IR Blog: Cargotec refocuses its business for profitable growth
Today, we announced that our focus will be on sustainability and profitable growth in our Hiab and Kalmar mobile equipment businesses. Although Cargotec’s vision and strategic objectives remain the same, the change is significant.
What is changing?
Each of Cargotec’s current businesses, Hiab, Kalmar and MacGregor, are industry leaders in their own fields. Of all of our businesses, Hiab and Kalmar sell mainly standardised equipment and services, like Hiab loader cranes and Kalmar terminal tractors as well as related spare parts and maintenance, whereas Kalmar’s heavy cranes business and MacGregor are project businesses selling tailored solutions for customers’ needs.
In recent years, Cargotec has demonstrated considerably stronger profitable growth in standardized equipment business, but faced more challenges, even losses, in the project-based business.
In line with our refined strategy published in 2021, we will focus on profitable growth. Hence, we start planning to exit project-based businesses. In practice, that would mean quitting Kalmar’s heavy cranes business and evaluating strategic options for MacGregor.
Towards strong growth
In terms of 2021 figures, our topline would have been 20 % lower without the project businesses. However, accelerated growth is the ultimate target of the refocused strategy.
Hiab is one of the fastest growing Nordic industrial companies, and Kalmar’s mobile equipment sales grew with 4% CAGR between 2013-2019.
Both businesses also meet the criteria of profitable growth, as they have been consistently printing above 10% comparable operating profit margins. We aim to continue to grow organically but also accelerate our M&A pipeline development around our core businesses. Hiab has already successfully expanded to new market and product categories with the recent acquisitions of Argos (2017), Effer (2018) and Galfab (2021).
We are forerunners in key technologies: electrification, automation and digitalisation. They all play a crucial role in enabling sustainable and efficient cargo flow, supporting our organic growth ambition. Climate change and greenhouse gas emission reduction are increasingly important megatrends and we see that the high emitting logistics industry is changing as well. Hence, climate change has increased its value as a business driver too, over the recent years. Already today, Cargotec is able to offer an electric version in all of its product categories, and by focusing on our strengths, we are able to accelerate our R&D investments.
Refocused Cargotec is in a strong position. The core businesses operate in growing and structurally attractive markets and our well known brands and competitive solutions have strong market positions in all product segments. Our highly profitable businesses and strong balance sheet support our growth also through M&A.
To date, a third of our revenue comes from services and our focus on expanding the lifecycle services will support the growth of our highly profitable service business.
Our vision is to become the global leader in sustainable cargo flow and our commitment to the ambitious 1,5 degree target means that we aim to reduce CO2 emissions in our whole value chain by 50% by 2030. From this increasingly strong position, we will continue our determined work towards more sustainable and profitable growth.