IR Blog: Frequently asked questions about Cargotec's Q4/2022 result
What is your outlook for 2023? How did your comparable operating profit develop? How did eco portfolio sales progress? Here are answers to some of the most topical questions regarding Cargotec’s Financial statements review 2022.
What is your outlook for 2023?
Cargotec estimates its core businesses’(1) 2023 comparable operating profit
to improve from 2022 (EUR 384 million)(2) and MacGregor’s comparable operating profit in 2023 to be positive (EUR -47 million(2))(3)
(1)Core businesses = Hiab + Kalmar excluding heavy port cranes and including all group costs
(2)Cargotec changed the definition of the alternative performance measure comparable operating profit starting from 1 January 2023. The restated comparable operating profit will also include the impacts of the purchase price allocation, which amounted to EUR 4 million in the core business and EUR 12 million in MacGregor in 2022. Comparison figure has been calculated based on the new definition. Restatement for 2022 figures will be published before Q1/23 result announcement.
(3)Cargotec’s outlook for 2023 does not include the comparable operating profit of Kalmar heavy cranes business which will be discontinued
Cargotec’s orders increased by 13% to EUR 1,190 million in Q4. What were the drivers?Demand remained solid and Cargotec’s Q4 orders received increased to EUR 1,190 (1,051) million.
- MacGregor’s orders received increased driven by strong merchant vessel contracting in 2021.
- Kalmar’s demand continued at a high level and orders grew supported by pricing increases and currencies.
- In Hiab, demand continued at high level despite decline in units ordered
Why did Cargotec’s comparable operating profit increase by 95% to EUR 89 (45) million in Q4?
The comparable operating profit increase was driven by higher sales and solid margin improvements in Kalmar and Hiab
Why did your eco portfolio sales increase by 61% in Q4/22?
The eco portfolio sales increased by 61 percent and totalled EUR 268 (166) million, representing 22 (18) percent of consolidated sales. The increase was driven by higher sales in Hiab’s and Kalmar’s eco portfolio. Customer demand for eco solutions is clearly increasing.
How much did component shortages and delivery bottlenecks impact your sales?
There was a clear impact, but we have got better to deal with the situation.
Component shortages will continue to impact our delivery capability at least H1/2023
Why did you change the definition of comparable operating profit again?
We are going back where we used to be. The definition was changed in 2021 to align Cargotec & Konecranes reporting for the intended merger which was then canceled.
Our aim is that in the future comparable operating profit and operating profit would be closer to each other. In addition to the change in purchase price allocation (PPA), we will also hike the threshold of items that can be booked as items affecting comparability. We have not had significant one-offs in the core businesses and the amount of PPA was EUR 4 million in 2022. Restated figures will be published before Q1/23 results.
What would have been the result of the core businesses in Q4/22?
Core businesses’ comparable operating profit was EUR 124 million and margin 11.9 percent in Q4/22. We publish core businesses’ key figures in a table in our quarterly reports to make it easier for investors to track our progress towards our performance targets. Inspect the table by clicking this link to the "Performance targets"-section.
Why did you rationalise MacGregor’s offering now?
After the conclusions of MacGregor’s strategic evaluation, we did a thorough assessment of its portfolio, offering and ongoing projects. We also test the goodwill of the business quarterly. MacGregor will be in better shape for divestment after we have done the actions which we have communicated now.
How would an increase in interest rates affect you?
At the end of Q4 the average interest rate for bank debt was 2.1 percent. At the moment we forecast the average interest rate to rise by some 0.5 percent in 2023. Around 60 percent of debt is fixed. A possible increase in interest rates would be partially offset by higher interest income of relatively high cash reserves.
Why did your R&D spending decrease in 2022?
The year’s R&D expenses decreased from the comparison period and totalled 100 (102) million euros or 2.4% of total sales. The decrease was due to divestment of Navis business. Our core businesses Hiab and Kalmar total R&D spend increased by 8% compared to 2021 to support our ambitious climate ambitions.
What was your operative cash flow in Q4/2022?
Q4/22 operative cash flow was 147 MEUR. Reduction in inventories supported our operative cash flow.
What is the Board of Directors’ dividend proposal?
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 1.35 for each outstanding class B shares be paid.