Cargotec as an investment

The second quarter of 2024 was another operationally solid one for Cargotec. We have now six quarters in a row with good and stable results. The market environment remained mixed as high interest rates and uncertainty in some of Hiab’s key geographies and industries continued to delay customer decision making. On the other hand, MacGregor continued to benefit from the strong ship building cycle. During the quarter, we achieved two major milestones in reshaping Cargotec. We completed the partial demerger on 30 June with Kalmar listing starting on Nasdaq Helsinki on 1 July, and we started the sales process of MacGregor in May.

Taking a look at our financial performance, Cargotec’s orders received in the second quarter increased, driven by MacGregor and totalling EUR 584 million. The order book declined from the comparison period as Hiab's order book has gradually been returning to a more normal level. Sales amounted to EUR 625 million, declining by 4 percent from the comparison period. A solid business execution in both Hiab and MacGregor led the second quarter comparable operating profit to increase by 2 percent to EUR 82 million or 13.1 percent of sales. Our balance sheet is very strong after the demerger. Our gearing is only 2 percent and net debt amounted to EUR 18 million.

In Hiab, delayed decision making continued to impact customers’ ordering behaviour whereas the order book collected in the past couple of years still supported Hiab’s sales. Orders received declined by 7 percent to EUR 348 million. Hiab’s sales decreased from a record-breaking comparison period by 11 percent to EUR 433 million. Service sales continued to increase and amounted to EUR 115 million, representing 27 percent of Hiab’s sales. Despite lower sales, Hiab’s profitability remained on a good level and the comparable operating profit amounted to EUR 69 million, corresponding to 15.9 percent of sales.

In MacGregor, the positive development continued with both merchant and service businesses continuing their strong performance. Demand remained strong and orders received increased by 26 percent to EUR 235 million. MacGregor’s order book continued to increase and amounted to EUR 1,014 million. Sales increased by 17 percent to EUR 192 million, driven by merchant and service businesses. MacGregor’s comparable operating profit improved yet again against the comparison period, reaching EUR 21 million, representing 11.1 percent of sales.

To proactively adjust to continued uncertainty in the market environment, and to support Hiab’s future growth, Hiab initiates planning of an efficiency improvement programme. On top of cost saving actions in 2024, the target would be to reach approximately EUR 20 million of cost savings in 2025. These actions would further promote Hiab’s ambition to improve efficiency and to support our commitment to profitable growth and sustainable customer value creation.

We have also specified our outlook for 2024. Cargotec now estimates Hiab’s comparable operating profit margin in 2024 to be above 13.5 percent and MacGregor’s comparable operating profit in 2024 to be above EUR 55 million. In the outlook initially published in February, we estimated Hiab’s comparable operating margin to be above 12 percent and MacGregor’s comparable operating profit to increase from 2023 (EUR 33 million).

We strongly believe that Hiab will continue its profitable growth by ​​shaping the essential industries with innovative lifting and delivery solutions and increase customer’s productivity, safety and sustainability. This is reflected in the new long term financial targets set for 2028 which were published in May: Hiab targets to continue to grow over 7 percent over the cycle and to reach a comparable operating profit of 18 percent (as a business area of Cargotec), and deliver an over 25 percent operative ROCE. Setting Hiab-specific financial targets is also a major milestone on Hiab’s journey to become a standalone company.

Preparations of transforming Hiab into a standalone company progressed well during the quarter. We announced that if a solution to MacGregor is found so that MacGregor would not thereafter be part of the Cargotec group, Cargotec’s Board of Directors is planning to propose to Cargotec’s General Meeting of shareholders that the company’s name would be changed from Cargotec to Hiab. The Board of Directors would then appoint the President of the Hiab business Scott Phillips as the President and CEO of the renamed company being the current Cargotec. We currently estimate that these changes could take place during 2025. The current Cargotec CFO Mikko Puolakka would continue as CFO of standalone Hiab.

A major step was also taken in finding a solution for MacGregor. We settled the dispute with a monopile installation vessel customer and started the sales process of MacGregor. We continue to aim to find a solution for MacGregor in 2024.