Hiab Aktie

Hiab just announced the acquisition of refuse collection vehicle manufacturer, Labrie Environmental Group, based in North America for enterprise value of USD 1,035 million. The acquisition significantly strengthens Hiab's position in the essential industry of waste recycling. Welcome to the joint investor and press conference. My name is Aki Vesikallio. I'm from Investor Relations. Today's presentation will be held by Hiab's President and CEO, Scott Phillips. Our CFO, Mikko Puolakka, will join us for the Q&A session to be held after Scott's presentation. With that, over to you, Scott.

Thank you, Aki. And good morning from my side. Really excited to have the opportunity to share with you this milestone announcement. First, I'd like to start out by saying a huge thank you to all of those within and outside of the business that help make this happen and bring it all together. Secondly, I would like to extend a warm welcome to the 1,200 terrific colleagues that will newly join the Hiab family post closing. So a big warm welcome from my side. So diving into the rationale and to give you some highlights and details around the acquisition.

So first, really excited that we were able to expand our position in a core segment exposure waste and recycling by further being able to serve customers and essential industry needs by adding a significant new product vertical within Hiab, which is the Labrie Environmental Group, who is a leading provider of refuse collection vehicles in North America, serving both Canada and the U.S. Taking you through from left to right on the slide, a bit of highlights from the company itself. Currently, last 12-month sales are USD 491 million, delivering a comparable EBITDA margin of 23% or USD 113 million as well as USD 83 million of comparable operating profit at 17% margin.

Labrie comes into the Hiab family with a significant and strong order backlog of USD 435 million. And as mentioned earlier, 100% of the sales are in North America. So it also aligns quite nicely with our strategy objectives, not only to grow in a critical essential industrial segment, a waste and recycling, but then also helps significantly expand our position in North America.

From a product portfolio overview, Labrie competes with 4 brands, all offering industry-leading solutions, and I'll go into a bit more detail in a few slides. So we have Labrie side loaders that are the fastest-growing subsector within the overall market, Wittke front loaders, Leach rear loaders and providing continual aftermarket and life cycle services for its customers through LabriePlus. So as I mentioned earlier, there is a nice fit and alignment for us in terms of not only the segment, but as well as the customer base that it served. Labrie competes on a differentiated level business strategy, serving a set of premium customers that can be defined in 3 different sectors.

The core of the business is serving municipal and independent regional customers, making up about 60% of the overall market exposure. Then there is an exposure with national accounts as well as rental companies. The applications that are served can be bifurcated or are bifurcated between both residential and commercial applications. And as -- in the company, we think one of the key and attractive capabilities that we have to bring to the equation is, is that there's currently a nice penetration in parts and services, but we think this is one of at least 3 or 4 areas with which Hiab's capability and scale can help enhance further the penetration of parts and service business.

So then moving forward into giving you a bit more insights into the deal logic and why we find this so attractive. First and foremost, I think, as I mentioned, it gives us a much greater expanded opportunity to serve a critical set of customers in an essential industry. And at the same time, enabling us to have an even more stable demand curve cycle on a go-forward basis. Now this is underpinned by the fact that there are good overall structural characteristics that define the growth curves in the past 10 years as well as those we see in the years to follow on the basis of the fact that overall aggregated volume of waste and recycling is growing.

And at the same time, on a per capita basis, that trend continues to grow as well. Now as a consequence, the refuse collection vehicle equipment market is expected to grow in the low to single mid-digit range and as well as supported by an overall case due to differentiation and the fact that the solutions, in particular, on automated side loaders should enable from an increased set of outcomes for safety and productivity, also allow us to compete on a basis to defend a premium price for the offering as well.

And then as I mentioned previously, the fourth element that's critical here is that side loaders, where Labrie has an excellent position and #1 in their sector is the fastest-growing segment of the RCB market, approximately 200 basis points faster than the overall market. And we think on a full potential basis, there's room between 500 and 1,000 basis points of further penetration of this solution in the overall market. Now currently, the overall market picture is such that about 50% or roughly 35% to 40% of the market is side loaders. And then you have the balance of the market between front loader and rear loaders. And then as I mentioned earlier, on an aggregated basis, municipal solid waste generation in the U.S. in particular, has grown year-over-year.

So nicely stable and anticyclical demand patterns, if you will. Now diving a bit into more detail in terms of the tools with which Labrie has to compete with. From a brand perspective, I mentioned that they compete on a multi-brand strategy similar to Hiab. And so in looking through the Labrie brands, automated side loaders designed to enhance radically safety and efficiency. And with the quality and the design capability that Labrie's team has brought to the equation, the level of durability and quality is second to none in the industry.

Now the selected products can be -- are bifurcated between Automizer series as well as Minimax series. And as I mentioned earlier, commanding a #1 position overall in the market in North America and the most significant contribution to the overall top line demand curve. Moving to the right, the Wittke brand is a front-loader brand of solution, primarily targeted for urban industrial as well as commercial collection applications. Two different offerings here. One is on the XPress, the other Starlight brand, currently holding a #3 position.

And then moving to the far right-hand side, the Leach brand, are rear loaders optimized for tight space locations, serving both residential and commercial applications, with 2 different solutions, the 2R-III as well as the Alpha-III commanding a #4 position in the market. And then as I mentioned previously, the services and life cycle business come to the market as part of the LabriePlus offering and supported by a dealer network of approximately 80 dealers and offering a comprehensive set of services and parts support as well as a proprietary set of hydraulic solutions as well as loader arm components.

So a great technological fit as well as a mission fit with the overall Hiab offering. Now in addition to the technological and emission fit, we love how this enhances Hiab's overall footprint within the North American market. And so just to give you a comprehensive overview on a page, if you will, how does this all fit together? Looking from left to right, and you'll know from the Capital Markets Day, I call this color peach that if you think about what we currently bring to the equation, we have an at-scale sales and service network globally and as well as in North America of 3,000 different locations, both our own as well as supported by a comprehensive dealer network, we participate in 100 different countries within our delivery footprint.

And we do compete on a basis of asset-light supply chain model, which served us well both in terms of upside flexibility with regard to capacity, but then also downside risk with regards to our cost curves. Approximately 60% of our sales in the past 12 months have been indirect sales, 40% direct. Now combining that with the Labrie footprint, you see that in terms of Labrie, they have over 80 dealer locations, as I mentioned previously, all located, allowing them to serve the bulk -- the aggregate of their customers within a 4-hour drive, which is critical in this industry. And approximately all but 5% of the sales are through their indirect channels. And then if you look at what the team has accomplished amongst their many accomplishments in the last 5 years, you've got 11 new dealers that have been added since 2021.

And from a manufacturing footprint perspective, we're nicely positioned with 2 locations in Canada, 1 in the U.S. and 1 in Mexico. So a very nice fit to the overall Hiab footprint. Now in addition, as I mentioned previously, the business level strategy is clearly differentiated, which fits within our portfolio perfectly. And that's competing on a basis of differentiated safety productivity as well as quality outcomes. Now at the same time, this enhances our desire not only both to grow and grow above the industry, but at the same time, have more resilient growth into the future as well as higher quality level of earnings.

Overall, Labrie is #3 in the market in North America, #1 in the subsector and automated side loaders. So an opportunity for us to add significant value in a couple of different ways. And I mentioned a few previously, but in addition to the services piece and the overall technology, the opportunity to help fast track and accelerate not only overall product development, but at the same time, to be able to enhance and fast track the digitalization of the fleet, which will be increasingly important now and into the future, we think that this is quite a nice fit.

Similarly or at the same time, with the combined footprint, we have an opportunity now to optimize our local manufacturing and sourcing footprint for both the combined organization, but also each of the individual product lines that are served within the North American market. And we're excited with the potential of synergies on the sales side, combining our GALFAB business together with the Labrie Environmental Group. At the same time, from a synergies perspective, we see clear opportunities for material procurement, and I mentioned previously, sales synergies. And then the fifth element here that -- the fifth attribute that we find a must in terms of our criteria and how we evaluate M&A or acquisition targets, if you will, is that it's an extremely high-quality business that is soon accretive to Hiab earnings and in this case, should be immediately accretive to both Hiab growth as well as earnings.

And at the same time, due to that fact, the sixth attribute that we think makes us a perfect fit in terms of our strategic criteria and evaluating inorganic growth opportunities that we will, over a short period of time, have our balance sheet back within our targets of less than a 50% gearing and should enable us to also stick to our commitments in terms of returning value to our shareholders.

Now as Aki mentioned in his opening, the overall purchase price was USD 1.035 billion on a cash-free, debt-free basis. And in terms of the last 12 months comparable EBITDA, it represents a multiple of 9.2. So in line with our criteria in terms of how we evaluate opportunities such as this in consideration of the current trading multiple of our business. From a financial impact perspective, we see the opportunity to have an enhanced financial profile. And as I mentioned previously as well that we expect this to be soon to be accretive both in terms of margin as well as our growth ambitions. And as this is a high-quality business at the same time, it has very similar characteristics in terms of cash conversion as we have in Hiab.

So again, a really nice fit here. And we do expect synergies both in the form of sales synergies as well as cost synergies. And as we progress through the next 30 to 60 days or so, we will all share additional details around that particular topic. On a financing basis, it's 100% cash consideration, and it will be financed with cash at hand as well as additional debt to a maximum of EUR 900 million. And had the acquisition been completed at the end of Q1 which is the latest financial period that we published, as you all know. The planned financing would have resulted in a pro forma gearing of approximately 70% compared to our target of 50% and a pro forma net debt-to-EBITDA of 2.1x.

Long-term target for gearing, as I mentioned, is still below 50%, and we believe this supports that case quite nicely as we expect continued strong cash generation. Now in terms of timing, we anticipate the closing to be early Q3 of this year. And of course, this transaction is subject to regulatory approval and customary closing conditions. Now how will our portfolio look in aggregate post closing? Going from left to right, you all are familiar with our loader crane offering in the form of 6 different brands, Hiab, ARGOS, EFFER, ING, JONSERED and LOGLIFT. We have, of course, our truck-mounted forklifts, MOFFETT and in addition to MOFFETT, we have PRINCETON. And then in terms of our leading hooklift and skip loader solutions, we compete under 2 brands, MULTILIFT AND GALFAB.

Tail lifts are, generally speaking, been a regional offering, competing across 3 brands, ZEPRO, primarily serving Europe; WALTCO, primarily serving the United Kingdom -- or my apologies, WALTCO serving the U.S. market and DEL serving the United Kingdom market. And then we have our services brand, and we have a brand of solutions under our HiPerform umbrella. And then, of course, we now get the privilege of adding not only the great brands within Labrie Environmental Group, but as I mentioned before, a fantastic team that we inherited and pleased to say that the majority, if not all, of the key management team members, we expect to continue to stay with the business, which we're super excited about.

Now how do the combined businesses look on an overall basis just in terms of the financial profile as well as the market segment exposure profile. I won't take you through all the details on the slide as it's quite comprehensive. But looking at a last 12 months basis on a top line perspective, Hiab is last 12 months at a little over EUR 1.5 billion. On an EBITDA basis, EUR 241 million or 16% margin. And of course, on an EBIT basis, a little under EUR 200 million or 13%.

Now we have a varied sector and segment exposure, which we quite like, primarily serving essential industries as well as defense logistics. And from a geographical perspective, we serve all 3 regions in terms of APAC, EMEA as well as the Americas. And then drawing your attention to the middle slide, on a euro basis, I gave you U.S. dollars previously, on a euro basis, you see that Labrie Environmental Group has EUR 438 million of top line, EUR 101 million at 23% margin on an EBITDA basis, EUR 74 million on an EBIT basis at 17% and with a concentrated focused exposure in waste and recycling. And then similarly, a focused exposure in North America.

Now drawing your attention to the third column, then the combined pro forma financials on a last 12 months basis, a little under EUR 2 billion combined business, 6% CAGR over the last 10 years in terms of growth. EUR 342 million margin 17% on a relative basis and 14% on an EBIT level and nicely positioning the business to increase in line with our strategy, our exposure in waste and recycling as a core essential industry, slightly change in terms of the geographical mix where APAC would reduce slightly, EMEA, of course, reduce slightly and then North America increase in line with our strategy. So we love the 4 attributes that this brings to the overall equation for Hiab to be able to deliver an optimized value for all of its stakeholders.

So one, it increases our scale and as well as our growth profile. Two, it's margin accretive, solid cash generation characteristics, gives us more diversification in end markets critically reducing our cyclicality, adds to our technology and our mission fit perfectly and absolutely strengthens our position in North America. So getting close to wrapping up here. The 6 attributes that I took you through before, just to give you a different visualization, if you will, in terms of what this does as far as delivering on our inorganic growth that I know has been a lot of topic of conversation here, especially in the past 1, 1.5 years. So certainly fits our overall strategic imperative to make choices that enable us to enhance our ability to be 1 or 2 so that we can be differentiated within the subsector and the overall segment and Labrie fits that equation perfectly.

Number two, it allows us to continue to create growth through innovation as this segment is absolutely critically impacted by technology and innovation and capabilities that will significantly drive differentiated outcomes for the industry as well as its end users. So we see that as a perfect fit as well. Three, it allows us to be geared to expand in our leading position in North American market, which is absolutely critical given the scale and size and scope of the -- of that overall market as well as the fact that just 2 years ago, when we introduced our strategy via our Capital Markets Day in May of '24, as we shared with you, we were geographically underexposed in this critical geography. And this helps absolutely solve for our scale and coverage within the market quite nicely.

Then four, it further enhances our ability to leverage a sizable installed base by digitalizing our offering with our connected solutions and with our digital services capability. And we think this will set Labrie Environmental Group offering geared to grow nicely into the future and allow them to accelerate the nice growth path that they've already been on. Now in terms of value creation, we feel strongly convicted around the fact that our operating model that we bring to the equation here and our decentralized operating model, allowing for focused end-to-end businesses with full transparency and accountability are going to further enhance our ability to maximize the value creation potential not only for Hiab, but then our newest platform.

And so we still aim to focus on profitable growth and this will further enhance our ability to create incremental value creation for the Labrie Group. And as wrapping up, last but not least here on this page, we have a combined best-in-class financial profiles that create a nice fit in all of the characteristics that we look for in terms of ideal inorganic opportunities to catalyze growth. We see this ticking those -- all of those key criteria nicely. So concluding here quickly before I welcome my colleagues on the stage with myself. Together with Labrie Environmental Group, this is a clear opportunity for us to accelerate our combined profitable growth strategies by providing the highest quality, most differentiated offering to the set of customers that we proudly serve within the critical waste and recycling and essential industry that makes up the foundation of what it is we do at Hiab as well as the foundation of what we do at Labrie.

So we're excited to add this new product vertical, refuse collection vehicles to our overall portfolio, enhancing our ability to do that. And as I mentioned before, we anticipate the transaction to close early Q3 of this year, subject to regulatory approval and customary closing conditions. So with that, I'll conclude and turn it over to Q&A. And welcome, Mikko and Aki to the stage.

Thank you, Scott. We have received a couple of questions from the chat function. So we can start with these questions before entering into the telephone conference. So firstly, the first question is about if we are worried about buying from a private equity owner at all-time high margins. And do you think that -- is this too expensive deal for Hiab considering the private equity could have had tendency to stress up the figures?

Yes. Well, we obviously like the valuation of what we were able to bring this over the line with. We think that it was certainly after an extensive amount of due diligence, a fair representation. This is an asset along with others within the same segment and sector and geography that we've been looking at for half a decade. And so we feel like we have a pretty good view as to where the fair valuation of this asset is. And as I've talked about with a lot of the audience previously, we always consider these deals in the context of how Hiab is trading overall.

So we feel from that standpoint, good about the valuation piece. And then most importantly, we see a significant upside opportunity for incremental value creation agnostic of industry tailwinds, if you will, within this particular platform given what we bring to the equation and what they already have to bring to the equation. And we do see this as a perfect fit in terms of incremental value creation. So we feel quite okay about where this deal ended up transacting at.

Thanks. And the next question comes from Frans, I assume, from Bastian. So he is saying good morning. And he asked us how comparable are Hiab and Labrie in terms of equipment versus aftermarket mix? What are the specifics for the Labrie aftermarket revenue? Is there any potential to improve that mix?

Yes. We've got a pretty good view on that, and we know where the best-in-class benchmarks are within the North American market. So we know that there is significant upside potential with further services penetration. We think that on a like-for-like basis from our recurring revenue, a quite similar mix to the overall revenue profile. And then we know within the industry that there is a competitive benchmark on the -- that also brings to the overall market a digital enhanced service offering. And so that offers further upside potential. So therefore, there's a realistic opportunity if you look forward in the next 5 to 10 years or so, that we would have a similar type of mix of services to overall revenue profile, somewhere in the range of our recurring revenue and to our overall services percent of sales.

Okay. And the next question, I assume this is for Mikko. So this is coming from Mark Mullen from Nordea. So you have a EUR 150 million bond maturing in September. What is the plan regarding it? And has this announced transaction changed your plans in any way? Secondly, is there any seasonality in the Labrie business, maybe more for Scott. And thirdly, you highlighted Labrie's strong cash flow generation in the presentation, but can you discuss what the cash conversion rates look like as a stand-alone basis and compared to Hiab? Maybe if we start from the bond.

Yes, we have EUR 150 million bond maturing in September, and the plan is to repay that bond. We are planning to finance the Labrie acquisition by raising EUR 900 million of debt. Most of that approximately 5 years term loans. So solid financing with competitive pricing. So...

And Scott, how about the seasonality of the business and the cash conversion profile?

Yes. So I'll start with the latter first. Of course, as I mentioned during the presentation, the cash conversion profile historically has been well in line with the Hiab historical cash conversion. Having said that, much like we saw for our business as well in '22 and '23 with the backlog situation, they've been a little bit off of their cash conversion profile over the past couple of years, but we know exactly what needs to be done. And Michael and the team have a great plan in place in order to solve for that.

So on a long-term basis, we see no issue there. And then the second part was relative to the question around seasonality. And we don't -- we see not so much seasonality characteristics in the Labrie revenue profile. But you also have to appreciate at this point, we'll learn more in the period to come. But at the same time, with the backlog and the nature of their ability to mass customize solutions and the customers' willingness to wait because of the quality and technical differentiation, that's probably smoothed out a little bit of what could be some inherent slight seasonality effects in terms of the top line. But more details to follow on that in future periods.

Okay. Then we have the next question. When was the first time we took a look at this asset, if you can give any insights. Of course, it's really well aligned with our strategy that we published in 2024.

Yes. Yes, it was more than 5 years ago. And probably in some of my team members now, they're virtually kicking me under the table, but likely they've looked at this asset long before that. But I can say myself, it's been on my radar intensively for more than 5 years.

Then we have a slide that is showing that Labrie has had a CAGR of 14% in the last 10 years, but the market has not been growing as fast. So what explains that?

Sure. And it's due to a combination of factors. You have the overall structural characteristics on the increase in aggregate waste and recycling, the emergence of now more recycling, which is in the sweet spot of Labrie's offering and technology. But at the same time, you also have this increasing uptake of automated side loaders as an alternative solution to the front and rear loaders. So the combination of those 3 factors as well as the fantastic support of the Labrie team as well as the personnel within the at-scale dealer group. It's those 4 factors is really the key ingredients that has enabled them to grow this fast.

And finally, looking at Labrie, they seem to be much more capital intensive considering they are a manufacturer of these vehicles. Also, the depreciation and amortization as a percentage of sales is more than 6%, while Hiab has less than 4% of sales. Do you intend to get more into capital-intensive segment because Hiab is, by nature, quite asset-light?

Yes. We've -- this actually fits quite perfectly into how we've thought about our supply chain strategy. If it makes sense for us to have some manufacturing because of the level of criticality and complexity of components, both in terms of how that equipment performs relative to its normal duty cycles, but also in terms of securing the aftermarket life cycle services such that we can secure and guaranteed near perfect delivery within the time constraints required to keep our customers up and running. And we've always had that view. And so certainly, one of the key work streams within the overall integration plan will be to take a deep dive look into the overall supply chain setup, but in consideration of the whole combined footprint and then make choices that are in line with our strategy because we still like the way that we're positioned.

And it really isn't a matter so much as we seek to have an asset-light and a more flexible cost structure for ourselves, but it's also even more about leveraging the real expertise and capability of companies whose mission is a little bit more focused on those type of mission-critical components compared to us. And so we'll take the same strategic look and apply the same choice criteria. And then on a go-forward basis, we'll execute on the supply chain strategy where it makes -- in ways that make sense in line with our strategy.

Okay. Great. So let's now take the question from the telephone line. So you have the possibility to post questions in the chat. We will take them after the telephone.

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

Congrats on the deal. A couple of questions from my side. I'll take them one by one. And the first one is maybe a follow-up on the revenue trends. And Scott, I guess you mentioned that you expect the deal to be accretive for Hiab's growth as well as margins after the transaction. So maybe a little bit of color on how does the USD 491 million in terms of sales look in historical perspective compared to the past couple of years? How is the business momentum in this business compared to your own? And maybe then on a more structural basis, maybe you can talk a little bit about the competitive landscape especially on the U.S. market regarding market shares, regarding kind of potential to maybe regionally grow the business, take market share on the equipment side aside from the fact that you can bring on the aftermarket?

Yes, sure. So starting with your first one relative to the characteristics of the last 12 months, USD 491 million -- I almost said euro, but U.S. dollar revenue profile. Coming back to the earlier comments I made, Antti, for the most part, you have, of course, the overall industry demand. But on the other hand, you have this subsector trend where automated side loaders have been growing faster than the overall market, which is right in the sweet spot of this particular business. And then what has really underpinned Labrie's performance in this critical market is that combination of designed in quality, manufactured in quality, in particular, of the hydraulic and the lift arm performance, the ability to get up and running and performing faster as compared to the competition in that regard and the recognition then that the subsequent durability and performance is clearly differentiated.

And then as I kind of snuck in as a bit of a throwaway comment earlier, and I'll highlight it a bit more now, the ability to have a rapid configuration within their own design and manufacturing platform that integrate together quite seamlessly. They've been much more successful in being able to at scale, design more customized solutions or purpose fit for the application with which customers have been then willing to wait for -- on a longer lead time basis.

So that's been a key factor. Then on the other hand, I would say that the management, rightfully so in my view, have taken the view that they wanted to be conservative in terms of the capacity ramp-up that growth curve has dictated in the prior 5-year period. And that has helped smooth out the overall backlog of the business and it has allowed them to better perform in terms of supply chain, in terms of the trade-offs of going after top line, but then at the same time, being able to control cost. And I think that absolutely has been a key factor in terms of when you think about the sequential development of their revenue profile, that also had a contributing factor as well.

Then you asked about the competitive landscape. It's a still a fairly concentrated market in North America. You have the top 2 players are in our context, business areas within large at-scale listed companies. You have McNeilus and Heil, if you will, from Oshkosh and Terex, respectively. And then in addition, you have New Way, which as of, I believe, September or I think it was September of last year was announced, recently acquired by Federal Signal, also a listed company within the U.S. with a similar revenue profile as the Labrie Environmental Group in terms of a bit more focus and concentration or, let's say, scale of their revenue profile on automated side loaders versus front loaders and rear loaders and I would say, competing on a slightly different competitive basis with excellent lead times, nice at-scale manufacturing that's fully concentrated in the U.S. and able to compete on extremely competitive pricing.

So in regards of Labrie's ability to outgrow the market going forward and take market share, it's more about kind of the penetration rates on the side loaders continue to grow rather than any substantial potential on, let's say, geographical expansion within North America or things like that.

Yes. And just to add a bit of additional color here and I'll probably get myself in trouble a bit. But also, there are 3 other key characteristics there. One I alluded to during the pitch was the rate of services penetration. They recognize that's a big opportunity for them and one of the reasons that I think they're excited to be part of the Hiab portfolio. Two, there are some key product introductions current and in the future that will allow or enhance this platform's ability to grow in the automated side loader subsector. And then, of course, three, as one of the many areas that has me excited is the fact that they're lagging in the front and rear loaders with a massive opportunity to further or to establish a position within national key accounts because you have quite also a concentrated end market profile for that offering.

So there's real opportunity to grow in that space as well, all of which then can be underpinned by having the full complement of supply chain capability and sourcing capability in North America that allows for flexibility given the today's and in the future demand and trading environment.

Okay. Then the next question is on the production setup and how is this company exposed to the U.S. tariff regime currently, which products does it serve from the U.S. setup and which comes from Mexico and Canada? And are they exempt from the -- especially on the Section 232 side?

Yes. Yes. Overall, taking you through the supply chain setup, you have an at-scale factory in Canada, producing the full build solutions located in Quebec City. That is supported by a smaller manufacturing facility that's manufacturing the critical components I was showing on one of the pages in the presentation around the hydraulic and the lift arm components. Then in the U.S., you have a factory located in Georgia that is primarily focused on automated side loaders and that also is the primary bulk of the solution that are produced in Canada as well. And then you have a facility in Mexico that's primarily focused on front and rear loaders in an excellent facility in the maquiladora across the border.

The tariff exposure is at present for both solutions that come from Canada as well as from Mexico. As you all know, the team has done an excellent job in mitigating the tariff exposure, however they are exposed, and it is captured within the financial pro formas that we shared previously, and they have an excellent view as to the exposure moving forward. But we do have the opportunity to continue to carry on with the 3 different mitigating strategies that they've employed, and we would expect then over time for us to continue to further mitigate any tariff exposures. But that will take just a bit of time as we continue to scale the operation and lift and shift where need be.

All right. And then the very last from me is obviously already looking at the next thing. So how is your capital allocation priorities now for the, let's say, short term next 6 to 12 months, balancing any further M&A opportunities versus dividends versus your gearing target?

Yes. Yes. So we've got the flexibility in our dividend target profile that we should be well in line in terms of adhering to our 30% to 50% dividend policy. Capital -- from a capital allocation perspective, due to the strength of the balance sheet that we come into this transaction with and how we see that balance sheet developing over the next couple of years. We still believe that from an allocation prioritization that we can stick with the same tune that we've been seeing and sharing with all of you in the past. We still have opportunities and one of the many reasons I'm excited about this platform that this gives us an opportunity for further bolt-ons for this new product vertical, and we see a number of opportunities to do so, and we have the balance sheet strength in order to go execute, provided we can meet all of our criteria and characteristics. At the same time, we certainly aim and seek to then in terms of the balance of our available balance sheet to continue to return predictable and attractive dividend profile to our shareholders.

The next question comes from Mikael Doepel from Nordea.

Congratulations on the deal. A couple of questions here as well. So firstly, coming back to the competitive landscape and the market structure. So I think you mentioned, Scott, that #1 and #2 players are roughly the same size as the company you are now acquiring, Labrie. Why are they market shares? Just trying to understand kind of the level of consolidation in the market and also coming back to your kind of comment you just made in terms of doing potential bolt-ons on these new platforms. Just trying to get a better feel for the level of concentration in the market. Let's start there.

Yes. So if you think about the headline numbers, so the revenue piece, I would say Labrie Environmental Group overall is a bit of a distant #3. If I think about the revenue profile of both Heil and McNeilus are, I would say, significantly higher compared to Labrie, which is a positive. And as a consequence, the -- that would be #3 in terms of overall market share. And number 4 would be the New Way platform that's part of Federal Signal. In terms of the automated side loaders, we have a leading market share position that's roughly between 1/3 and about 35% of the overall market, and we see opportunities to further expand that position. And then if you do the math in terms of the overall growth potential within that subsector, we see an opportunity to both in the short as well as the medium term to perform quite nicely in terms of expanding not only market share in automated side loaders, but then offering a nice alternative in the 2 subsectors with which we are -- or Labrie is performing significantly behind the top 2 players within the overall sector.

Okay. And just on kind of that same topic, if you look at the profitability, I mean, looking at where Labrie is currently, would you say there is a significant difference compared to the main competitors or broadly in line? Do you have any insight into that?

Yes. I'd say broadly in line compared to the top 2 and a bit better compared to #4.

Okay. Okay. And just continuing on that topic. So we talked about the historical revenue growth of Labrie right here, which was quite strong. I just wanted to check if there is any kind of acquisition-driven growth also representing that number. And even more importantly, actually on the margin trajectory, if you could talk a bit about how these margins have developed within Labrie in the past, call it, 5 years or so?

Yes. No, excellent question. I would say -- I have to give credit to the current ownership group together with the management team. So if you think from the owner's perspective, looking back a little over 5 years ago, roughly, they recognized quite right away that there was a need to invest in supply chain capability, both in terms of derisking the overall cost curves by scaling up in both the U.S. as well as Mexico. And from my perspective, they did that quite nicely.

Number two, they were successful in bringing in and complementing the incredible technical capabilities and personnel that they had from the core business. and layered over the top of that world-class type leadership talent that has then enabled the business to go through a nice transformation over the past 5 years. And that's translated into the nice top line growth that was the core of this question. But then also then the variable B is it also translated into a better incremental profit pull-through or operating leverage compared to the platform in the 5-year period prior.

So -- and then number three, they made a nice investment not only in terms of the IT piece in terms of creating a unified ERP platform that integrated nicely with the design platform, but then also have continued to invest in new product and technology. So those factors combined have enabled this business to accelerate its trajectory, both in terms of driving top line, but more importantly, the quality of the top line.

The next question comes from Panu Laitinmäki from Danske Bank.

I have 3 questions. Firstly, starting on the current trading and kind of short-term outlook of the acquired company. Can you comment on how the order intake and order book has developed if you look at kind of sequential development of the past quarters and the growth in the past 12 months was pretty substantial. So was there anything kind of unusual in that number?

Nothing unusual in that number that I can report. Now I'm looking for support to my side here, Panu. So nothing unusual. The overall market had certainly been softer in '24 and '25 or '24 somewhat, but certainly '25. And then coming into this year, I'd say it looks -- mirrors very much what you've seen from Hiab overall. And having said that, where this platform had been so nicely positioned is the nature of its backlog and the type of solutions that it provides to its customers, whereby they've been able to smooth out the delivery of the backlog, which is -- even though it looks quite a positive slope in the last couple of years, it could even have been more substantially positive, but they've been able to, I think, intelligently work through the backlog. So yes, from an order intake perspective, you see a bit of softening over the last 12 to 24 months and hasn't quite translated into the top line for this platform in particular.

Okay. Then secondly, on the synergies, maybe both on sales and cost side, do you -- how does the overlap with your existing waste and recycling business look like? Are you selling to the same customers? And where do you think the sales synergies would come from? And then on the cost side, will you quantify this going forward? Or will it remain as just like an ambition to do it in procurement?

Yes. We will absolutely provide additional insight on a go-forward basis. And then the broad headlines, we're, at this point, not trying to be overly aggressive in terms of what we expect in the next 3, 5 years in terms of pro forma EBIT synergies, but we see that there's clear and attractive opportunities on the materials and manufacturing and sourcing piece that should represent anywhere between 50% and, let's say, 60% to 65% of the synergies. In the near term, we see clear sales synergies opportunities from 2 vectors. One, there are channel as well as customer overlap with our existing business in the U.S. with GALFAB. And similarly, we have some overlapping customers with regards to our lifting solutions as well, albeit today a bit subscale, but nevertheless there.

And then the second vector of sales synergies, as I've alluded to, is certainly on the service side as well and will enable this platform to have even more proximity and more density in terms of coverage for its existing customer base. And we've got at scale level of existing capabilities to deploy at this located both here in Europe as well as in North America as the customer profile is quite similar to many of the customers that we have here in Europe. So we understand how to participate in these customer end markets very well.

If we calculate the sales and procurement synergies together, so our initial assessment is that those should be on EBITDA level, a low-double-digit U.S. dollar amount per year. So of course, that synergy assumption then gets more granular as we proceed with the integration planning.

My final question is that can you comment on the deal valuation? Because it looks quite reasonable, which is obviously good, but it also kind of raises the question that how did you manage to acquire the company at this price given the really good financial profile and kind of earlier indications that the valuations in the U.S. might be a bit on the high side?

All right. I'll answer that question. Yes. I'll give you the same answer as to the online question. We arrived at a valuation that we felt was well representative with the quality of this asset, well in line with what we could from a balance sheet perspective, manage and at the same time, still have a line of sight to, in a relatively short period of time, get our gearing ratio and our -- the level of debt that we have on the balance sheet work down fairly quickly. And I think like always in these scenarios, timing is always a factor. And I think that given the timing that we find ourselves in and the way in which we were able to work together with the current owner, I think, allowed both sides to come out with a deal that they were quite happy with, one that we could accommodate relative to the valuation and one that the current owner was quite happy with in terms of their return profile to their LPs or their shareholders.

The next question comes from Tom Skogman from DNB Carnegie.

This is Tom Skogman from DNB Carnegie. Congratulations on the deal. I have a couple of questions. First, with this growth, 14% sales CAGR over the last 10 years is very fast. But I didn't really understand what was the -- what acquisitions have they made? And kind of what is the organic growth number? Do you have the exact number? Or could you elaborate on that you get some kind of a picture?

In the past 5 to 10 years, it's all organic growth, Tom. Otherwise, I would have included that as part of the previous question in my answer. So sorry, I didn't clarify that there weren't any acquisitions.

And I would say that also during the past years, some of the growth is driven also by this kind of post-COVID order book and backlogs supply chain constraints, which are now kind of getting resolved as well.

And then how much is the order book up or down at the end of March?

Overall, the order book, I would say, has been fairly stable and at the moment, corresponds roughly 1 year of sales if we look at the last 12 months revenue profile. So stable order book.

So that means that book-to-bill has been around 1. So it's basically -- that's the situation.

Broadly speaking.

Broadly speaking in the last 12 months, yes.

And then this raises your margin in one strike by 1 percentage point if you -- based on the numbers you show. And you have -- I mean, you have your financial targets. So should this trigger a change to the financial target to raise the margin target from 16% to 17%?

Well, we'll certainly come back and address that topic as we do each quarter, Tom. So if you hold on to that, then as we get more visibility to the next 2 years. And as we work our way through the integration process, as Mikko had alluded to, then we'll certainly address that topic in due course.

And perhaps it's good to note also that those consolidated numbers, what we showed on the slide, they don't yet include the purchase price allocation amortization, which, of course, will be then granularized as we have completed the acquisition and have then the full calculations for the PPA available.

Actually my next question, how should we model the depreciation and the PPAs when you move to IFRS bookkeeping here? Will there be any change in depreciation? And how large have they been?

The depreciation, I would say, in the big picture, the depreciation percentage should not dramatically change. Of course, the PPA allocation, like I said, we have some initial estimates about the PPA and anticipate that it could be potentially around EUR 30 million to EUR 40 million in the first couple of years due to the fact that Labrie has a sizable order book and that will be amortized as a part of the PPA amortization in 2 years' time. After that, the PPA amortization would go down quite significantly.

And how about the goodwill amortization that they report currently?

Yes. So according to the U.S. GAAP, the goodwill can be amortized when Labrie would be part of Hiab, that would be part of the overall Hiab goodwill based on the Labrie acquisition and then it's not amortized.

And so how large will the depreciation, you say just the same percentage, but in millions of euros if you want to do a model?

Are you talking now about amortization or depreciation?

Both, of course, but starting with the depreciation, as you said, just percentage will it remain the same?

Yes. I would say that in the big picture, the depreciation percentage should not dramatically change from the top line. The amortization, of course, from this acquisition is sizable compared to our past amortization, which has been more or less single digit on an annual basis.

Okay. So you mean the same percentage of sales as Hiab currently with the depreciation basically. That's how you define it.

Roughly on that level.

Yes. And I didn't fully understand this -- PPAs, I understand, but the other amortization, how was it that?

Sorry, can you repeat?

The amortizations that are not PPAs, you said they will -- you will not do that or move into IFRS.

So Labrie has had goodwill, which is amortized according to the U.S. GAAP. And that will disappear and that will become part of the overall acquisition goodwill. And according to IFRS, that will not be amortized.

You can find the details in the stock exchange release. So that's why the gap between EBITDA and EBIT is quite big.

Yes. That has been, if I remember correctly, roughly EUR 20 million exactly per annum.

And the interest rate is 4% to 5%, I guess?

If we look at this overall EUR 900 million financing, so the average interest would be approximately 3.6% based on the current Euribor levels.

And then do you have any plans to expand into this segment in Europe as well as this is a new opening and the other products you have tried to have products available both in Europe and in Americas.

Yes. Just to come back to the reground in the strategy. So 4 focus segments, waste and recycling amongst those. So broadly speaking, yes, is the answer to that question, both in Europe as well as other parts of the world.

And could you just help us to understand a bit when you bought the GALFAB company, I mean, that was about transferring technologies from Europe to the U.S. How advanced would you say that American products are in this industry compared to European products?

Yes, certainly lagging behind in some areas, but the uptake, we're certainly seeing in our GALFAB business that's moving along very nicely. And similarly, we're seeing a bit more penetration of -- especially if you think about the MULTILIFT product, we're starting to see a bigger conversion of containers to the hooklift solution, which is enabling, albeit step-by-step slow uptake, but a bigger uptake of that solution as well. So the foundation is laid, if you will, to have a more rapid uptake of a similar type of technology given the application.

So even though you don't have this product, you still have this feeling that you can -- American products can be developed more to catch up against European products in this industry. Is that the way to think?

In this particular industry, I'd say that -- because I took your question to mean if you think about the GALFAB business, there were certain control systems, digitalization as well as duty cycle automation characteristics. There are capabilities we had to share and scale within the GALFAB offering. That's gone very well and according to plan, and we see the benefits of that. Similarly, we've seen the benefits to our operating model and business excellence in terms of turning around significantly the GALFAB platform as well as our commercial excellence. So that's gone along nicely.

And then as I was trying to get to where I thought your question was, you see a bit more convergence of the demand for the similar type of higher technology in the U.S. in the duty cycle and applications on a like-for-like basis than if I think about when I started this role. And so I do see that trend continuing in the future, albeit with purpose-built and fit-for-purpose type solutions that may not necessarily be the same as here. I'd say on an RCV basis and thinking about the automated side loaders, I'd say that's likely to be on a different level and a higher level of differentiation technology than what I at least personally have seen here in Europe. Whereas here, we tend to use a bit more knuckle boom crane applications and in-ground bin storage, if you will, whereas that trend is not quite in the U.S., and I'm not sure that it will be.

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

It was mainly the same thing that Tom already asked about the adjusted EBIT kind of comparability with all of the amortization. So do I now understand correctly that the way that we should model is that add the EUR 22 million of goodwill amortization to the announced pro forma adjusted EBIT, so you get EUR 96 million and then take EUR 30 million to EUR 40 million in PPA out of it, so you get around EUR 60 million as a comparable adjusted EBIT number that would be comparable to your reporting?

Roughly speaking, yes.

And how you'll kind of amortize the backlog in a couple of years' time and afterwards, then the PPAs would be perhaps half of the EUR 30 million to EUR 40 million or something else?

Correct.

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

Thank you for the interest and for the great questions, and thank you for the great answers and presentation, Scott and Mikko.

Yes. Thank you, everyone. Have a safe day.

Thank you.

Welcome to Hiab's First Quarter 2026 Results Call. My name is Aki Vesikallio. I'm from the Investor Relations team. Today's results will be presented by CEO, Scott Phillips; and CFO, Mikko Puolakka. As a reminder, please pay attention to the disclaimer in the presentation as we will be making forward-looking statements.

Before handing over to Scott Phillips, let's take a look at the highlights of the quarter. Book-to-bill was positive in all geographical areas. Our sales were still impacted by low order intake in the U.S. during the previous 3 quarters. However, our comparable operating profit margin increased sequentially to 13.5%, and we continued to deliver strong cash flow. The new operating model announced in January was successfully implemented in the beginning of April. We also specified our outlook for full year comparable operating profit margin from above 13 above 13.5%.

Let's then view today's agenda. First, Scott will present the group level topics. Mike will go through reporting segments, financials in more detail and the outlook. After Mick, Scott will join the stage for key takeaways before the Q&A session.

With that, over to you, Scott.

Greetings, everyone, and a warm welcome to our first earnings report for 2026. I would like to start out sharing 3 developments, highlighting our execution of our profitable growth strategy. So during the third quarter earnings report, as you'll recall, we shared our plans to reduce our cost by EUR 20 million within this year as a result of the increased uncertainty that has led to a more challenging demand environment in the U.S. as well as the overall development of the order backlog.

Consequently, we have announced plans during the quarter to evolve our organizational structure and our model targeting to create 3 positive outcomes. Number one, to evolve to further clarity on our end-to-end accountability through further decentralization by reducing layers of complexity within our overall organizational design. That should help us to attend to a few issues that occasionally come to light in terms of suboptimal customer support. And then third, overall, it will allow us and enable us to reduce our fixed cost in line with our plans, which should create much more improvement in our value creation resiliency.

So core to our strategy is our aim to -- is our aim to lead the sustainability transition from road load handling industry. So I'm really pleased to share the second development here in the execution of our strategy, and that's the fact that we have validation in our science-based targets to achieve our commitment to be net 0 by 2050. The third development I would like to share with Pride is another example of a key outcome-based innovation co-created with our distribution partner, [indiscernible], together with key customers in Spain aiming to optimize productivity for dump over column lift tippers by developing a new [ Dell ] brand lightweight lift gate.

So another great example of our focus on developing new innovations together with our customers and our partners, that's purpose-built to solve our customers' most challenging problems. So let's get into the headline results of our group financials for the quarter. So starting off with our order intake development, I'm pleased to see that our organic order intake increased by 7% in constant currencies versus the comparison period. In actual exchange rates, order intake reached a level of EUR 402 million or EUR 419 million in constant currencies for an 11% positive variance. IND contributed EUR 15 million in the quarter, so in line with our business plan. And all regions contributed a solidly positive book-to-bill, increasing our backlog sequentially.

Now unlike prior periods, we didn't get the advantage of large lumpy orders as we've myself and Miko and Aki have talked about in the past, but rather resulting from a number of increased activities that manifested in smaller order intake or midsized order intake. So no real large orders of note to report within the period. So overall, a good start to the year despite the uncertainty in the macro environment. So let me turn your attention to the regional breakdown of our order intake profile for the quarter.

Now as you can see from the table, we had growth in all regions with the exception of Asia Pacific. Europe, Middle East and Africa increasing from EUR 203 million to EUR 207 million or 2 percentage points. The Americas grew by 15% from EUR 145 million to EUR 166 million. And Asia remained relatively flat at EUR 29 million compared to EUR 30 million in the comparison period. Now Europe continues to show signs of steady demand growth which we do see in all businesses, but most notably our lifting solutions. The growth in the Americas was primarily driven by ING acquisition, but at the same time, we certainly did not see further declines in the U.S.

Overall, the environment remains highly uncertain with ongoing trade tensions in the U.S. and heightened geopolitical tensions in the Middle East. So let's turn our attention to the revenue results for the quarter. Our revenues were down 7% year-over-year due to the EUR 114 million lower order book we started the period with -- now in line with our expectations that revenues were on the level of EUR 383 million. As you can see on the table on the left-hand side, our rolling 12-month revenues are now converging towards our order intake level of prior periods at EUR 1.528 billion. Now our share of services and actual exchange rates increased the percentage point due to the decline in equipment sales.

However, as Mike will explain, we had a nice increase in service sales in constant currencies and ING contributed $13 million in sales or 3% and and currencies overall had a negative impact of 4% on group results. Now geographically, our share of sales were impacted by the positive order intake development in the second half of 2025 in Europe, while the Americas was negatively impacted by the decline in the U.S., but partially offset by ING. Now in addition to the increase in Europe, our Asia Pacific region was also slightly up, improving to EUR 26 million or 7% year-over-year. And I'm pleased to see the development of our Eco portfolio sales as they increased by 23% to EUR 176 million or 46% of sales overall.

Now with our year-over-year decline in sales, our comparable operating profit was negatively impacted, so I'll guide you through the numbers. For the period, we delivered EUR 52 million on sales of EUR 383 million, which is a 22% decline versus the comparison period. But all in all, a good start to the year. On a relative basis, the group was on a level of 13.5% versus 16% last year. Now the factors most impacting comparability were lower sales in the U.S., lower indirect cost affecting gross profit and lower fixed cost affecting operating profit.

Now consequently, our operative return on capital employed declined due to the reduction of profit. items affecting comparability and the ING acquisition. Now Mika will further guide you through the bridge. Now wrapping up on our quarterly check-in for how we are performing versus our long-range targets. Our last 12-month -- our 10-year CAGR is now at 5% versus our long-range targets of 16% comparable operating profit over last 12 months is at 13% and and versus our long-range target of greater than 25%, were in line at 27%, albeit a decline sequentially for the factors that I shared earlier.

So with that, I would like to turn the stage over to Mikko to share with you results for the reporting segments.

Thank you, Scott, and good morning also from my side. Let's start first with the Equipment segment performance in quarter 1. So the equipment orders were EUR 284 million during the quarter. This is a 10% increase year-on-year. But if we exclude the currency impact, the growth would have been 14%. So in constant currencies. Lifting Equipment grew very nicely, growth came mainly from Americas, like elaborated already by Scott, very much driven by the ING Cranes acquisitions. .

The delivery equipment orders were flat year-on-year. I would say that taking into account the market situation in the U.S. And the fact that we did not book any major key account or defense orders during the quarter. I would say that the Equipment segment performed well in terms of orders during quarter 1. Sales were EUR 266 million. This is us 9% year year-on-year. And again, if we exclude the currency impact, the decline would have been minus 6% Lifting equipment actually grew in all 3 geographies, and the decline in sales is coming solely from our delivery equipment, especially in the U.S. market. The U.S. decline is very much due to the past quarters below 1 book-to-bill caused by the volatile tariff environment and the delayed decision-making by the U.S. customers.

Equipment comparable operating profit was EUR 32 million or the margin, 12.1%. And the biggest driver for the lower profitability was the decline in the delivery equipment sales in the U.S. Like I mentioned earlier, equipment profitability was very much impacted by the lower sales as can be seen in the bridge on the right-hand side there. Lower sales up gross profit margin as the gross profit margin includes also fixed production overhead. So the factory overheads. We had a slight positive impact coming from the lower SG&A costs. But I would say that the cost savings from the earlier announced EUR 20 million cost savings program are not yet visible in our quarter 1 results. Then let's have a look on service performance. And I would say that currencies had a significant impact on services orders and sales during quarter 1.

Service orders were EUR 119 million with constant currencies. Actually, service orders would have grown 4%. Sales was EUR 117 million, and again, with constant currencies growth would be plus 5%. So in absolute terms and in constant currency, services, quarter 1 revenues would be EUR 123 million. Really nice development in our recurring services like spare parts and maintenance, those sales grew in quarter 1. However, installation services sales declined. So I would say that the recurring services growth was able to offset really nicely both currency headwinds as well as the decline in the installation services. The number of connected equipment and maintenance contracts also continue to grow in quarter 1.

So really nice performance in executing also the services strategy. Services profitability was stable at EUR 28 million or the margin 23.6%. If we look at the services bridge, on the right-hand side, services sales growth would have been actually EUR 6 million with constant currencies instead of the EUR 1 million decline as we have reported. Recurring services growth, very much offsetting the decline in installation services. And then the negative FX impact, mainly coming from the weaker U.S. dollar offsets the volume growth. Next, let's have a look on Hiab's total financials. The overall higher profitability decline came from equipment volumes as you were able to see from the previous bridges. Lower volumes affected gross profit margin as the gross profit includes fixed production overheads.

Our SG&A costs were stable in constant currencies like mentioned, the cost savings program effects are not yet visible in quarter 1. Those start to be more visible in the second half of this year. Currencies had a notable impact on quarter 1 profitability mostly stemming from the weaker U.S. dollar. We booked EUR 11 million restructuring costs during quarter 1 as items affecting comparability. So this is below the comparable operating profit, these items affecting comparability. They are related to the ongoing EUR 20 million cost savings program, head count reduction, including also the separate life production move from Sweden to Poland. And our quarter 1 tax rate was 26%.

Our cash generation continued on a very good level in total, EUR 75 million in quarter 1. The cash conversion was really high, 186% our inventories decreased slightly. But I would say that the main contribution to our to our cash flow was coming from the net working capital, like accounts receivable decline and the VAT receivables collection. So those were the main contributors to quarter 1 cash flow. Hiab has a very, very strong balance sheet with a net cash of EUR 219 million at the end of March. Our gearing was stable at minus 23%. And thinking the target to keep our gearing below the 50% threshold. This would allow us to raise more than EUR 700 million debt. So a really strong balance sheet to execute the inorganic growth strategy. We paid the EUR 75 million dividend in April 2.

So this is not yet the dividend payment is not yet visible in our quarter 1 numbers. And then on the right-hand side chart, you can see that we have only 1 major debt item. That's the EUR 150 million bond, which is maturing in quarter 3 this year. And today, we have also revised or specified our outlook for for the 2026 based on a very good start for the year. So we estimate that the comparable operating profit margin for this year exceeds 13.5%. This is up from the earlier above 13%, what we announced in February. The key assumptions behind this outlook are more or less unchanged, what we said in February. We expect EMEA to continue to grow. U.S.A. not further declining from the previous quarters.

However, the customer decision-making continues to be still slow and difficult to predict. 2026 has started with EUR 14 million lower order book. Also, the March 26 order book was almost EUR 40 million lower than what we had a year ago. We have factored in the outlook also the EUR 20 million cost savings materializing in 2026. As mentioned, mainly effective from second half onwards. And then our group admin, underlying costs would be more or less on 2025 level, plus then approximately EUR 5 million investments in process systems development, mostly in the second half this year.

So with those words, then I would hand the word back to Scott.

Thank you, Mikko. So just closing with a few key takeaways summarized in the quarter. I'd say, first and foremost, we certainly continue to see a gradual recovery in lifting equipment in Europe, Middle East, Africa, which is great to see. Our delivery equipment market, the U.S. is expected to be in a cyclical trough. Third key takeaway is we are on track to achieve our EUR 20 million lower cost level in 2026 versus the prior year. We continue to nicely execute on our profitable growth strategy. with a keen focus on where we can take advantage of opportunistic growth.

As Mikko mentioned, our strong cash flow and balance sheet position us nicely to catalyze growth in the coming periods. And we're really pleased to see the solid good start to the year in 2026.

So with that, I'll turn it back over to Aki.

Thank you, Scott. Thank you, Mikko. With that, we are ready to start the Q&A session.

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

And I'll start with a bit of a long winding 1 on the U.S. demand. I mean, backing out kind of your Americas orders the FX impacts and the acquisition impact, it still looks quite good organic order growth for the quarter. Then again, if we look at kind of the quarter you flag increased geopolitical uncertainty. There was a bit of a back and forth on the Section 232 tariffs and things like that.

So how would you kind of describe the demand environment that you saw on the first first quarter. Did you start to see a gradual recovery in some sense? Or is it kind of the heightened uncertainties adding kind of an extra layer of slower decision-making versus what you kind of saw going into the quarter?

Yes. , and thank you for the questions. Starting that 1 off. In the U.S., I think 1 of the key factors to note is [indiscernible] second half of Q1 last year, impacting both of our at-scale delivery solutions business within the U.S. So we're coming off of, I'd call it, a relatively low comp. So therefore, I'd say that was a driver in terms of the positive variance that you see slightly in the U.S. year-over-year. But on the other hand, I'd say from the combination of still the factors that existed prior to the trade tensions and then subsequent to the trade tensions. And even with the geopolitical unrest, notwithstanding, we are seeing a bit of stability, albeit as Aki characterized and Mekko as well that the decision-making is still on a similar level in terms of customers being cautious.

Having said that, I think it boded quite nicely for us in the quarter that similar to what we saw here in EMEA. The composition of the order profile in the period was more skewed towards small or midsized type orders. So the overall activity level was quite strong. And I'd characterize the sales funnel within the quarter also nicely positive variance compared to last year. Having said that, we still have the same level of uncertainty. We have the added variable of geopolitical unrest. So therefore, we're trying to stay quite balanced in terms of managing expectations that which is why we made the note of where we think we're in a situation where we don't see it imminently getting worse. And so therefore, I think there's a potential to be stable to slightly improving.

And certainly, you see that supported nicely in some of the reports from the truck OEMs. And then as has been noted in some of the analyst reports, there would be a bit of a lag in terms of the impact for our business compared to what you see at the truck OEM. So the factors at least are lining up to be, I think, skewed more positive versus negative.

All right. And then specifically on the changes on the Section 232 tariffs start of April. What's your analysis on -- are there any impacts on your clients in terms of truck prices or costs? And also what's the direct impact to your specifically? .

Yes. The impact of the change in the tariff code certainly has a negative impact from the customer perspective in that the cost level goes up. somewhat. And so we've run through all the analytics and the math and we've revised our our price model vis-a-vis the surcharge as a consequence. So our customers will certainly see that. I don't see it at a level where there would be an imminent negative impact compared to the current demand environment.

But certainly, an additional factor to consider on behalf of our customers in terms of deploying the budgeted capital within the year. And then as we have highlighted in some of the past periods, 1 of the key shows that we did see in the U.S. was a tendency to move away from providing longer-term view of demand and capital allocation and rather going to more shorter demand horizons, if you will, in terms of quarter-by-quarter or biannual, if you will. So we still see that trend continuing. .

And then kind of talking about pricing and surcharges, how much would you say that the U.S. orders in Q1 benefited from pricing in terms of year-over-year basis? .

Yes, the U.S. orders benefited approximately EUR 10 million from the surcharges during quarter 1.

All right. That's very clear. And then just a housekeeping question on the savings program on the EUR 20 million. So would I model it correctly by kind of the full

Run rate impact for Q4. So it's a little bit of a benefit on Q3 and then in a similar fashion first half of next year as well on a year-over-year basis.

Yes. Yes, I'd say that's about right. Yes. Yes. .

All right. The next question comes from Panu Laitinmäki from Danske Bank. .

I would have 2 questions about the guidance. So firstly, what kind of triggers the upgrade I mean, is it that you have now more visibility towards the end of the year? Or was Q1? Or what do you see in the market better than you were expecting? And then the second 1 is kind of what kind of what are you expecting for the U.S. market for the rest of the year in your guidance assumptions? .

Do you

Do you want to take the first part of the -- yes.

So basically, what triggered the specified new outlook is that we had, of course, a solid start for the year, and we have now basically 3 months better visibility for the year. We don't see in customers' behavior at the moment, any change. So that -- those are basically the elements which which basically made us to slightly specify the outlook from the above 13% to above 13.5%. .

Yes. And just adding 1 more to that one, Panu, is also the view that Europe continues on the positive glide path that we've seen -- so better visibility to the order book now as we have an additional 3 months coverage positive variance to the start of the year versus expectation or plan and then the continued good development in Europe that offset, of course, by a more or less stable situation in the U.S.

Okay. Then you had the second part of your question was with regards to the U.S. demand, yes. Yes. So in terms of U.S. demand, just to reiterate the prior comments, we certainly see the similar factors coming into the year that we did for the second half of last year, where you had the environment where there was already a bit of a slower level of decision-making or, let's say, a longer time horizon to deploy capital based on changes in the cost levels and the inability of our customers to know, let's say, upon the time of taking possession of the equipment what their forward-looking cost curves would look like.

So then naturally, you would if you could delay the decision-making until you have better visibility there? We see that continuing within the year. Having said that, we did see a bit of recovery, of course, in the delivery solution business in the U.S. and activity level bodes well as the composition of the order intake was again, rather than being skewed towards a few lumpy key account orders, but rather a number of small to midsized orders. So the key account orders are also still in the pipeline. So overall, we see a situation where we feel a bit more comfortable given that we still have a lack of coverage to the end of the year. which then will further clarify potentially in line with our Q2 earnings report.

But for now, given those 3 factors that I talked about earlier and this U.S. situation that we think is on quite a stable level or we don't see it eminently declining supported by the data that we're seeing with the truck OEMs, a key factor for us to be able to bump up the outlook for the year slightly.

My final question is on the European market. So it continues to recover. But could you kind of tell a bit more looking better for you. And what about construction, which I understood, has been still slow, but do you see any pick up there? .

Yes. For us, the quick answer on the construction side is not yet. But what we do see is we see a pickup on special logistics, a bit of infrastructure a little bit of retail last mile, but significantly, of course, in our waste and recycling segment, somewhat offset by a slight decline in the Defense Logistics as that's a consequence of timing of fulfilling past very large orders that were won in the past and then the fulfillment schedule is starting to wind down a bit.

So overall picture with the exception of construction is all moving somewhat in the positive direction and somewhat steady. We're not seeing big swings period-over-period or sequentially within the quarter, but rather a nice steady improvement.

The next question comes from Michael Doepel from Nordea.

Yes. Thank you. Starting off following up on the EMEA question there. Any specific countries you would like to flag here that are looking particularly strong you are seeing some kind of improvement, maybe some early signs into Q2? Any specifics you could add there?

Yes. If you think about our demand environment in Europe, it very much follows along with the countries that have the highest or the most at-scale GDPs. And those were certainly the countries that had the most positive variance for us within Europe, Middle East, Africa region. So of course, the U.K., France, Germany, Benelux, France, Spain, all were nicely positive.

Okay. No, that's clear. And then also coming back what you mentioned on the event how would we describe the pipe there currently? And also maybe a specification did you book any orders there in Q1 and then the pipeline and potential how you see or

Mikael was your question concerning Middle East or because the line was a bit or part -- on defense, on defense.

Yes, I was asking, did you book any orders related to that segment in Q1 and also how would you describe the pipeline and potential here going forward? .

Yes. Quick answer, yes, we did, albeit I'd say, overall, there was a slight negative variance on the defense orders from the comparison period. Pipeline looks really healthy. And as we've called out in the past, it's challenging to call the timing of converting the orders. But Harmony Frank, the team are doing a great job managing the pipeline, and we feel really good about how we're positioned to convert the pipeline. The question is around the timing. .

The defense orders were roughly 4% of the total order intake in quarter 1. So as we have said earlier, they are a bit lumpier than the kind of typical commercial orders. So from quarter-to-quarter, it might fluctuate a bit. But like Scott said, solid pipeline and something to come most probably later this year. So yes. .

Okay. No, that's fair. And then just finally, on the M&A. I think Mike mentioned the [ 700 million ] firepower here. How would you describe the pipeline? I mean, which regions would you say are most active right now? And what are the key hurdles to get the deals done? .

Yes. So let me start, I'll take that question. Pipeline is quite active as we have consistently called out in the past. Of course, it's always all a matter of timing. Our focus is in line with our focus segments. Similarly, from a geographic perspective, I'd say there's an active pipeline, of course, both in both of our core markets, both within Europe as well as the Americas. And of course, that's a critical area of focus for us.

At the same time, we continue to look for opportunities to help us scale quicker in regions where we're subscale. And so we still like the APAC region and are investing a lot of time and a in understanding the opportunities in that part of the world. And similarly, we still see opportunities in Latin America as well.

Okay. And then just a follow-up. I mean, what would you say are kind of the key hurdles to get the deals done, is that a valuation question more or is something else that's kind of -- what are the kind of keep the kind of Phase I this customer.

Yes, sorry for -- just to give you a bit of context and around the history. So the first key factor was just needing to work our way through the merger and then the demerger process. as we were certainly constrained for good reasons to take actions during those years. So post completion of the demerger, then the key constraint really, it's just been a matter of timing of working the processes.

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

Which would be on the U.S. distributor. So Scott, maybe could you talk a little bit about where you are with this kind of a growth strategy, adding the distributor network or expanding the distributor network in the U.S. and expanding geographically? And what type of revenue potential should we think about from these actions in the next, let's say, 12 to 24 months.

I mean if the demand in the U.S. is starting to bottom out, I guess, the fact that you have a wider distributor network today than, let's say, a year ago would add a little bit of a bigger potential for you going forward.

Yes. Thank you very much for the follow-up question, one. I'd love to provide some color on this follow-up. So quite pleased with where we are relative to executing on our growth strategy in North America vis-a-vis activating a hybrid model, whereas in the past, we were almost entirely direct with the exception of our Princeton branded truck [indiscernible] forklifts. So over the past 2 years, we've activated 16 new dealers. Of course, very much back-end loaded towards that time period. So great companies at scale for the first time, it gives us real coverage in all 48 contiguous United States. And so that's a key milestone for us.

And then I'd say, number two, and I couldn't emphasize this 1 enough, that the quality and capability within these dealers is extremely good and proud that the that they've elected to work together with us as rural partners and they're going to certainly help our overall growth strategy as well as to develop the overall Hiab brand in the U.S. Now having said that, we're in the mode of developing and going through the training and activating the dealers. And so that's a bit of a step-by-step process. Hard to exactly characterize the amount of positive variance, certainly within this year, but we expect some positive variance to our order intake development in the U.S. as a consequence, and over the time series, I think about 27, 28 and beyond, then that should steadily pick up. We believe that we'll end up somewhere around $20 to $22 million distributors overall. So we still are in the process also of adding new dealers in areas where either were undercovered and/or we're looking for the capability, be it for a lifting solution or a delivery solution. as some of our dealers are quite specialized and others are more generalists covering the whole portfolio.

Is there any way for me to kind of compare from revenue potential wise a 20 to 22 distributors versus your prior direct model, kind of how much how much does it expand the addressable market or how much kind of the dollar revenue potential would it give you down the road when all are fully activated and selling your equipment?

Difficult.

On the spot. No, probably I can -- but however, as we work -- progress through subsequent periods, and of course, as we certainly have touch points with all of you that cover our business, we certainly would be able to start to give better and better color on just that point. .

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

Thank you for the telephone conference questions. We have, please 1 question from the but this 1 is related to the Germany infrastructure package. Did we see any impact in the quarter? How would you characterize the situation or the stimulus money from the German infrastructure package? Is it visibility better, the same or worse than in the beginning of the year.

Well, certainly, better visibility compared to the beginning of the year. Timing-wise, I'd say, too early yet? BUT we do anticipate having nice opportunities in the future, and we're starting to get visibility in the opportunity funnel. .

Great. How about then the supply chain? Do you see any constraints, especially in the hydraulics or electronics, I think this must be related to the Middle East situation.

Ones, a great question and it gives me an opportunity to put the spotlight for a second on our supply chain teams. I think they've done a great job, both in terms of our factories and in collaboration with our sourcing team. So really pleased to share that no impact. Now that picture, of course, looks a lot like the duck on top of the water. But of course, below the surface. There's a lot of activity behind the scenes, both internal the but also in our partner network vis-a-vis our suppliers as well as the logistic shipping companies.

But overall, no negative impact within the quarter. But a lot of organizational bandwidth that's been redirected to make sure that we secure and stabilize the overall supply chain.

Indeed, and the next 1 here is that do we see any potential considering new trade agreements between Europe and South America or then potentially how about India, there is any potential there? Will this lead to high up new equipment production and service units in the medium term, impacting sales year-on-year growth rate in these regions. Any color you could provide?

Yes, we haven't seen yet any impact at this point as a consequence of the new trade agreements. However, I would say that markets such as India are a great example of those that we are constantly pulsing and checking for what's the right opportunity for us to better participate in the market? Is that an import opportunity? Or is it a produced local opportunity? And certainly, I anticipate that a market such as this will play a key and ever increasing ran role in the future of our business.

And I think we have still some more questions from the telephone line. So let's turn back to the moderator.

The next question comes from Michael Doepel from Nordea.

Just very briefly, a question on your service business. I just could talk a bit about how you the environment there and the dynamics there. I mean, where are we currently in the spare part capture rate? And how do you see the kind of the overall growth here going forward?

Yes. Yes. Thanks for the question, Mikael. In terms of the services business, what I would still say is that the Mikko and his team are progressively working towards better and better partnership, training and development of how to, one, make sure that as a result of having new or current activated connected units, that, that gives us great control in over the installed base, which is the first key factor, and that's why that's 1 of the critical KPIs that we we track relentlessly each period. Then that enables to have the dialogue of converting the management of those assets in the installed base. wrapped around ProCare contracts that we do both for direct as well as through indirect. And we know that we have a significantly different outcome of capture rate and revenue per unit on those units that are captured in ProCare.

And the good news is, is that our Net Promoter Score and feedback from the customers are on a significantly higher level as well. So the team is doing a good job getting better and better control of the overall installed base, but it will take time as given the the top line split between what we sell direct versus indirect. The biggest opportunity for us is to continue to increase the share of capture on the indirect sales side. And so a lot of good progress is being made there overall in terms of the capture rate versus what we shared in 2024. We continue to step by step make good improvements sequentially and throughout each period. The limiting factor so far potentially, and this is a bit of opinion assets quite variable, is then around the utilization rates of the equipment, and we have seen a lot of variability through the period where some periods, some geographies is up and some within the same geographies, maybe down and that might have a bit of a factor through -- if I think about the past 2 years.

Moving forward, our expectation is, is that given the age of the installed base, the replacement rate should continue to increase. And at the same time, the level of service events or the frequency of the service event should get slightly increasing as well, which bodes well for our recurring revenue business. So overall, good progress there. When we come back on our next Capital Markets Day, we'll give a lot more color on how we're progressing relative to the 3 KPIs that we shared in '24 as well as the overall capture rate. And I'd say the last comment I would add is, I think I did share in either Q3 or even in February in the Q4 earnings. Our share of recurring revenue is now on quite a good level at around 75%, 76% level.

The next question comes from Tom Skogman from DNB Carnegie.

Yes. I know you have sensors installing or equipment. Can you open up a bit what you see how customers are using the equipment sequentially year-on-year and between different geographies, what can you read about your customers from this? .

We get quite a lot of data-driven insights off of our connected equipment and really pleased by the fact that we are able to provide condition-based monitoring services, so we can see any number of data points from the amount of how they're being utilized, the time under load, the type of loads, whether it's overload, under load, time and idle even if an operator is not buckle the seat belt and attended to some of the basic requirements around safe operations. So a whole host of variables that we're able to see relative to most of the units that we have connected. And then quite pleased to tell you that at least before the end of the year, you'll start to also see quite a nice uptick in connected units in our tailored business as well.

But what do you see in customer activity like in the U.S. where we have this kind of both kind of uncertain demand situation. Do you see positive signs in how customer equipment is used, for instance.

Sorry, now I understand a little better than what you're getting at there, Tom. So in terms of utilization, we see quite a lot of variability. I'd say, overall, we don't see any real negative or positive trends. but some periods, utilization or activity levels are up. And then in the next period, it might be down. So overall, I'd call it quite stable. And I'd say it's a team at roughly applies here in Europe as well. In some periods, it's trending more positive than in another period, it will trend slightly negative.

All right. And then about your M&A pipeline, do you have any targets you would like to share, how many companies you would like to acquire this year or how much utility would like to add in through an M&A in 1 year or a year period or so? .

Yes. I mean I'll stick to my same answer as before. I think that given we're a business configured of 6 divisions and a number of business units. I would love to get to a steady state where we're able to do a bolt-on at least 1 per year per division per business unit. And similarly, if you think about the than the composition of our business, managing 1 or 2 more transformative or, let's say, business unit or division size acquisitions per year would be a great steady state to get to.

But to go from where we are to that steady state, then it's going to take some time as we now are, what, 9 months or so into being able to now action opportunities that we weren't -- we were constrained in action until we completed the demerger. So we'll also share a lot more color on that as we progress towards the next Capital Markets Day.

And when is the next Capital Markets Day?

We haven't set the date yet, but we will share that as soon as we do. .

But for already this year, you plan to have it Yes.

Sense is it's likely to be in '27 Yes. Yes. .

Not yet decided Yes. Yes. .

And perhaps a bit more on this service sales target. You have EUR 700 million as a target I realize this downturn probably was a bit deeper and longer than you expected. But just on a general level, how do you feel about this because, I mean, that will really demand exception of sales CAGR to reach that. .

Yes, you're exactly right, there is that element. If you think about the -- especially on the nonrecurring revenue piece. There is a significant element there of when does the equipment demand recover relative to the way we modeled the demand curve in Q4 '23 when we established the current strategy period. So a lot will be understood depending upon how the balance of this year and the beginning of 27 plays out, of course. .

But of course, 1 should still -- if we think quarter 1 service development, so sales up by 5% with constant currencies. At the same time, we saw in the installation services. So if the installation services, i.e., new equipment sales, then attached with the installation sales would improve, then that would, of course, have had in this quarter, a nice further addition to service service revenues. Yes. .

And then finally, these new U.S. distributors today wish that you would expand your product portfolio to some certain direction. .

I think at this point, too early to tell. They're still in the mode of getting themselves up and running on understanding the the full scope of the portfolio that they're responsible for how to work within our processes and systems and with the support staff that's available to them. But I am confident that as we look forward, they will certainly, and frequently share insights where they see that we have opportunities to fill gaps within the portfolio. But at this point, I'd say it's too early.

The next question comes from Antti Kansanen from SEB.

Just a quick follow-up on the U.S. order side. I mean I just wanted to get a reminder like last year, your Americas orders declined by 14% on a euro basis. But I'm sure that there was, I think, contributor on a positive side. So how much the volumes last year decline? Or how much your pricing was up with the surcharges and all of that during '25.

Surcharge impact, if I recall correctly, was something like between EUR 20 million, EUR 30 million for last year. .

A bit less than EUR 30 million, around EUR 25 million Yes. .

Do you have any view kind of how much the volumes are currently the order volumes are below, let's say, what you booked on '24, which was kind of the previous peak.

You mean in the U.S. .

In the U.S., just trying to kind of think about that if there's a recovery on the market, what is kind of the upside in terms of your order intake, given that your prices are quite much higher now than they were a few years back.

Of course, it's good to remember that the surcharges are something which, I mean, they change all the time as tariffs change. So of course, depends on the tariff landscape, whether 1 can use that as a let's say, permanent price increase or we have communicated to the customers that the tariffs, if the tariffs change, then the surcharge will change, correct?

But all in all, last year roughly that EUR 25 million, let's say, impact in the order intake. It's a bit difficult to -- because -- there are so many different products in the U.S. market. There are the lift loader cranes, truck-mounted for Cliffs. So 1 cannot count those together. It's like calculating apples and bananas together. So from that point of view, it's a bit difficult to say the kind of volume impact .

Sure. I mean, it's a simplification, but it seems like the pricing had a mid-single-digit impact and then that would kind of suggest. Correct. 20% down on volume.

That's the right way to think about it. .

Yes. Overall, it's the biggest impact is coming from the customers' overall demand the pricing having a quite small impact. .

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

Yes. Let's still take a couple of questions from the iPad. So Firstly, on the services. So do we always nowadays of our service agreement when we sell a new piece of equipment. And what is our hit ratio with service agreements with new equipment sales.

A quick answer to that is that's certainly our expectation that it's 1 of our key strengths. And certainly, if I think about the 50 or 60 customer meetings, I have a year -- that's usually the first topic of the conversation is services and the availability of the services proximity to installed base and the high need to secure uptime as most of our customers are understanding that they're paying a premium on the margin in order to secure the service outcomes that they need to keep them going.

So therefore, it's critical for us to offer the services concurrent with the opportunity to sell a new piece of equipment. The hit rate or, let's say, the attachment rate of the service contract varies depending upon region. So I would kind of come back to Mikko's comment earlier, it's a bit -- it's not a great metric if you just aggregate it all together and and say, here's our percentage of attachment because it's much higher in certain areas depending upon how we're configured with our own organization and the personnel that we have, but it varies I'd say overall, I can say that this 1 of the key opportunities for us to continue to not only drive our services business, but more importantly, a key factor for us to increase our Net Promoter Score customer satisfaction.

So the teams are working quite diligently together and with our partners to ensure that we feel like we have all the tools, processes and capability and training in order to not only offer the services, but then most importantly, to execute successfully in delivering against those service contracts.

Then we have -- 2 more questions this. I think these are quite quick ones. The first 1 is on the M&A any preferences in geographical regions. I think you Scott already mentioned that we like EMEA, Americas, our key regions, but we also seek for opportunities in the APAC region. So that was the answer already. And then the final one, which 1 of you remember the numbers, how large proposal is the U.S. out of our Americas sales.

Of course, we provide on an annual basis, the North American sales, but we don't split U.S. separately. But of course, it's a significant share out of the Americas and also on the North American side.

Yes, I don't remember now the exact percentage, but it's I would say U.S. is the majority of the Americas revenues. .

Exactly.

Yes. Yes. A very high percentage

Yes. And of course, for this year, the rest of the Americas is somewhat higher due to the ING acquisition impact. So the Brazil market is proportionately higher than last year.

Okay. That then concludes our Q&A session for the great questions and for the great answers. We will be back with our second quarter results in 22nd of July. So stay tuned. .

Thank you.

Thank you.

Welcome to Hiab's Full Year 2025 Results Call. My name is Aki Vesikallio. I'm from Investor Relations. Today's results will be presented by CEO, Scott Phillips; and CFO, Mikko Puolakka.

As a reminder, please pay attention to the disclaimer in the presentation as we will be making forward-looking statements.

Before handing over to Scott and Mikko, let's take a quick look at the highlights of the year. Market environment was characterized by increased trade tensions and uncertainties and our orders received remained at past 2 years level.

Sales declined by 6%, but we increased our comparable operating profit margin and achieved a new record of 13.7%. Also, our Services business had a record year. Strong cash generation continued, and we acquired ING Cranes, significantly expanding our presence in Brazil.

Let's then view today's agenda. First, Scott will present the group level topics and strategic development. Mikko will go through the reporting segments, financials in more detail and the outlook. After Mikko, Scott will join the stage for key takeaways before the Q&A session.

With that, over to you, Scott.

Thank you, Aki. And good morning, everyone, from my side. So starting first with the demand environment. I'd characterize the full year situation as our orders remaining on a similar level to the prior 2 years. As you can see visually on the left-hand side of the slide, the last 3 years were quite on a similar level, and we've talked about the demand environment that's led to that.

Drawing your attention a bit more to the right-hand side of the slide, going into the numbers. First, starting with comparing quarter versus quarter. Orders received for the quarter last year were EUR 375 million -- or in 2025, EUR 375 million versus prior year of EUR 414 million for a 9% change in actual exchange rates, 6% change in constant currencies.

And for the full year, orders received were EUR 1.48 billion versus prior year EUR 1.509 billion or a 2% change in actual exchange rates and essentially flat in constant currencies. As a consequence, our order book has decreased to EUR 534 million ending 2025 versus EUR 648 million in 2024, so a decrease of EUR 114 million or 18%.

So summarizing the overall environment, relatively stable and on a similar level in constant currencies. The decrease was primarily from our delivery equipment orders in the U.S. in 2025, somewhat offset by increases in our lifting equipment in Europe and APAC and other parts of the Americas and an increase overall in our Services business.

So in summary, our overall order book decreased only in Equipment and not in Services business.

So looking in more detail within the regional perspective, starting on the left-hand side of the slide, our orders received for last year for 2025 were 54% in EMEA, 39% in the Americas and 8% in APAC.

On a quarterly basis, looking into the numbers, that translated into EUR 208 million in fourth quarter in EMEA versus EUR 218 million in the comparable period or a 5% decline. However, for the full year, EMEA order intake was EUR 794 million versus 2024, EUR 736 million or an 8% increase.

In the Americas, however, we saw a decline in fourth quarter to EUR 137 million versus prior year of EUR 164 million or a 16% decline, a bit more acute in the U.S., and I'll provide a bit more color on that in a second. For the full year, total order intake was EUR 572 million in the Americas versus prior year EUR 668 million or 14% decline.

In Asia Pacific, we saw a slight decline in the comparison period on a quarterly basis at EUR 30 million versus EUR 32 million in the prior year, a 5% decline. However, for the full year, we saw a 10% increase to EUR 114 million versus EUR 104 million in the comparison period.

Now summarizing the operating environment. We saw a gradual recovery, if you look at it on a full year basis, in both EMEA and APAC. However, in the U.S., we continue to see soft demand, however, on a relatively stable level if you think about the last 3 quarters.

Now why is that? The first -- the main reason, of course, are the trade tensions that elevated the level of uncertainty in the demand environment, in particular in the U.S. that led to our customers being quite cautious and especially shows up in our results as we are a short-cycle business in both our Equipment and Services.

Now looking into our sales for the full year. As you see on the left-hand side of the slide, we had a decline sequentially from 2024 to EUR 1.556 billion or 6% decline in actual exchange rates, 4% decline in constant currencies. Looking into the quarter, our sales was EUR 396 million versus EUR 412 million or a 4% decline in actual exchange rates, relatively flat in terms of constant currencies.

And our share of services in the quarter was 29%, the same level that it was the prior year. However, for the full year, our services as a percent of sales was 30%, so up 2 percentage points versus the comparison period.

Now in summarizing the overall revenue environment, clearly, our sales in the second half were lower than the first half by 9%. Currencies had an impact on the results by 2 percentage points in the negative direction on a full year basis. And as I mentioned earlier, our share of services sales increased from 28% to 30%.

Now looking more deeply on a regional basis in terms of the sales environment for 2025. EMEA represented 50% of our overall sales; the Americas, 44%; APAC, 7%. And on a quarterly basis, EMEA was EUR 212 million, up 3% in the comparison -- versus comparison period. In the Americas, however, we were down 14% versus comparison period at EUR 154 million. And in APAC, we were up slightly or by 8%, EUR 30 million versus EUR 28 million in the comparison period. And really pleased to report that our Eco portfolio sales as a percentage and in absolute terms increased nicely year-over-year to EUR 135 million or 34% of sales.

And then on a full year basis, on a -- looking at -- starting with the EMEA region. Full year sales were down slightly 2%, EUR 785 million versus EUR 804 million. In the Americas, we were down 10% in revenue, EUR 662 million versus EUR 735 million and in APAC, EUR 110 million versus EUR 108 million or up 1%. Eco portfolio sales for the full year in absolute terms, up to EUR 572 million versus EUR 476 million or 20% positive variance. And on a percentage basis, increased from 29% to 37%.

So summarizing the regional environment. Our Americas sales decline came wholly from the U.S., somewhat offset by growth in other regions or other markets within the region. In EMEA, our sales declined slightly in the full year, but grew towards the end of the year. We started to convert the uptick in the order intake from the first half of the year as we moved into the end of the year last year. Our Asia Pacific sales increased nicely. And then as I mentioned earlier, our Eco portfolio sales increased in our circular solutions, decreased somewhat in our climate solutions.

Now looking into how our sales translated into profitability. As you can see on the visual on the left-hand side of the slide, the slope continues to be nicely positive in the prior 3-year period of time. And that's, of course, despite the fact that we have a lower sales level year-over-year from '24 to '25.

Looking at it into more detail, starting with the quarterly view, our comparable operating profit was EUR 47 million versus the comparison period of EUR 41 million. Mikko will go into more details in terms of what that variance means, but it's a 15% positive variance quarter-over-quarter.

On a full year basis, our comparable operating profit was EUR 213 million versus 2024 EUR 217 million, so a 2% negative variance. But in relative terms, we had a nice 50 basis points improvement from '25 to '24 to 13.7% versus 13.2%, which translated nicely into an improvement in our return on capital employed, looking at it on a last 12-month basis at 30.8% versus 28.2% in the prior year.

So our full year profitability in quarter 4 was burdened significantly by lower U.S. equipment sales. However, it was somewhat offset by looking at it on a total basis, a nice 100 basis points improvement in our gross profit margin. So a nice example of executing on our strategy.

At the same time, as we had communicated previously, we were targeting lower SG&A costs, so that somewhat offset the decline in the top line, all of which translated nicely into improving our return on capital employed, largely driven by a nice reduction in our net working capital that we continue to execute.

Now speaking of how the strategy is developing, I thought I'd transition a bit into how are we doing relative to what we talked about in our Capital Markets Day in 2024. I'll start first with the next step in our evolution of our operating model.

As we've stated earlier, we are quite adamant about driving radical transparency and accountability and operating our business such that we have decision-making and ability to act on behalf of our customers at the point that's closest to impact to our customers.

So the next step in our operating model to drive further transparency, accountability and empowerment is a change that we're making into our organizational structure at the Hiab leadership team level. So we're streamlining our business from 6 to 5 global functions, which we show here.

And similarly, we will then evolve our business operations, organizational design to 3 business areas is what we're proposing, all of which should be effective as of April 1st, pending the outcome of our labor negotiations. And if we're able to move forward on executing this plan, then the way that the organization will look will be organized into 3 business areas, 2 equipment business areas, Lifting Solutions and Delivery Solutions, one led by Magdalena Wojtowicz, our Delivery Solutions led by Hermanni Lyyski. And then Michael Bruninx will continue to lead our Services business as a business area.

Now we're doing this, as I mentioned earlier, as a logical next step, both to simplify our organizational design and enable us to more effectively add additional business units, divisions in the future.

At the same time, it's key to our success in order to shrink the levels of organization from our colleagues within Hiab that impact our customer outcomes on a day-to-day basis, with those that are located in our product management, sales support, R&D organizations to bring those constituents closer together so that we can act and react more effectively on behalf of our customers, either addressing day-to-day problems and opportunities or allowing seamless communication, being able to understand more deeply our customers' applications and translating those insights into the next-generation solutions.

By aligning our sales end-to-end with our business areas, we think that will significantly drive further accountability to the overall result in terms of customer experience, financial outcomes and our own employee experience.

And as I mentioned earlier, we think this organizational design will allow us to be much more agile and adapt to changes in our business in the future. So we think this is a key enabler to continue to drive the successful execution of our strategy and ensure long-term success.

Now just to give you a bit of color on the cost savings program that we announced previously with our Q3 results. As previously communicated, we target approximately EUR 20 million of cost savings within the year, coming primarily from 2 vectors. On the one hand, the most significant piece of the cost savings that we are targeting will be personnel-related costs. Unfortunately, as a consequence, that could result in as many as 480 roles reduction globally. And then at the same time, we have a number of nonpersonnel-related activities that we plan to undertake, that will also deliver cost savings according to our plan.

All told, we estimate that our planned one-off cost would be approximately EUR 30 million. This will be reflected in items affecting comparability and of course, certainly subject to change as we complete the negotiation and the planning process and move into implementation.

Concurrent with this action is a next step in executing on our supply chain strategy. So we announced that we would plan to change our -- the ZEPRO tail lift assembly. The change would involve reducing and closing the operation in Bispgarden, Sweden, transferring the work to our facility in Stargard, Poland.

And the rationale here is pretty straightforward. We hope that we can improve efficiency, better leverage the facility that we have in Stargard, help ensure and secure competitiveness of the brand by reducing our bill of material cost, which should be a key enabler to driving future growth within this important brand within our overall Hiab portfolio.

So we think these are necessary actions, both in terms of executing the strategy as well as reacting to the declining order book, as we previously communicated the rationale, to continue to reinforce and build our credibility on delivering a good track record of results and continue to focus on value creation despite the level of -- despite the top line development.

Now looking further into a few additional insights on how our strategy execution is going. I'll start first with on the left-hand side. Really proud to announce that we've recently signed 2 new dealers in the U.S. in line with our strategy we communicated in '24.

So recently, we announced that we had closed and signed agreements with MGX, a subsidiary of Manitowoc as well as Custom Truck One Source. Now this brings us up to 16 new dealers that we've signed since we first announced this piece of the strategy in terms of growth in North America. And this brings us quite close to having now full coverage in the U.S., especially for our Hiab loader crane business, and we're inching closer in getting full coverage as well in our critical delivery solution businesses as well.

So really pleased with this development, proud of the work that the team has done on behalf of achieving this critical objective in our strategy, both in the U.S. as well as here in Europe.

The second piece that I'd like -- I'm very proud to report is that we now have achieved a critical milestone. We're over 25,000 service contracts. As you'll recall, in 2024, we communicated we were targeting to be above 50,000 by the end of 2028. So we're nicely on track. And this is a critical element for us in order to ensure that we can continue to drive improvements in terms of our capture rates. And that's critical to our parts and other recurring revenue business within our Services business area to be.

At the same time, we also talked about another key data point. We were targeting to be above 90,000 units connected by the end of 2028, and we're now on a level of 56,000 units connected. So well on track on those 2 critical elements of the service growth strategy.

And then finally, on this particular slide, I'll end on highlighting that we did complete a strategic acquisition of ING in Brazil. This is critical to our growth in the Americas strategy as well as giving us increased coverage and penetration in one of our key segments that we called out as part of the strategy as well, and that was our Construction segment.

So the combination of ING and ARGOS, we think, positions us quite nicely as complementary portfolios and will enable and catalyze significant growth in that part of the world. So a big warm welcome to all of our new colleagues from ING to Hiab.

Now just closing and recapping on our strategy. Proud of the work that the team is doing in terms of executing on the strategy. We remain keenly focused on our step-by-step approach to ensure that we are in leading niche attractive end market segments that are quite nicely aligned to essential industries that we learned about during the time of COVID.

We seek to be #1 or 2 in each of those exposures in order that we can set the tone in terms of technological superiority and deliver through that and backed up with a second to none service offering, then we know that's critical to delivering the best customer experience in the industry.

We talked about how we intended to grow faster than the market. There were 3 critical pieces to the strategy. One was we had 4 targeted segments that we seek to grow in, and we're progressing nicely in 2 or arguably 3 out of the 4 segments. We've yet to see the tailwind coming through in construction, but we continue to take steps in order to expand our share into the Construction segment.

We talked about growing in North America, in particular, through increasing our coverage geographically. And so as I mentioned earlier, we're now up to 16 new dealers that we've onboarded towards that end. And of course, critical to our success as well as our customers' success is growing our Services business.

Now at the same time, we also talked about how we would improve profitability, which you see coming through in the results of improved profitability versus declining top line. And so we've talked quite a lot about improving our efficiency through higher business excellence and ensuring that we continue to execute through our decentralized operating model for the reasons that I gave earlier.

And then finally, it's important to note that all of which is designed to help enable that we have sustainable industry-leading value creation across the business cycles. And the team is progressing quite nicely according to that plan.

Now what does that look like in terms of the numbers? We are behind in terms of our progress on delivering 7% across the cycle as we're at 5.5% now after the latest quarter. We're right on schedule or slightly ahead even in terms of delivering 16% at 13.7% in the last 12 months. Similarly, we remain nicely ahead of schedule in terms of our return on capital employed as we remain above 25% as we have at last 12 months of 30.8%.

So with that, I'll turn it over to Mikko.

Thank you, Scott, and good morning, ladies and gentlemen, also from my side. Let's first have a look on the Equipment segment's performance in quarter 4. Equipment segment's financial performance was quite uneven between the lifting and delivery equipment in quarter 4. Order intake totaled EUR 258 million. This was minus 13% year-on-year. But if we clean the currency impact, so 10% down in constant currencies.

Delivery equipment orders declined, especially in Americas, while then the lifting equipment orders were actually flat year-on-year. So actually quite nice development there, very much also supported by the European market area.

On a full year basis, the orders decline came solely from Americas. We start in equipment business the year 2022 -- 2026 with EUR 140 million lower order book. And to compensate this, we plan to reduce cost by EUR 20 million this year, as Scott described earlier.

Equipment sales was EUR 280 million in quarter 4. This is a decline of 5% from previous year or again, minus 2% in constant currencies if we clean the -- especially the U.S. dollar weakening.

In quarter 4 and on a full year basis, the Equipment segment comparable operating profit was negatively impacted by the lower sales, especially in the short-cycle delivery equipment and as mentioned earlier, especially in the U.S. market.

Sales in the U.S. was EUR 25 million lower in quarter 4 than in the comparison period. And this had roughly a EUR 10 million negative impact in the Equipment segment profitability in quarter 4.

We had some nonrecurring costs in the operative results, EUR 3 million in quarter 4 and EUR 10 million for full year. And without this, the comparable operating profit would be 13.4% in quarter 4 and 13.8% for full year.

Equipment segment's profitability, as I mentioned earlier, was negatively impacted by the lower sales in the U.S., and this was partially offset by fixed cost reductions based on that cost savings program which we announced 1 year ago.

Lower volumes impacted also the gross profit margin as certain factory overheads do not scale 100% with the volumes. We had a EUR 1 million negative impact from FX translation effects mainly due to weaker U.S. dollar, also as mentioned earlier.

And then we had a positive impact coming from basically 2 elements. Firstly, in quarter 4 2024, we had EUR 15 million costs, mainly related to the restructuring of our Italian operations. And then secondly, our SG&A costs were lower in the Equipment segment due to the cost savings program, which has been -- which has started in 2024.

So on like-to-like basis, without the previously mentioned nonrecurring costs in quarter 4 2025, the comparable operating profit was 13.4%, so on the same level as in 2024 despite a 5% decline in sales.

Then on Services. So Services continued to grow, very much supported by growing the number of connected equipment and service contracts, like Scott highlighted earlier. The weaker U.S. dollar had a significant impact on our Services top line. In constant currencies, Services quarter 4 orders would have been EUR 122 million, so up by 4%. And on full year basis, the orders would have been in constant currencies EUR 479 million, up by 7%.

We have seen good growth in recurring services like spare parts and maintenance services, while then the installation services declined due to the lower new equipment sales, as you have been -- have seen in the previous pages.

Services quarter 4 profitability was impacted by low installation services volumes and a EUR 1 million booking, kind of nonrecurring booking to cover the deficit in our self-funded healthcare system in the U.S.

On a full year basis, there has been a good development in services profitability, mainly supported by the recurring services growth. And on full year basis, Services delivered a record high EUR 109 million comparable operating profit, and this is 23.2% margin. So nice progress in Services.

When we look at the Services profitability bridge, sales in constant currencies contributed positively to profitability. So kind of service volumes were developing well. As mentioned earlier, the recurring services had a positive impact on the growth, while installation services declined.

Lower installation services had also a negative impact on gross profit margin because, for example, rents for the installation workshops are fixed. FX translation had a negative impact on Services profitability and as mentioned earlier, stemming very much from the weaker U.S. dollar.

And as mentioned earlier, we booked EUR 1 million to cover the U.S. healthcare deficit program. And here, basically in the picture, it's illustrated in the other bar on the right side of the bridge. So without this EUR 1 million, Services profitability would have been 22% in quarter 4.

Next, let's have a look on Hiab's total financials. So Hiab's quarter 4 comparable operating profit improved EUR 6 million from the comparison period despite the 4% decline in sales. Main contribution came from not having similar kind of EUR 15 million nonrecurring costs, which they were in quarter 4 2024. Here, those nonrecurring costs are pictured in the other bar on the right-hand side of the bridge.

We have had a negative gross profit impact coming from the lower sales in the U.S., as mentioned earlier. And luckily, this has been partially also offset by growing revenues in EMEA and APAC, as also illustrated earlier.

Our quarter 4 operating profit included EUR 5 million items affecting comparability, and these are mainly related to the planning of the EUR 20 million restructuring program for this year.

The tax rate for the full year was developing favorably. It was 25% versus 27% in 2024. And our net profit was EUR 33 million for quarter 4 and then EUR 151 million for full year.

Our cash generation continued on a good level also in quarter 4, amounting to EUR 56 million. EBITA contributed EUR 53 million to cash flow. And then we released EUR 27 million from inventory in quarter 4, while on the other hand, the accounts receivables increased from quarter 3 due to higher invoicing in the latter part of the year. Full year cash flow from operations was EUR 308 million. So really strong performance from the whole organization.

Hiab has a very, very strong balance sheet to support the strategic priorities like organic and inorganic growth. Our net cash declined from quarter 3. Here, basically, the main driver is the EUR 100 million additional dividend, which was paid in October 2025. ING acquisition did not impact the net cash position as the transaction was closed in January 2026.

On the debt side, we have basically one major bond, EUR 150 million, that's maturing in November 2026. And basically, the rest of our interest-bearing liabilities are mostly IFRS 16 lease liabilities.

Hiab's Board of Directors is proposing a 50% dividend payout for the Annual General Meeting in March according basically to the maximum of our dividend policy. This dividend proposal would be EUR 1.17 per B share and the total dividend payout would be EUR 75 million. Dividend payment date would be April 2, 2026.

We have provided an outlook for 2026, and this outlook is basically based on few key assumptions. And let me elaborate some of those. As Scott indicated earlier, there has been gradual recovery in EMEA and in APAC. However, the U.S. demand is still uncertain. That has remained stable during the last 3 quarters.

Trade tensions are still expected to cause uncertainty around customers' investment decisions. Our last 12 months rolling order intake has been on EUR 1.5 billion level, and we start the year 2026 with EUR 114 million lower order book compared to 2025.

Our outlook incorporates the planned earlier mentioned EUR 20 million cost savings for 2026. This would be visible mainly in the reporting segments and then mostly visible in the second half of 2026.

For group administration also from -- for the outlook purposes, full year 2025 is a good base level for modeling. In addition, we are doing certain system development to simplify our processes and further improve our cost efficiency. And this will increase the group administration cost level by roughly EUR 5 million in 2026, mainly skewed towards the second half.

So based on these assumptions, we estimate that the 2026 comparable operating profit margin exceeds 13%. And as in previous years, this is the floor level.

And then, I would like to hand the presentation back to Scott for the summary and final remarks.

Thank you, Mikko. All right. Managed to get this to go the right direction one more time. So thank you very much, Mikko, again, and I'd like to leave you with 5 key takeaways.

One, thinking through the demand environment, we have seen a gradual recovery if we look at broadly the full year 2025 in both EMEA and APAC, especially positively impacting our lifting equipment business. However, we do see a continued tough environment in the U.S. for our delivery equipment. And as I mentioned earlier, we've seen it quite stable in the prior 3 quarters. So we'd like to think that, that's at a trough level.

Number two, despite the decline in sales, we reached a record high comparable operating profit margin. So a nice example of the impact that we're creating through executing on the strategy.

Similarly, key takeaway number three is that we're targeting to lower our cost level by approximately EUR 20 million in 2026 compared to 2025, which Mikko just elaborated.

Number four, we continue to execute on the strategy, as I've mentioned a few times previously, with a focus on both growth opportunities, but at the same time how we increase our relative value creation potential and all of which should lead to our aim to continue to have an extremely strong balance sheet with excellent cash flow.

So with that, I think I'll turn it over to you, Aki.

Thank you, Scott. Thank you, Mikko. With that, operator, we are ready for the Q&A session.

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

It's Antti from SEB. A couple of questions from me. I'll start with the comments on the U.S. demand, which you are talking about an uncertain environment, but at the same time, not expecting any incremental weakness anymore. So could you maybe open up a little bit on those comments in a sense that have you seen something start of, let's say, '26 in the first couple of months that would indicate that your own business has stabilized? Is this more comment on what you are looking at the leading indicators and the overall macroenvironment on -- especially on the U.S. delivery side?

Yes. How about I start with that. Thank you, Antti. In terms of the U.S. side, to elaborate more broadly, we really see that the same factors that have led to the demand environment, especially that we saw in the latter part of Q1 last year and then, of course, through Q2, 3 and 4 should continue into 2026. So we aren't at this point seeing any variables that would lead us to believe that the environment gets more, let's say, unstable or an imminent additional risk. So we feel like we have pretty good visibility in terms of the risk.

The environment, at least at this point, continues to be quite similar as it was in '25 and also somewhat similar to the prior year period as well in terms of we still see more robust demand from our larger key account customers. So a good portion of the business is still driven by bigger, more lumpy key account orders, which accounts for a bit of the negative variance if you think about Q4 '25 versus Q4 of '24.

So on the other hand, we still see pretty significant pressure on our small and medium-sized customers who are, to the extent possible, delaying decision-making with the environment at hand that it's hard to understand the level of cost out into the future that they'll actually experience relative to the environment that they'll experience when they take possession of the equipment. So we do still continue to see with small and medium-sized customers softer demand through delayed decision-making.

Yes. Just maybe a reminder on how the start of '25, let's say, Q1, Q2 and especially on the smaller clients in the U.S. Is this kind of a tough comparison if we think about the run rate that you're now entering this year versus what it was 1 year ago?

Yes. I'll answer it this way, and hopefully, I hit the point you're getting to, Antti. If you think about the Q4 '24, we had a rather large key account order that hit our order intake in Q4 that we didn't match in the comparison period in '25 and Q4. We had a couple of nice sized key account orders in '25, but not at the magnitude that we had in '24, which accounted for primarily the variance, especially in the U.S. market that you're mentioning.

Now if you think about the beginning of '25, the demand environment from the U.S. did give early indications that it might uptick if -- as we examine more closely the development sequentially throughout the year of order intake and particularly in the U.S. But of course, once the trade tensions manifested themselves, then, of course, we've seen a pretty consistent level of demand as a consequence from that point forward. And we still see that carrying forward into '26 at this point.

All right. And then a couple of more, let's say, housekeeping related profitability questions. First is on the service profitability and understand the EUR 1 million negative impact that you point out. But the margin trend is still a little bit different than what we saw on second and third quarter on the top line, that's not really that much different. So is there something more in play? Just trying to get my estimates right for this year. Is that kind of the '24, '25 margin level a bit too challenging for current environment? Or how should we think about that?

Yes. Thanks for the question. So basically, quarter 4 service profitability without this EUR 1 million, U.S. healthcare deficit coverage was 22%. And this is lower than, for example, as you indicated, lower than quarter 1, 2 or 3. And here, basically, the other underlying reason is the lower installation volumes what we have had in Services throughout 2025. And this is due to the fact that the Equipment order book has declined and the equipment volumes have been lower. So there has been less installation volumes during quarter 4.

There are certain kind of fixed costs like rents for the installation workshops, and this has lowered the services profitability. That's basically the -- those are the underlying reasons.

So the installation volumes that impact service profitability dropped in Q4 versus the previous 2 quarters?

Yes. And also compared to quarter 4 2024.

Okay. And then the last one was on something that you said on the group admin side, I mean, EUR 11 million for the quarter, if I remember now, a bit higher than what it has been. Is this a number that then you will further increase by, what was it, EUR 5 million annually going into this year?

There are certain fluctuations, quarterly fluctuations in the group admin costs. So that should not necessarily be used as a run rate. But if you think the full year 2025 and what I indicated in the outlook that on top of that we anticipate to have roughly EUR 5 million related to the systems development, which is then expected to generate cost savings in the later -- kind of in the later years once the system landscape has been simplified.

The next question comes from Panu Laitinmaki from Danske Bank.

I have a few. I will start with the U.S. market outlook, going back to the previous discussion. What do you think is the underlying reason causing the uncertainty? Is it that your product prices have increased and the customers are kind of -- they need to digest that? Or is it just the uncertainty around like what happens with the tariffs next?

Yes, thanks for the question. Just to clarify a bit, we still see the hangover from a couple of years prior where we still have a bit of the inflationary environment that we inherited from the COVID situation, followed by the increase in interest rates. Then, of course, the new variable that entered the equation last year was then the changing trade environment as a result of changes in tariff regime. So where we see a slight difference that I hadn't articulated earlier is we do see that more acutely impacting our, let's say, retail last mile type customers.

So broadly speaking, we see it impacting still similarly in our building construction supplies, waste and recycling, construction logistics. But where we do see a difference here is in our retail last mile customers, if you're looking for a bit of what changed kind of sequentially through the year in 2025 and certainly more so in the second half of the year. Now that both impacted the top line and as Mikko articulated earlier, also created a situation where we weren't quite able to keep up with cost out relative to the change in the top line. So we had a bit of trapped or under-absorbed costs that we'll attend to throughout this year, if you will, as part of our cost savings.

But that mainly are the underlying factors there. So you still have the inflationary environment, the additional variable trade tensions, where we do see a bit of change in behavior who, based on the changes in demand was most impacted were the retail last mile customers.

Okay. Then on the market outlook in Europe, could you talk about like what are you seeing there? And how are the different segments performing, especially interested on defense and construction?

Yes. Yes, we certainly saw in Europe a nice or, let's say, a steady pickup in our Logistics segment, which shows up in part of our lifting solutions. We still see a relatively stable construction environment. So we're yet to see real evidence of, let's say, a sustained uptick in the demand curve, but we have seen some green shoots there where we've perhaps -- well, we picked up our sales. Whether it's an issue of gaining market share or not, we're not sure. I'd say more broadly, in some geographies we're up, some down. So on balance, we're saying we're relatively stable in terms of the overall market shares in that segment.

At the same time, of course, we're seeing a pickup in defense logistics. However, it's important to note that, that's one area of our business where you'll tend to see a large spread in from taking the order or having order received versus the revenue recognition. Often, those contracts are multiyear contracts to be delivered over a longer time series. So then the time between order received and rev rec might be long-ish. So there'll be a bit of a spread between our order intake development versus seeing that in revenue side, keep that in mind, and some of which will be dependent upon our partners in the transaction and how they choose to fulfill the orders that they have to the various military organizations that they provide those solutions to.

And then in terms of services, similar story more broadly speaking, we continue to see a nice steady uptick in both order intake as well as services, primarily -- or in revenue rather, and then primarily driven by the execution of the strategy, as I had mentioned earlier in the presentation. We see the nice uptick in our ProCare contract coverage. It's working nicely for both our dealers as well as executing in terms of the direct sales. And we have more to come there.

Similarly, we see a nice uptick in connected units that are turned on, and now we're able to engage more meaningfully with our customers on an ongoing basis relative to how the installed base is performing. But then at the same time, it also gives us a unique opportunity to engage with them in terms of the actual cost and productivity and safety outcomes that they're experiencing. And that's translating into better services revenue uptake as well.

All right. Then my final question is on the guidance, or actually 2 things around the guidance. First one is that can you comment if the more than 13% margin is a guidance for each of the quarters this year? So will it be higher than 13% every quarter? And then more importantly, what are the kind of swing factors in the guidance? You said that it's a floor, and I get that it's quite early in the year, so it's probably conservative. But what are the kind of positives that could drive margin higher than the floor level? And any comments around those?

Yes. Thanks for the excellent question. As I mentioned in the kind of background of the outlook, we have incorporated the EUR 20 million cost savings in that outlook. And based on the labor union or labor works council negotiations, we anticipate that the new organization could come into force in quarter 2. So that means that mostly those savings would be visible in the second half of 2026. So from that point of view, I would say that one can't say that it's every quarter above 13%. This is a full year outlook, and we aim at being above that 13%.

The next question comes from Andreas Koski from BNP Paribas.

A number of questions from me as well. So if I can start with the backlog development. You now have a backlog that is 18% lower compared to 1 year ago. And I wonder how will this impact sales in 2026 compared to 2025, i.e., is there a lower absolute amount from the backlog that will be delivered in '26 compared to what we saw in '25?

Yes. I'd say that -- Andreas, thanks for the question. So I'd say the right way to think about the backlog and then how we are thinking about the sales realization in '26 is as follows. So on the one hand, if I come back to the prior question from Panu, the lower order book by EUR 114 million means that we have been that much less visibility to our revenue curve into '26. So that's an influencing factor in terms of where we set the floor. Having said that, we've set the floor 100 basis points higher than we did in each of the prior 2 years.

On the other hand, then what I would say is the right way to think about the revenue recognition for '26 is a bit more a factor of looking at the trailing last 12 months order intake. And then as we've indicated, we're at or about the EUR 1.5 billion range. So that's for us the right starting point of how we think about the potential for this year and then how it relates into setting the outlook for '26. But at this point, we don't give the outlook relative to the top line development, primarily because we have -- we're a short-cycle business, so we have this 4 to 5 months' worth of visibility into our revenue curve with where our order book stands, which is quite at a normal level now.

Understood. And is it fair to say that, it sounds like you expect the recovery to continue in EMEA and APAC, and you are now saying that the U.S. market is at trough. So in total, it sounds like you expect total orders to move upwards from the stable level that we have now seen for a number of years? Is that the correct reading of what you're saying?

Well, what we're saying is that we are -- if you look at the trends throughout '25, we see a nice recovery in EMEA and APAC. But of course, if you think back to Q4, for example, so Q4 compared to the comparison period, we had a negative variance, whereas we had positive variance for the entire year. So there is still a bit of variability, which is also part of why we're at this point not providing guidance on order intake or revenue for the year. And at the same time, we see that if the environment in the U.S. continues as it was in '25, then we would expect for the demand environment to look similar to what it did in '25 at this point.

Okay. Understood. And then on the 16 new dealers that you have signed since the beginning of 2024, are most of them at full speed now? And do you see that you are performing better than the market because of these new dealer agreements?

Yes. Excellent question. And I would say, broadly speaking, not yet. Many of the dealers that we've onboarded have been into the latter half of '24 and then throughout '25. So we're, let's say, sequencing the onboarding of the dealers, which, of course, is quite a nice and involved process in terms of getting them up to speed on our offering, getting the systems behind the support and then at the same time, getting everyone in both the dealers as well as on our side up and mobilized in order to help ensure and secure that our dealers are able to deliver on behalf of today's and tomorrow's customers. So we're at varying stages of mobilizing the dealers. So I would say, broadly speaking, no, all 16 dealers aren't at full speed yet, but some of which are and we're over time getting all of the dealers up to speed. And then we would anticipate to continue to add additional dealers as we progress through '26.

Understood. And then quickly on the balance sheet. Is the Board considering any more extraordinary dividends in the years to come? Or is the priority now to do acquisitions and grow organically?

Well, I'd say that we have a full mandate to leverage the balance sheet to catalyze growth, both organically and inorganically and continue to explore ways in which we would successfully deliver value creation back to our shareholders.

The next question comes from Tom Skogman from DNB Carnegie. [Audio Gap] [Operator Instructions]

The next question comes from Mikael Doepel from Nordea.

This is Mikael Doepel from Nordea. So a couple of questions from my side. First of all, how big part of your total revenues or orders was the defense business in 2025?

Yes. On an order basis, our defense for full year '25 is approximately 7%, so a little bit up from 24%.

Okay. That's very clear. And then secondly, if you look at 2026, I mean, I understand that you have your cost [indiscernible]. But if you look at the underlying trends in costs, how do you see that developing in terms of material costs, in terms of labor costs? And also, are you still adjusting pricing upward [ or downwards ]? Just a bit on the price-cost equation?

Yes. So in terms of material cost, there -- we still have in our execution plans specific actions that are both process related as well as design related that we think on balance are going to provide favorable variance in terms of our bill of material cost. Labor cost, of course, we have the statutory increases that we assume will come. We don't yet have visibility in terms of what the magnitude of that impact will be, which we're taking into consideration relative to our cost savings program.

And then in terms of our pricing environment, as always, we -- there are certain products that we surely are seeking additional pricing for, which we've already announced, both in terms of equipment as well as the services side of the business. And there may be a number of SKUs where we go into this year with flat pricing. It all depends on the market list pricing, which is the nature of the environment in which we compete in.

Okay. No, that is clear. And then just related to pricing, just a brief follow-up. So do you see -- I mean, in terms of tariffs, would you say that you are still fully able to compensate on that? Or is that having -- or do you expect that to have some sort of impact on your margin in 2026?

Yes. Broadly speaking, the answer is yes. And of course, there are always -- there's always variance around timing, Mikael. But broadly speaking, so far, yes.

All in all, as discussed earlier, basically, our principle has been to treat the tariff as a cost element. So we pass that cost to our customers. We don't put the profit margin on the tariff. And basically, in last year the tariffs had roughly EUR 20 million impact kind of tailwind to our order intake and then roughly EUR 15 million in sales.

Related to pricing we have also one question from the webcast. So our customers pushing back more on pricing compared to prior periods now?

I'd say, as always, our customers are seeking for the best possible price. So -- and we have great customers, so we have tough negotiators. But I wouldn't say that it's a different level of environment as compared to what we're normally seeing. So it's our obligation to offer the best possible price.

The next question comes from Antti Kansanen from SEB.

Maybe you already answered on the previous one, but I was just wanting to ask how much of that kind of 0% organic order growth in '25 was pricing? I mean you said that tariffs had a EUR 20 million impact, but how about price increases otherwise?

Yes. In -- I would say that in our Equipment business globally without the tariffs and in Europe and in Americas, I would say that the pricing has been fairly flat in 2025 compared to 2024. In Services we have done certain low single-digit price increases, mainly to reflect, for example, topics like labor inflation. And then as mentioned earlier, we have implemented in the U.S. since the inflection of the tariffs then the tariff surcharge. But it's not in the price list, but it's a separate kind of cost item in the customer invoice.

And this is kind of positive or neutral versus kind of cost increases that you have accrued?

I would say neutral. Yes.

Okay. And then, I mean, I understand that there's no sales guidance, but I'll try anyways, because you mentioned that kind of the 12-month rolling order intake, a good starting point, around EUR 1.5 billion, that's also the Q4 run rate we are right now. Then you'll add EUR 50 million plus from the Brazilian acquisition and then you are kind of seeing European market recovering, U.S. market not coming down. So if I then add that scenario, that would be a growing top line and maybe together with the savings also growing earnings. Is there something that I'm misunderstanding here or being too optimistic?

So one topic to consider is that we had still in -- if you look at the run rate for the revenues, we had more than EUR 400 million revenues in the first and second quarter of 2025. And that was still coming from the -- a bit higher kind of order intake run rate from 2024 and the backlog as well. So perhaps looking the kind of second half -- well, like I said, the rolling 12 months is the indicator what we are using for kind of sizing our costs and planning the operational activities.

Sure. And then the ING acquisition, is there anything you want to point out on how much margin dilutive that would be on the Equipment business, if anything? Or is there some kind of cost saving synergies that would already impact this year's numbers?

There is a certain PPA impact. I would say that on an EBITA level, it would be fairly stable as an Equipment business. But then on an EBIT level, there is a certain PPA element, which we will then open as we proceed in 2026 reporting.

The next question comes from Tom Skogman from DNB Carnegie.

I would just like to start by asking, do you have expectations for larger defense orders in '26? I guess these are projects that are discussed for a long time. What do you know?

Yes, I'll start there and please chip in, Mikko, if I miss something here. But the backlog is pretty robust and exactly as you described, Tom, we've pretty fairly well known and understood. As we have discussed maybe since late '24, however, we have seen a number of, let's say, shorter cycle opportunities that have popped up. And that's maybe one of the key differences that we've seen in the demand environment with defense logistics.

So whilst we have a view today in terms of what the value of the backlog is and what each individual opportunity is, it could easily be so that there are new opportunities that present themselves throughout the year that we didn't foresee as we speak right now. So that's probably the one change. In terms of the expectation of how we'll convert that this year, extremely hard to call as those orders are frustrating at best to dial in as part of a forecast. I'll put it that way.

But overall, I would say that the funnel looks good for the defense business.

Yes.

But the timing is...

Timing is really difficult to call. Yes.

Okay. And then on your Service business, how large share of sales in 2025 related to installation of new equipment?

Yes, you can think of it this way. Our nonrecurring revenue for 2025 was around 24%, 25%, which is linked to our new equipment sales. Installation specifically slightly down probably from the last time that I think we had this conversation, so between 10% and 15%.

Okay. And then what about the utilization rates of your equipment? I didn't see any slide on that when you have your sensors. Is it still the situation in the U.S. that equipment is used a lot, but they don't order?

Yes. We've seen a lot of change in variability in the utilization. Some periods have been up, some down, also changes as it relates to equipment in Europe versus equipment in the Americas. So on balance, fairly stable as it related to the prior year period. But to your point, Tom, it's -- we're still in this environment where our customers are sweating the assets. That's no question about that.

And then when you get new distributors, is it so that they start by building up an inventory? Or do you need to ship kind of things just to display to them? Or how does it usually work now when you get this kind of larger new distribution contracts?

It depends on the nature of the equipment. Some equipment is advantageous for the distributors to have inventory of other equipment. It's not necessary based on our lead times. So it all depends on the focus of the particular dealer. Not so insightful if I make a broad statement of some dealers will build up a bit of inventory because they're going to focus more on longer cycle business or longer lead time businesses versus others that will have, let's say, relatively short-cycle equipment.

Having said that, an example where that's a bit counterintuitive is the tail lifts would be a great example where we have distributors in Europe that do maintain a level of inventory because of the need for less than 1 day fulfillment, both in terms of the tail lift as well as the parts that are associated with the tail lift. So it all depends.

Yes. But the U.S. distributors do not really have inventories of cranes for it?

Correct.

And then the EUR 10 million cost saving, how is it split between OpEx and SG&A cost?

Part of the -- Part of these cost savings come -- we have not specified how much comes to the SG&A cost. Part of that will be visible also above gross profit. But overall EUR 20 million savings in '26 versus the 2025 cost level. Yes.

Yes. And just a bit more color. If you think about it compared to '25, then we anticipate a bit more shift towards the below gross profit level cost savings. But at this point, too early to say as we need to complete the labor negotiations process first. Then we can provide a bit more color on that as we progress through the year, Tom.

And then finally, with the current FX rates and especially the dollar rate, how big impact do you expect it to have on EBIT after all hedges and everything basically?

Well, I would say that if we would take, say, 10% weakening of the U.S. dollar from the, let's say, average second half of U.S.-euro rate, that would -- that 10% would mean roughly EUR 8 million decline in comparable operating profit.

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

Okay. Thank you for the good questions and for the presentation and answer for Mikko and Scott. We will be back on 24th of April with our first quarter results, 2026. Thank you.

Thank you, everybody.

Okay. I think clock is now 1:00 here in Helsinki, so I can welcome you to Hiab's pre-silent call ahead of our fourth quarter results. Still some people joining, so I'm letting them in.

So we will start having a presentation by Mikko Puolakka, recapping the third quarter results and any notable releases during the fourth quarter. After that one, we will have a Q&A session. [Operator Instructions]. Just to note that this call is recorded and will be then later available on Hiab's website.

So with that, over to you, Mikko.

Thank you, Aki, and happy New Year also from my side. So a quick recap on our quarter 3 results, then a couple of words about the releases and the developments, what we have seen during quarter 4, and then, like Aki said, questions-and-answers section.

About quarter 3. So our order intake was EUR 351 million. That was down by 3% year-on-year. And based on the first 9 months performance, our order intake was more or less flat compared to the previous year. So this was now the 3rd -- 12th consecutive quarter in a row when our order intake has been fairly flat. Our last 12 months order intake has been roughly on the level of EUR 1.5 billion. And primarily the order, kind of, intake headwind we have seen, the Americas region, especially in the U.S. area. While in Europe, we have seen some improvement in the overall market and also in a couple of seg end markets like defense logistics and the wind segment orders what we have announced also earlier in 2025.

When we look geographically, the first 9 months EMEA has been up by 13%. Americas down by 14%, very much driven by the tariff-related uncertainties, especially smaller customers withholding their investment decisions, while some kind of bigger home improvement customers have been still quite nicely placing orders. On a positive side, there has been a positive momentum in defense logistics. We have a very good pipeline in that area, of course, the deals typically -- kind of, the revenue we recognized from the defense logistics orders, typically, over multiple years. And then the energy segment, like mentioned already earlier.

All in all, there is a robust replacement demand both in EMEA, but also in Americas, like I said, in the U.S., especially the larger kind of home improvement customers have been renewing their fleet. But on the kind of minus side, trade tensions in the U.S., those have increased the customers' uncertainty, and that's why we have seen, especially in the smaller customers in the U.S., quite cautious ordering activity.

Our sales decreased in quarter 3 due to the lower order book. Sales were basically on the same level what we had the order intake in quarter 3. Currencies, in currencies, we had, in quarter 3, roughly 2 percentage points negative impact. And if we look at the year-to-date 9 months sales, that's down by 6%, primarily coming from the U.S. market, that lower order intake, especially in the early part of the year.

Americas' sales was down by 9% during the first 9 months. EMEA was down by 4%. APAC sales grew slightly in quarter 3, but year-to-date, September, more or less flat on year-on-year basis. We have had a good development in the Eco portfolio sales, especially in the circular solutions and climate solutions. So year-to-date, 38% of the total sales.

If we look at our comparable operating profit, so especially in quarter 3, our comparable operating profit was negatively impacted by the lower U.S. equipment sales. That impact was approximately EUR 20 million in our comparable operating profit. Gross profit margin decreased by 80 basis points, also very much coming from the U.S., kind of, lower utilization. SG&A costs, we have been able to reduce year-on-year, but that's not necessarily enough to compensate quite sizable decline in the U.S. equipment sales. And that's why we have also announced in connection of quarter 3, the EUR 20 million cost savings program in order to protect the profitability in 2026 if this kind of market activity would continue in the coming quarters.

Key takeaways from quarter 3. So overall, the market uncertainty has continued. Overall, we have not seen any dramatic changes compared to the previous quarters. So gradual improvement in EMEA, while in Americas, especially in the U.S., the customers' decisions have been impacted by the tariff situation. Despite the market situation, we have been able to improve our comparable operating profit if we look at the rolling 12 months performance. And as mentioned, we have started the planning for the EUR 20 million cost savings program. And this would be EUR 20 million lower costs compared to the 2025 level.

Nothing has been changed in our strategy. So even despite the current tariff situation in the U.S., we see that the U.S. market is able to offer us good growth opportunities in the future by addressing those white spaces, what we have, for example, in the Central and Western part of the U.S. Also services and the focus on 4 key growth segments have still been intact in our strategy. So overall, no changes in our strategy.

Despite the lower top line, our cash flow has been very strong in the first 9 months, and our balance sheet is also very strong, offering, for example, in quarter 3, if we would look the quarter 3 balance sheet, that would offer us roughly EUR 800 million M&A firepower. And with that kind of EUR 800 million additional debt, we would be still below the 50% year-end target.

A couple of releases from quarter 4. So we announced in the first week of January, the acquisition of ING Cranes. ING has been founded in 2010. Last -- 2024 revenues, EUR 50 million. We had already, before the ING acquisition, a business in Brazil, Argos, which we acquired back in 2017. Argos has been mainly focusing on light and medium loader cranes, while ING brings into our portfolio the heavier loader cranes in the Brazilian market. So actually quite nice complementary acquisition for our Brazilian business, plus then offering also sales channels for the Southern American markets.

We also announced the proposals by the Nomination Board for the Board of Directors. So the current Board members would continue except for Ilkka Herlin, who has informed that he is not available for reelection in the AGM, which is to be held on 24th of March. And the other releases -- press releases, what we have announced, during quarter 4, you can find in our website.

And as a last topic, our outlook for 2025 is unchanged. So what we have said already earlier this year, we are aiming at reaching higher than 13.5% comparable operating profit. And as we are now at the end of the year, I would like to remind you also about our dividend policy, which is 30% to 50% of the net income.

Thank you, Mikko. We can jump to this consensus already now and then take the Q&A. So we -- at the change of the year, we also changed the provider of our consensus services. So we now work with Modular Finance. So all of the analysts will be -- sell-side analysts will be reached out by Modular Finance to collect in the numbers. The consensus is now available on Hiab's website, hiabgroup.com.

But with that, we jump to Q&A. And Antti Kansanen was first with his hand. Please, Antti, go ahead.

Yes. A couple of questions, and I'll start with the earnings side of things. If we think about Q4 versus Q4 last year, I think there was a couple of recurring type of cost elements on the fourth quarter last year. So how much of those that you don't expect to repeat this year? Just a reminder. And maybe then also reflecting on the EUR 20 million that you are flagging on the lower U.S. sales impact on Q3, will that impact be different on Q4 in terms of realized savings or higher volumes on the U.S. production on the fourth quarter?

Thank you, Antti. So if I remember correctly, we had, last year, in quarter 4, approximately EUR 15 million nonrecurring items. We have also announced when we communicated this EUR 20 million cost savings program that for the full transparency, we will report these as items affecting comparability, so below the comparable operating profit. However, as the program is still on the planning phase, we do not anticipate, let's say, significant amount of one-off items in quarter 4, some but not in a significant manner. Once the program implementation starts in the first half of this year based on the planning, then we should start to see the nonrecurring items.

What comes to the U.S.? Our quarter 3, like you mentioned, was impacted by the lower volumes. We got a fairly sizable home improvement customer order in quarter 2. And basically, that order, we have started to deliver now in quarter 4. So that will support the U.S. market profitability to some extent at least. So the expectation is that, that kind of volume impact would contribute to the equipment and total higher top line in quarter 4.

Okay. And then on the order side, don't have it in front of me, don't remember if you disclosed the U.S. orders from Q4 last year. But overall, just if you think about kind of the run rate that we saw in the U.S., especially on the equipment side in the past 2 quarters versus Q4 last year, what's kind of the delta?

We have not -- if I remember correctly, in quarter 4, we have not announced any sizable orders in the U.S. So the comparison period as such was quite high.

Yes. And is there any seasonality that if we just like think about that the demand is similar as it has been, let's say, Q3? Is Q4 typically higher and lower in any type of calendar impacts or anything like that?

Overall, quarter 3 for us is the lowest, typically due to the holiday season, and then quarter 4 is higher than quarter 3. And if I think the U.S. market in general, like I mentioned also earlier that there are kind of bigger customers, are kind of quite okay from the investment side, while the smaller customers are more considerate. However, with the bigger customers, the order timing might sometimes fluctuate so that they don't necessarily place orders in every quarter.

Thank you, Antti. And next in line, we have Mikael Doepel.

Yes. So a couple of questions. Just firstly, coming back to the cost takeout. So just to be clear here, so what you're saying is that it's still in the planning phase and it's going to be implemented in the first half of this year, but you still expect the full EUR 20 million to flow through on the P&L next year? And related to that, how big will the one-off cost be at the end of the day?

Yes, it's still in the planning phase. Of course, we need to have the works council negotiations before we can start to do the implementation. This EUR 20 million is the 2026 impact. So if you would compare at the end of 2026, our cost base, that would be EUR 20 million -- fixed cost base, that would be EUR 20 million lower compared to 2025.

And on the one-off costs...

One-off costs. We would come to the one-off costs most probably somewhere around the full year results announcement, in February.

Okay. Yes, right. And this EUR 20 million, is this purely just layoffs? Or are you doing something else as well to get those costs down?

It's anticipated that it comes from various sources, personnel costs surplus, also other non-personnel-related costs.

Okay. Good. Then just secondly, on this aftermarket or the service business. So despite the fact that the markets have been fairly muted overall, I think you have been able to grow the business in quite a good way in the last couple of quarters. How should we think about this business going forward into Q4 into next year? What are kind of the levers for you to keep that business growing? And are you seeing any headwinds within this aftermarket business currently?

Overall, like you said, despite the equipment volumes decline, we have been able to grow the services business. In our case, in 2025, the services growth has been very much coming from the recurring services, so spare parts, maintenance-related services. And this is actually very much according to our strategy because in our strategy, we have been focusing on the connected fleet, increasing through that basically the spare parts capture rate from the, let's say, current 47% towards 52% by 2028. And then basically, whenever we sell new equipment, we try to combine with that also the maintenance contract. And through the maintenance contract, then we can ensure that we or our partners, like dealers, get then the maintenance work and the spare parts sales when the customer requires the servicing.

So basically, we have not, let's say, made any kind of new inventions as such, but we are just prudently executing those strategic initiatives, which we have been, let's say, identifying already, some years backwards. And these are now starting to bear the fruit, and you can see that in our service development.

What comes to the U.S. market? We have seen that equipment utilization in the U.S. has been on a good level despite kind of new equipment orders declining, so indicating that customers are actively using the equipment and for that purposes, they need to buy spare parts. In the U.S., we have seen to some extent that customers are perhaps not holding as large spare parts inventories and what they kind of in a pre-tariff situation would hold in the spirit of not tying up capital in the inventories.

Okay. And then just finally, a question on your guidance. So you tend to guide an adjusted EBIT margin for the year. Is this the way forward as well? Or are you considering some other measures, perhaps sales growth or something else also for this year? Any changes planned for the guidance essentially the question?

At the moment, no changes planned. So we have considered that for us the most important is the profitable growth. And of course, we want to make sure that the profitability is on that kind of trajectory that it brings us to the 16% comparable operating profit margin by 2028.

Next in line is Tom Skogman.

I'd just like to talk a bit about the dynamics of the U.S. market. So I mean, now we have had a time with tariffs on your products and also on trucks. I've heard at least some rumors that in the truck industry that some seem to have difficulties to push through the tariffs and are backing off a bit, not to kill demand too much. Have you heard anything about this? And are you 100% confident your kind of price hikes are sticking basically?

Yes, I can't talk about the others. But in our case, we have sticked with the principle that tariff is an extra cost for us, which we move to the customers. So we are also very transparent with the so-called tariff surcharge in our invoicing, not kind of hiding it in the price list, but showing as a separate line item in the invoice.

Of course, we are doing also actively measures to mitigate as much as possible the tariff impacts, localizing the supply chain. We already assembly more than 50% of our U.S. revenues in the U.S. market. So continuously looking ways at how can we reduce the tariff cost, and that is also something what we continuously also reflect in the customer invoicing. So not kind of just sitting and waiting because most probably these tariffs are here to stay at least in some extent or in some form and shape.

And in our industry, many of the OEMs have a similar type of assembly setup that we have. So global supply chains with local assembly, so no clear big differences between the players.

And there seems to be discipline that all stick to kind of adding tariffs to prices. You don't see this? [ You were inside the market. ]

Yes. This is what our competitors have been doing as well. And in the U.S., the most -- let's say, most of the competition is coming from European companies.

We have seen lately that the Trump administration is quite active when it comes to Fannie Mae and Freddie Mac, trying to boost private consumption and construction, making it easier for the consumer. But do you see any positive signs in some segment of the market or some geography in the U.S.? Or is it still just negativity everywhere, basically?

At least so far, until today, we have not seen any kind of notable changes in customers' behavior in the U.S. market, in none of the kind of end markets where we operate.

And then the opposite in Germany, we have seen good construction data in December. Do you see any -- the recovery is continuing, I guess, but do you see that it's accelerating or...

I would say that the recovery, what we started to see in the latter part of 2024, has continued in those main markets like Germany, here in Europe. I can't say that we would have seen a kind of acceleration in the recovery, but solid development in that improvement part. Still, it's good to remember that -- or note that also our European volumes, if we would look the unit volumes, those are not necessarily in all markets even yet on 2019 level. So there is a kind of a replacement need coming -- piling up, but at least so far, we have not seen any kind of accelerated replacement activities.

Overall, good tendering activity has continued like we saw already in quarter 3, but still it takes quite a while for the customers to make the kind of final investment decisions also in Europe.

And then I'd like to not discuss the Q4 margin yet, but if you go to H1, I mean, you had very good margins in H1 in '25. And help us to -- or remind us about the cost savings you had last year when you had the biggest incremental help. I mean, how is it then you roll over to Q1 and Q2 in 2026, then apparently, these savings for this year, this EUR 20 million will not really help now in H1. It's rather an H2 thing now. And -- but you had savings, if I remember right, immediately from the beginning of last year, right?

Yes. Some kind of quick wins we had already from the beginning of 2025. But I would say that let's say, majority of the previous EUR 20 million cost savings kind of a run rate we started to reach somewhere in the middle of 2025. And also in this new program, which we announced now in quarter 3, I would say that it will not have, let's say, significant impact in the -- at least not in the first quarter and possibly also not yet in the very early part of the second quarter.

As a reminder, so in the first half last year, the U.S. business were still much less impacted by the slow decision-making as we had volumes stemming from the latter part of '24 and January '25.

So do you -- I mean, is it wise just to expect that margins go down in the first 6 months then given you have lower order books and these savings are not really helping now the new savings in H1 and you had big savings from the beginning of last year? It sounds like that. I mean it's just good that we don't expect too high margins in H1, if that's the case at the moment, that it's more of a...

Yes, let's come back to the 2026 margins when we provide the full year outlook. But yes, overall, like I said, the first half of last year, i.e., 2025 was still quite normal for the U.S. market, while we were then negatively impacted in quarter 3 and to a certain extent, in quarter 4, even though we started to book some of the revenues from those U.S. orders, which we received in quarter 2. But overall, as the U.S. order intake has been lower this year compared to last year, that will at least impact us to a certain extent in the first half of next year, before the cost savings start to kick in.

Then finally, are you in active acquisition discussions for more companies at the moment given your strong balance sheet and earlier communication?

We have discussions with potential target companies.

[ Edward ], you next in headline.

Sorry about that. Just an understanding on the EUR 20 million savings. Is this a structural saving? Or if the market turned in the U.S., as one hopes it does and gets back to a normalized market conditions, how much of that EUR 20 million would you actually see having to go back in? And then just on the other question, do you actually see then a sort of margin mix dilution as the equipment part picks up, going back to your comment about the overall usage and extension of either rental and lease contracts and over usage of equipment as it is, that you actually see the new kit being bought and the service side drops? That's one.

And then the other question was just on pricing in the U.S. If you looked at your pricing for '26 versus your pricing that you were thinking about for the second half of '25, is there a major delta difference between that thinking?

Thanks for the questions. First on the savings, we aim at doing as much as possible structural savings. So those should be fairly sticky, i.e., not kind of traveling type of savings, which might go up when the business picks up. So as much as possible, structural savings. Then what comes to the mix when the business improves? Yes, the equipment growth -- equipment business growth might have a slightly negative impact on the mix as services is now a bigger portion of the business due to the equipment sales decline. But it's good to remember that before the U.S. market decline also, our equipment business was doing a very solid double-digit comparable operating profit.

So yes, equipment growth can have a slightly negative adverse impact on the mix. But on the other hand, with the equipment volumes, we can get good leverage on our SG&A costs.

And then what comes to the pricing in the U.S.? I would say that the kind of underlying pricing in the U.S. has been fairly stable. But then, of course, due to this tariff surcharge, I would say that our pricing kind of invoicing to customers has been, say, 10-plus percent higher since, I would say, 1st of March compared to the beginning of 2025.

Okay. And then just a last question. If you just look at the overall inventory between both from yourselves and from competitors actually in the distribution network, how is that looking running into '26?

In our case, our kind of inventories have declined in 2025 due to the top line declining. And if we think our dealers, they don't typically hold sizable inventories. They kind of -- when they get an order from the customer, then they place an order for our equipment, so they don't -- except for some kind of high runner, very standardized products. Otherwise, they don't typically hold sizable inventories.

I don't see any hands up or any questions in the chat, but if we have any questions from the telephone lines, now is your chance.

So I don't hear any questions from the telephone lines, but [ Edward ] has a follow-up. So please go ahead.

Sorry, I'll take an opportunity then. You talked earlier about discussions with clients in the U.S. that not much really has changed. But if you take the commentary from the larger clients at least, I mean what is their planning for '26? I mean, okay, we had the whole tariff friction through '25, but at some point, companies just say, "Okay, we just have to swallow it to a certain extent. We've had it so far. There's a degree of known dynamics within it. We've got to get on with the business." So what are they actually talking to you, the larger clients, at least who probably have the financial flexibility to make decisions?

Yes. The larger clients, they have done, for example, market consolidation. So they have been buying competitors. And what they have been doing in '25 and most probably they would possibly do also in '26 is this kind of fleet renewals. They might have thousands of our equipment in use. And basically, every year, they may have to replace hundreds of those. So basically, they have -- like you said, they have stronger balance sheets. They have established relationships with leasing companies, and they are looking perhaps things in a bit longer time horizon than perhaps smaller players who might kind of have a bit more constrained balance sheet.

Thank you. I don't see any further hands up, so it's time to conclude today's call. So we will go into the silent period on 22nd of January, and the results will be published on 12th of February.

So stay tuned and have a nice, let's say, winter so far, and let's get back to the topics on 12th of February. So thank you, and bye-bye.

Thank you.

Welcome to Hiab's Third Quarter 2025 Results Call. My name is Aki Vesikallio. I'm from the Investor Relations. Today's results will be presented by CEO, Scott Philips; and CFO, Mikko Puolakka. And as a reminder, please pay attention to the disclaimer in the presentation as we will be making forward-looking statements. Hiab's Q3 profitability was affected by lower sales in the U.S. Our orders decreased slightly. Comparable operating profit margin decreased to 11.4% due to lower sales in the U.S., which was caused by elevated market uncertainty due to increased trade tensions. However, our services business continued to grow. Sale of MacGregor was closed on 31st of July, and the business is now separated from the company. Let's then view today's agenda. First, Scott will present the group level topics. Mikko will go through reporting segments, financials in more detail and the outlook. After Mikko, Scott will join the stage for key takeaways before the Q&A session.

With that, over to you, Scott.

Thank you, Aki. And greetings, everyone, from my side. I will start with a few highlights looking towards executing on our strategy of profitable growth for the future. First, I'm pleased to share with you that we announced a partnership with Forterra to further develop automated solutions for our lOad Handling Systems business. So really exciting development there.

Next, we launched a new 3.5 ton truck-mounted forklift for the EU, which will enable our MOFFETT forklift -- our MOFFETT branded solutions to be the clear industry leader in this size class of delivery solutions. And I would also like to highlight that we announced the launch of the smartest cable hoist solution in the U.S. market under our GALFAB brand. So really proud of the work the teams have done on both sides of the Atlantic there. And finally, we are pleased to announce the revised long-range climate targets, aiming to be net zero by 2050.

Now getting into the financials for the quarter. I'll start first with order intake. Our orders received in the quarter declined by 3% to EUR 351 million versus last year comparison period of EUR 361 million. And then as a consequence, as you see on the left-hand side of the slide, we've gone from EUR 900 million order book to roughly EUR 636 million at this time last year and now stabilizing out around EUR 557 million following this quarter.

Now for the period year-to-date, our order intake is up 1 percentage point to EUR 1.1 billion versus last year. And as you think about the last 12 months order intake, we're somewhere around the EUR 1.5 billion level, which has been the case for approximately the last 2 years. Now the decrease in orders received was driven primarily by the delayed customer decision-making in the U.S. Of course, that was partially offset by Defense Logistics, and we won a nice Wind segment order that we announced previously in the quarter.

Currencies had a 2 percentage point negative impact on orders received in Q3, which we had highlighted would be the case with last quarter's results call.

Now looking further into the geographic distribution of the order intake. Our EMEA market was represented 56% of the orders for the quarter or EUR 195 million versus last year at EUR 155 million. So that's up 26%. Year-to-date, we're at EUR 587 million versus EUR 518 million last year. That's a change of 13% year-over-year, year-to-date. In the Americas, however, a bit different picture. In the quarter, we were EUR 132 million versus last year at EUR 185 million. So that's a 29% reduction. Therefore, year-to-date, we're down 14% versus last year at EUR 435 million versus EUR 504 million the prior year.

And in APAC, we were up nicely in the quarter by 11% from EUR 24 million versus EUR 22 million last year. Year-to-date, we're at EUR 84 million versus last year's year-to-date figure of EUR 72 million or up 16%. In terms of the operating environment, we do continue to have positive momentum in our Defense Logistics and Energy segment opportunities. So that's good.

We have also a big robust replacement demand that's driving the majority of our business. Of course, on the negative side, we still have the uncertainty of the trade tensions. And this, of course, has impacted the demand curve, in particular, in the Americas and in particular, drilling further in the U.S. market, which, of course, means our U.S. customers have remained quite cautious.

Then moving into the sales development. Sales in the quarter were down 11%, so EUR 346 million versus last year's comparison period of EUR 388 million. And year-to-date, we're at EUR 1.16 billion, which is 6% below last year's level at this time, which is EUR 1.235 billion. And then on an organic basis or in constant currencies, we're down 8% in the quarter versus last year and 5% year-to-date.

Of course, our services percent of sales grew in the quarter to 34% versus last year's comparison period at 29% year-to-date. Services represent 30% of sales versus last year's year-to-date figure of 28%. So sales have leveled out at the -- approximately the level that we would expect given our prior 11, 12 quarters' worth of order intake adjusted for the seasonality effect. But of course, the big story was the negative impact that we had in the U.S. market, which I'll cover in the next slide.

So looking into the geographic distribution of the sales. EMEA represented 51% of our sales in the quarter, down slightly from last year, 5%. Year-to-date, EMEA is at EUR 573 million versus last year at this time at EUR 599 million. So that's a 4% decline. In the Americas, however, is where we had the biggest decline. Americas in the quarter was EUR 140 million versus EUR 177 million last year, a 21% drop year-to-date. We're at 9% down versus last year, EUR 508 million versus EUR 556 million.

And in APAC, much like the order intake, we were up slightly EUR 29 million in sales versus last year's Q3 of EUR 24 million in sales, representing an 18% positive variance. Then year-to-date in APAC, we're down 1% or EUR 1 million, EUR 79 million versus last year at EUR 80 million. Our ECO Portfolio sales continues on a positive development. We're at EUR 140 million in the quarter of ECO portfolio sales versus last year comparison period of EUR 114 million, so that's up 23% year-to-date, EUR 437 million versus last year, year-to-date at EUR 354 million, up 23%.

So as indicated earlier, our sales decline was most prominent in the Americas. EMEA sales declined slightly, of course, linked quite closely to the order intake development in the region. APAC sales increased slightly, which, of course, is also linked to the order intake development in APAC. And on the positive note, our ECO portfolio sales increased, in particular, in our circular solutions from our service business as well as our Climate Solutions and our Lifting Solutions equipment business.

Then looking into the profitability. For the quarter, our comparable operating profit was EUR 40 million versus last year, EUR 52 million. That's a 24% drop on the EUR 42 million drop in sales quarter-over-quarter. That puts our year-to-date comparable operating profit at EUR 166 million versus last year's EUR 176 million, representing a 6% drop. which, of course, all occurred within the quarter. On a percentage basis, our comparable operating profit percentage was 11.4% versus 13.4% last year. And year-to-date, we're at 14.3%, which is on the same level as last year due to our good performance in the first half of this year.

We were primarily impacted by the EUR 20 million negative impact from our lower sales in the U.S. as I highlighted on previous slides. Our gross profit margin also decreased slightly by 80 basis points, primarily due to the change in the revenue curve, which we weren't able to fully offset with cost out in line with sales development or the revenue development. However, our SG&A costs were lower in the quarter by approximately EUR 5 million. EUR 1 million lower in sales and marketing, EUR 4 million lower in administrative costs, so well in line with our EUR 20 million cost reduction program that we announced last year.

And then as a consequence, our operative return on capital employed improved driven by the nice development of managing the working capital within the team, especially as it relates to the days sales outstanding. So really strong execution in that regard. Then as we've done each of the past few quarters, we want to highlight where we are relative to our long-term targets. So just to remind you, our long-term target was to was to be on a level of 7% CAGR over the cycle, 16% comparable operating profit and above 25% return on capital employed.

Our progress as of through Q3 of this year, our rolling 10-year average is down slightly to 6%. Our long-term -- last 12 months comparable operating profit is at 13.1%. This compares to 12.7% where we were at this time last year. And our last 12 months return on capital employed is at 29.8%.

So with that, I'll hand it over to Mikko.

Good morning also from my side. Let's first have a look on the Equipment segment's performance in the third quarter. Equipment segment had a slightly positive book-to-bill in quarter 3 with EUR 239 million order intake. Gifting equipment quarter 3 orders were actually flat, while the delivery equipment orders declined. This delivery equipment orders decline came from the U.S., as mentioned already earlier by Scott, and this is very much caused by the trade tensions driven slowness in our customers' investment decisions.

Equipment sales was EUR 230 million. This is a 17% decline from prior year. Lifting equipment sales was flat year-on-year. So the decline came solely from the delivery equipment and in particular, from the U.S. market. The Equipment comparable operating profit declined to EUR 20 million, which represents an 8.8% margin. This decline in margin is solely again, attributable to the delivery equipment sales decline and very much attributable to the U.S. market.

You can see clearly in the bridge on the right-hand side there, what kind of impact the EUR 46 million decline in Delivery Equipment volumes had in our profitability in quarter 3. The gross profit margin was negatively impacted by lower volumes. So all in all, the Equipment as well as the whole Hiab quarter 3 profitability was impacted by the lower delivery equipment sales in the U.S.

Services grew nicely in quarter 3. We continue to increase the number of connected units, and there has been also really good intake for maintenance contracts as well. The growth both in orders and sales came from recurring services like spare parts and maintenance. Services grew even in Americas as there is an installed base, which needs to be up and running every day. Services profitability was on a good level, 23.5%, especially thanks to the higher sales as well as commercial and sourcing actions.

When we look at the services profitability bridge, profitability improved by EUR 5 million in quarter 3. The main drivers for better profitability were EUR 4 million higher sales as well as the previously mentioned commercial and sourcing actions, which improved the gross profit margin in services. Also, the services fixed costs were slightly lower compared to the previous year.

The foreign exchange or the translation impact had roughly 3% units negative impact in Services quarter 3 orders, sales as well as profitability. Let's have a look then at the total Hiab financials, and I'll focus here more on the right-hand side, the profitability bridge. The comparable operating profit declined EUR 12 million from the comparison period. Here, the EUR 42 million decline in sales is the main factor behind the lower profitability.

As described earlier in the call, lower sales impacted also our gross profit margin, as mentioned by Scott earlier, it was 0.8% units lower. It's good to remember that some of the costs above the gross profit margin like factory overheads, those are not fully scalable within a few quarters. So when we have lower revenues like we had in quarter 3 that has a slight negative impact on the gross profit margin.

We got some tailwind from the lower SG&A, which were roughly EUR 5 million lower than last year and then EUR 8 million year-to-date September. The currencies, as you can see from the picture, had a minor roughly EUR 1 million negative impact on our profitability in quarter 3. On a positive note, our cash conversion, i.e., the cash flow versus comparable operating profit was 173% for third quarter.

Net working capital decline was the biggest contributor to the over 100% cash conversion and the net working capital declined mainly in accounts receivables. The reported cash flow still includes July cash flow from MacGregor, but as can be seen on the chart, the contribution to the overall cash flow was relatively small. When we look at our balance sheet, McGregor has now fully been removed from Hiab's balance sheet at the end of July 2025. Hiab is now EUR 308 million net cash position, and this converts to a minus 32% gearing at the end of September.

As you have noted, we have also paid an additional dividend of roughly EUR 100 million in October. This is not yet visible in this September balance sheet numbers. If the dividend payment would have taken place in September, our gearing would have been minus 21% in September. Still a very, very strong balance sheet.

On the right-hand side, you can see that we have a couple of outstanding interest-bearing debts, one EUR 25 million maturing this year and another bond EUR 150 million in September '26..

About our outlook, we reiterate our outlook for 2025. Our estimation is that the comparable operating profit margin for 2025 is above 13.5%. And please note that this is the floor for our profitability. This outlook is based on the year-to-date September comparable operating profit margin of 14.3%, as well as the order book that we have in hand at the moment and then also the current situation related to ongoing trade tensions.

And then I would like to hand the presentation back to Scott for the quarter 3 summary.

Thank you, Mikko. All right. Summarizing the quarter, a few key takeaways. Market uncertainty has continued to negatively impact our business. And keep in mind, we're a relatively short-cycled business. So we see these impacts in a relatively short period of time. But despite the market situation, we have been able to improve on our last 12 months comparable operating profit margin, so strong execution on delivering what we've committed to deliver.

However, as a consequence in the uncertainty level that continues to be the case, we will start planning for a program which would target approximately EUR 20 million lower cost level in 2026, compared to current levels to give ourselves a bit more resilience and flexibility in dealing with the ongoing levels of uncertainty. However, we continue to execute on our strategy and focus on activating growth opportunities where they exist. And I would reiterate that we have an incredibly strong balance sheet, generating strong cash flow and that continues year-to-date, and that will continue to be our primary focus, moving forward.

So I think we're well-positioned to deal with the levels of uncertainties that we face in the future and I feel really positive about our ability to deal with the changes in the demand curve, whether they would be up or down.

So with that, I'll hand back over to Aki.

Thank you, Scott, and thank you, Mikko. Now we are ready for the Q&A. Operator?

[Operator Instructions]

The next question comes from Panu Laitinmaki from Danske Bank.

I would have 3. Firstly, starting on the margins. I was a bit surprised to see such a big change in Q3 given that sales has been declining for 2 years already. So basically, the question is that what caused this? Is this mainly under absorption of fixed costs? Or is there an element that the lost U.S. sales had like really good gross margin compared to the rest of the business?

Do you want to take it?

I can take that. Yes. As we mentioned, basically, this profitability decline is fully attributable to the U.S. market and -- this is stemming actually from the fact that we started to see already in the beginning of the year, basically from February onwards, weaker order intake caused by these trade tensions. And as we have a fairly short lead time from the order to the delivery, we started to see that sales weakness already now in quarter 3. And this is stemming very much from the delivery equipment, truck-mounted forklifts, tail lifts in the U.S. market.

This is the reason for the lower margins. As you can see, yes, our SG&A costs went down, but those are not enough to volume impact, which is then in addition to the U.S. market decline then also connected with the low seasonal volumes.

Yes. Just to add a bit more color there. I think just to reiterate for you, Panu, it was a combination, as you pointed out, of sales decline which primarily happen in the U.S., but also it was more impactful than we would have anticipated from a mix perspective. So both of the 2 businesses that were primarily impacted there, normally have margins that are quite accretive to the overall higher margins.

Okay. Then secondly, on Q4, so what are you seeing in the -- during the rest of this year in terms of orders, like -- are the trends similar? Or should we expect sequential worsening? And also maybe if you can comment on the margins. So should we expect that the seasonality Q3 was maybe the lowest point of the year and how should we think about Q4 as in the comparison period, you had this restructuring costs last year?

Yes. As you point out, we certainly tend to have a seasonality impact in Q3, which we've called out previously, anywhere in the 10% to 15% range, which we did see that materialize overall primarily due to the lower working days, both in Europe as well as in the U.S. So similarly, we would expect to see Q4 top line to be -- from a sales perspective, more in line with our trailing last month order intake and similarly follow the pattern of seasonality, whether it's negative or positive. So we expect Q4 to be quite in line with what you typically see in Q4.

Okay. And then thirdly, could you talk about Europe? So we saw pretty good orders in there. What is driving this? You mentioned defense and the wind order, but is this like an overall market recovery or some single orders? And do you have any kind of improvement in the Construction segment yet?

Sure. I'd say 4 points that I'd highlight here. One, as we alluded to in the presentation material, primarily the demand is replacement cycle driven, which should follow along the lines of pattern that we would expect to see given the life cycle of our products. Two, we certainly are seeing an uptick in activity on the quote side on the lead generation side. We have seen a mixed picture in terms of lead conversion throughout the period, which has been interesting.

Then the third point I'd highlight, as I alluded to earlier in the discussion, the Defense Logistics was a positive within the quarter. But then if you add the Defense Logistics from Q2, Q3, we were roughly flattish with an increasing pipeline of opportunity. And then the last point, we have seen a number of lumpy large key account deals. And in this case, in our Wind Energy segment that converted. So that was primarily the drivers for the increased level of order intake in Europe.

The next question comes from Andreas Koski from BNP Pariba Exane.

So firstly, I want to try to get your thoughts about 2026. When I listen to truck manufacturers, it sounds like the truck market is not going to improve at least substantially in 2026 or 2025. And now you are planning for restructuring program aiming to lower your cost base by EUR 20 million. So should I read that as a signal that you share the truck manufacturer's view that 2026 is most likely not going to be much stronger than 2025?

Yes, I can start this one. Yes. Thanks for the question, Andreas. The way we think about 2026 is twofold. One is that we will adjust our cost base on the basis of what our trailing order intake levels are. And on that basis as well as the change in the mix that we've seen now reflected in the sales result, it's obvious that we need to adjust the cost base just to make sure that we're covered relative to the changes we've seen both in terms of the trailing order intake as well as then how that's affected from a mix perspective.

And then in terms of the top line development for next year, we haven't typically provided forward-looking comments on the top line development. But of course, we want to plan for a scenario that would allow us flexibility to deliver if the demand curve were to pick up. And similarly, we want to manage our cost base so that we're well covered in the event that the demand curve goes in the negative direction.

Understood. And then I understand that the tariffs might have impacted the demand for your products, but did it in any meaningful way also impact your your cost levels and in combination with that, what kind of price increases did you see in this quarter? And what should we expect for the coming quarters?

Yes, sure. I can start with this one and Mikko, you can pick up if I miss a point here. Yes. Thanks for the question, Andreas. So what our policy has been our practice, so year-to-date relative to the tariff responses that we're trying to implement surcharges that we transparently share with our customers. So that we could stay neutral from a cost perspective, and that still remains our view today.

So I would -- I couldn't say that we got either a positive or a negative impact relative to the tariffs. And if we did, it'd be just a matter of timing. I think Mikko alluded to in his presentation, though, the impact relative to order intake and to the sales level and perhaps maybe you can reiterate the impacts there.

Yes. In our quarter 3 order intake, we had less than EUR 10 million kind of let's say, price increase effect coming from the tariff surcharges in sales due to the lead times, one could say that the impact was almost plus/minus 0. And the main impact there, I would say, from tariffs is on the demand side. So it's -- like Scott said, we are basically moving the tariff cost to the customer prices.

I might be mistaken, but if I remember correctly, when we discussed on the pre-close call, we talked about price increases of 10% to 20%, but maybe I'm mistaken there, but was that on the case?

Depending on the product category, the surcharges have been around 10% to 20% depending on the product category. These changes all the time because there are also changes in the tariff regulations and what kind of components are included in the tariffs. We are also doing actively measures how to mitigate the tariffs changing our supply chain so that we could make this as, let's say, bearable to our customers as possible.

The next question comes from Antti Kansanen from SEB.

It's Antti from SEB. I will start with the same topic on the U.S. orders and sales going forward, kind of reflecting back to the price increases and the tariff surcharges. I mean, I get to a number that on a volume basis, your orders contracted quite a lot on the third quarter compared to what they were on the first half of the year. So I just wanted to better understand that is -- will the volume impact on profitability be much more severe going into Q4 and perhaps Q1 next year as it seems that the volumes that you are getting into your factories are still on a decline.

Yes. If I take this one, you can complement. So overall, you may remember that in quarter 2, we received a key account order Order in the Home Improvement area. Basically, if one calculates the kind of lead times from the order to the delivery, we would start basically the delivery of that order, let's say, in the beginning of quarter 4. So that would then support the top line development in the U.S. in the quarter 4. That would allow them better loading for our factories, both in Europe as well as in U.S., which are supplying that kind of product during quarter 4, and that should also then improve the U.S. profitability in quarter 4.

Okay. And then the second one was on clarification on the previous questions on the difference between the communicated surcharges, 10% to 20%, and they achieved kind of the price impact, which I calculate to be around 8% of the U.S. orders. I'm not exactly sure if I calculate it correctly, but is the delta kind of something that you have given up on pricing in order to secure volumes? Or is there something -- some other dynamic in play here?

Now these are basically this 10% to 20%, these are the surcharges. And then, of course, our, let's say, order intake, it cannot be kind of just simply be calculated from our kind of year-on-year order intake development development. So basically, like Scott mentioned, if there is a tariff of EUR 100 that EUR 100 million is reflected in the tariff surcharge to our customer invoicing or in the order intake.

Okay. And then on the development outside of Americas, I guess, mainly in Europe where you are flagging Defense Logistics and Energy Wind orders. Is there something regarding delivery times that we should be taking into account? Are there kind of a bigger deals or, let's say, frame contracts in the Q3 orders that would have a longer delivery times? Or should we just assume that it's a normal kind of a backlog to sales rotation?

Yes, I can start this here and Mikko please jump in if this isn't reflecting an accurate picture. But we reflected in Q3 Antti, relative to the wind order is a consequence of a frame agreement that will be reflected as order intake over a number of quarters. So it's not a case where the entirety of the order was reflected in one quarter, and then it will be delivered sequentially from there over a period of time, but rather the order intake will also be reflected a bit more in line with the revenue recognition.

All right. Makes sense. And then the last one for me is the EUR 20 million cost savings program to be implemented next year. Will there be a one-off cost booked on Q4? And will that be included in the adjusted EBIT that you are guiding for? Or will that be a one-off?

In case based on the initiative planning in case there would be one-off cost. We would report those in items affecting comparability -- so separately below the comparable operating profit depends on the planning and then we would be also opening how much that kind of cost we would have in quarter 4 or in 2026.

The next question comes from Tom Skogman from DNB Carnegie.

This is Tom from DNB Carnegie. Did I understand correctly does that if you book an EU item, it is kind of above EBIT adjusted, like last year?

So if we book for this EUR 20 million cost savings program, one-off costs, those would be reported as items affecting comparability below the comparable operating profit. So not included in the comparable operating profit.

Why will it be different from last year?

This is very much related to the, of course, weakness in the U.S. market. But the EUR 20 million program would be company-wide. Previous programs have been more related to the kind of general optimization of the business, also in line with the order book. But this EUR 20 million is of course, in the first place, very much driven by the trade tensions.

Okay. And then I wonder about -- I mean this is perhaps more kind of a general big picture discussion. So last year, Americas was 45% of sales, and you have painted a picture where the Americas is quite an immature market. You have a lot of kind of white spots in distribution in the U.S. But still, I mean, it's been almost half of your business. So -- and I just remember 10, 15 years ago, Spain was the world's largest market. And that market basically never got back to all levels. It was so overheated. So could there be like just a risk that it will take many, many years before the U.S. market is back to where it has been in the last couple of years? Or do you really feel confident that it's just normal fast breaking, fast accelerating in the U.S. market? Or are there some kind of risk elements there that suggest that it could be that it takes many years to go back to all record levels?

Yes. I'll start with this one. And thanks, Tom. I take this in pieces. So you mentioned our characterization of the U.S. market. And the way that we characterize it is threefold, if you will. So on the one hand, we were quite mature in our penetration of delivery solutions as it relates to serving primarily the building construction supply market. Two, we've had -- continue to have and did have quite a strong position also in delivery solutions relative to retail and last mile. So those were fairly mature markets, a long ways to go, especially on the retail last mile given the market share position relative to the #1 competitor that we face on a daily basis. Then the way we characterize it is we're underpenetrated both in our knuckle boom loader cranes as well as our hook lift and mountable solutions, primarily in waste and recycling, perhaps somewhat in terms of Defense Logistics that the market was definitely underpenetrated relative to knuckle boom loader cranes in the Construction segment as well. the way in which we wanted to attend to this is, is that we have a lot of geographic white spots because we weren't structurally set up similar to how we are structured in a European country, let alone Europe as a continent. And that was a weakness on our part.

So the way that we've been attending to it and we continue to execute on the strategy is, is that we're turning on at scale distribution channel partners to cover the geographic white spots with a focus on shoring up those areas that we both were underpenetrated because of just lack of scale of sales and service excellence to support those products, but then also the geographic lack of coverage that we had as well. So that continues to be ongoing.

Now in terms of the comparison relative to Spain, I'd say there's 2 things to keep in mind. Of course, let me start with the really obvious one is that just mirror scale, it's an order of 10x magnitude difference in terms of the GDP of comparing the U.S. versus Spain. But then more importantly, probably is the fact that the growth in Spain was primarily driven by one segment that was Construction. So at one time, it was one of the world's, if not the world's largest construction applied knuckle boom crane markets. And of course, that's the segment that had most been impacted following the global financial crisis.

And to your point, hasn't quite recovered or hasn't recovered at all relative to the pre-global financial crisis levels. But definitely 2 different comparison cases and thinking through Spain versus the U.S. because the basket of of segments that we serve relative to our full portfolio, completely different opportunity set, if you will, in the U.S. versus, well, any country in Europe, but especially if you think about a country like Spain. Having said that, we've got a lot of opportunity to grow in Spain as we are underpenetrated there.

So what do you think then will be kind of -- what are you looking for in the U.S. is a trigger for customers to start ordering more again. What will be the trigger I mean the interest rate is quite high on the housing and the ABI index is not that strong. For instance, or just that you have this tariff situation with the loads of parts imported from Mexico that is just kind of cooling the entire market and we get the solution to that, then this will be normal again. What are you looking for?

Yes. Yes. I'll sound like a broken record here, Tom, but I think it's still a factor of I can bifurcate it into 2 parts, right? One on the one hand, you're right, we need to see the macroeconomic costs come down a bit for our U.S. customers that we've talked about a lot, especially last year and a little bit in the first half of this year. in terms of overall inflation as well as the general level of interest expense.

But I think then moving to the second piece now, of course, it's a matter of getting some stability in terms of being able to plan the business in the future on what your general cost level is going to be, I think that's a key factor as well. And then I would then add one more point to this scenario is that, once you see the level of stability achieved that no doubt will happen, it's just a matter of when. Then you'll start to see a pickup, I believe, from the stimulus bill that was enacted earlier in the year that I think is characterized as the one big beautiful bill. At the same time, we know that with the aging of our equipment in the installed base, there will be a robust replacement cycle coming as well.

Okay. And then finally, on the Defense side, I mean, it's just easy to say that it's a promising market generally. But I would like to understand a bit more. I mean we have seen orders from, for instance, the U.S. army and orders from Rheinmetall or bundle -- to Rheinmetall. But -- is it so that we should kind of perhaps also expect that just kind of national defense forces in different countries will be kind of major customers? Or will it be more like kind of defense companies that will order from you or how will it be?

Yes, I can start here as well. Yes. Thanks for the question again, Tom. In Defense, we have a 40-plus year history of serving not only the U.S. Department of Defense, but then also the majority, if not all, of NATO countries as well as NATO partner countries, which will continue to do moving forward. And you're right, each of the defense organizations have made commitments to increasing spend unfortunately, due to the geopolitical changes that we've seen materialize over the last 3, 4, 5 years. And we expect that to continue moving forward.

The challenge that we have is being able to forecast and model that business because the majority, if not all of these opportunities are typically larger tender opportunities that have quite a lot of variability in terms of time of opportunity to decision in terms of who that deal is going to be awarded to. And it's worked on both sides of the equation for us, if you think through the last year.

On the one hand, we've seen more faster-moving emergent opportunities. And then on the other hand, we've also seen delays of opportunities that we knew were there prior to this period of increased geopolitical uncertainty that have pushed to the right. So difficult to model on our side in terms of the timing, both of booking the order as well as then how that will materialize and the change in revenue recognition.

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

Yes. We will have a couple of questions from from the iPad, from the webcast audience. So first question is about the service order trends. Is there any lagging impact from that? So what is the profitability trend in the services going forward?

Yes.

So on the Services side, the only real lag would be the nonrecurring revenue that we have. And if you think about the mix within the quarter, we were approximately 74%, 75% recurring revenue. So that's been on a nice trend relative to the overall Service, both order intake as well as revenue. Within the nonrecurring, of course, you have installations that are a factor of the equipment lead times. And so that tends to be the piece that lags behind. But otherwise, the rest of the services order intake, will follow and link quite nicely to the revenue recognition.

Yes. Thanks. And then we have a couple of questions. I'll try to combine them. It's both are related to the tariffs. So we went through quite a lot of the parts of the question already but there was also a question, do we see permanent impact that could be caused by the tariffs. For example, could we lose some of the U.S. customers because of these tariffs permanently? And do we have any estimates how long the situation would last?

Yes. So I'll start with the easy part first, the last part of that question. Hard to tell, right, how long this will last. One thing that's certain is, is that I myself have lived in 9 countries, and I've had a long career of this type of work and serving 100 to 200 different countries and most countries have some form of tariffs. So we can count on that. There will continue to be some form of tariff.

I think really, the core of the issue and the question is then how long will this level of uncertainty last? And that's hard to call at this point. So our job is to be as resilient in our overall cost as well as our ability to deliver and execute as we possibly can. So we need to be prepared that this level of uncertainty may continue indefinitely.

And could you please then still repeat what were the mitigating measures that we do? And do we individually negotiate with U.S. to get lower tariffs?

Yes. So far, no, we haven't directly negotiated with the U.S. government on the tariffs. That one, we haven't had the opportunity to, and I'm not aware that any individual company has. But what we do, however, is that the way we sell our equipment is a function of market list price, and we sell on value. So therefore, from the tariff perspective, relative to our price positioning, this is more mechanical, if you will. So the contribution of the equipment that is under subject to a tariff, then we transparently share that information with our customers. We link that then to a surcharge that is simply a mathematical calculation and we try to work on other mitigating factors on the market list price to see if we can make this more attractive for our customers or not.

But to reiterate, the biggest impact at this point from the change in the trade policies has been on the demand cycle because all businesses have a need to be able to forecast the forward-looking cost in order to then be able to take risk on deploying capital in order to catalyze or to run their business or to grow their business.

Supply also to reduce the, let's say, tariff base as an example yes. And then it's good to remember that a significant part of our U.S. sales are assembled in the U.S., but of course, the ultimate tariff depends on where the components are coming from.

Thank you, Mikko. Thank you, Scott. And that concludes our third quarter earnings call. So we published our financial calendar for next year yesterday. So we will be back in February 2026. Thank you for watching.

Thank you.

Thank you.

Welcome to Hiab's Second Quarter 2025 Earnings Call. My name is Aki Vesikallio, I'm from Hiab's Investor Relations.

Our excellent performance continued, resulting in a strong first half of the year. Today's results will be presented by our CEO, Scott Phillips; and with our CFO, Mikko Puolakka. We will be making forward-looking statements in the presentation, so please pay attention to the disclaimer.

With that, I would like to hand over to you, Scott.

Thank you, Aki. And good morning, everyone, from my side, and welcome to our second quarter earnings call. For the quarter, I'd say we had several highlights in the quarter, a couple of which I'd like to point out here on the opening slide. Our orders received increased versus the comparable period. I'll give a bit more color on that later in the presentation. Similarly, our comparable operating profit improved from a margin perspective. I'm really proud of the team for the great execution of our operational excellence pillar, which is the key driver behind the improved profitability despite the decline in sales.

However, the good performance internally is a bit offset with the continued elevated market uncertainty due to the ongoing trade tensions and changes in trade policy. We will specify our outlook today for the remainder of the year. And proud to report that with excellent work of colleagues that are current and former colleagues within Cargotec and Hiab, we've announced the closing of the sale of MacGregor, which is expected on 31st of this month.

All right. Let's see if I can get the technology to work here. Apologies for that, everybody. So I'd like to start off the group presentation by highlighting a few of the key investments we have made in the quarter as we continue to execute on our strategy. First, moving from left to right, we are making a -- we announced we're making a EUR 19 million investment in our MULTILIFT factory in Raisio, which will help to deliver on our promise to be more scalable and flexible throughout all cycles as well as delivering an excellent customer and employee experience. The investment will also enable our division to be much more efficient as well as more sustainable.

Concurrently, we continue to execute nicely on our operational excellence road map. So I'd like to highlight one of the elements to help us in our operations across our footprint as our truck-mounted forklift and our information management team successfully piloted a new manufacturing execution system solution, which will enable improved material management and process efficiency. And then finally, we launched new solutions in our MULTILIFT and GALFAB brands to better serve our on-road load handling customers in both Europe and the U.S. At the same time, our DEL brand tail lifts launched a new heavy-duty solution for the U.K. and Ireland markets geared towards serving customers who have more operationally intensive fleets carrying heavier loads. So a key new penetration for us in that incredibly important market.

So now I'd like to turn your attention to group financial results, starting with order intake. The orders received for the quarter were EUR 377 million versus EUR 348 million for the comparison period, representing an 8% positive variance. And for the first half, orders were EUR 755 million, up 3% year-over-year. In terms of demand trends, we remain on a similar level as we have for the prior 10 quarters with demand coming more from larger key account customers, which is the explanation for the positive variance compared to the second quarter last year.

And currencies had a negative impact in the quarter compared to a slightly positive impact in the first quarter of approximately 200 basis points. So in constant currencies, we had a 10% variance versus the comparison period. So all in all, we are pleased with the results, but at the same time, we do not see the trends overall changing in either direction.

So let's look a bit more in detail the order intake by region. For the quarter, we were positive relative to the comparison period, but I would point out that we were coming from a relatively low base in the Americas, so starting with the Americas. EMEA delivered EUR 188 million of orders, representing 50% of the group results, which is up 2% year-over-year, and EUR 391 million for the first half, up 8% versus last year. The Americas delivered EUR 159 million in the quarter, representing a 15% positive variance and for the first half delivered EUR 303 million, which is actually down 5% year-over-year, representing 42% of orders at the group level. But as I mentioned earlier, we come off a relatively low comparison period or base from last year, and the positive variance was largely driven by a large order that we've recently reported on.

In the Asia Pacific region, we continue to deliver stable results, representing 8% of orders for the group in the quarter and up nicely year-over-year by 15%. So we continue to see positive momentum in defense logistics, together with robust replacement demand. But at the same time, we continue to see demand impacted by the uncertainty stemming from the trade policies, which we see is causing our target customers in the U.S. to remain cautious.

In terms of sales execution, which is quite strong in the quarter, which resulted in EUR 402 million of revenue and EUR 814 million for the first half, representing a 7% and a 4% negative variance, respectively, year-over-year. In constant currencies, we were down 5% versus the comparison period. And in terms of Services sales, we were up 2% year-over-year.

Now looking at the sales mix by region. The mix for the quarter was similar to our order profile as EMEA represented 50% Americas up slightly in sales versus orders of 43% and Asia Pacific at 7% of sales. EMEA declined by 4% to EUR 203 million. The Americas delivered EUR 173 million, representing a 12% decline. And Asia Pacific remained flat at EUR 27 million for the quarter, but down 10% for the first half.

So I'm really pleased with the development of the percent of sales of our Eco portfolio as we improved to 38% of sales or EUR 155 million for the quarter compared to EUR 126 million for the comparison period. And for the first half, sales from Eco portfolio represented EUR 279 million of our EUR 814 million of sales or 37%. So nice execution by the team in that regard.

And perhaps this will work better if I pick up the remote. Although we had a 7% decline in sales, we were able to deliver a good level of operating profit in the period and for the first half of the year coming from excellent execution, in particular, in our operational excellence pillar of our strategy. In terms -- in absolute terms, profit was EUR 60 million versus EUR 63 million, so a decline of 4%. And for the first half, the result was EUR 126 million versus EUR 124 million. So a nice year-over-year increase by 1% despite the decline in sales.

In relative terms, the group delivered 15% for the quarter and 15.5% for the first half. So a strong performance overall, and then Mikko will provide additional insights with regards to the profit bridge just a bit later. So the good level of profitability supported a nice improvement in return on capital employed from 27.1% last year to 30.4% this year.

So I'd like to close this section with an update as to how we are tracking towards our strategy targets. If you look back to the prior quarter, we're down slightly in our rolling 10-year average of our compounded annual growth rate. Similarly, we're slightly down sequentially on our last 12 months of operating profit due to the fact that we lost a strong quarter last year in Q2, so slightly down from 13.7% to 13.6%. And our return on capital employed, as I talked about in the prior slide, is up to 30.4%. So we feel that we're nicely on track to achieving our long-range strategy targets that we communicated last year.

So with that, I'd like to hand over to Mikko Puolakka to take you through the segment results.

Thank you, Scott, and good morning also from my side. Let's first have a look on the Equipment segment performance during the second quarter. The equipment order intake grew. However, profitability was impacted by lower volumes. Order intake grew 8% to EUR 256 million. This growth came from the lifting equipment, especially in EMEA and in APAC. The delivery equipment order intake declined in EMEA. We had quite a sizable defense order in the comparison period. And it's also good to remember that this kind of orders, defense orders do not necessarily come every quarter. So overall, we still see that the defense activities on a good level and hope to also book some orders in the future.

The order book decline is attributable to delivery equipment due to the lower market activity, especially in the U.S. during the first quarter and now in the second quarter. Sales declined 11% to EUR 284 million. The lifting equipment sales grew, but this was not enough to fully offset the delivery equipment sales decline, which is very much stemming from the low order intake what you saw in quarter 1.

Our comparable operating profit declined due to lower sales as well as due to a EUR 5 million asset write-off, which we took in quarter 2. Without this asset write-off, the equipment comparable operating profit margin is 15.5% in quarter 2 despite the 11% sales decline. So really strong performance, underlying performance. And I will describe this write-off a bit more in detail on the next page.

So let's have a look on the Equipment segment profitability bridge. The EUR 33 million sales decline, what you saw on the previous page was the biggest adverse impact on Equipment segment profitability. The Equipment gross profit margin declined. It was impacted by this previously mentioned EUR 5 million asset write-off that diluted the comparable operating profit margin and also gross profit margin by 1.6% units. As a part of ongoing restructuring in our Italian operations, which we announced late last year, we have identified certain assets which we have decided to write off now in quarter 2.

Currencies like lower U.S. dollar caused also some headwind in quarter 2. On the positive side, the Equipment segment SG&A costs declined illustrated here on the other bar on the right-hand side. So summa summarum, without this EUR 5 million write-off in quarter 2, Equipment segment delivered a very solid 15.5% comparable operating profit margin in the second quarter.

Services performed extremely well in quarter 2. Order intake grew by 9%. This growth came mostly in so-called recurring services like spare parts and maintenance services. We have been successfully growing also the number of connected units as well as the maintenance -- number of maintenance contracts. The profitability development was really strong, supported by the commercial and sourcing actions.

Looking at the Services profitability bridge, there were several positive contributions to the profitability. First of all, 3% sales growth was one of the contributing factors. Then already previously mentioned commercial and sourcing actions were supporting also the gross profit margin. We did not have any major impact from the FX during the second quarter. And then we had slightly higher SG&A costs as we continue to develop services capabilities and technologies in line with our strategy to take the Services business to revenues to EUR 700 million by 2028.

Next, let's have a look still quickly on the total Hiab financials. So as mentioned already earlier, our sales declined 7%. Also, as mentioned earlier, the gross profit margin was impacted by the EUR 5 million Italy-related write-off. Without that, our gross profit margin in quarter 2 was 32%. The same applies to our comparable operating profit.

So without the write-off, EUR 5 million write-off, the comparable operating profit was 16.1% on the same level as in quarter 1 and clearly improving from the comparison period. Thus, I would say that the underlying business performance has been very good despite the 7% sales decline, really highlighting the robustness of Hiab's business model.

Looking at the cash flow, like in quarter 1, most of our quarter 2 cash flow was generated by the continuing operations, i.e., Hiab business. The cash conversion was slightly below 100% in quarter 2, mainly due to the incentive payments, which typically take place in the second quarter and the VAT payments, which fluctuate from month-to-month and from quarter-to-quarter. Thanks to the solid cash flow in the second quarter, we continue to have a very strong balance sheet.

Continuing operations, i.e., Hiab's gearing was minus 7%. This is slightly lower than what we had in the first quarter, minus 12%. We paid EUR 77 million of dividends in the second quarter, and this was mostly offset by the strong operative cash flow, as you saw on the previous page. Also, please note that, like I said also earlier, we aim at closing MacGregor sale at the end of July, and we expect then roughly EUR 225 million sales price coming in, in quarter 3.

Like Scott mentioned earlier, we have specified the outlook for 2025. This is based on the first 6 months financial performance and our current visibility to the second half of the year. So we estimate for the continuing operations, i.e., for Hiab, the comparable operating profit to exceed 13.5%, so to be slightly higher than in 2024. So with those words, then I would hand back to Scott to summarize the key takeaways.

Thank you, Mikko. All right. So a couple of key takeaways that I want to summarize the quarter around. One is our first half of the year has been extremely strong and due to the excellent execution of the entire team at Hiab. That's led to our profitability being on a strong level, really proud of that despite the challenging market situation.

However, the market uncertainty continues to negatively impact our business, especially in the U.S. So therefore, we're still taking a relatively conservative view and providing a bottom scenario as we have been for each of the last several quarters in terms of our outlook. We believe we're in an excellent position, however, to deal with this market volatility. And we like the fact that our strong cash flow and balance sheet position positions us to continue to invest in the business and gear Hiab for growth into the future.

So with that, Aki, I'll turn it over to you for Q&A.

Thank you, Scott. And I would like to welcome Mikko Puolakka back to the stage. And with that, operator, we are ready for the Q&A.

[Operator Instructions]

Quiet at the moment on the question front.

Yes.

So if we don't have any questions for the call, so we can conclude the session. But I would still remind you that we have our site visit upcoming on 18th of September. So please sign up if you're interested to participate this one. Thank you, Scott, and thank you, Mikko, for the presentation.

Thank you, Aki.

Thank you.

Thank you. Thanks, everyone, and have a safe day.

And have a nice summer.

I will cover quickly the quarter 1, kind of recollection of that, and then also a couple of words about the quarter 2 releases, which we have published to date. And then like Aki said, we have some time for Q&A.

So in quarter 1, the demand picture, especially in late February and also throughout March, was quite a lot dominated by the escalating trade tensions. Like in many companies, uncertainty about the tariff outcome impacted our customers' decision-making in the U.S. That was quite visible in the Americas order intake, what you will see a bit later.

Other regions, EMEA and APAC, grew nicely in quarter 1, and they were mostly offsetting the U.S. decline in order intake. And as a consequence, our order intake for quarter 1 was EUR 378 million versus the EUR 386 million for the same period last year.

We have had the last 10 quarters quarterly order intake roughly at the level of EUR 370 million, plus/minus some tens of millions of euros, depending a bit on the quarter and also a bit on the period of the year, from the seasonality point of view.

Our rolling 12 months order intake has been fairly stable and remained also in quarter 1 on the level of EUR 1.5 billion.

Our order book stands now at EUR 601 million at the end of March. This is 22% below the comparison period quarter, and this represents some 5 months of sales. So this kind of 3 to 5 months' lead times, that's fairly normal to our business.

When we look further into the geographic split of our order intake in quarter 1, we saw an improvement in EMEA as well as in APAC, while Americas declined. Americas' decline is very much attributable to the U.S. customers' behaviors.

EBITDA improvement was supported by a good activity in the Defense segment. We saw also an improving activity in large European markets like Germany. Construction, we see also gradually improving. But it's good to remember that we are still on a very -- or we are starting on a very, very low levels compared to the past years. We have not seen any order cancellations and we have also not seen any kind of preordering in the U.S. before the tariffs came into force.

As the order intake has been fairly stable in the past quarters, like you saw in the previous page, also Hiab's revenues were flat in quarter 1 compared to the past quarters, as you can see on the left-hand side.

Our supply chain, i.e., for example, the subcontractors, component manufacturers, that has been performing. And we did not have any delivery delays or postponements during the first quarter. The share of Services increased slightly as Services revenues were flat, while the Equipment revenues declined by 1%.

Our rolling 12-month sales were, at the end of quarter 1, EUR 1.64 billion. This is slightly below last year's comparable number. The current sales levels and the rolling 12 months' revenue curve reflects also the normalization of our order book as especially still in 2024, we delivered the remaining so-called COVID excess order book, which was stemming from, for example, the truck lead times back in 2022 and '23.

When looking at the geographical sales split, so we have 4 to 6 months' lead time from booking of the order until delivery and invoicing the order. And therefore, still during quarter 1, we were delivering still orders which were stemming from, for example, quarter 4 last year. And the result of this, so Americas revenues grew still in quarter 1, while EMEA and APAC declined. This pattern is likely to change in the coming quarters as a result of the geographical split of the quarter 1 order intake, as you saw in the previous slides where, for example, the U.S. order intake declined by 20% year-on-year.

Our ECO portfolio sales constituted 35% of total sales in quarter 1. And our ECO portfolio offering includes solutions which contribute to basically 2 sustainability objectives. The first objective is to mitigate the climate change. For example, products like loader cranes, which are able to reduce the fuel consumption of the truck on which the loader crane is installed. And the second objective is related to the transition to the circular economy. And here, we have products like spare parts in Services.

When we look at the profitability, our profitability was very good in quarter 1 despite the 7% decline in sales. We did not have any exceptional items during quarter 1, not positive ones nor negative ones. The profitability in quarter 1 is a result of, for example, successful sourcing actions during 2024, and these actions have enabled us to improve the cost of goods sold.

Both Equipment and Services delivered solid profitability in quarter 1, 15.7% and 23.7%, respectively. And thanks also to good profitability and decline in net working capital, operative return on capital employed was 30% in March.

When it comes to outlook for 2025, so we maintain our outlook for year 2025. Continuing operations in practice stand-alone, Hiab's comparable operating profit, we expect to be above 12%. So this is the kind of floor for our comparable operating profit for 2025. We have defined this outlook already in early 2025 and, at that time, taking into account the potential uncertainties in the U.S. related to tariffs and also any possible ripple effects also outside the U.S. and obviously, from the trade tensions.

So then if we look at the announcements during quarter 2, so we have announced a EUR 19 million investment in expanding and modernizing our Raisio demountables production assembly factory here in Finland. This factory is specialized in the assembly of our MULTILIFT ground products, and this product is delivered both for commercial and defense logistics customers. And this investment will spread out mainly over the next 3 years, mainly in 2026, 2027.

And with that one, then I think we have the floor open for any questions.

Thank you, Mikko. And as you know, the practice is please raise your hand in the Google chat, and I'll give you turn. You can also write to the chat or I also take questions from the telephone lines.

And the fastest one today was Antti Kansanen from SEB. So Antti, please go ahead.

Yes. Obviously, just coming back to the demand situation in the U.S. And if you remind a little bit how kind of you ended the Q1 and any kind of comments on how the second quarter has started. I mean the truck registration data has been really volatile and quite weak. That doesn't necessarily contribute, kind of correlate to your business. But has kind of the uncertainty meant that a lot of your clients have been hesitant? Or have they kind of pulled forward investments? Any comments on the current situation?

Thank you, Antti, for the question. I would say, in general, the quarter 2 has started in a very similar manner from customer activity point of view. What we saw in the latter part of the quarter 1, so still hesitation in investments. It does not mean that the customers have completely stopped investing, but a very similar kind of behavior, what we experienced already at the end of quarter.

And obviously, kind of when the U.S. order volumes are coming down and the rest of the world is coming up, the delivery mix changes quite a lot on the second half geographically. Does it have a big impact on your Equipment profitability on where the order is coming from?

Well, in general, our U.S., at the moment, our U.S. business is perhaps more kind of direct route to market, so through our own sales and service operations, while outside the U.S., we have perhaps a higher mix of dealers. So that has a certain impact. And then it, of course, depends -- the second half profitability depends also on how fast the European volumes can compensate the U.S. decline, so do those kind of increases in Europe and decline in the U.S. go hand in hand or is the U.S. revenues declining faster than the European or APAC revenues are going up.

Okay. I guess then it's logical to ask about the European kind of recovery. How does it look like? Where do you see it? Is it construction-driven, Central Europe accelerating? Any color on that one?

Well, firstly, we have seen good activity in the defense sector as many European countries are increasing their defense budgets. So their customer activity has been on a better level than what we have seen, for example, 12 months ago. And then in these large economies like Germany, we see gradual improvement. However, we are coming from very low levels still in the activity, for example, construction. So it takes still a while before we are on those kind of controlled levels like we used to see even perhaps before COVID times. But yes, gradual improvement in construction as well, but coming from very low levels.

Thank you. So do we have any questions from the telephone lines at the moment?

Maybe I can ask a question, if you can hear me.

Yes.

It's about, say, the leverage or organic drop-through because you delivered a very strong margin in the first quarter. I think it was explained by a relatively high revenue level as well. If we would see sales coming down towards the order level of around EUR 370 million, EUR 380 million, we would have a revenue delta from Q1 to Q2 or Q3 or whenever that will happen of around EUR 30 million, EUR 40 million. Is it fair to assume that we should expect a drop-through of 30%, 35% on that revenue drop? Or how to think about the margin progression if sales come down in the coming quarters towards the order intake levels that we have seen?

Thanks for the good question. We communicated in quarter 1 that our gross profit margin has been roughly 30% to 31%. But below that gross profit margin, we have the SG&A costs, selling and marketing; R&D and admin costs, which dropped, let's say, flex very easily, at least in the short term. Of course, in the long term, we can do various kinds of restructuring activities there. And then above the gross profit margin, we have certain factory overheads also, which are fairly, let's say, fixed irrespective of the volume. So I would say that it's fair to say that for each euro in the top line, at least one should calculate, based on quarter 1, at least some EUR 0.31 kind of drop-through on the profit line.

Understood. And then the second...

We lost your voice. Still silent here. He might come back. So meanwhile, do we have any other questions from the telephone lines? Tom, please go ahead.

I was wondering about the MacGregor divestment. Will it be now booked in Q2? Or will it be booked in the third quarter? And are there more details we should know about this?

Yes. Still, our aim is to close the transaction by the end of quarter 1 -- sorry, end of quarter 2. So that's still the plan that we will have it closed by this month, in the next few weeks' time.

Implying all cash movements will be in Q2 as well? Any update on that?

That's the ambition, whether it's on the last day of this quarter or the first day of next quarter, but within those days.

And how big will the cash inflow be now?

We have indicated that the sales price will be approximately EUR 220 million.

Yes. But adjusted for the cash position, I mean, now you know pretty well what the cash position will be in 2 weeks' time.

Yes. We have not basically disclosed anything else than what we had at end of March.

Okay. Let's see if we have Andreas back on the line for any questions if the microphone is working. If not, we have a question just from Jonathan on the M&A. Do we have any news on the M&A front?

Yes, we have been engaging actively on potential M&A targets. Of course, sometimes it takes time to kind of develop the M&As to that kind of stage where we would be able to tell a bit more about potential targets in both Americas region as well as in EMEA region. I would say typically, bolt-on type of acquisitions, for example, allow us to have a geographical access to certain markets like we have done in the past, ranging from, say, few tens of millions of euros, say, EUR 50 million to EUR 400 million.

Thanks, Mikko. Do we have any further questions coming through from the chat or from the telephone lines? I'll give you 30 seconds time to think. Mikko, if you go to next page because I would like to take the opportunity to still advertise our upcoming site visit in Poland, 18th of September. We have sent the invitation to you last week. So if you did not receive that, so please reach out to us. It will be a nice event organized together with Kalmar Corporation. And our results will be published 23rd of July. If we don't speak before that, have a nice summer break, if you have a possibility to take one before we start reporting. Thank you, and have a nice day.

Thank you.