Good progress in many areas, sales were a disappointment
Questions and answers about January-September 2017 interim report
Orders received increased in Hiab, MacGregor and services during the third quarter of 2017. For the first time in three years MacGregor’s orders received increased compared to previous year, and service sales growth were good news for us. Our sales were below our own expectations. However, we had strong cash flow from operating activities, which enables investments in R&D, growth, and M&A.
Read our answers to questions about Q3 results below.
Q3 sales declined 13%. What was the reason for that?
The sales decline came from low MacGregor delivery volumes, timing of the deliveries in Kalmar projects, as well as supply chain challenges in Hiab and Kalmar’s mobile equipment.
Currency rate changes had EUR 18 million negative impact on sales.
In Q4/2016 your cash flow was very strong (152 MEUR) - what about this year?
We received several customer payments in Q4/16 and were able to release capital from inventories. We do not expect to reach such levels necessarily this year.
Kalmar Q3 orders received declined 10% y-o-y, why?
Orders received declined in large projects. We did not receive any large automation orders in Q3. Customers’ decision making is slow.
It seems like it takes a long time before the ports are getting better visibility regarding the future volumes. Our customers are making smaller deals and focus more on brownfield deals.
Also software orders declined y-o-y.
Kalmar Q3 EBIT excluding restructuring costs decreased 15%, what is the reason for the decrease?
Kalmar’s EBIT excluding restructuring costs decreased due to lower business volumes in project business.
Why did Kalmar’s net sales decline 14% in Q3?
Sales were burdened by the timing of the deliveries in project business as well as supply chain challenges in mobile equipment, which led to postponements of deliveries.
Why did sales of services increase 8% in Kalmar? What can we expect from Q4 and 2018?
Spare part sales were higher and there were more upgrade project deliveries. Core services (excluding crane upgrades) grew by 5%, and this is more relevant growth rate going forward. We do not guide service sales.
Why did software sales decline 10% in Q3?
Quarterly software sales fluctuate depending on TOS order timings (TOS = terminal operating system).
Market outlook for Hiab in the US?
Construction output is the most important driver for our business in the US, and that indicator is still solid: Oxford Economics expects growth of 2.4 % in 2017 and 3.6% in 2018. However, construction output estimates have been downgraded in short and in long term and also US housing starts have declined in recent months. September housing start ups were lowest for one year due to hurricanes.
Hiab Q3 order intake increased 18% y-o-y. How do you see market activity going forward?
In Q3 Hiab’s orders increased in EMEA and APAC (37% and 13% respectively), but decreased in AMER (-2%). Going forward construction activity remains key driver, and it is expected to grow globally in 2017 and 2018.
How much was Hiab affected by weakened USD in Q3?
In orders the negative effect was 8M€ (3%-units) and in sales 7M€ (3%-units).
Why did sales of services decline 10% in MacGregor?
Customers are saving and parts from decommissioned ships are increasingly used as spare parts. However, the biggest decline in services is coming from offshore while in merchant the situation seems to be more stable.
How much offshore related orders accounted for Q3 order intake?
Around 80% of the orders received were related to merchant ships and around 20% were offshore vessel-related.
How much of MacGregor order book is merchant ship and how much offshore-related?
Around three fourths of the order book is merchant ship-related and one fourth is offshore vessel-related.
2018 order outlook for MacGregor?
We have seen slow pick-up in the merchant side. However, we are still well below historical levels. Clarkson estimates 1018 merchant ships (vs 811 in 2017) and 114 mobile offshore units (vs 80 in 2017) to be ordered in 2018 . In Clarkson’s September estimate, merchant ship order estimate was upgraded and mobile offshore units estimate was cut.
January-September 2017 interim report in brief
Hanna-Maria Heikkinen, Vice President, Investor Relations, presents Cargotec's Q3 2017 results.