Konecranes Plc

Miikka Kinnunen - Vice President, Investor Relations Panu Routila - President and Chief Executive Officer Teo Ottola - Chief Financial Officer, Deputy Chief Executive Officer and Member of Executive Board

Leo Carrington - Credit Suisse Manu Rimpela - Nordea Capital Markets Sebastian Growe - Commerzbank AG Tomas Skogman - Carnegie Investment Bank AB

Yes, hello, everybody. My name is a Miikka Kinnunen, I'm the Head of Investor Relations at Konecranes and welcome to this Full-Year 2017 Financial Statement Release Presentation.

I'm accompanied here by my President and CEO, Mr. Panu Routila, and also together with us, we have our Chief Financial Officer, Mr.

Teo Ottola. Panu Routila, he will cover the group matters and discuss some of the highlights, and then Teo Ottola will delve into the business area performance as well as some observations on cash flow and balance sheet.

Without further ado, I will give the floor to Panu Routila, please.

Thank you, Miikka. 2017 was an eventful year for Konecranes.

The highlight of the year was obviously the successful completion of the MHPS acquisition back in January 2017 already. I'm also happy with the fact that our full year 2017 order intake was stable despite the comparison year, including over €200 million single-order import solutions.

Also based on the comparable combined company's figures, our adjusted EBITA margin improved to 6.9% in 2017. The focus of the management and the board has been on the improvement in EBITA margin in particular.

Our fourth quarter results came in line with our expectations. The small decline in Business Area Service order intake was attributable to negative currency exchange rate effect, and it was positive to note that order intake grew by 3.3% at comparable currency exchange rates.

Clear profitability improvement continued in Industrial Equipment, where the adjusted EBITA margin was 5.5% compared to 3.0% a year ago. The improvement in adjusted EBITA margin related mainly to the cost-saving measures implemented in 2015, 2016 as well as successful deliveries.

Gross margin improved and fixed costs were lower on a year-over-year basis. Furthermore, our crane component orders grew strongly in Americas and EMEA.

Business Area Port Solutions faced tough comparison in terms of order intake and the adjusted EBITA. As said, the comparison period area included a single order exceeding €200.

As I commented already last quarter, Port Solutions business areas adjusted EBITA declined due to lower sales related to the timing of deliveries. The year-end 2017 run rate of MHPS cost synergies came in at €56 million, €6 million higher than our previous estimate published.

Furthermore, the Board of Directors proposes a dividend of €1.2 per share. Let's look at some of the key figures in more detail.

On a comparable basis, orders received in the fourth quarter totaled €733 million, representing a decrease of 20.5%. However, in the full-year, the decrease in orders was below 1%.

The value of the order book at the end of December totaled €1.536 billion, which was 1.9% higher than in the previous year on a combined basis. Group sales on fourth quarter decreased by 6.5% to €910 million.

The consolidated adjusted EBITA in Q4 decreased from the previous years €86 million to €80 million. However, the adjusted EBITA margin was stable at 8.8%.

In full-year 2017, the EBITA was €216 million, marking an increase of 17% year-on-year basis. The adjusted EBITA margin in the full-year improved to 6.9%.

The consolidated operating profit totaled €65 million and EPS was €0.26. We booked restructuring costs of €13 million relating to the integration of MHPS acquisition.

Our free cash flow remains strong at €58 million. Let's look at some of the key macro indicators.

The European Union manufacturing capacity utilization rate continued to improve in the fourth quarter. Demand for equipment and services among our industrial customers improved from Q3, 2017 and was approximately stable year-on-year basis.

The U.S. capacity utilization rate improved only just before the year-end.

Hence the demand of our products and services was still mixed in the fourth quarter. Based on the Purchasing Managers' Indexes, economic activity improved in emerging countries compared to the previous year.

Correspondingly, we continued to see higher demand for our products and services in Asia Pacific. The global container throughput was robust, as it increased approximately 6% on a year-on-year basis in 2017.

Regionally, the volumes in Asia, which represents more than half of the global container traffic, rebounded on most of the trade routes. Container volume from Asia to North American East Coast grew particularly strongly as the widening of the Panama Canal has supported traffic above expectations.

In addition, the volumes in the Mediterranean ports clearly increased, thanks to the improved economic growth in Southern Europe. Excluding the over €200 million order received from the U.S.

a year ago, our orders increased in Business Area Port Solutions. Our demand outlook is as follows: Demand situation for industrial cranes, hoists and services in Europe is stable within the industrial customer segment; business activity in the North American manufacturing industry remains mixed; demand in Asia-Pacific is showing signs of improvement; global container throughput growth has improved and the prospects for the small to medium- size orders related to the container handling have strengthened.

Our financial guidance for 2018 is, we expect sales in 2018 to be approximately on the same level or higher than in 2017. The adjusted EBITA margin to improve in 2018.

Furthermore, we would like to point out some additional information. First, we would like to highlight that the comparable combined company order book was up 1.9% year-on-year at the end of 2017.

That said, we have a negative sales impact from translation exposure, mainly related to the euro, U.S. dollar of approximately 3%, based on current currency exchange rates.

We expect incremental MHPS acquisition-related synergy benefits of €40 million to €50 million in our P&L in 2018. At the same time, our estimate is that we will spend an additional €50 million in IT and R&D in 2018 to enable harmonized processes within the company and secure our long-term competitiveness.

On the other hand, we expect to see savings of €12 million in net interests related to the financing facilities in 2018. Our 2017 MHPS integration activities tracked ahead of our plan.

I am very pleased with the fact that we have been able to maintain our customer focus without allowing our day-to-day operations to get too much distracted in spite of all the integration activities. We have fully fledged integration programs set up with 400 initiatives and over 3,000 actions planned.

In 2017, we implemented the full closure of nine production facilities and announced one significant downsizing. In Industrial Equipment, we are in progress of reducing the number of product platforms from 30 to 40.

In 2017, our group headcount decreased by approximately 730 employees, which is approximately 4%. When it comes to the Q4 actions, we announced the closure of a salon factory in the U.S.

The closure is now being finalized. The second factory closure in India is now already completed.

In Q4, we saw the first crane components being harmonized and rolled out. Our planning efforts for 2018 and 2019 initiatives are ongoing on a broad front.

We have implemented run rate synergy, so €56 million during 2017, which came in €6 million ahead of our earlier forecast. This had a €20 million impact on the P&L level.

In 2018, we expect the cumulative run rate impact at year-end to be €100 million to €110 million. The corresponding cumulative P&L impact of these actions is estimated to be approximately €60 million to €70 million in 2018.

We maintain the target of €140 million EBIT level synergies per annum by the year-end of 2019 intact. The following slides contain the group financial performance still in graphics, and I won't repeat the previously mentioned figures anymore here.

But I will just mention some highlights before Teo will tackle them more detail in business area level. The Q4 orders received, decreased in all business areas – in Business Area Service and Business Area Industrial Equipment, this was related to negative currency exchange rate effect.

As mentioned earlier, import solutions the comparison period included the order from Virginia Port Authority worth over €200 million. Excluding this item, Port Solutions orders also increased.

Geographically, orders received grew in EMEA but were lower in Americas and APAC. Sales were lower in the previous year in all business areas.

As expected, the decrease in Business Area Port Solutions related to the timing of deliveries and exceptionally high sales of certain products in the comparison period. The sales in Business Area Service and Business Area Industrial Equipment were affected by negative currency exchange rate effect similar to order intake.

Order book decreased and order book increased in Port Solutions, but decreased in Services and Industrial Equipment. The order book decline in Service and Industrial Equipment was attributable to the currency exchange rate effect.

In this graph, we can see the year – that all year-over-year basis, the Q4 EBITA margin remains stable at 8.8%, against the comparison that was clearly the highest figure posted in 2016. The adjusted EBITA declined due to lower sales, although the gross margin improved.

In the full-year, the EBITA was €260 million, increasing 17% year-on-year. The adjusted EBITA margin in the full-year improved to 6.9% from previous year 5.3%.

Looking at the key financials on a comparable combined company basis for the whole 2017, we can proudly state that the adjusted EBITA increased by €32 million as the adjusted EBITA margin by 1.3 percentage point on a year-on-year basis. The adjusted EBITA margin improvement was driven by Business Area Service and Industrial Equipment.

The group adjusted EBITA improved mainly thanks to the cost-saving measures implemented in 2016, 2017 as well as successful delivery execution. The gross margin improved and fixed costs were lower on a year-on-year basis.

Finally in 2017, Business Area Service generated 36% of group sales; Industrial Equipment, 34%; and Port Solutions, 30%. In terms of the geographic Europe, Middle East and Africa represented slightly more than half of our total sales whereas Americas generated 31% of it.

The share of Asia-Pacific was 17%. And now I have will have Teo go through the Business Area presentations.

Thank you, Panu. And let's start with the start with the service numbers, as usually we have done.

So the order intake for the Service Business in the fourth quarter was €237 million. That is a decline of 1.5% compared to the situation Q4 2016.

As already discussed by Panu, we had quite a lot of currency headwind in the fourth quarter and with comparable currency rates, we are actually looking at the growth of 3.3%. Sales fell to €321 million by 3.8% and here the same currency comment applies.

So with comparable currencies, we are actually looking at the small positive growth. Sales decreased in Americas and APAC, while in EMEA, they remained unchanged.

Of the business units so the split between parts and field service so there was actually no significant change, plus the product mix remained roughly the same as in Q4 2016. The service-adjusted EBITA was €49 million and 15.2%, which are both good numbers however, slightly lower than a year ago, both in euros and in percentage.

The gross margin was flat, so there was no major change in that one. The fixed cost declined in the year-on-year comparison.

So basically, the EBITA decline comes purely from the volume or in other words, from the translation impact from the currency changes. When we take a look at the order book.

It was €196 million at the end of 2017, also this one, lower than a year ago. And again, the currency comment with comparable currencies, we will be taking an improvement of roughly €10 million in the order book.

Agreement base 613,000 units or €231 million at the end of 2017. Then to Industrial Equipment.

Industrial Equipment order intake was €285 million that is 3.8% lower than a year-ago. Again, this one is attributable to the currency changes with comparable currencies there is only a very small decline in the order intake.

The decrease in orders was related to the Americas and EMEA. The orders grew in APAC and then when we take a look at the business units within Industrial Equipment.

Industrial crane orders decreased. However, the component orders were strong in Americas and EMEA.

Sales were €313 million, the sales declined by 2% and again, with comparable currencies, we are taking a look at the small growth in sales volume. Industrial Equipment adjusted EBITA was €17 million and 5.5% of sales.

So there is a clear improvement both in euros as well as in percentage despite the fact that the sales were flattish in on year-on-year comparison. The improvement has been there for – throughout the whole year so we have – so we are seeing the same kind of improvement in the fourth quarter.

The improvement is due to the gross margins which have continue to improve in the fourth quarter in on year-on-year comparison also fixed cost are on a lower level than they were a year-ago. And of course, the gross margin have been supported by successful deliveries also the cost saving actions that we have taken during 2016 and 2017 and the fixed cost of course as well as a result of the cost saving activities we have conducted.

When we take a look at the order book, we can know that, that is €527 million. This is a decrease of 2.6%.

And again, like we have to repeat here that with comparable currencies, a slight improvement in the order book. And the Port Solutions order intake €255 million that is as much as almost 40% lower than a year-ago.

Again, now here we have to repeat what Panu already said, so the comparables are very tough because the Virginia deal was in the fourth quarter of 2016. As a result of that one, obviously, orders fail in Americas in Q4 2017.

They also declined in APAC, whereas we had order growth in EMEA. Of the business units in the order intake, lift trucks actually did pretty well.

Port service did pretty well, and also within the business unit port cranes where the Virginia order happens to fall in. So if we take a loot at the other product lines like RTGs so they were actually doing quite okay.

Sales were €313 million here as well in the Port Solutions, this is a decline of 11%. This is also something that we commented already earlier in 2017.

The decrease of the sales is due to the timing of deliveries and notably, the very high deliveries for RTGs in the fourth quarter of 2016 and now we have less of those in the fourth quarter of 2017. Adjusted EBITA about €17 million, 5.3% here about the euros and percentage are lower than what they were a year ago.

The decline obviously is mostly due to the volume. Sales was much lower.

But also gross margins were somewhat lower than what it was in the fourth quarter of 2016. In project business, every now and then margins are a little bit higher and sometimes slower so nothing dramatic in this one.

Also fixed costs were lower than a year ago, but it was not enough to compensate for the volume or the gross margin decline. Port Solutions order book €830 million that is 6% up.

The currencies overall in the Port Solutions do not play as much of a role as they do in Service or Industrial Equipment so there is a currency impact, but it is much smaller than the other – in the other two business areas. And then before going into the Q&A, a couple of comments on the net working capital and balance sheet topics.

Net working capital continued to be on a good level, €335 million or 10.4% of rolling 12-month sales. This continues to be a very good level on a historical perspective.

Actually, the situation improved slightly from the end of the third quarter. The situation was stable or slightly improving in basically all business areas.

And of course, if you take a look at the balance sheet so you can notice that the inventories are at a lower level at the end of the year and accounts receivables are on higher level as a result of the high delivery volumes. But all in all, a very good development also towards the end of 2017 from a net working capital point of view.

This is, of course, feeding into the free cash flow €224 million for the whole of 2017 helped by a release from net working capital in the amount of more than €100 million. Then gearing and return on capital employed.

So here, the net debt is €525 million and gearing for 1%, much stabler has the gearing as well as the net debt now being compared to the situation before the combined company due to the both debt level and the equity level being on a higher level. The 41% we are, of course, satisfied with the capital employment – return on capital employed.

We can see on the right-hand side, €2 billion roughly to capital employed, return on capital, 15%. And obviously, now this one – this curve will again change now a little bit as we go into 2018 as then the both starting point will be with the combined company for a month.

This one concludes the presentation. And we can move into the Q&A.

Good morning. Thank you for taking my question.

Can you give us any quantification in terms of number or approximate revenues with the extent of the statute took through 2017 to close the underperforming outlooks as part of the synergies planed? And what you can say about the plans for 2018 in terms of geographies and most of the size of the actions plans compared to what's been done through 2017?

Well first of all, as we have communicated, we have closed nine factories and one has been further announced since then. This, obviously, has a certain effect.

We have also communicated earlier that in the Service business, we have really concentrated the last year on laying the ground for the new growth that is happening this year. These two, obviously, have had an effect, and Teo might comment a few words about that.

Sorry Leo, would you mind repeating the other part of the question.

Yes. I was really looking on the revenue side rather than costs.

My understanding was, through 2017, particularly in the U.S., you've been closing some of the underperforming sales outlets, particularly in Service. Can you quantify that for us at all just to give us a bearing on the run rates of the underlying business?

And also, if you're planning any similar measures through 2018, which might weigh on revenue growth?

I think we will not actually comment the exact numbers here. That is a confidential amount.

We have though already seen the activities done so we do not expect that to continue this year.

Okay. Thank you.

Okay, thank you. My first question would be on the IT spend, a €50 million increase of your – on R&D that you are planning for 2018.

So how should we think about it? Is this something that you looked into the assets you acquired to realize that their IT systems are of lower quality than you expected, and this is actually kind of €140 million synergies, which is lower by €60 million?

I said it is actually happening in R&D and IT, both. First of all, regarding the R&D, we are a technology company, and we actually want to put now a little bit more even effort on our technology development so that is coming from that part.

The synergy related R&D, which I was already commented earlier like a reduction of the platform that has been clearly counted already in synergy activities. So this is a separate item from that one.

Regarding the IT issues, we will have some more to do actually, and this has not been really in relation to the synergy and synergy project. But this is more like in the harmonization of the future processes and some more additions that we will be doing in the IT spending.

It might be good to add to that one – that much that very early on, going into the acquisition, we already concluded that we would actually like to take the Konecranes' legacy IT systems for most of the activities in the MHPS as well. So basically, this one was already planned from the very beginning.

What now then of course happens is that, we will need to do some additional things in the IT. New requirements from the legislation and markets and new requirements from our business, and these are applications that are mostly being built on top of what we already have in our systems.

May be asking the other way around, is this €50 million included into €60 million increase CapEx that you had communicated to the market in terms of what you need to do for this acquisition – or is this on top of the €60 million?

This is a separate item.

Yes, and the €60 million obviously was a CapEx and this one is €15 million, that we are now talking about regarding the IT and R&D. So this is OpEx, so this will be into P&L directly into 2018.

Can you then comment on the mix of the backlog you see, going into 2018? I mean, clearly, there was some potential surprises, at least to the market, on the Port Solutions side in the first quarter.

So can you just talk about how do you see the mix? Is it improving, and the gross margins are better, prices are higher or how should we think about it?

Prices have been increased roughly in line with the inflation. So what we can see from the price mix within our order book is that we are in line or maybe in some product categories even a little bit ahead of the inflation.

So the product mix from that perspective, from the pricing perspective is not weaker, at least, than it was one year ago. When we then take a look at the actual mix within the order books from the product line point of view, so there are differences particularly in the ports and there are differences also within the Industrial Equipment.

But all in all, I would say that these changes are quite a lot netting each other. So that the mix impact in net terms is actually not significant.

Can you please tell the divisional mixed shifts that you commented on Port Solutions? Is it better or worse?

And what is the Industrial Equipment that was the other one?

I think we can, firstly, say that we expect improvement in margin in all of the business areas for 2018.

Can you comment on, because Teo already talked that the mix is different in the two divisions. So can you help us saying that in what direction, because sales are on good level?

Well, the mix in the Industrial Equipment probably is a little bit, let's say, weaker from the point of view that what business lines we have in there, and in the ports, maybe slightly better, because of the lift trucks and Port Solutions. But then even if we take a look at the BEAs themselves, so the differences are not necessarily very big.

What I mostly meant regarding the Port Solutions, for example, is that there are many changes within the Port Solutions that are then probably netting to a relatively close to unchanged situation in comparison to a year-ago.

Okay. Thank you.

Thank you. Thinking about demands, have you seen any effects of the pickup following the general improvements in fiscal activities in 2017 in the broader markets?

Have you seen any sign of take-up of components orders that's typically preempts those heavy crane orders or what you can tell us about – I know you have given your market outlook statements, but what can tell us about early signs of revenue growth next year?

Yes, I think first of all we can start from the components – crane components side. And there in Americas and EMEA, we have seen a strong increase in order intake, very strong actually.

In Asia, not that much and otherwise, the demand in cranes has been pretty much stable, but the crane components order intake, being that strong already, hasn't had an indication.

Thank you. That’s clear.

And on a separate topic slightly, when thinking about the expected P&L implementation of synergies, you've given us a figure of €40 million to €50 million to be seen on the P&L? This strikes me as a little low, given that in 2017, you saw a €20 million P&L impact of €56 million run rate synergies.

So the bottom end of your guidance for 2018 of €40 million is just implying the catch-up from 2017 synergies and probably a little incremental synergies. I know in 2017, you're essentially a bit cautious on our expectations for the pace of implementation, but how do you see that synergies target for 2018?

Yes, your calculation and conclusion, of course, is correct from the point of view that we are getting a heritage from the actual run rate implementations at the end of 2017 of approximately €35 million to €36 million and then €40 million to €50 million, obviously, is relatively close to that number. This is, of course, reflecting the type of the activities that we are going to do now in 2018.

So these are more complex and they are more time-consuming as they are more going into the type of activities of unifying the component between different platforms and unifying platforms. And as you can imagine, so the lead times regarding those kind of activities and we are, of course, mostly talking about Industrial Equipment business here.

So the lead times for those kind of activities is quite long and therefore, even though we are doing those activities at the moment, so the impact when it comes to the P&L is quite far due to, for example, let's say, demands in or let's say, difficulties in planning those, of course. But then also in inventory turns and from order to delivery which we will be then seeing it in the P&L.

So that time lap just is longer in the activities that we are going to do in 2018 compared to 2017.

Thank you very much.

So it’s me again. I’m just taking advantage of the time to speak to you.

In Service, as I understand it, the market is historically being relatively sticky with in-house service offerings, holding relatively constant market share, which Konecranes hasn't historically been able to access. Have you seen any new opportunities to capture any of the market now that you have a larger service organization or now that you're influencing these kinds of technological improvements that you showed us in your Capital Markets Day?

First of all, we have already now identified clearly the growth opportunities in the Service business. We have been laying out now the plan for this year, how the growth will happen.

I will not go into the details of that. But the plan is actually good.

Based on that plan, we can see that the acquisition of MHPS is clearly giving us an advantage for the growth possibilities for now, but also later on.

Thank you. So I interpret that's just some sort of cautious optimism, perhaps?

You are right.

Thank you very much. That concludes my questions.

Just a follow-up. Can you comment on the cash flow profile, and how do you see that developing in 2018?

And obviously, the cash flow, I know, was very strong in 2017. Is there any kind of reversal of some of the strong working capital or is there something else that we should expect?

We had at first – last year, we started with a very good development in the net working capital and we were actually estimating at the end of the year would have been somewhat worse. I am actually quite happy that we did not attain those numbers that were forecasted before, and our net working capital has remained pretty on a good level.

Maybe, Teo, if you want to say further, some words.

I will, unfortunately, say in the same way as I have been saying in the previous quarters. The good thing is that I have been wrong, but I have been saying that we will most likely see a deterioration of let's say, between 1 to 3 percentage points going forward.

And this is of course, quite a lot depending on the timing of the projects, but now we have been benefiting a little bit from good advanced payments that we have been getting. So slight deterioration during the course of 2018.

I had a 1% to 3%. So that's off of sales you expect to kind of be given back in terms of working capital?

Yes. Well, when we talk about these percentages, we are then referring to the net working capital divided by rolling 12-month sales.

So that now – and now this was at the level of 10.4%, but of course, you can calculate the impact by taking 1% of the sales at the time so that is the way to calculate it.

Okay. And then a follow-up, a further question on – in terms of the outlook for the Port Solutions.

So you clearly stated that it's expected to improve, but how do you see the split between this kind of smaller ground-field type of investments? And then the larger points with automation orders?

Do you see the automation orders in the backlog of 2018?

We have already now. If you look at our last two months announcement, we have been already announcing quite many, actually the small and the medium-sized orders in the Port Solutions, and that seems to be continuing like that.

There are some bigger discussions ongoing, but maybe we don't expect this year still to get any huge order.

Okay. Thank you.

Yes. Good morning, gentlemen.

Three questions for my side. Thanks for taking the question.

So the first one is on the currency impact in the quarter. You guys have been pointing out what the impact on the sales level was, but I would just be curious to your thoughts on how much the overall impact on EBITA has been in the quarter.

I’m sorry if you have mentioned that because I joined a little bit later. And my second question is on the IT and R&D step-up of €15 million, how should we think about that?

Is this a recurring item? Or is it spikes, so to speak, a one-step change in 2018 and normalizing again in the years thereafter?

And the third question then is on synergies. You have so far only been leveraging on the cost synergy part of the MHPS field and back at the Capital Market Day you have been rather optimistic, especially on the sales synergy potential and I'm referring to the Service business in particular – MHPS service base?

Yes. The line was cut a little bit.

Which parts or which questions have you understood then?

Regarding the sales synergies, can you repeat the question please?

Well, yes. On the sales synergies, I was just making the point that so far, during the call, we have been talking about the cost synergies.

But on sales, I think the [PSHU], we're pretty optimistic there could be a Capital Market Day in December. So my question then is, and as the sales synergy not least refers to the installed base of the MHPS business and penetrating the agreement base there further, can you just update us on how the progress is going?

And if you are willing to share any quantification with us for the year 2018, what you have in mind here?

Maybe I will answer a couple of ones, and I will let Teo think a little bit how he wants to answer the currency question. Firstly, regarding the IT spends, that is not meant to be a recurring item.

Secondly, regarding the synergy, you are absolutely right that so far, we have been communicating mainly also about the cost synergies. Regarding the sales synergies, we discussed about this thoroughly in the Capital Markets Day, and we have repeatedly been saying that this year or last year 2017 was the year in Service business where we have been doing the base work, laying the ground work for the future growth to happen.

And now this year, we are going to see the growth happening in the Service business. And of course, a big part of that is happening from the installed base that we now received as part of the acquisition.

And now, Teo, you may.

Yes, on the current season and the fourth quarter in particular, so if we talk a look at – if we start with the easier one, on the translation impact. So that has come through, of course, fully.

It doesn't impact the margin but it – the old rule applies. So roughly the percentage change that we see in sales is the same percentage change that we see in our EBITA.

So now the currency impact for the sales was between 3% and 4% in the fourth quarter and a similar impact we can see in our EBITA in absolute numbers. Regarding transaction, which is then impacting the margin itself so there we have given this guideline of 10% in unilateral, unilateral meaning €9 million, and now if you take a look at the situation in the fourth quarter, so we actually did not take a hit that would be, so big as it would be in line with this equation.

And the reason obviously, has been that we have had some of the so-called good hedge fees still to be utilized in the fourth quarter. We have taken a hit as a result of the transaction, but not as much as the formula itself would let it to assume.

In 2018, obviously, we will be feeling via the transaction impact also more clearly because we do not have any more for the, let's say, rolling ongoing day-to-day business, these good hedge fees in our portfolio.

Okay. Thank you.

Yes, thank you. I was wondering about to get some more granularity about this Capex cycle that seems to be approaching given the high capacity utilization levels.

Can you just give some comments about individual countries, in particular in Europe and some industries? I mean, you must be seeing some changes and quotations on customer?

Well, if we take now a couple of words, not going too much into the details, but on a certain higher level, we can say that in Americas we have now seen that there is actually even willingness for the base industries to be investing. That is actually a sign that hopefully, we're also showing signs for further activity.

In Europe there are some countries where the industries are actually going quite well and we have to actually manage them here in Germany. That's one of the countries where the industry is doing somewhat well.

Now we are expecting that to be seen also in our demand. I've said already earlier that in the crane and crane component side, we have clearly seen in EMEA, in particular, Europe and Americas, a strong order intake, and that would be a indication for something.

And then I didn't understand about this increased IT spending. Is that something we should just add on to OpEx or also beyond this year or is it kind of a one-off increase for this year?

I already commented that this is not a recurring item. So this is one-off item.

The one-off for this year?

Yes. End of Q&A

Thank you, operator. Do we have any questions here in Helsinki audience?

Yes. I believe not, I think we can gradually close the event.

Just a small announcement, actually I will be handing over my duties to Eero Tuulos. He is here in Helsinki.

So if you have any questions regarding the fourth quarter result, so please do not hesitate to contact me, otherwise I will move on within Konecranes, and Eero Tuulos will then meet you and take your calls and emails in the coming months. Thank you.

Thank you.

Thank you.