Cargotec's financial statements review 2017: Strong year for Hiab
CARGOTEC CORPORATION, FINANCIAL STATEMENTS REVIEW 2017, 8 FEBRUARY 2018 AT 8:30 AM EET
Cargotec's financial statements review 2017: Strong year for Hiab
Kalmar's project business orders received low
A record year for Hiab
MacGregor's orders received increased in the second half of 2017
The figures in these financial statements review are based on Cargotec Corporation's audited 2017 financial statements.
October-December 2017 in brief: Net income increased
Orders received decreased by 5 percent and totalled EUR 784 (822) million.
Order book amounted to EUR 1,550 (31 Dec 2016: 1,783) million at the end of the period.
Sales decreased by 3 percent and totalled EUR 902 (933) million.
Service sales totalled EUR 229 (231) million.
Service and software sales represented 31 (30) percent of consolidated sales.
Operating profit was EUR 57.3 (21.3) million, representing 6.4 (2.3) percent of sales.
Operating profit excluding restructuring costs increased by 22 percent and amounted to EUR 74.6 (61.0) million, representing 8.3 (6.5) percent of sales.
Cash flow from operations before financial items and taxes totalled EUR 112.4 (152.0) million.
Net income for the period amounted to EUR 29.7 (12.2) million.
Earnings per share was EUR 0.45 (0.20).
January-December 2017 in brief: Profitability improved
Orders received decreased by 3 percent and totalled EUR 3,190 (3,283) million.
Sales decreased by 7 percent and totalled EUR 3,280 (3,514) million.
Service sales totalled EUR 874 (872) million.
Service and software sales represented 31 (29) percent of consolidated sales.
Operating profit was EUR 226.7 (197.7) million, representing 6.9 (5.6) percent of sales.
Operating profit excluding restructuring costs totalled EUR 263.2 (250.2) million, representing 8.0 (7.1) percent of sales.
Cash flow from operations before financial items and taxes totalled EUR 253.5 (373.0) million.
Net income for the period amounted to EUR 136.3 (125.3) million.
Earnings per share was EUR 2.11 (1.95).
The Board of Directors proposes to the Annual General Meeting convening on 20 March 2018 a dividend of EUR 1.04 per class A share and EUR 1.05 per outstanding class B share be paid. The Board also proposes that the dividend shall be paid in two instalments, in March and September 2018. The dividend for class A shares would be paid in two EUR 0.52 instalments. The dividend for outstanding class B shares would be paid in EUR 0.53 and EUR 0.52 instalments.
Outlook for 2018
Cargotec's operating profit excluding restructuring costs for 2018 is expected to improve from 2017 (EUR 263.2 million).
As a result of the adoption of the IFRS 15 standard effective from January 1, 2018, Cargotec's revenue recognition for certain products and customer contracts will change in 2018. The IFRS 15 restated figures for 2017 will be published in March 2018 the latest. The change in accounting principles is not expected to have a material impact on annual operating profit.
Cargotec's key figures
|Service orders received||212||222||-4%||864||889||-3%|
|Order book, end of period||1,550||1,783||-13%||1,550||1,783||-13%|
| Service and software sales, |
% of Cargotec's sales
|Operating profit, %||6.4%||2.3%||6.9%||5.6%|
|Operating profit**, %||8.3%||6.5%||8.0%||7.1%|
|Income before taxes||49.6||14.2||250%||193.8||169.1||15%|
|Cash flow from operations||112.4||152.0||-26%||253.5||373.0||-32%|
|Net income for the period||29.7||12.2||143%||136.3||125.3||9%|
|Earnings per share, EUR||0.45||0.20||129%||2.11||1.95||8%|
|Interest-bearing net debt, end of period||472||503||-6%||472||503||-6%|
|Interest-bearing net debt / EBITDA***||1.6||1.8||1.6||1.8|
| Return on capital employed |
(ROCE, annualised), %
|Personnel, end of period||11,251||11,184||1%||11,251||11,184||1%|
*Software sales include Navis business unit and automation software
**Excluding restructuring costs
***Last four quarters' EBITDA
Cargotec's CEO Mika Vehviläinen: A year of change and development
2017 was as a year of changes in our industry. We saw large-scale consolidation, as shipping lines formed alliances and reorganised cargo handling routes. The shipping market was still recovering from severe overcapacity. The on-road load handling market was strong both in the US and in Europe.
In terms of orders received, the year was twofold for us: orders received declined in Kalmar and MacGregor, but the strong development in Hiab continued. In Kalmar, the development in the project business did not meet our expectations. MacGregor's orders grew during the second half of the year. The activity improved in the merchant ship markets, but remained well below historical averages. Hiab's orders received grew in all our main markets supported by the good level of construction activity, and the development was strong especially in Europe.
Also the sales declined in Kalmar and MacGregor but grew in Hiab. The delivery volumes were in line with our expectations in the fourth quarter. We are satisfied that we were able to grow our operating profit despite the sales being lower than in the previous year. We expect that our operating profit, excluding restructuring costs, will improve also in 2018.
Strategy implementation, driven by our three must-win battles - digitalisation, services and leadership - progressed well. A number of new digital products were introduced during the year. We have an ambitious approach to development and to delivering our promise to be the leader in intelligent cargo handling in 2020. In addition to our product and system level digitalisation initiatives, we have launched several projects that focus on utilising robotics and artificial intelligence both internally and in our commercial offering.
In services we took decisive steps to improve and expand our offering as a lifecycle partner to our customers. At Kalmar, the main service business developed well, although the project-based services faced some challenges. Hiab introduced new service concepts which increased its service sales by four percent. MacGregor services suffered from weak market conditions, especially in the offshore business.
Our leadership development serves as an enabler for our transformation as a company. We have now focused on this area for three years, and measure our leaders' behavior and effectiveness on a regular basis. This has clearly improved our working climate, employee satisfaction and performance.
During the year, we were also able to agree on three interesting acquisitions. Argos is one of Brazil's leading loader crane manufacturers. With the acquisition, Hiab will extend its operations to the Brazilian market. MacGregor agreed to acquire Rapp Marine Group in order to strengthen its offering for the fishery and research vessel segment. In addition, Kalmar acquired the port services business of Inver Engineering in Australia. Our balance sheet is strong, enabling further acquisitions.
Reporting segments' key figures
|MEUR||31 Dec 2017||31 Dec 2016||Change|
|Corporate administration and support functions||-20.1||-14.0||-44%||-56.3||-42.9||-31%|
Operating profit excluding restructuring costs
|Corporate administration and support functions||-12.0||-14.0||14%||-42.2||-42.9||2%|
Press conference for analysts and media
A press conference for analysts and media, combined with a live international telephone conference, will be arranged on the publishing day at 10.00 a.m. EET at Cargotec's head office, Porkkalankatu 5, Helsinki. The event will be held in English. The report will be presented by CEO Mika Vehviläinen and Executive Vice President, CFO Mikko Puolakka. The presentation material will be available at www.cargotec.com by latest 10.00 a.m. EET.
The telephone conference, during which questions may be presented, can be accessed using the following numbers with access code 686095:
FI: +358 (0)9 7479 0360
SE: +46 (0)8 5033 6573
UK: +44 (0)330 336 9104
US: +1 646-828-8199
The event can also be viewed as a live webcast at www.cargotec.com. An on-demand version of the conference will be published at Cargotec's website later during the day.
For further information, please contact:
Mikko Puolakka, Executive Vice President and CFO, tel. +358 20 777 4105
Hanna-Maria Heikkinen, Vice President, Investor Relations, tel. +358 20 777 4084
Cargotec (Nasdaq Helsinki: CGCBV) enables smarter cargo flow for a better everyday with its leading cargo handling solutions and services. Cargotec's business areas Kalmar, Hiab and MacGregor are pioneers in their fields. Through their unique position in ports, at sea and on roads, they optimise global cargo flows and create sustainable customer value. Cargotec's sales in 2017 totalled approximately EUR 3.3 billion and it employs over 11,000 people. www.cargotec.com