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BA Service
August 30th, 2021
Fabio Fiorino EVP BA Service
The following applies to this presentation, the oral presentation of the information in this presentation by Konecranes Abp (the “Company” or “Konecranes”) orany person on behalf of the Company, and any question-and-answer session that follows the oral presentation (collectively, the “Information”). In accessing theInformation, you agree to be bound by the following terms and conditions.
This presentation is to discuss Konecranes’ Business Area Service. Securities laws in the United States and in other jurisdictions restrict Konecranes fromdiscussing or disclosing information with respect to the contemplated merger with Cargotec. Information regarding the contemplated merger can be found athttps://sustainablematerialflow.com/. Until the completion of the merger Cargotec and Konecranes will carry out their respective businesses as separate andindependent companies. The Information contained in this presentation concerns only Konecranes.
The merger and the merger consideration securities have not been and will not be been registered under the U.S. Securities Act, and may not be offered, sold ordelivered within or into the United States, except pursuant to an applicable exemption of, or in a transaction not subject to, the U.S. Securities Act.
This presentation does not constitute an offer of or an invitation by or on behalf of, Konecranes, or any other person, to purchase any securities.
The Information is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of, or located in, any locality, state,country or other jurisdiction where such distribution or use would be contrary to law or regulation or which would require any registration or licensing within suchjurisdiction.
The Information contains forward-looking statements. All statements other than statements of historical fact included in the Information are forward-lookingstatements. Forward-looking statements give the Company’s current expectations and projections relating to its financial condition, results of operations, plans,objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words suchas “target,” “believe,” “expect,” “aim,” “intend,” “may,” “anticipate,” “estimate,” “plan,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could” and otherwords and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and otherimportant factors beyond the Company’s control that could cause the Company’s actual results, performance or achievements to be materially different from theexpected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based onnumerous assumptions regarding the Company’s present and future business strategies and the environment in which it will operate in the future.
The Information, including but not limited to forward-looking statements, applies only as of the date of this document and is not intended to give any assurancesas to future results. Market data used in the Information not attributed to a specific source are estimates of the Company and have not been independentlyverified.
Important Notice
Agenda
• Service strategy and fundamentals
• Agreement base
• Financial performance and insights
• Digitalization enabling growth and profitability
• Takeaway / ambition level
• Q&A
© 2021 Konecranes. All rights reserved. August 20213
Service strategy and fundamentals
© 2021 Konecranes. All rights reserved.4 August 2021
© 2021 Konecranes. All rights reserved.5 August 2021
Industry-leading maintenance services for all types and makes of industrial cranes and hoists.
Our objective is to improve the safety, productivityand sustainability of our customers’ operations.
Build long-term relationships – the service agreement is the foundation of our business.
Engage customers – through a consultative, open and transparent approach.
Deliver measurable improvements – in safety, productivity and sustainability.
Commercial excellence – continuous improvement culture, driven by KPIs.
Lifecycle Care – comprehensive and systematic approach to managing customer assets.
Digitally-enabled customer experience –connecting data, machines and people in real time.
Smart technology – transforming customer assets and optimizing maintenance and operations.
Operational excellence – continuous improvement culture, driven by KPIs.
Customer focus Delivering on our promises
Service Strategy
Service business model – managing assets throughout the lifecycle
Inspections, Preventive Maintenance, Predictive MaintenanceAgreement Sales, Inside SalesNew business development and renewalsLead generation
Corrective MaintenanceInspector, Technician, Inside SalesAdvice based on findings and condition monitoring – speedLead generation
Retrofits, Consultation Services, Mods, Lifting EquipmentService Sales, Inside SalesConsultative selling, analytics driven lead generation
Spare Parts & AccessoriesInside Sales, eCommerceTransactional, convenient
© 2021 Konecranes. All rights reserved.6 August 2021
~20% of
sales
~30% of
sales
~25% of
sales
~25% of
sales*
* Includes all channels (direct & indirect)
Global footprint – strengthening presence in Asia Pacific
MHE-DEMAGacquisition
Countries with direct service operations
© 2021 Konecranes. All rights reserved.7 August 2021
~40% of sales
~45% of sales
~15% of sales
Available industrial crane service market & favorable trends
EUR 1Obn+ market
Safety
Aging industrialworkforce
Digitalization
Outsourcing Regulationsand compliance
Productivity Sustainability
Rise of Asia
© 2021 Konecranes. All rights reserved.8 August 2021
Agreement base expansion
• Service programs – tailored to cover all segments and customer types
• Installed base coverage
• Increase retention & penetration
• More comprehensive agreements
Digital services
• CheckApp for Daily Inspections
• Digitized Slings and Accessories Inspection
• Expansion of remote monitoring sensors and services > Predictive Maintenance
Equivalent spare parts
• Equivalent replacement parts and components for third party equipment
Asian footprint expansion
• MHE Demag acquisition/integration
• Springboard for growth
Smart technologies
• Retrofits
• Modernizations
• Consultation Services
Bolt-on acquisitions
• Re-activated acquisition engine
• Active target funnel
• On-going discussions
Revenue growth drivers
© 2021 Konecranes. All rights reserved.9 August 2021
Profitability drivers
Organizational efficiency
• Field operative productivity -mobility/digitalization
• Centralization/virtual teams –knowledge sharing/onboarding
• Robotic process automation
• Customer self-service
• E2E process optimization
• Data quality / enrichment
• Branch & warehouse consolidations
• Sales force performance management
MHE-Demag Integration
• Centralized sourcing
• Centralized supply & distribution
• Procurement excellence
• E2E process optimization
• Data quality / enrichment
• Equivalents Parts (for third party equipment)
Material efficiency
• Deliver synergies
• Critical mass/leverage
• Optimize/combine offering
Bolt-on acquisitions
• Leverage business model and infrastructure
© 2021 Konecranes. All rights reserved.10 August 2021
Agreement base
© 2021 Konecranes. All rights reserved. August 202111
Approximately 45% of the hoisting machinery in our agreement base was manufactured by the Konecranes Group; the other 55% by third parties.
Hoists can be replaced when they reach the end of their service life or even before then in order to improve safety, productivity and sustainability and/or reduce maintenance costs.
Agreement base / breakdown by hoist brand
© 2021 Konecranes. All rights reserved. August 202112
Konecranes
Demag
Component Brands / Legacy Brands
Third Parties
45%
55%
• Coverage is based on the estimated asset installed base in operation.
• 1KC asset definition is applied. Asset generally refers to the crane: industrial crane, light crane system, jib crane, etc.
• A single asset may have multiple hoists. Hoists have a much shorter life than the crane (structure). Hoists may be replaced several times over the life of the crane.
Agreement base / asset coverage by asset (crane) brand
0
10
20
30
40
50
60
KONECRANES DEMAG
2020
2017
2020
2017
Asset coverage for Konecranes following warranty period is 65%
© 2021 Konecranes. All rights reserved. August 202113
Financial performance
© 2021 Konecranes. All rights reserved. August 202114
1 180 1 1921 260
1 190 1 187
0
200
400
600
800
1 000
1 200
1 400
2017 2018 2019 2020 R12M
161
180
209 205 21213,7 %15,1 %
16,6 %17,2 %
17,9 %
0,0 %
2,0 %
4,0 %
6,0 %
8,0 %
10,0 %
12,0 %
14,0 %
16,0 %
18,0 %
20,0 %
0
50
100
150
200
250
2017 2018 2019 2020 R12M
231244
268 276 283
0
50
100
150
200
250
300
2017 2018 2019 2020 Q2/2021
Strong track record of performance – resilience through COVID
Going forward (2021…)
• Revenue growth / leverage cost structure
• Continuous improvement COMEX/OPEX
• Digital services / ecosystem
Post-Demag acquisition (2017-2019)
• Integration / delivering synergies
• Finalizing 1KC deployments / digitalization
• Profitability > pivot to growth
Pandemic (2020)
• Safety of our people and customers
• Business continuity – essential industries
• Cost flexing / rapid adoption
FOCUS AREAS
Agreement Base, MEUR Sales, MEUR Adjusted EBITA, MEUR
© 2021 Konecranes. All rights reserved. August 202115
MHE-DEMAG Integration
255 253 256 250266
209219
234
255 257
0
50
100
150
200
250
300
Q1/19Q2/19Q3/19Q4/19Q1/20Q2/20Q3/20Q4/20Q1/21Q2/21
297309 312
342
304277
295315
278299
0
50
100
150
200
250
300
350
400
Q1/19Q2/19Q3/19Q4/19Q1/20Q2/20Q3/20Q4/20Q1/21Q2/21
47 50 51
61
4248
5561
4650
15,7%
16,1%
16,2%18,0%
13,8%
17,2%
18,7%
19,2%
16,7%16,8%
0,0 %
5,0 %
10,0 %
15,0 %
20,0 %
25,0 %
0
20
40
60
80
100
120
2021 – return to growth / expand profitability
In H1/2021
• Service orders received totaled EUR 512.7 million, +11.7% on a comparable currency basis. Base up 1.2% on a comparable currency basis to EUR 282.8 million.
• Order intake increased in the Americas and EMEA but remained flat in APAC due to continued adverse effects from COVID lockdowns.
• Orderbook at all time high.
Order intake, MEUR
• Sales increased 3.1% on a comparable currency basis to EUR 577.0 million. Base invoicing is up 6.4%
• Sales increased in EMEA and APAC but decreased in the Americas due to low starting order book.
• Supply chain challenges, customer postponements / scheduling, COVID related shutdowns/restrictions in Southeast Asia and parts of LATAM. Labor shortages in the US and other markets.
Sales, MEUR
• The adjusted EBITA increased 8.0% on a comparable currency basis to EUR 96.7 million and the adjusted EBITA margin expanded to 16.8% (15.4%)
• The increase in the adjusted EBITA margin was mainly attributable to efficient cost management in both variable and fixed costs
Adjusted EBITA, MEUR
© 2021 Konecranes. All rights reserved.16 August 2021
Personnel efficiencies secured going into H2/2021
6 600
6 800
7 000
7 200
7 400
7 600
7 800
8 000
8 200
Jan-20 Jun-21
# Personnel
Recruited 100+ operativesto due to a new agreement
© 2021 Konecranes. All rights reserved.17 August 2021
• Business / digital transformation continues to drive organizational efficiency.
• MHE-Demag integration well underway.
• Lean thinking. Continuous improvement culture and processes in place.
• Service delivery model transformed by mobility and digitalization – brick and mortar reduction opportunities still exist.
2,3
2,4
2,5
2,6
2,7
2,8
2,9
3,0
Jan-20 Jun-21
Operatives / Staff Ratio
Remote monitoring provides real-time insights to demand environment
© 2021 Konecranes. All rights reserved.18 August 2021
• Service orders driven by capacity utilization and industrial production i.e., equipment usage.
• Remote monitoring provides real-time insights by customer, industry and region.
• Allows for more dynamic planning, allocation of resources and more accurate forecasting.
Customer satisfaction – NPS approaching world class levels
© 2021 Konecranes. All rights reserved. August 202119
0%
10%
20%
30%
40%
50%
60%
Jan-20 Jun-21
Net Promoter Score, R12M• Systematic and comprehensive use of
Voice of Customer and Net Promoter Score.
• Response/resolution metrics and follow-up for all customer feedback.
• Real-time visibility supplemented by Natural Language Learning to identify trends and provide further insights.
• Customer satisfaction drives retention and supports premium positioning.
Digitalization enabling growth and profitability
© 2021 Konecranes. All rights reserved. August 202120
Digitally enabled customer experience / ecosystem
Crane operatorsCheckApp pre-shift inspections Slings and Accessories Inspection data
Crane ownersyourKONECRANES portal eCommerce STOREAlerts and notificationsVoice of Customer
Inspectors & technicians
Mobility appsInspection, maintenance and asset data
TRUCONNECTRemote Monitoring
Condition, usage & operating data
Sales, planning, technical support
CRM / FSM / ERPAnalytics and reporting
AI, machine learning, RPA, predictive engines
Customer, asset, maintenance, condition & operating data
© 2021 Konecranes. All rights reserved. August 202121
80%
81%
82%
83%
84%
85%
86%
87%
88%
Jul-20 Jun-21
eCommerce adoption –
all brands by order lines
60% adoption by agreement base monetary value i.e., higher
adoption by larger customers
Increasing adoption of the digital ecosystem
% of assets under agreement in 1KC digital ecosystem
MHE Demag & remaining countries to be completed over the next two years
0%
5%
10%
15%
20%
25%
30%
35%
40%
Jul-20 Jun-21
0%
5%
10%
15%
20%
25%
30%
35%
40%
Jul-20 Jun-21
© 2021 Konecranes. All rights reserved. August 202122
yourKONECRANES customer adoption
Smart Technologies
Customer Experience
Digital Services
SalesEfficiency
Service Delivery Efficiency
Service Quality
Digitalization focus areas
© 2021 Konecranes. All rights reserved. August 202123
CheckApp for Daily Inspections
Intuitive-to-use mobile application for crane operators, production managers and safety personnel to perform daily pre-shift checks.
Comprehensive reporting at yourKONECRANES.com.
Super simple and fast data entry: pass or fail.
DATA ENTRY
15 mandatory checkpoints, compliant with local regulations. Additional, location-specific custom checkpoints can be added.
CHECKPOINTS FOR COMPLIANCESubscription service/fee: EUR 100 per asset p.a.
Add photos and text to report a defect.
EASILY REPORT DEFECTS
No. of assets with CheckApp
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
Jul-20 Jun-21
© 2021 Konecranes. All rights reserved. August 202124
Digitized Slings and Accessories Inspection
Enables easy and reliable identification of slings and accessories.
Helps to keep track of inventory and inspection planning.
Full transparency on yourKONECRANES for all lifting equipment.
Inspection service/fee: EUR 10 – EUR 100 per device
Defective devices are normally replaced (not repaired) – additional revenue stream
© 2021 Konecranes. All rights reserved. August 202125
Slings and Accessories Inspection – Devices Recorded
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
Devices passed Devices failed Devices recorded
Devices with RFID Agreements
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
Jul 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20 Jan 21 Feb 21 Mar 21 Apr 21 Mai 21 Jun 21
TRUCONNECT Remote Monitoring
TRUCONNECT Retrofit kit for Demag cranes
TRUCONNECT modem kitfor Konecranes Q platform hoists
TRUCONNECT Brake Monitoring (BMU)
Electromagnetic disc brake
Retrofits are now available for multiple brands. Remote monitoring is the key enabler of predictive maintenance.
5 200
5 300
5 400
5 500
5 600
5 700
5 800
5 900
6 000
13 500
14 000
14 500
15 000
15 500
16 000
16 500
Jul-20 Jun-21
Activeconnections
Connections on agreement
TRUCONNECT connections
© 2021 Konecranes. All rights reserved. August 202126
TRUCONNECT Wire Rope Monitoring
Alerts operator in case of imminent safety risk
Rope sensor
JUST LAUNCHED
Subscription service/fee: EUR 100-1000 per asset p.a.
Live Remote Support: approximately EUR 4000
Predictive maintenance “engine”
Predictions based on TRUCONNECT data of needed maintenance actions.
PREDICTION MODELS
Repair quote
SALES CASE
Hoist/brake, wire rope has reached its economical lifetime.
TRUCONNECT WARNINGS
Repair order
SERVICE REQUEST
© 2021 Konecranes. All rights reserved. August 202127
LAUNCHED
Smart technologies
© 2021 Konecranes. All rights reserved. August 202128
Side Pull Prevention Collision AvoidanceLoad DisplayCondition/Remote Monitoring
Retrofits and modernizationsWe’re using smart technology and features to transform customer assets and optimize safety, productivity and sustainability.
Snag Prevention
Automation
Sway Control
Protected Areas
Equivalent Parts Extending our offering from genuine Konecranes & other OEM spare parts to equivalent replacement parts for other all makes and models.
Reverse Engineered and cross-referenced commercial items.
Asset/component data and 1KC processes/systems are key enablers.
Equivalent replacementrope guide
© 2021 Konecranes. All rights reserved. August 202129
Sizing/seizing the opportunity:
• 300,000+ third party hoists in agreement base• eCommerce offering to end users and re-sellers
Smart Technologies
Customer Experience
Digital Services
SalesEfficiency
Service Delivery Efficiency
Service Quality
Digitalization focus areas
© 2021 Konecranes. All rights reserved. August 202130
Harmonized digital experience across all touch points and E2E integration.
Customer ExperienceEmpowering our customers and personnel with the right information at the right time.
Multi-channel communications and customer 360 view.
Digital journey Customer engagement Customer support
Ticketing and escalation.
© 2021 Konecranes. All rights reserved.31 August 2021
Sales efficiencyHarmonize ways of working and end-to-end processes to ensure sales and back-office operations are aligned, data is leveraged, and automation is utilized.
Field Ops can view sales case history, send existing quotes to the customer and initiate support for on site quoting.
Configurators / quote automation
Standardize offering, drive end-to-end processes/upfront data capture, improve quote speed and accuracy.
Platform for sales content management, training and coaching, document automation and internal communications.
Mobile sales tools Sales enablement platform
© 2021 Konecranes. All rights reserved.32 August 2021
CheckApp brochure TRUCONNECT Remote Service brochure
Parts white paper Consultation Services infographic
Slings and Accessories brochure
• Integrated planning tool
• Autofill/auto-planning
• Planning metrics
• Map visualization
• Route optimization
• Skill/job alignment
Planning optimizationDelivering on total service commitment while optimizing our field operative time.
Planning board Mobile planning board
Real time mobile access to FSM planning board, both individual schedule and branch view.
© 2021 Konecranes. All rights reserved.33 August 2021
Modular mobility platform
Modular mobility application platform delivers an enhanced employee experience –provides feedback, guides behavior and ensures process adherence.
Field operative tools Driving efficiency, data quality and employee experience.
Asset data enrichment Intelligent troubleshooting
App highlights missing asset data and makes the asset structure easier to navigate. Asset data quality drives E2E process efficiency, service delivery quality leading to an improved customer experience.
Intelligent troubleshooting platform that helps field operatives diagnose and correct issues in the field. Learns and improves as it is used. Live technical support available via video.
© 2021 Konecranes. All rights reserved.34 August 2021
Takeaway/ambition level
© 2021 Konecranes. All rights reserved.35 August 2021
Takeaway
• Digital customer experience and ecosystem drive growth and retention
• Sales and service delivery efficiencies locked-in – with more yet to come
• New products and services: digital services, smart technologies, equivalent parts
• Offering and delivery can be tailored to multiple customer segments – from value to premium
© 2021 Konecranes. All rights reserved.36 August 2021
◎Digitalization has transformed the business
◎MHE-Demag acquisition strengthens our foothold in Asia-Pacific
• Increasing share of revenue from Asia-Pacific
• Expanded opportunity in servicing non-crane assets
◎Bolt-on acquisitions re-activated
• Additional potential source of revenue and profitability growth.
Ambition
High single digit growth target over the cycle.
© 2021 Konecranes. All rights reserved.37 August 2021
◎Revenue growth
◎Profitability expansion
Driven by leverage, efficiencies, higher margin products and services.
Q&A
© 2021 Konecranes. All rights reserved.38 August 2021
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