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Aki's 4+1 tips for digesting Cargotec as an investment case

17.12.2019

Cargotec might not be the easiest company to get a hold of for a new investor, given our three business areas operating in complex and diverse environments. Here Cargotec's new IR Director Aki Vesikallio shares tips that helped him during his first week to create an understanding of the business and investment case.

December is a busy month for most of us before we can slow down for a while and enjoy a short but well-deserved break with our loved ones. For me, this December has been even a bit more exciting, as I started in Cargotec’s Investor Relations in the beginning of the month. 
 
Working in Investor Relations requires thorough knowledge of the company. During the first weeks, I have tried to learn as much as possible about Cargotec besides getting to know my new co-workers. I also had a great opportunity to travel with our CFO Mikko Puolakka to Danske Bank’s Winter Seminar in Copenhagen on my second day. I will share some insight from the investor meetings later in the text, but first I will go through my tips on how to get to know the company in one week. 
 
The name Cargotec itself might not say too much to everyone - especially since the company consists of three business areas, which have strong and well-known brands with leading market positions. What they have in common is that they provide intelligent cargo handling solutions: Kalmar in ports and terminals, HIAB on roads and MacGregor at sea.
 
For an investor, this means developing an understanding of three businesses instead of one. Luckily there is plenty of material available to ease this task. Here are my tips for a speedy onboarding that were helpful during my first week:
  1. Get a quick overview. I think the best quick introduction is this Why invest in Cargotec-video, that gives a good overview of the company and its future prospects. This one might interest you particularly if you do not know that much about the company yet.
     
  2. Dig deeper. Cargotec’s investor presentation is a comprehensive information package that we actually use when meeting analysts and institutional investors. Most of the discussions we have with the institutional investors are based on the information found here. Check also the IR Blog for reflections from our recent investor events.
  3. Listen to CEO and CFO insights. On-demand quarterly result webcasts provide more business insight, and I would especially recommend checking out the Q&A sessions in the end. Here, the CEO and the CFO are bombarded with the most topical questions from analysts and investors.

  4. Follow demand drivers. Each of our business areas has key demand drivers that investors can use as indicators.  Demand for Kalmar’s solutions is driven by global container throughput. Meanwhile, the best proxy for HIAB’s demand is construction output in its main markets EMEA and Americas. Both indicators are forecasted to continue to grow steadily. MacGregor’s demand indicators, merchant ship and offshore contracting activity, are currently well below historical averages, but the forecast shows somewhat higher activity going forward.

    + Here’s a bonus tip for Finnish speakers. As a Finnish speaker myself, I also listened to Cargotec’s quarterly podcasts for insights. These are usually presented in a more laid back format with external guests like Tomi Lahti and Erkki Vesola, and often include interesting points about investing in general.
All in all, my first impression is that Cargotec offers an interesting investment case as it is working on markets with long term growth potential supported by global megatrends such as globalisation, urbanisation and the growing middle class. Our company is the forerunner in automated and digital solutions and it has a broad eco-efficient offering. At the same time, increasing the share of service and software sales help to reduce earnings volatility in the cyclical business.
 
So what are the hottest topics right now? Based on my short experience, service and software offering and port automation were on top of the investors’ agenda at least in Copenhagen. Only a small fraction of the world’s 1200 terminals are currently automated, but the ports are increasingly thinking when and how they should automate rather than if automation makes sense, as cost and energy efficiency as well as safety benefits are evident.
 
I’m looking forward to seeing my first automated port in action. Until then, I’ll continue learning the business and getting to know my new colleagues. 
 
Happy holidays to you all!
 
Aki Vesikallio
Director, Investor Relations at Cargotec
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