IR Blog: Frequently asked questions about Cargotec's Q4/2023 result
What is your outlook for 2024? Why did Cargotec’s comparable operating profit increase by 62 percent? What is the Board’s dividend proposal? Here are answers to some of the most topical questions regarding Cargotec’s financial statements review 2023.
What is your outlook for 2024?
Cargotec estimates Hiab’s comparable operating profit margin in 2024 to be above 12 percent, Kalmar’s comparable operating profit margin in 2024 to be above 11 percent, and MacGregor’s comparable operating profit in 2024 to improve from 2023 (EUR 33 million).
Cargotec’s orders decreased by 15 percent to EUR 1,015 million in the last quarter 2023. Why is that?
Order received decreased in all business areas. In Kalmar, demand continued good in mobile equipment used in industries and small- and midsized terminals, while in larger equipment and in the distribution segment, the decision making was slow. In Hiab, inflation and interest rates impacted orders received negatively; however, truck lead times are improving. In MacGregor, demand was good in merchant and services while new offshore orders were accepted only selectively.
How large is Cargotec’s order book?
At the end of the year, the order book was MEUR 2,812 million.
Why did Cargotec’s sales decrease by 4 percent to EUR 1,193 million in Q4?
Kalmar’s lower order intake in 2023 compared to the record year of 2022 was visible in sales. In Hiab, sales decreased only slightly. MacGregor’s sales increased by 42 percent; sales increased in merchant and services businesses.
Why did Cargotec’s comparable operating profit increase by 31 percent to EUR 111 (85) million in Q4?
The comparable operating profit increase was driven by good progress in the MacGregor turnaround.
Why did Kalmar’s Q4 comparable operating profit increase to EUR 279 (189) million?
Kalmar’s comparable operating profit increased due to successful management of inflationary pressures, favourable sales mix and smaller losses related to heavy cranes business, which will be discontinued.
Why did Hiab’s Q4 comparable operating profit decrease to EUR 48 (62) million?
Hiab’s comparable operating profit decreased due to one-off costs of EUR 10 million related to cost saving actions announced in October 2023, and EUR 6 million in investments in growth.
Why did MacGregor’s comparable operating profit increase from EUR -34 million to EUR 13 million in Q4?
MacGregor’s comparable operating profit increased due to higher sales in service and merchant businesses, smaller losses related to offshore business, and cost savings.
What would have been the result of Cargotec’s core businesses in Q4?
Our core businesses’ comparable operating profit margin was 10.4 in Q4 2023. We publish core businesses’ key figures in our quarterly reports to make it easier for investors to track our progress towards our financial targets. Core businesses = Cargotec excluding MacGregor and Kalmar heavy cranes business (includes corporate administration and support functions).
How did your service business develop in Q4?
In the fourth quarter, service orders received decreased by 4 percent and totalled EUR 331 (345) million. Service sales increased slightly and totalled EUR 355 (354) million, representing 30 (29) percent of consolidated sales.
How did your eco portfolio develop in Q4?
Eco portfolio sales in the fourth quarter increased by 3 percent and totalled EUR 404 (392) million, representing 34 (32) percent of consolidated sales. Eco portfolio sales increased in the climate change mitigation category and decreased in the transition to circular economy category. Eco portfolio sales increased in Hiab and MacGregor and decreased in Kalmar.
How is the heavy cranes exit progressing?
The heavy cranes exit is progressing according to the plan. At the end of the year, the order book of Kalmar heavy cranes was EUR 3 million.
How much was the effect of currencies and structural changes in your orders received and sales?
In the fourth quarter 2023, orders received decreased organically in constant currencies by 13 percent. Changes in exchange rates had a 3 percentage point negative effect on Cargotec's orders received. Structural changes had a 0 percentage point impact on Cargotec's orders received. In constant currencies, sales decreased organically by 1 percent. Changes in exchange rates had a 3 percentage point negative effect and structural changes a 0 percentage point effect on Cargotec's sales.
The impact of structural changes and changes in fx rates on orders and sales are reported in our interim reports.
What does the operation environment look like?
The business environment in which Cargotec operates is complex, stemming from high interest rates and inflation, possible interruptions in supply chains, growing geopolitical tensions, and sluggish growth estimates. However, many of our customers and partners are performing well.
What was your operative cash flow in 2023?
Cash flow from operating activities before financial items and taxes totalled EUR 544 (231) million during 2023. The increase in cash flow was driven by good profitability.
What were your restructuring costs in Q4?
Restructuring costs in the fourth quarter amounted to EUR 7 (36) million and to EUR 15 (91) million in 2023. The restructuring costs in 2023 were mainly related to the restructuring programme in MacGregor, where approximately 350 roles were reduced in sequence, targeting EUR 23 million annual cost savings compared to 2022. Out of the total savings, EUR 14 million was realised in 2023. With the restructuring and strengthened project management, Cargotec is aiming to turn around MacGregor's offshore business.
How did your gross profit margin develop in Q4/23?
Cargotec’s gross profit margin improved to 23.8 percent in Q4/2023 from 19.5 percent in Q4/2022.
How is the planned separation of Kalmar and Hiab progressing?
Separation of our core businesses Kalmar and Hiab into two world-leading standalone companies is progressing according to the previously communicated plan. We announced on 1 February 2024 that the The Board of Directors of Cargotec has approved a demerger plan concerning the separation of Kalmar into a new listed company. The demerger is subject to approval by the Annual General Meeting of Cargotec to be held on 30 May 2024. The planned completion date of the demerger is 30 June 2024. The demerger and listing prospectus, which is expected to be published by Cargotec in May 2024 before the Annual General Meeting, will contain more detailed information on the demerger and Kalmar. The demerger plan is attached to the stock exchange release published by Cargotec on 1 February 2024.
How much demerger costs have you booked so far? What is your estimate for 2024?
At the end of the year, costs related to planning of the planned separation of Kalmar and Hiab amounted to EUR 28 million. Of the costs, EUR 14 million is booked in Kalmar and EUR 14 million in corporate administration and support functions. For the year 2024, Cargotec estimates to book approximately EUR -60 million for items affecting comparability related to the planned separation of Kalmar and Hiab. The estimate may be subject to change.
What is the Board of Directors’ dividend proposal?
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 2.15 for each outstanding class B shares be paid.