CARGOTEC CORPORATION, INTERIM REPORT, 25 OCTOBER 2016 AT NOON EEST
Cargotec's January-September 2016 interim report: operating profit margin improved
- Profitability continued to improve in Hiab - No big project orders in Kalmar, long term market potential still strong - Challenging market situation continued in MacGregor
July-September 2016 in brief
- Orders received decreased 19 percent and totalled EUR 733 (907) million.
- Order book amounted to EUR 1,874 (31 Dec 2015: 2,064) million at the end of the period.
- Sales declined 8 percent and totalled EUR 854 (928) million.
- Sales in services totalled 210 (216) million, representing 25 (23) percent of consolidated sales.
- Operating profit excluding restructuring costs decreased 3 percent and was EUR 65.9 (68.3) million, representing 7.7 (7.4) percent of sales.
- Operating profit was EUR 56.2 (61.9) million, representing 6.6 (6.7) percent of sales.
- Cash flow from operations before financial items and taxes totalled EUR 74.4 (74.5) million.
- Net income for the period amounted to EUR 33.5 (43.6) million.
- Earnings per share was EUR 0.52 (0.67).
- Orders received decreased 10 percent and totalled EUR 2,461 (2,733) million.
- Sales declined 6 percent and totalled EUR 2,581 (2,753) million.
- Sales in services totalled 641 (653) million, representing 25 (24) percent of consolidated sales.
- Operating profit excluding restructuring costs increased 6 percent and was EUR 189.3 (178.6) million, representing 7.3 (6.5) percent of sales.
- Operating profit was EUR 176.4 (168.1) million, representing 6.8 (6.1) percent of sales.
- Cash flow from operations before financial items and taxes totalled EUR 221.0 (227.3) million.
- Net income for the period amounted to EUR 113.0 (107.4) million.
- Earnings per share was EUR 1.75 (1.67).
Cargotec's key figures
| MEUR | 7-9/2016 | 7-9/2015 | Change | 1-9/2016 | 1-9/2015 | Change | 2015 |
| Orders received | 733 | 907 | -19% | 2,461 | 2,733 | -10% | 3,557 |
| Service orders received | 205 | 226 | -9% | 667 | 665 | 0% | 880 |
| Order book, end of period | 1,874 | 2,233 | -16% | 1,874 | 2,233 | -16% | 2,064 |
| Sales | 854 | 928 | -8% | 2,581 | 2,753 | -6% | 3,729 |
| Sales of services | 210 | 216 | -3% | 641 | 653 | -2% | 883 |
| Sales of services, % of Cargotec's sales | 25 | 23 | 25 | 24 | 24 | ||
| Operating profit* | 65.9 | 68.3 | -3% | 189.3 | 178.6 | 6% | 230.7 |
| Operating profit, %* | 7.7 | 7.4 | 7.3 | 6.5 | 6.2 | ||
| Operating profit | 56.2 | 61.9 | -9% | 176.4 | 168.1 | 5% | 213.1 |
| Operating profit, % | 6.6 | 6.7 | 6.8 | 6.1 | 5.7 | ||
| Income before taxes | 46.6 | 55.4 | 154.9 | 149.2 | 186.2 | ||
| Cash flow from operations | 74.4 | 74.5 | 221.0 | 227.3 | 314.6 | ||
| Net income for the period | 33.5 | 43.6 | 113.0 | 107.4 | 142.9 | ||
| Earnings per share, EUR | 0.52 | 0.67 | 1.75 | 1.67 | 2.21 | ||
| Net debt, end of period | 581 | 678 | 581 | 678 | 622 | ||
| Gearing, % | 41.6 | 52.5 | 41.6 | 52.5 | 46.4 | ||
| Personnel, end of period | 11,226 | 10,876 | 11,226 | 10,876 | 10,837 |
*excluding restructuring costs
Cargotec's CEO Mika Vehviläinen: Hiab's strong development continued during the third quarter and profitability improved compared to the previous year. Hiab's core business orders were at a good level, but we did not receive any big defence industry orders as we did during the comparison period. Kalmar's result was also satisfactory; however, the pace of customer decision making has slowed down, which could be seen in declining order numbers. Kalmar's long-term market potential is still strong: bigger ship sizes and the need to develop ports and make operations more effective require investments in port technology and automation. The number of potential projects is still large, but customers are delaying their investment decisions. The challenging market situation continued in MacGregor. The global merchant ship market is facing overcapacity and new ship orders are at an exceptionally low level. Industry consolidation, alliances and possible new ship routes create uncertainty in the industry. We are continuing with our measures to lower the MacGregor cost level. Our strategic focus areas are services, digitalisation and leadership development. In services we see tremendous business potential that we need to grasp with increased determination. We have increased our efforts in this area; for example, Hiab opened a spare parts web shop in September, MacGregor strengthened its spare parts delivery cooperation relationships in Asia, and Kalmar has initiated new measures to speed up the growth in services. In terms of digitalisation, we are developing Cargotec IoT Cloud-based solutions with our customers regarding, for example, automation effectiveness and proactive maintenance. Our internal leadership development programme is expanding to the next phase now that the first 200 leaders have completed the intensive training programme. We are focusing our efforts on projects that improve competitiveness, the cost efficiency of products and digitalisation. Additionally, we are investing in global systems and procedures that in future enable higher efficiency in operational activities as well as in support functions. Alternative performance measures (APMs) used in Cargotec's financial reporting New ESMA (European Securities and Markets Authority) guidelines on Alternative Performance Measures (Alternative performance measure (APM) = financial measure other than financial measure defined or specified in IFRS) are effective as of 3 July 2016. The new guidelines have had no impact on performance measures used by Cargotec, but in accordance with the guidelines, Cargotec publishes the explanation of use, definitions as well as reconciliations of its APMs to IFRS financial statements. APMs are used at Cargotec to better convey the underlying business performance and to enhance comparability from period to period. APMs are not substituting the performance measures stipulated by IFRS, but are instead reported as complementary information. The alternative performance measures used by Cargotec are:
- Operating profit excluding restructuring costs= Operating profit + restructuring costs
- Operating profit excluding restructuring costs, % of sales = (Operating profit + restructuring costs) / Sales * 100
- Interest-bearing net-debt = Interest-bearing debt - interest-bearing assets +/- Foreign-currency hedge of corporate bonds
