Cargotec’s interim report January–September 2019: Profitability improved

CARGOTEC CORPORATION, Q3 2019 INTERIM REPORT, 22 OCTOBER 2019 AT 2:00 PM EEST

Cargotec’s interim report January–September 2019: Profitability improved

• Sales increased
• Operating profit continued to increase in Kalmar and Hiab
• MacGregor’s result still weak. TTS Group acquisition completed

July–September 2019 in brief: Comparable operating profit increased

• Orders received decreased by 7 percent and totalled EUR 858 (921) million.
• Order book amounted to EUR 2,251 (31 Dec 2018: 1,995) million at the end of the period.
• Sales increased by 12 percent and totalled EUR 901 (805) million.
• Service sales increased by 13 percent and totalled EUR 269 (239) million.
• Service and software sales represented 35 (35) percent of consolidated sales.
• Operating profit was EUR 57.9 (54.5) million, representing 6.4 (6.8) percent of sales.
• Comparable operating profit increased by 18 percent and amounted to EUR 68.3 (57.8) million, representing 7.6 (7.2) percent of sales.
• Cash flow from operations before financial items and taxes totalled EUR 80.8 (17.0) million.
• Net income for the period amounted to EUR 29.7 (37.9) million.
• Earnings per share was EUR 0.46 (0.58).

January–September 2019 in brief: Sales increased

• Orders received totalled EUR 2,752 (2,766) million.
• Sales increased by 11 percent and totalled EUR 2,669 (2,394) million.
• Service sales increased by 8 percent and totalled EUR 777 (722) million.
• Service and software sales represented 34 (34) percent of consolidated sales.
• Operating profit was EUR 162.0 (129.1) million, representing 6.1 (5.4) percent of sales.
• Comparable operating profit increased by 10 percent and amounted to EUR 190.0 (172.5) million, representing 7.1 (7.2) percent of sales.
• Cash flow from operations before financial items and taxes totalled EUR 153.1 (39.8) million.
• Net income for the period amounted to EUR 89.7 (73.9) million.
• Earnings per share was EUR 1.39 (1.13).

Outlook for 2019
Cargotec reiterates its outlook published on 8 February 2019 and expects its comparable operating profit for 2019 to improve from 2018 (EUR 242.1 million).

Cargotec’s key figures

Cargotec applies the accounting standard IFRS 16, Leases, and the interpretation IFRIC 23, Uncertainty over Income Tax Treatments, starting from 1 January 2019. More information on the standards is available in Note 2, Accounting principles and new accounting standards. Cargotec has also refined the definition of service business for Hiab and MacGregor from the beginning of 2019. The figures related to service business have been restated for the comparison period 2018 accordingly. Cargotec has published a stock exchange release on 4 April 2019 regarding the changes.

 

MEUR	Q3/19	Q3/18	Change	Q1-Q3/19	Q1-Q3/18	Change	2018
Orders received	858	921	-7%	2,752	2 766	0%	3,756
Service orders received	262	251	4%	803	766	5%	1,031
Order book, end of period	2,251	1,887	19%	2,251	1,887	19%	1,995
Sales	901	805	12%	2,669	2,394	11%	3,304
Service sales	269	239	13%	777	722	8%	980
Software sales*	44	39	11%	122	100	22%	147
Service and software sales, % of Cargotec’s sales	35%	35%		34%	34%		34%
Operating profit	57.9	54.5	6%	162.0	129.1	26%	190.0
Operating profit, %	6.4%	6.8%		6.1%	5.4%		5.8%
Comparable operating profit	68.3	57.8	18%	190.0	172.5	10%	242.1
Comparable operating profit, %	7.6 %	7.2%		7.1 %	7.2%		7.3%
Income before taxes	50.0	47.0	7%	137.7	108.9	26%	161.1
Cash flow from operations before financing items and taxes	80.8	17.0	> 100%	153.1	39.8	> 100%	125.8
Net income for the period	29.7	37.9	-22%	89.7	73.9	21%	108.0
Earnings per share, EUR	0.46	0.58	-21%	1.39	1.13	23%	1.66
Interest-bearing net debt, end of period	927	639	45%	927	639	45%	625
Gearing, %	64.5%	45.3%		64.5%	45.3%		43.8%
Interest-bearing net debt / EBITDA**	2.8	2.5		2.8	2.5		2.3
Return on capital employed (ROCE), last 12 months, %	8.6%	7.9%		8.6%	7.9%		8.0%
Personnel, end of period	12,742	11,652	9%	12,742	11,652	9%	11,987

*Software sales include the strategic business unit Navis and automation software

**Last 12 months’ EBITDA

Cargotec’s CEO Mika Vehviläinen: Operating profit continued to increase in Kalmar and Hiab

I am pleased with the good development that continued in Kalmar and Hiab in the third quarter. Kalmar’s comparable operating profit increased by 24 percent and Hiab’s by 41 percent. Our actions to solve Hiab’s supply chain challenges which we started earlier this year proceeded as well.

MacGregor’s market situation continued to be challenging, and its operating profit was negative. We will continue to streamline MacGregor operations during the last quarter of 2019.

During the third quarter, Hiab’s orders received increased by four percent and MacGregor’s by 10 percent compared to the comparison period. Kalmar’s orders received declined by 19 percent. The customer interest towards port automation increased, but they consider their decisions carefully, targeting their investments mostly to phased renewals of existing ports.

Our service and software business progressed according to our plans. Service orders received increased by four percent, while service sales increased by 13 percent. Software sales grew by 11 percent. The sales of our services and software business was about 1.2 billion euros during the last 12 months, which is in line with our strategic target of 1.5 billion euros.

During the third quarter we completed the acquisition of the marine and offshore businesses of TTS Group ASA. The acquired businesses have been consolidated into MacGregor's financial figures as of 1 August 2019, and the process to integrate the companies is ongoing. The scale benefits of the acquisition create an opportunity to further improve MacGregor’s productivity and global presence. The merger of the two leading companies in their field provides us with excellent opportunities to better serve our customers, strengthen our competitiveness and continue to develop our products and services.

Reporting segments’ key figures

Orders received

MEUR	Q3/19	Q3/18	Change	Q1-Q3/19	Q1-Q3/18	Change	2018
Kalmar	396	486	-19%	1,329	1,469	-9%	1,919
Hiab	307	294	4%	988	902	9%	1,259
MacGregor	156	141	10%	437	396	10%	580
Internal orders	0	0		-1	-1		-1
Total	858	921	-7%	2,752	2,766	0%	3,756

Order book

MEUR	30 Sep 2019	31 Dec 2018	Change
Kalmar	1,083	1,012	7%
Hiab	458	453	1%
MacGregor	712	530	34%
Internal orders	-1	-1
Total	2,251	1,995	13%

Sales

MEUR	Q3/19	Q3/18	Change	Q1-Q3/19	Q1-Q3/18	Change	2018
Kalmar	424	415	2%	1,252	1,174	7%	1,618
Hiab	307	260	18%	982	831	18%	1,149
MacGregor	170	130	31%	436	389	12%	538
Internal sales	0	0		0	-1		-2
Total	901	805	12%	2,669	2,394	11%	3,304

Operating profit

MEUR	Q3/19	Q3/18	Change	Q1-Q3/19	Q1-Q3/18	Change	2018
Kalmar	47.5	38.6	23%	113.3	91.0	24%	138.1
Hiab	30.3	23.9	27%	111.0	99.4	12%	133.8
MacGregor	-9.8	0.2	< -100%	-23.4	3.1	< -100%	-4.2
Corporate administration and support functions	-10.1	-8.2	-23%	-38.9	-64.5	40%	-77.7
Total	57.9	54.5	6%	162.0	129.1	26%	190.0

Comparable operating profit

MEUR	Q3/19	Q3/18	Change	Q1-Q3/19	Q1-Q3/18	Change	2018
Kalmar	47.8	38.6	24%	117.8	92.5	27%	143.6
Hiab	34.1	24.2	41%	118.4	99.6	19%	134.5
MacGregor	-5.8	1.0	< -100%	-15.6	5.2	< -100%	-1.6
Corporate administration and support functions	-7.7	-6.0	-29%	-30.5	-24.9	-22%	-34.4
Total	68.3	57.8	18%	190.0	172.5	10%	242.1

 

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 3.00 p.m. EEST 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 2.30 p.m. EEST.

The telephone conference, during which questions may be presented, can be accessed by registering at https://bit.ly/2lSD6zm. The registration opens 15 minutes prior to the event. The event conferencing system will call the participant on the phone number provided and place the participant into the event.
The telephone conference can also be accessed without advance registration with code 965922 by calling to one of the following numbers:

• FI +358 (0)9 7479 0360
• UK +44 (0)330 336 9104
• US +1 323-794-2095

The event can also be viewed as a live webcast at www.cargotec.com. Conference call will be recorded, and an on-demand version of the conference will be published at Cargotec's website later during the day.

Note that by dialling in to the conference call, the participant agrees that personal information such as name and company name will be collected.

For further information, please contact:
Mikko Puolakka, Executive Vice President and CFO, tel. +358 20 777 4105
Carina Geber-Teir, SVP Communications, tel. +358 20 777 4000

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 2018 totalled approximately EUR 3.3 billion and it employs around 13,000 people. www.cargotec.com

Attachment:

• Cargotec interim report January–September 2019, pdf