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IR Blog: Frequently asked questions about Cargotec's Q2/2020


What are your assumptions for Q3 and for the rest of 2020? Which of your businesses has the best possibilities to recover in H2? Here you can find answers to some of the most topical questions regarding our Q2/2020 half year report.

What is your expectation for Q3 and FY 2020 comparable EBIT?

Visibility towards the end of the year is still weak. In the current exceptional situation we estimate that we are not able to give guidance for the year 2020. We estimate our business and operating environment to develop in H2/20 as follows:

  • The recovery of market activity continues
  • The delivery capability of Cargotec and its supply chain continues to improve
  • Productivity improvements support profitability in the future as well.

Why are you not giving any guidance for 2020?

Visibility for the rest of the year is weak.

Was the Q2/20 comparable EBIT better than you expected in April?

When the quarter started, the state of the global situation made us prepare for a difficult period. Our organisation reacted quickly and decisively and produced positive results.

Are you looking for additional financing?

Our financial position is strong. During the second quarter, we prepared for a possible financial market imbalance by raising a total of EUR 250 million in loans from our partner banks. Currently this is sufficient financing according to our estimates. Our total liquidity at the end of June was 970 million.

Which business has the best possibilities to recover in H2?

Our service business has performed relatively well, and is expected to continue solid performance. Typically businesses with shortest lead times will come first back. Typically logistics as an industry recovers among first industries.

Kalmar Q2 comparable operating profit declined by 20%, why?

Kalmar’s comparable operating profit decreased due to decline in sales. However, Kalmar’s comparable operating margin remained at the comparison period’s level due to increased share of services in the sales mix, productivity improvements and temporary cost savings.

Why did Hiab comparable EBIT decrease by 52% y-o-y in Q2?

Hiab’s comparable operating profit decreased due to lower volumes. However, Hiab’s comparable operating margin remained on a good level due to a higher share of services, productivity improvements and temporary cost savings. The asset-light operating model supported margin as well.

Why did MacGregor’s comparable operating profit increase?

MacGregor’s comparable operating profit increased due to restructuring savings and merchant solutions volume increases. Project management improved as well.

What are the assumptions for Q3 and 2020?

The challenging situation from mid-March improved gradually during the second quarter. Orders and sales have started to gradually bounce back. Uncertainty still prevails considering the future, both in terms of demand and our delivery capabilities. Delivery postponements were requested in Q2, this may happen in Q3 as well.

According to Drewry’s June forecast, Kalmar’s demand driver, the number of containers handled at ports globally, is estimated to decrease by 7.3 percent in 2020 compared to the previous year and increase by 10.0 percent in 2021. During the first half of 2020 it is forecasted to have declined by 9.6 percent. Demand for smaller cargo handling equipment in industrial segments decreased. There is demand for automation solutions, but customers postpone their decisions due to the uncertain market situation.

Oxford Economics forecasts that one of Hiab’s demand drivers – construction activity – would slow down by approximately nine percent in Europe and by approximately six percent in the US in 2020. During the first half of the year, the construction activity is prognosed to have decreased by almost ten percent in Europe and approximately six percent in the US compared to the previous year.

For residential and non-residential building, Oxford Economics estimates a 6.7 drop in the US during the first half of 2020, and a 9.4 drop in Europe for the same period. Trading Economics (TE) estimates that building permits rose by 14.4 percent in May in the US after a five-year low in April. The National Association of Housing Builders’ housing market index rose to 37 in May, rebounding slightly from 30 in April. Still, the sentiment remained in the negative territory.

For 2021, TE estimates the US building permits to decline to 12 percent below the historical average. For Europe, TE estimates housing permits in 2021 to be above the historical average in Austria (+37%) and Germany (+15), and below in the rest of the examined countries from -17% (Poland) to -88% (Turkey).

Clarkson forecasts that merchant ship contracting will decrease close to the historically low level of 2016. In the offshore sector the amount of new vessel contracting is still expected to remain at a low level. On the other hand, for example new contracting of wind turbine installation vessels is expected to grow. During the first half of the year, the amount of offshore vessel orders increased from the comparison period but remained still on a low level.

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