distribution network. I mean, these folks do a good job in the markets they're at, and we want to continue to support them. And I think this is an area where we can really also grow volume through that channel as mentioned before. So it's -- we kind of continue to tweak a little bit our go-to-market strategy, but I think we're finding the right balance for the focus on the channels. Here we can see the -- let's say, the journey, and when it comes to the harmonization of the product with the chain hoist, we're down to about 3 platforms, but our goal is to get down to one. It does take time to ramp down inventory and ramp up and go around the whole world, right? So we do now have the new platform for Demag launched. New platform was introduced for all the regions for Konecranes and Legacy Alpha. So we're well on our way, but it will take a little bit of time here over the next year to bring it home. Like crane systems, we are on one platform. We now harmonized to the KBK platform, which was the Demag platform, but we use that KBK brand, which was extremely well-known and respected in the material handling industry, so we now call it the Konecranes KBK and the Demag KBK. We brand it on both. And of course, the other brands are using their own branding on that product. Wire of hoist here is where we probably made the biggest advancement in rationalizing products. We ramped down 2 product last year. We're now really down to 2 platforms, 2 standard primary platforms, which is our Q platform, which we've had for 20-plus years and it's been very successful, and then now we're launching our -- what we call the R platform, which is the platform for the future. So eventually, that will move towards the R platform over time, but otherwise, we are on a common global platform now. And then the winch is kind of the same thing. We are -- that's primarily talking about process cranes and we're moving towards just having a modular platform, whether we call that a one -- that doesn't mean there's just one winch, it means that we're going to focus on having core lifting components that can be used for general industry-specific and special applications. And then standard cranes, we're down now to one platform. We had the Demag and the Konecranes crane, let's say, where we do have one, and then over the future, we'll just be replacing that hoist with a new hoist as we go forward. A little more color on this product transformation, you could see the electric chain hoist platform, you could see the various brands, and now you also see the product that was also launched for Demag was shown here in LogiMAT for EMEA in March, and it'll be available in the configurator for June orders. And we continue also to expand the light crane system offering. And here is our new flagship, right. This is the future of standard lifting. We call the crane, under the Konecranes world and brand, we call it the X-Series crane. This is our advanced crane with all the smart features. And at the center of that crane is what we call the S-Series low-headroom hoist. Again, that's what's called the R platform that gets branded by the various brands. And this is really the future of standard lifting. It provides higher performance, meets the norms of the future. It's eco-efficient, a lot less parts to kind of when you come to put it together. It has over-the-air operatable features. It's quite scalable from having the basic mechanics to quite advanced smart features. Again, it's connected, it's lower production costs from what we're estimating, and we could also, of course, create new earnings models with the connected smart features and patented empathic technology. Again, this was launched for EMEA at the LogiMAT in March. It's available in the configuring Q3 and first deliveries in Q4. So we're pretty excited. The things are progressing as planned. And here's a little more detailed view of the product launches. You could see we have to go around the world in launching these products. We're starting with some in EMEA, but then, of course, moving to APAC, Latin America, and the Americas. And it's not just the cranes and the chain hoists. We do have some expansion on the KBK systems, freestanding systems, and structures for the EMEA market in September. We actually do that already in the Americas market. Belt hoist is a nice niche product. Also electric chain hoist for hazardous environments as well. So it's not just the ones that I mentioned. So we're going to be busy, but we're pretty excited over the next couple of years in terms of the product pipeline. And here's some photos from LogiMAT. As you can see, we're represented by 3 of our wonderful brands, Konecranes, Demag, and SWF. We felt pretty good about the feedback, feedback both from end-users, distributors, and dare to say even competitors. Maybe a little bit of jealousy, I don't know. And then process cranes, again, the focus here is to improve profitability, productization, commercial and project management excellence. That's the area. Again, it takes us a little longer here because of the complexity of the product and the long sales and delivery cycles. But real focus, again, is to have as much as possible the offering productized. And even when it's a tailored part of the offering, it would be done from the basic components from our library that we can kind of bring together and really leverage our core of lifting here as well. When we look at the manufacturing footprint, not too much changes since last time. As you know, the crane manufacturing capacity is really supplemented by subcontracting, so we can really leverage that. And then we have these component manufacturing centralized in global and regional units. I guess the main changes from last time, as mentioned, we stopped crane manufacturing in France and Singapore, basically supporting that either from our nearby factories, whether it's other European factories for France or Malaysia, for Singapore, or subcontracting when necessary. We rightsized our India labor force. We refocused our Wetter Germany plant and really invested in intra-logistics and optimized material flow. We're really pleased with that. We have a lot of opportunity there to continue to deliver great product. And then if we look at the business transformation that we had announced to deliver these EUR 40 million to EUR 50 million, the actions are largely completed. Some execution, of course, remains, but everything's in motion. We track this very closely. The profit impact is already visible, but it will continue to build over the next couple of years. So again, we feel pretty good about that whole project. And then we do have other actions. We do have these next-generation products that the profitability impact is not yet visible, neither, of course, the sales impact. And that's, of course, the volume of these products will develop. We will see that impact as well into the bottom line, as well as the sales leverage and lower-cost structure that will be generated. So again, a lot of good things in the pipeline. So then, I guess, in conclusion, I think we're doing the right things. I think we made the right decisions, so I would say we stay the course. If anything, we accelerate the pace. So again, in service, this agreement-based focus on expansion through our service programs, focus on enhancing the customer experience and journey, the commercial excellence, the price management, predictive maintenance, digital services, continue this optimization of the sales and service delivery, equivalent parts, bolt-on acquisitions, again, technician recruitment, development, and retention. Those folks are at the heart of what we do. They're the face of Konecranes. Driving towards a sustainable fleet is very important to us as well. Then on equipment, as we have cleaned up this alpha-beta, the focus is to expand market coverage via these dual sales channels as mentioned before. Standard equipment, we can really focus on growth as well. And again, here too, the enhanced customer experience and journey goes hand-in-hand, of course, with service, commercial excellence, and price management. There's probably more opportunity on the equipment side now in that area. We've got to complete the platform harmonizations, which were well underway, but then get this expanded scalable offering out, which we have already bringing to market now. This improves competitiveness, will reduce delivery times, continue to drive supply chain efficiency and operational excellence, and of course, sustainable factories and offering. So that is it. Thank you very much. And I guess we got quite a bit of time for questions, I hope.

Yes. Thank you so much, Fabio. So now would be time to send in your questions. You can do that in the chat function. And even though the questions are not available or visible for everyone, so we still access to those and we're able to present those to Fabio. And I would also remind here that a recording of this webcast will be available on Konecranes' investor website afterwards, as will be the presentation slides. So no need to take screenshots of those. But hello, let's start.

Okay.

What would you say are the key benefits from having a global aftermarket platform, referring to service, I think? Why do you think the competitors are not challenging you in a bigger way? And what are the layers for growth ahead for this business?

Now we're talking service.

Yes. Yes.

Well, the global platform, I guess, we're uniquely positioned in that we're probably the only global service provider. Most of our, let's say, global competitors work through distribution. Again, nothing wrong with that. That's also part of our go-to-market. And then that's a great business. But they do not have, so we have both the right hand and the left hand, I guess, that aspect of the direct end-user business, most of our competitors have tried at times, have pulled out. And so we feel they're in a very good position, especially on a global basis. Of course, there are local and some regional competitors. But having this global platform, we could really use best practices from across the world. We can leverage the development costs. We can really leverage the infrastructure and also learn from each other from the various regions and everything that's going on. So I think that makes us uniquely qualified. Also we're the only ones that can go to a global company and offer the same across the world, across countries. So very hard, I think, for anybody to start catching up in that end. And also our installed base with all the legacy brands that we do have, and we've added 2, Whiting and Munck. That also gives us quite an advantage. And the ability to create these equivalent parts, again, leveraging that globally. That gives us a lot of benefit as well. In terms of growth, I mean, as I said it before, it's as easy as 1, 2, 3, that expand the agreement base, focus on the sales and service delivery efficiency, and focus on how to better serve the third-party equipment. Hopefully I answered the question.

And then the next question, it's about the components business. So components business is now mandated to grow. Could you please expand a bit how to grow and take market share in this business?

Sure. And it's like any business. It's also about the customer experience. It's about the products and services in the portfolio. We're dealing with distributors, right, and they're the ones dealing with their end users. So if we can make the distributors successful, if we can make our portfolio attractive to those distributors that would rather distribute our products than somebody else's, that's kind of how you grow. You want to be the most attractive supplier to those folks, which means help them to be more successful, help them to take care of their customers, help them to be profitable, which of course they want to be. So by having, I think, first of all, the widest product range, and we believe as we continue to bring out products, those will make those distributors more attractive. Also the configurators and the things that allow them to sell the products, configure the products, bring those products to market. Having improving deliveries, on-time deliveries in many markets, that gives us a big advantage. So those are the areas, and we cover, you can see our component factories across the world. We're able to cover quite a bit of geography. So again, it's just about being the best partner we can be, make it easy to do business with those folks, be in their corner, support them in their business. We've been doing this a long time, and we have brands that are also very recognizable, brands that also end users are attracted to. So that helps also our distributors or distributor partners. I think that's as simple as that. It's good old-fashioned business development and supporting your distribution network.

Thank you. Then we have one eagle eye viewer saying that Slide 30 showed service EBITDA between 22% and 24%. Previously it was 20% to 24%. Maybe we can go for that slide. Has this target been updated due to ahead of schedule?

No, it hasn't.

No, no. That's a mistake. A typo. We will correct that. So 20% to 24% is the correct margin range. Apologies for that. Then we don't actually have any more questions here in the chat function. So I think probably...

Either you're totally confused or we've covered everything. I don't know.

I think we had a quite good coverage here and preempting a presentation. So let's maybe take it that way. Fabio, once again, for being here and giving the industrial service and equipment update. Thank you for that.

My pleasure.

And thank you for all the viewers for your time and participation.

Yes. Thank you.

Thank you.