Konecranes Plc (KCR.HE) 2025-02-07 Earnings Call Transcript

Good morning, everyone, and welcome to Konecranes earnings conference. We reported our Q4 earnings and 2024 financial statement release today. My name is Kiira Froberg, and I'm the Head of Investor Relations at Konecranes. And here with me, I have our usual people, President and CEO, Anders Svensson; and CFO, Teo Ottola. Before we start, just a kind reminder, please remember that the presentation includes forward-looking statements. Anders will start and talk about the group level figures. And after that, Teo will focus more on the business segment level numbers. And the presentation is followed by Q&A. [Operator Instructions]. Thanks a lot. Anders, it's your turn now.

Thank you, Kiira, and a warm welcome also from my side. So the headline of this quarter is a strong end to an excellent year. And our demand held up really well also in the last quarter of the year. It's actually the second highest order intake for a quarter ever, almost at EUR 1.2 billion and we ended at 26% up from the previous year. Our sales execution was also strong in the quarter, and we delivered the highest sales in the single quarter ever above EUR 1.2 billion. And with that strong sales execution, we managed to deliver a new all-time high for a fourth quarter comparable EBITA margin of 13.2%. Free cash flow was really strong and even excellent in the quarter at EUR 170 million. And the 2024 dividend proposal is EUR 1.65 per share. That's EUR 0.30 up from the previous year. And now moving to the market environment, and I'll start with the Industrial segments. And even though the macro indicators like the manufacturing PMI and the manufacturing capacity utilization are all showing weakness we managed to deliver a very strong order intake in -- also in our Industrial segment. We move into the Ports market environment. And here, we can see that it's remained high container throughput throughout the year and also in the fourth quarter. And we can see that reflected also in our order funnel with ports and activities there, up 3% on a year-on-year comparison. I'm moving to the group order intake and net sales. And as I said, very strong order intake, EUR 1,167 billion, second strongest order intake in a quarter ever, up 26% versus the previous year. And we saw that Ports was reporting really strong order intake, followed by also strong order intake in Industrial Equipment. If we look at the regions, we saw an increase in EMEA and Americas, while we saw a decrease in APAC. Sales execution, as I said, new record for a quarterly sales number at EUR 1,213 billion, that's up 5.5% versus the previous year. And here, we saw improvement in all segments. And when we come to the regions, Americas and APAC were significantly growing, while we saw a flattish sales in EMEA versus the previous year. If I then move into our order book, given that we had fourth quarter a bit special, very similar order intake and sales. Normally, sales is higher in the fourth quarter in order intake. So very similar order intake and sales. And then if we add on to that, our acquisitions, Peinemann, the order book there and also the FX effects, we actually have a growing order book of EUR 41 million in the quarter. If we compare year-on-year here, we are down EUR 150 million, roughly. That's down 5% at the end of the year. But if you look what we will deliver going into 2025 versus what we had in the book for 2024 when we entered into 2024. The difference is EUR 60 million less for the year. So still a very strong order book in historical perspective. I move into our group comparable EBITA. And here, we delivered the highest ever at EUR 159.5 million for the quarter. That equals a margin of 13.2%, and that's 150 bps up from the previous year. The improvement was mainly driven by volume, good price inflation management, and a strong strategy execution. Gross margin improved also year-on-year. At the end of the year, I think it's appropriate to evaluate our progress towards our financial targets. And I think we can summarize it as a success. I start with the group. And here, we had a growth target to grow faster than the market, and the market was defined as nominal world GDP growth, and that was for '24 roughly 4%. And we achieved a 6.9% growth in comparable currencies for the group. And we can also see that our margin of 13.1% for the full year is clearly within the range of 12% to 15%. Looking then at service. And here, we also had a target to grow faster than the market, and we achieved that with a 6.2% growth for the full year. And given the volume, the price management, and the strategic initiatives, we managed to improve our margins 110 bps here up to 21%. So clearly, within our profitability range also here. Moving into Industrial Equipment. And here, we had a target to grow in line with the market, and we achieved that as well. So we grew 3.1% for the year in Industrial Equipment. Given the strong strategy execution, focusing on profitability and stability, we managed to improve together with pricing, of course, we managed to improve 200 bps in the year from 7% to 9%. So very strong strategy execution within Industrial Equipment. Then in Ports, we had a target to also here grow quicker than the market, and we achieved that as well. We grew 10.9% in comparable currencies. And as you can see, we improved 180 bps year-on-year and ended the year at 9.3% for the full year. And also here, we are within the profitability range communicated. So in general, all our businesses are performing as to our expectations. I'm now moving to the demand outlook. I'll start with our industrial customer segments. So our demand environment within industrial customer segments has remained good and continues on a healthy level. And we can see that, that has been true for basically the whole of 2024, and we believe that it will continue also going forward. Interest rates, as we have discussed previously, has caused some delay in decision-making at our customers, especially in the larger process crane orders. But during this quarter, we also had some nice conversion into order intake within process cranes. The funnel continues to be good, both in terms of number of cases and in total value. So we see also new cases coming into the funnel in a good pace. So underlying seems to be stable. Within Port customers, we say that the global container throughput continues on a high level and long-term prospects related to global container handling remains good overall. And we can see here that our order pipeline looks really good, especially in automation cases but also in other projects. But as we know, order intake within these project businesses are fluctuating and much depending on customers' decision-making process. We had some nice conversion in this quarter into order intake, and we're also now discussing other projects with our customers, but to estimate if we get order intake in Q1, Q2 or Q3 is very difficult as we have talked about previously, but we have a good funnel that we are working on tightly with our customers. I now move in to the financial guidance for 2025. Net sales is expected to remain approximately on the same level in 2025 compared to 2024. The comparable EBITA margin is expected to remain approximately on the same level or to improve in 2025 compared to 2024. So as a summary, I think we can say that the fourth quarter was a very good and strong end to an excellent year. And we will continue with our strategy execution in terms of both growth initiatives, but also profitability initiatives going forward and we intend to discuss that and also our targets with you guys and the market during our Capital Markets Day in May this year. I also want to mention, as you have noticed that I have decided to leave Konecranes at the mid of July. And the Board has immediately initiated the recruitment of a new President and CEO for Konecranes, and our company is an excellent position, very strong. We have a clear road map, and we are executing on our strategy, and we have dedicated teams around the world to continue to execute that and follow the journey that we are on. And I'm fully committed until the mid of July to support this and drive this to the best of my abilities. With that, I would like to ask our CFO, Teo Ottola, to come up and talk more about our strength moving into 2025.

Thank you, Anders. And let's move forward in the presentation. So before we actually go into the segment numbers, so let's take a brief look at the comparable EBITA bridge between Q4 of '24 and Q4 of '23. Here, we can see how the numbers look like. So we actually made a EUR 25 million improvement in a year-on-year comparison in comparable EBITA. And we can start unpacking that a little bit with the help of -- let's say, net pricing impact and underlying volume impact as well. So the price increases in comparison to the situation 1 year ago were roughly 3% on average. And now that our sales increase was 5.4%. And in a year-on-year comparison. So that gives the underlying volume improvement of roughly 2.5% in the numbers for Q4 in comparison to the situation a year ago. Though the impact of operating leverage as a result of the underlying volume and net of inflation pricing were roughly on par with each other now in the fourth quarter. So it was a very balanced situation from that point of view. So price increases were more than inflation that generated positive delta, but also the volume as a result of the operating leverage gave positive delta roughly in the same amount in the fourth quarter. We did not have any meaningful mix impact in a year-on-year comparison now in the fourth quarter. Operational efficiency or execution continue to give positive delta, positive sort of profitability improvement or profit improvement in Q4. Even though we did not have a 100% clean quarter from the, let's say, efficiency or operational execution point of view but still the overall delta was positive. We can see in the picture that the fixed costs were very well under control. So the only a very small increase in fixed costs. Of course, one thing worth noting here is that we received an R&D grant in Finland in the amount of EUR 3 million roughly in the fourth quarter for the costs that we had already spent earlier. So this is, of course, helping the fixed cost comparison in this picture. Then we can move into the segment data. And as usual, let's start with the Service business. Service order intake, EUR 392 million, that is an increase of 3.5% year-on-year in comparable currencies. We had growth both in field service and parts. We had growth in all regions. And we actually also in addition to year-on-year, we also had sequential growth after a little bit lower Q3 order intake. Agreement base also growth there, more than 6% in comparable currencies. Sales, EUR 419 million, 3.7% improvement or increase in a year-on-year comparison in comparable currencies. Also there, increase both in field service and parts. No significant mix impact in a year-on-year comparison. And then we had also here increased in all regions. So quite balanced from the volume point of view. Order book, EUR 436 million, a slight decrease in a year-on-year comparison. Comparable EBITA, 20.6%. This is a 0.4 percentage point improvement in a year-on-year comparison, of course, attributable to pricing, also higher volume and gross margin increased in Service business as well. So overall, a very stable, good performance, excellent performance actually in the fourth quarter as well as for the whole year of '24 of this. Industrial Equipment order intake, EUR 357 million. That is almost 28% increase in comparable currencies when we take a look at the external orders year-on-year. This increase is, of course, supported by -- in the fourth quarter in the heavy end, so that the process cranes were impacted positively by that one. But when we take a look at the other 2 business units, so standard cranes and components, so we actually had year-on-year order intake growth in those as well. So the order intake was good overall across the business units. All the regions, we had increased in Asia Pacific. And then again, sequential comparison is exciting as well when we take a look at that one. So of course, the process cranes increased sequentially as a result of the bigger deal that we reported separately. Standard cranes were more or less flat in a sequential comparison. But components, which is maybe the let's say, fastest reacting, was actually growing also sequentially from the third quarter. Sales, 6.6% higher than a year ago. We had a good delivery quarter in the Industrial Equipment. Also -- and then when we take a look at the order book, EUR 893 million, which is almost exactly on the same level as we had 1 year ago. Comparable EBITA, 9.7% as much as 2.7 percentage point higher than a year ago, excellent improvement, of course, the underlying volume growth was good. So that was supporting it. The R&D grant that I already mentioned was mostly impacting Industrial Equipment. So that is, of course, helping there as well. And then also the optimization program that we have been having ongoing has continued to yield results in this quarter as well. Then Ports, moving on there. Order intake, EUR 461 million. This is an excellent level, of course, more than 50% increase in a year-on-year comparison when we again take a look at the business units a little bit, we had excellent orders in RTGs. We had very good orders in straddle carriers and port service as well. And overall, one could say that we had a good flow of midsized orders in the fourth quarter in the Ports business. When we take a look at like more early cyclical business units, lift trucks, for example, now in ports case, so lift truck order intake was flattish, both year-on-year and Q-on-Q, but still on a relatively low level. Sales growth was around 6%, and we had a good delivery quarter in Ports business as well. But from the order book point of view, of course, we are behind the situation a year ago almost 9%. The good order intake in the fourth quarter was not enough to compensate for the decline from the earlier quarters as we have, of course, seen this kind of development already in the earlier quarters. Comparable EBITA, 9.7% here as well as in the Industrial Equipment, also here a good improvement, 1.7 percentage points or a very good improvement, actually due to pricing, underlying volume improvement and also good strategy execution, meaning that in Ports the performance, the operational execution was good in the fourth quarter. Before getting into the Q&A, a couple of comments on the cash flow as well as the balance sheet situation. Actually, net working capital, if we start with that one, continued to develop well. EUR 380 million, 9% of rolling 12-month sales. This is very well in line with our target setting of being below 12% of rolling 12-month sales. And also net working capital is lower than what it was at the end of Q3. And of course, quite naturally, the accounts receivable are more than what they were at the end of Q3, but inventory significantly less. As a result of the good deliveries that we did during the fourth quarter. Net working capital as well as the profitability are then, of course, reflected in the free cash flow. Anders already mentioned, this having continued to be on a very good level in the fourth quarter, and the full year number is EUR 427 million. Free cash flow, this is clearly above, let's say, cash conversion of 100% this year also. So very good from that point of view. And then when we take a look at the gearing and net debt. Net debt continued to decrease from the end of third quarter, even if we made the acquisition that Anders also mentioned and gearing level is now only 10% at the end of the year. And then also delightfully when we take a look at the right side of the slide, return on capital employed. Now this comparable return on capital employed 20.8%. But even if we take the official reported numbers, we are above 20%. So good development also on that side. That slide actually concludes the presentation, and then we can go into the Q&A.

Thank you, that was our last question for today. So it's time to conclude. And it's also time to thank you all for the act participation and good questions. And as a reminder, Konecranes Q1 interim report will be out on April 24. So back in the studio then. Have a great day. Thanks.

Thank you.

Thank you. Bye-bye.

Thank you, Teo. So we are ready for the questions. Let's open the line, operator, please.

[Operator Instructions] The next question comes from Daniela Costa from Goldman Sachs.

Ilaria here on behalf of Daniela. We wanted to ask, have you seen any market share increase in the U.S. as a result of higher tariffs to cranes in China? And also, how do you see this evolving with the new U.S. administration?

Yes. Thank you. I think if you look at our performance within the Industrial side, both in terms of Equipment and in terms of Service, we are doing very well in the U.S., and it's very difficult to get market shares there. But we believe that we have taken some market shares, especially within Service. If you go to the cranes and the higher tariffs on Chinese STS cranes, which I think you're referring to, then that is not something that we will see a quick effect from. There are not that many STS cranes sold in a year. And normally, the sales process is quite long for these projects and the delivery is 2 to 3 years from when the sales is done. So we haven't seen any dramatic change in market shares within STS cranes due to the tariffs, which will be implemented then in, I think, mid-May this year, right? So that we haven't seen, yes.

And then on the level of utilization of your installed base, how has it moved sequentially?

Yes. So utilization of the installed base has continued through the year, you can say, to be below previous year in terms of productive lifts with the same equipment in the 2 periods. So we can clearly see that it's below. It's a bit in line with, I would say, other macro indicators. We have, however, then held up, as you have now seen, our order intake throughout the year in a very good level, both in the Industrial side and in the Port side. So we are performing better than macro indicators and our Truconnect data would show.

Let's then take the next question, please.

The next question comes from Antti Kansanen from SEB.

I have 2 questions. I'll take them one by one. And the first one is on the demand on the industrial crane side. And I mean it's a good growth number even when excluding the impact from the big, big orders. So you're not really the only company to report a little bit of, say, a pickup on industrial demand on Q4. So maybe my question is that have you seen a little bit of an increased activity? And then the second theme is that do you think that this kind of a potential of tariffs being put up creates some type of, let's say, a prebuying impact for clients who want to maybe increase their inventories ahead of any potential tariffs?

Yes. Thanks, Antti. I think if you look at our business, we have seen both year-on-year and sequentially, both components the standard cranes and the process cranes are performing very well. So standard cranes are, I think, flattish sequentially. But otherwise, everything is up both year-on-year and sequentially. And you asked about the market activity. I think in U.S., it's been on a very high level, the whole year and maybe lately in waiting for the new administration to come into force. We have seen a somewhat softening in the U.S. activity. We believe that that's related to the administration shift. Then when you look at Europe, here we see it's been stable. And here, we see maybe somewhat improvements. If you look at APAC instead, here we see stability. It's been very stable, but on a lower level than we would like it to be, and it hasn't changed basically.

Maybe adding a bit on that one regarding the -- for example, European situation because that is usually something that is being discussed. So if the situation continues to be the same as it has been, so that we can say that the northern part of Europe, including U.K. actually has been doing fairly well from the order intake point of view. The Eastern Europe, Eastern part of Europe has not been doing that well, maybe the southern part, not that well either. And then, of course, the German situation, which is important from our point of view, continues to be let's say, for us, better than the macro data shows, but obviously not fantastic because the macro data is really, really down, and has been for quite some time. So then when we take a look at the funnels in particular, so the sales funnels for Industrial, particularly the standard cranes where it is maybe most meaningful, the funnel values continue to be good. But then when we take a look at the number of new cases that are coming in, so at least they have not at least increased. So this -- and then, of course, there are regional differences like Anders was mentioning, so that U.S. has been very strong. Europe has been clearly weaker. So of course, some kind of a balancing at some point of time may happen there.

But the effect from the tariffs that might be there has not been seen, I would say, in any increased or decreased activity.

Yes, prebuying because of tariffs before they may be in place can be difficult from the customer's point of view.

Yes.

Okay. That's clear. The second theme was on the Services margins. And I mean, if I remember correctly, a year ago, you had a bit of a soft Q4, there was some extra costs related to -- was it the holiday seasons and such. And I think the Q4 margin this time, at least it was a little bit below what I had expected. So is this -- was there something kind of a seasonal impacting the margins negatively? Or did we just have a too optimistic expectations on it?

I think this is very seasonal. Especially this year, we had very relatively few working days, which means always in the fourth quarter, we have a lot to deliver. So then we need to pay overtime to get those deliveries done with Thanksgiving, Christmas in the middle of the week, et cetera. So there were many days that sort of fell away from the normal working days. So clearly, there's a productivity from that with increased cost for us, which like last year, but maybe even more this year, impacts the profitability for Service. And then sequentially, we also had mix. We have more field service than parts always in the fourth quarter. So it's quite natural with lower margins on worked hours than on spare parts, for example. So it's basically in line with our own expectations.

The next question comes from Mikael Doepel from Nordea.

I have a question on the Service side and also then on the pricing overall. But if we stick with Service and actually following up on the margin discussion just earlier. If you look into this year, what can you do to improve the margins from here? I mean you have improved the margin already quite a bit in this business overall. But what are the levers to drive further margin enhancement within the Service segment?

So one clear thing that we are working with is improving our productivity, and that means with artificial intelligence, for example, planning our deliveries to customers, planning our workforce efficiency to maximize the output from each of our service technicians. Then we have launched new products, and we are continuing to launch new products with added services with a simple service contract, as we discussed earlier in the year to suit more of our customers, so that we can then sign up more service agreements, which is the base basically for driving Service growth going forward. So we're working on all of these areas to improve both our top line growth but also over time with a good volume leverage and making sure that we manage inflation with pricing. We are confident of continuing our journey with the Service profitability also going forward.

Okay. And that's clear. And I guess in terms of expectations into 2025, I mean, you talked about the customer utilizations in various industries being bit of a headwind and you have managed that in a very good way in 2025. So I guess you are targeting continued growth into this year despite the fact that you have these headwinds.

Within Service, definitely, we are targeting continued growth also in this year.

And then the other question was on the pricing overall. So how would you -- how do you see the pricing going into 2025 across the business segments. Whether you see pressure down, pressure up? And also, if you could relate that to what kind of a cost inflation overall you expect for the year?

So labor inflation was quite high in 2024, around high 4%, maybe 5% even. We expect labor inflation to be somewhat lower in this year. We had some tailwind in a couple of quarters here, less now at the end of steel raw material prices being lower than they were 1 year ago. And we don't expect that never continues over time, right? So it's always somewhat a bit tailwind on some were a bit of headwind. Given that we are not estimating material inflation going forward, but we will make sure that we compensate the total inflation with pricing going forward, and that's applicable for basically all of our businesses. Then there can be regional differences, like you say. Maybe it's more difficult to compensate in APAC, because there is an increased competition in that market and maybe in other markets, we have a bit simpler to compensate for pricing. But as a whole, we compensate for inflation and with a small surplus to make sure it's not diluting our business. But then we target to get the improved margins, primarily from higher efficiency in our own businesses and also from volume leverage.

And maybe as a summary, as Anders told so, the price increases will be there most likely in '25 as well. So we will need to increase prices because of the inflation. Inflation is most likely going to be lower for labor than it was in '24. But in some cases, it may actually be somewhat higher in material because of this tail impact that Anders mentioned. We benefited a little bit in some product categories of the long lead time of the materials. And now that is balancing out. So the material inflation may be, in some cases, a little bit higher than what it was. So price increases will need to be done also in '25.

Right. But -- and in terms of your order backlog, I would assume that the margins there are also higher compared to what you delivered in 2024?

So our backlog margin is at the same level or better basically.

The next question comes from Panu Laitinmäki from Danske Bank.

A couple of questions. Firstly, on the margin guidance. So you expect it to be at the same level or higher. Can you give more color on the assumptions behind that? So I mean how does it play out divisionally in your expectations I assume mix will improve if you grow Services faster than Ports, which has a lower order book. But I mean, can you kind of give any color? Do you expect margins to increase in all the businesses or how do you expect this to happen?

We always target to grow all of our businesses and increase margin in all of our businesses. That's a given. But as you say, we believe that service will have good growth next year. And then the mix would then improve and that will help the group margin as well. We -- we'll continue to execute on our optimization program within -- primarily industrial equipment, and we expect that to yield roughly EUR 10 million improvement in 2025, and that was, if you remember, in '23 and '24, it was EUR 11 million in each year, so EUR 22 million together. And so we expect another EUR 10 million in 2025. And then there are other areas where we will improve during -- due to our strategy execution, that's not a part of the optimization program. For example, within Ports, for example, within Service and productivity, in planning, et cetera. So with all these initiatives, together with the new products that we have launched during 2024 we are confident to improve our margins in 2025, even if the top line should be flat.

Just to clarify, the EUR 10 million is to Industrial Equipment or the total of Industrial business?

Basically, Industrial Equipment.

All right. Then I just wanted to ask on the kind of order or demand outlook in the Industrial Equipment, you described the regional developments. But what about the customer segments, which have been the strongest for you and which are the weakest? And yes, that's the question.

Yes. So strongest, I would say, power and logistics. They have held up very well or at a very good level. Then stable at a decent or good level even, general manufacturing, mining, chemicals, and then on the weaker side, we have seen, for example, paper and forest but also construction and engineering.

The next question comes from Johan Eliason from Kepler Cheuvreux.

I start with the tariffs coming back to, I mean, ship-to-shore seems now to -- if I understand you correctly to come into effect in May this year rather than August last year. Have you -- I also understand that all of you and your competitors are producing these big steel structures in China. Is there any way that you will not be impacted by these tariffs as well on new orders or on the existing backlog for the ship-to-shore into the U.S.

So on the existing backlog, we have -- that our customers will take the cost of the increased prices if they are delivered after the mid of May this year. And then we can produce these in other places as well. We can produce them in Eastern Europe. The steel structures, for example, we can produce them in China. And we have also communicated that we are setting up a network to be able to manufacture these also in the U.S. But still, the difference between U.S. made and Chinese made is huge in terms of cost. So still, there is not a huge amount of [BABA] requests from customers. We have, of course, these requests. We are discussing with our customers on some of these potential orders. But we should consider that even if it's 25% tariff on those, difference of cost in producing in U.S. versus producing in China is higher than that 25% tariff.

Yes, I guess the steel cost is 1 big delta still in these cranes. Then if we look at all of these other tariff ideas left and right, can you sort of remind us a little bit on how your sourcing looks like in North America, in Europe. How big share of your sourcing in these regions would potentially be impacted by any potential import tariffs?

By far, the biggest flow that we have between these, let's say, potential trade blocks is then the flow of goods from Europe to the U.S. And this volume is actually roughly the same as to which we have been referring when we have been talking about transaction impact. So we are talking about, let's say, EUR 130 million, EUR 140 million on an annual basis that is being moved, components, spare parts and those kind of things from the EU or Euro area, let's put it this way, to the U.S. And then, of course, in addition to that volume, we do have volumes to the U.S. from China, for instance, and some other places as well. But for example, the volume from China is significantly smaller, really small part in comparison to the volume from Europe nowadays because there already have been, to some extent, tariffs that have, in a way, impacted those flows. So -- and then if we take a look at this potential impact to us this EUR 130 million, EUR 140 million, we have to remember, of course, that if we take a look at the competition in the U.S. And this 1 is, of course, now in relation to let's say, Industrial Equipment and standard type hoists and cranes. So many of the -- much of the competition also has the topic that they may be importing stuff. Europe. So its impact into the competitive situation is not crystal clear, but the underlying volume that we are, we discussed already the port heavy cranes, there are, of course, lift trucks where we do not have manufacturing capacity in the U.S. So there, of course, can be a situation that should there be tariffs. So some of the U.S. competitors might be having an advantage over us, at least on a short-term basis in those cases.

But in general, we would say that we would not be worse off than basically anyone else in our industry, especially when it comes to the industrial products, there is no competition basically that has an advantage due to the supply chain towards our supply chain. But as Teo mentioned, maybe imports within lift trucks, but that's the only 1 in that case, even though some of that supply chain also comes from either EU or China for most companies. So we believe that the exposure from a competition point of view is quite low for us, and it would rather hit inflation and consumer in the U.S. But of course, we are working continuously to improve our own supply chains and be better at this. And if you look in general, we have basically benefited from tariffs. It sounds strange, but it causes movement in supply chains normally. And when supply chains move, manufacturing capacity moves and that normally calls for investments in new cranes, in new places, and that benefits us underlying the global growth in the world. And it also causes new or increased capacity in shipping routes that needs an investment, which is also underlying beneficial for our businesses.

Yes. That's a very fair statement, I think, in your case. Just tidying up. I mean, are there any sort of if there are potential tariffs into Europe as sort of offset of the U.S. potential tariffs. Do you have any significant sort of imports into Europe from the U.S.?

No, we do not have any significant imports from the U.S. to Europe. But of course, then that there have been these discussions on the Northern American continent. So of course, we have trade between U.S. and Canada, for instance. And in this case, it is so that we are actually exporting from the U.S. to Canada. So this kind of a volume flow exists, but to Europe, not significantly. [Technical Difficulty]

No problem. In the meanwhile, we can maybe take a couple of questions from the chat. So first one is related to the main investment acquisitions planned for '25. So what are the main investment acquisition plans for this year?

Yes. It hasn't really changed. So the M&A strategy remains what it is. We focus on service bolt-on acquisitions, both within the industrial side, but also within the port side. Then we look into sort of neighboring product offerings, if there's anything that could complete our offering. We also look into geographical coverage if we have white spots where we believe that we could invest in an acquisition and then get a better foothold of that market rather than going in a different direction to that market, be it indirect, for example. So those are the sort of directions where we direct our M&A capacity and our teams to work on. But of course, given our cash position and net debt position. We're also evaluating other things such as extra dividends, share buybacks and what have you.

And then another question on the new products that were launched this year. So could you comment on the traction of the new X-series?

Yes. So the new X-series is being rolled out in different geographies consistently during the last year and also during this year, and we have good traction and we get very good feedback from customers, on the lower headroom hoist and also the X-series crane. So the feedback has been very positive from customers.

The next question comes from Tom Skogman from Carnegie.

I wonder whether there are some early signs of companies now considering to invest into the U.S. that you start to see some concrete kind of plans.

Sorry, I missed the question.

Early signs of companies.

Concrete plans on investing in the U.S. by companies.

By customers, yes. I think there has been for quite some time. There has been a drive towards more investments into the U.S. Likewise, with Mexico, for example, there's been a massive investments in Mexico over the last couple of years. So I think that regionalization has been going on for quite some time. I don't think it has escalated due to the new administration, but I think that is a trend that has been there and most likely will continue to be there also going forward.

Tom, can you hear us? Do you have further questions? Okay. Can we then take the next question if we still have in the line please.

The next question comes from Erkki Vesola from Inderes.

Just coming back to the EUR 40 million to EUR 50 million optimization program you have had in IE and in Service. Could you specify the EBITA impacts you had in '24 and in Q4, in particular? And then your expectations for '25 in these divisions.

The impact for '24 was roughly the same amount that we have been talking about for quite some time. So say, EUR 11 million or so we are expecting around EUR 10 million to materialize year-on-year additional improvement in '25. The fourth quarter number was maybe a little bit lower than the average from the program, but there was a positive impact of the program in the fourth quarter as well.

And you don't want to disclose how much of these were in both in IE and in Service?

No, not the exact number. And I guess we can say that the by far, the biggest part of that was in Industrial.

The EUR 11 million was in Industrial Equipment. And the same refers to the EUR 10 million in '25, so that's Industrial Equipment related. So the service benefits came in already for a longer time ago.