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Strong year for Hiab

08/02/2018

Questions and answers about financial statements review 2017

What is the situation regarding the supply chain challenges?

The supply chain issues are still there but thanks to our activities and cooperation with the suppliers we have been able to stabilise the situation in both Hiab and Kalmar. However, strong orders in Hiab may still put pressure on our supply chain.


What kind of possibilities you have to increase net sales in 2018?

We’ll start year 2018 with order backlog, which is 13% lower than a year ago.

  • Grow service business
  • Acquisitions
  • Work as hard as possible in getting in the large orders in Kalmar and MacGregor as early as possible
  • Hiab’s sales in Europe

What are the key drivers for higher EBIT in 2018?

We have several levers to improve EBIT:

  • Service and software growth is key focus area for us and that is expected to support also the margin improvement. As said in CMD 2017, service and software growth is the biggest driver to reach our long term EBIT-margin of 10%.
  • We look after continuous improvements in product and project costs e.g. through design to cost initiatives.
  • We also have tight follow up on fixed costs, also seeing what we can afford in relation to sales.
  • Kalmar will get savings of EUR 13 million from assembly transfer from Lidhult, MacGregor has EUR 13 million cost savings program and on group level, we continue EUR 50 million cost savings program.


What are expected cost savings in 2018 (vs 2017)?

  • Kalmar production transfer from Lidhult to Poland EUR 13 million
  • MacGregor restructuring EUR 13 million
  • EUR 10 million related to indirect procurement from company wide program (with the target to save EUR 50 million by 2020)
  • Totaling EUR 36 million

 

Kalmar

Kalmar Q4 orders received declined 16% y-o-y, why?

Orders received declined in large projects. We did not receive any large automation orders in Q4. 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.

Part of the decline is also related to currencies. If the foreign exchange rates would have remained at the comparison period’s level, orders would have been 4% better.


How do you see Kalmar market outlook?

We continue to be positive on long term Kalmar market outlook. 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.


Kalmar Q4 EBIT increased 7% despite flat sales, why?

Operating profit improved especially in mobile equipment.

 

Hiab


What are your expectations for Hiab net sales and EBIT in 2018, are both growing?

Good outlook for construction market is supporting our growth opportunities. Weaker USD will be a headwind for us in 2018.


What was the impact of weaker USD for Hiab in Q4/17? 

Sales and orders would have been 4% stronger if the foreign exchange rates would have remained at the comparison period’s level. The EBIT impact was some millions of euros.

Market outlook for Hiab in the US?
Construction output is the most important driver for our business in the US, and construction market is still on a strong level, even though the growth level is now lower.

 

MacGregor


Oil price has risen from around 45USD to around 65USD since June 2017. What is the impact for MacGregor offshore?

Higher oil price in general should be positive for new offshore investments, but due to overcapacity in the industry the recovery is expected to slow.

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 (vs 811 in 2017) merchant vessel orders and in offshore 114 (vs 80 in 2017). In Clarkson’s September estimate, merchant estimate was upgraded and offshore estimate was cut.


Clarkson believes, that container ships and tankers will benefit most from of the upturn.



Financials


R&D spend in 2017 was EUR 93 million. Is this a level we can expect for 2018 too? 

We expect R&D spend to remain on 2017 level. Investments go into automation, software and new product development.

What kind of impact US corporate tax cut and US infrastructure program can have on Cargotec?

Cargotec could benefit from infrastructure programs. Lower corporate tax rate is positive for Cargotec, final version was clearly more positive for us than some of the earlier ones, which included clear cuts in tax deductions.

 

Financial statements review 2017 in brief

Hanna-Maria Heikkinen, Vice President, Investor Relations, presents Cargotec's Financial statements review 2017.