Cargotec Corp Earnings Call: Margins, Orders and Outlook

Cargotec Corp (OTC) ((FI:HIAB)) has held its Q1 earnings call. Read on for the main highlights of the call.

Cargotec Corp’s latest earnings call painted a cautiously optimistic picture, with management highlighting strong order intake, resilient services and powerful cash generation despite a dip in revenue and profit margins. Executives framed the current pressures as largely cyclical, particularly in the U.S. delivery equipment market, and backed their confidence with an upgraded margin outlook for 2026.

Order Intake Growth and Regional Book-to-Bill

Hiab’s orders showed encouraging momentum, with organic intake up 7% in constant currencies and total orders reaching EUR 402 million, or EUR 419 million on a constant currency basis. All key regions posted a positive book-to-bill, led by a 15% jump in the Americas, modest growth in EMEA and broadly flat trends in APAC, while ING added EUR 15 million of orders.

Sequential Margin Improvement and Upgraded Outlook

Profitability improved sequentially, even if still below last year’s peak, as the comparable operating margin reached 13.5% versus 16% a year earlier. Management nevertheless raised full-year guidance, now targeting a comparable operating margin above 13.5%, signaling confidence that pricing, mix and cost actions will offset lingering volume headwinds.

Strong Cash Generation and Balance Sheet Strength

Cash flow was a standout, with operating cash generation of EUR 75 million in the quarter, translating into an impressive 186% cash conversion. The balance sheet remains robust, as Hiab closed March with a net cash position of EUR 219 million and negative gearing of 23%, leaving room to raise more than EUR 700 million of debt if growth or restructuring opportunities arise.

Services Growth and High Profitability

Services continued to provide stability and high margins, with reported sales of EUR 117 million that would equate to around EUR 123 million in constant currencies, or roughly 5% growth. Comparable operating profit from services held at EUR 28 million, delivering a strong 23.6% margin, and recurring contracts still make up about three-quarters of total service revenue.

Equipment Orders Strength Despite FX Headwinds

Demand for equipment remained healthy beneath the currency noise, with orders rising to EUR 284 million, up about 10% year on year and roughly 14% in constant currencies. Lifting equipment saw order growth across all major regions, suggesting that underlying industrial and logistics customers are still investing despite macro uncertainty.

ECO Portfolio Momentum and Sustainability Push

Hiab’s sustainability-focused ECO portfolio is gaining traction, with sales jumping 23% year on year to EUR 176 million and now accounting for 46% of total sales. This shift supports the group’s broader decarbonization strategy while positioning the business for tightening environmental regulations and rising customer demand for greener solutions.

New Operating Model and Cost Program Implementation

A new operating model announced in January went live in early April, designed to simplify structures and sharpen accountability across the business. The associated EUR 20 million cost-savings program is progressing as planned, with the majority of the benefits expected to come through in the second half of 2026 as footprint changes and efficiency gains take hold.

Strategic Innovation and Partnerships

Management underscored ongoing innovation efforts, noting that Hiab’s science-based climate targets have now been validated on a pathway toward net zero by 2050. The company also launched a co-created lightweight DEL lift gate with partner MYCSA and Spanish customers, illustrating how collaborative product development can enhance performance and customer value.

U.S. Distribution Expansion

Hiab is expanding its reach in the strategically important U.S. market, activating 16 new dealers over the past two years. The company now has coverage across all 48 contiguous states and is progressing toward a network of roughly 20 to 22 distributors, which it expects will strengthen its go-to-market capabilities once demand normalizes.

Inventory and Working Capital Improvement

Working capital discipline contributed meaningfully to cash flow, as inventories edged lower and receivables were actively managed. Reductions in accounts receivable and the collection of VAT receivables were highlighted as key drivers of the quarter’s strong operating cash generation.

Revenue Decline and Order Book Reduction

Top-line performance softened, with group revenues falling 7% year on year to EUR 383 million, primarily due to a smaller opening order book and weaker U.S. equipment sales. The March 2026 order book stood nearly EUR 40 million below the prior year, following a EUR 114 million lower starting backlog, which limits near-term revenue visibility.

Profitability Pressures Year over Year

Comparable operating profit slipped about 22% from a year earlier to EUR 52 million, with the group margin narrowing to 13.5% from 16%. Management attributed the decline mainly to lower U.S. volumes and the resulting under-absorption of fixed production overheads, rather than pricing or structural margin erosion.

U.S. Delivery Equipment Weakness and Market Uncertainty

The U.S. delivery equipment market remained the weak link, as sales declined sharply and customers delayed investment decisions. Executives described the segment as being in a cyclical trough, with tariff volatility and geopolitical uncertainty weighing on confidence, but stressed that they do not expect further significant deterioration from current levels.

Foreign Exchange Headwinds

Currency movements, especially a weaker U.S. dollar against the euro, were a notable drag on reported performance, reducing both sales and earnings versus constant currency trends. Management estimated that FX shaved around 4% off group results, masking the stronger underlying order intake and equipment demand.

One-off Restructuring Costs

The quarter included EUR 11 million of restructuring costs tied to the cost-savings plan, covering measures such as headcount reductions and production relocations like moving ZEPRO manufacturing from Sweden to Poland. These items weighed on reported results but are intended to enhance competitiveness and cost efficiency over the medium term.

Lower Equipment Sales and Margin Impact

Equipment revenue declined 9% to EUR 266 million, or around 6% down excluding currencies, reflecting softer demand and a thinner backlog, particularly in North America. The equipment segment’s comparable operating margin narrowed to 12.1%, as lower volumes reduced the absorption of fixed production costs and squeezed gross margins.

Installation Services Decline

Installation services, which are project-based and non-recurring, fell in the quarter and offset part of the growth in recurring services. Management noted that a recovery in equipment sales will be necessary to revive these attached installation revenues, even as the core service base remains solid.

Guidance and Forward-Looking Outlook

Hiab refined its 2026 outlook, now aiming for a full-year comparable operating margin above 13.5% versus the prior “above 13%” target, assuming EUR 20 million of cost savings that should mostly materialize in the second half. The guidance also assumes EMEA will continue to grow and that the U.S. will at least stabilize, with group admin costs kept near 2025 levels plus targeted process and systems investments.

Cargotec’s earnings call suggested a business navigating a soft patch in revenues and margins but supported by strong orders, resilient services and a fortress balance sheet. Investors will watch how quickly U.S. demand recovers and whether the new operating model and cost-saving measures can unlock the upgraded margin ambitions in the coming periods.