Hiab Oyj

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.