KCI KONECRANES INTERNATIONAL PLC STOCK EXCHANGE RELEASE 1 (26)
11 February, 2003 10.00 a.m.
KCI KONECRANES GROUP
Financial Results 2002
BUSINESS DOING WELL IN DIFFICULT MARKET.
GROUP RESULT BURDENED WITH COSTS FOR DEVELOPMENT PROJECTS.
Sales down 5.6 % in low investment environment
Operating income down 32.0 % on lower sales and increased development
spending
Operating efficiency improved, Business Area margins well defended
Cash flow from operations at record level (66.3 MEUR or 4.54 euros per
share)
Million EUR 1-12/ % 1-12/ % Chg 10-12/ 10-12/ Chg
SALES 02 01 % 02 01 %
Maintenance
Services 372.4 365.2 2.0 104.7 104.6 0.0
Standard
Lifting
Equipment 204.5 244.9 -16.5 58.5 66.4 -11.9
Special
Cranes 209.2 227.3 -8.0 61.2 74.6 -18.0
Internal
Sales -72.5 -81.1 -10.6 -20.9 -26.1 -19.9
Sales total 713.6 100 756.3 100 -5.6 203.5 219.6 -7.3
Income from
operations
(EBITA) 40.9 5.7 59.4 7.9 -31.1 17.8 22.6 -21.3
Goodwill
amortisation -3.3 -4.1 -19.6 -0.7 -1.0 -28.6
Operating
income (EBIT) 37.6 5.3 55.3 7.3 -32.0 17.1 21.6 -20.9
Financial
income and
expenses -1.1 -2.8 -60.4 -0.3 -1.0 -71.9
Income before
taxes and
minority
interest 36.5 5.1 52.4 6.9 -30.4 16.8 20.6 -18.5
Net income 24.6 3.5 35.3 4.7 -30.2 11.4 13.5 -16.0
Earnings per
share (EUR) 1.69 2.40 -29.6 0.78 0.92 -15.3
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Cash flow per
share (EUR) 4.54 2.93 54.9 1.76 1.55 13.5
Dividend per
share (EUR) 0.95(1 0.90 5.6
ORDERS
RECEIVED
Maintenance
Services 310.2 307.2 1.0 70.2 66.0 6.3
Standard
Lifting
Equipment 203.2 229.2 -11.3 49.2 50.2 -2.1
Special
Cranes 154.9 209.6 -26.1 30.3 43.6 -30.4
Internal
Orders -69.4 -66.9 3.8 -17.4 -18.2 -4.2
Orders
received total
598.9 679.1 -11.8 132.2 141.6 -6.6
Order book at
end of period 206.0 279.7 -26.4
1) Boards proposal
Comment on 2002 results, future prospects:
Against a backdrop of low investment spending and low utilisation
rates Maintenance continued its growth, and the other Business Areas
held their positions well. Business Areas successfully defended their
Operating Income margins, and our market shares increased.
Group income shrunk, but due to continuous cost cutting, less than the
sales decline would suggest. Forward looking actions in R&D and M&A
increased, also taxing income.
Maintenance growth continues. The order intake in Standard Lifting
Equipment and Special Cranes is stabilising. Order backlog is stable
on a satisfactory level.
New market openings in Asia contain considerable growth opportunities.
Our strong market position, our geographical spread and our up-to-date
technology are all factors that will contribute to continued good
development, especially compared to other actors in our market. With
our strong balance sheet, our intent is to consolidate the industry
further.
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Stig Gustavson, President and CEO
At first glance, 2002 does not present itself as a particularly good
year for the Group. Sales did not reach previous years level, nor did
profits.
At a second glance the picture changes. The markets for investment
goods in the industrialised world continued in reverse gear but, in
spite of that, it is a great pleasure for me to report significant
progress in so many important fields of Group activity: our
Maintenance operations continued to grow, we made significant market
entries (China, Japan), we developed and launched new products, we
acquired competitors and our market shares grew in many markets.
Our operational efficiency continued to improve as cost cutting
continued. Our cash flow hit a new record level.
Still, our financial result was clearly lower. This is a consequence
of lower sales but also of increased R&D and M&A spending, i.e.
activities intended to improve our future prospects.
Business development
2002 was encouraging. Against a backdrop of low investment spending
and low utilisation rates Maintenance continued its growth, and the
other Business Areas held their positions well. Business Areas
successfully defended their Operating Income margins, and our market
shares increased.
Group income shrunk, but due to continuous cost cutting, less than the
sales decline would suggest. Forward looking actions in R&D and M&A
increased, also taxing income.
In 2002, Group Sales was EUR 713.6 million and the Operating Income
was EUR 37.6 million. Group Sales decreased by 5.6% and Operating
Income by 32.0%. Due to strong cash flow the financing costs decreased
further. The Net Income was EUR 24.6 million, which is a decrease of
30.2% compared to 2001. Earnings per share decreased by 29.6% to EUR
1.69.
Sales
Group sales were EUR 713.6 million, which is EUR 42.7 million or 5.6 %
lower compared to EUR 756.3 million in 2001. There were considerable
variations between Business Areas and Regions. Maintenance Services
sales grew, especially the Field Service activities, but Sales
decreased in the new equipment Business Areas. Among regions Europe
was stable, while Sales decreased in the Americas and Asia-Pacific.
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Profitability
The Operating Income was EUR 37.6 million, which is 32.0% less
compared to year 2001 (2001: EUR 55.3 million). The Operating Income
margin was 5.3% compared to 7.3% in 2001. Profitability improved both
in absolute terms and as a percentage on sales in Maintenance
Services. In Special Cranes, the margin percentage improved, but the
operating income decreased in absolute value. In Standard Lifting
equipment, both the percentage and the absolute value decreased. This
was mainly a consequence of lower sales. In Special Cranes the
Operating Income margin improvement was related to costs decreasing
faster than sales. In 2002 the Operating Income was not affected by
any significant one-time gains. Instead it includes one time costs of
EUR 7.3 million relating to one particular development project and its
launch. The first two cranes of this new technology were delivered and
taken into operation during the year 2002. Also M&A spending
increased.
Group Operating Income before goodwill amortisations (EBITA) was EUR
40.9 million or 5.7% on Group Sales (2001: 7.9 %). The Operating
Income before all depreciations and amortisations (EBITDA) was EUR
53.1 million or 7.4% on sales (2001: 9.4%).
The net of financing costs and income was EUR 1.1 million, which is
less than half of the EUR 2.8 million costs in 2001. Income Before
Taxes was EUR 36.5 million or 5.1% on sales (2001: EUR 52.4 million
and 6.9% respectively). Income taxes were EUR 11.8 million, which is a
decrease of EUR 5.3 million compared to 2001. The effective tax rate
was 32.5% (2001: 32.7%). Net Income or profit after taxes decreased
with EUR 10.7 million or by 30.2% to EUR 24.6 million.
The Groups Return on capital employed was 17.8% compared to 24.3% in
2001. In spite of lower sales there was no deterioration in the
capital rotation rate. Return on equity was 14.2% compared to 22.0% in
2001. The decrease was mainly due to lower Net Income.
Group profitability improved clearly during Q4/02 compared to
preceding quarters. However, compared to Q4/01 Sales was 7.3% lower
and the Operating Income 20.9% lower. In Q4/2002 the Operating Income
margin was 8.4% (2001: 9.8%). The Operating income during Q4/02 was in
absolute terms on the same level as Q4/01 corrected for one-time
items.
In the beginning of the fiscal year 2002 the Group implemented the
percentage of completionö method (POC accountingö) in sales revenue
recognition on all long term crane and modernisation projects. POC
accounting had earlier been applied only in harbour and shipyard crane
contract accounting (= Konecranes VLC Corp.). In all other projects
5 (26)
revenue recognition in full took place only at completion of the
delivery. Also the Group started to account for certain finance
leasing contracts as if the assets had been acquired. These changes
are part of the implementation process to comply with International
Accounting Standards (=IAS). These accounting changes, however, had
only a marginal effect on the balance sheet and the statement of
income and do not significantly affect the comparability between
previous years numbers.
Cash flow and balance sheet
Cash flow from operations was all time high at EUR 66.3 million, which
is an increase of EUR 23.3 million or 54.1% compared to year 2001. The
cash flow per share grew by 55 % from EUR 2.93 to EUR 4.54. With
increasing rotation, the level of net working capital is now 16.2% on
Group sales compared to 18.2% in 2001.
The cash was used to cover capital expenditures including acquisitions
(in total EUR 21.1 million), to repurchase the Companys own shares
(EUR 9.9. million), to dividend payments (EUR 13.2 million).
Additionally, interest bearing and other debts were reduced by EUR
22.4 million.
The Groups net interest bearing borrowing was EUR 33.0 million at
year end, corresponding to a gearing level of 19.1% (2001: EUR 50.1
million and 28.9% respectively). Group solidity increased to 45.5%
from 41.4% in 2001.
At year end the Groups EUR 100 million back-up facility was totally
unused.
Currencies
Some currencies, mainly the weaker US dollar/euro relation had some
effect on the development of Orders Received and Sales. At unchanged
currency rates Group order intake decreased by 9.3% and Sales by 4.0%
(reported figures 11.8% and 5.6% respectively). Currency rate changes
had only a marginal effect on Group Net Income.
The average consolidation rates of some of the most important
currencies developed as follows (currency/euro):
2002 2001 Change %
USD 0.94573 0.89599 -5.26
CAD 1.48420 1.38670 -6.57
GBP 0.62887 0.62193 -1.10
SEK 9.16070 9.25580 +1.04
NOK 7.50820 8.04790 +7.19
SGD 1.69150 1.60400 -5.17
AUD 1.73780 1.73240 -0.31
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The Group continued its currency risk policy of hedging all
transactions in non-euro currencies. Hedging was mainly done through
forward exchange transactions. Currency risks are hedged on average
one year ahead.
Order intake and order backlog
Group Order Intake (excluding the service contract base and renewed
service contracts) was EUR 598.9 million. Orders decreased by EUR 80.2
million or 11.8 % (with constant currency rates the decrease was
9.3%).
EUR 54.7 million of the decrease was seen in Special Cranes, where the
order intake decreased by 26.1%. Harbour- and shipyard crane orders
decreased over 50% mainly due to customers postponing their investment
decisions. In 2002 no super large harbour projects were booked,
whereas the numbers one year ago included one single large order for
onboard shipboard gantry cranes worth EUR 32 million. Other Special
Crane orders, especially to the power and various process industries
increased by approx. 12%.
The order intake in Standard Lifting equipment also decreased with EUR
26.0 million or 11.3%. Compared to 2001 the decrease was clearly
smaller in the second half of the year, but the Order Intake did not
yet turn into a growth mode.
The order intake in Maintenance Services grew by 1.0%. The development
varied between services products. The order intake in Field Services
grew 11.8% year-on-year, but orders for modernisation and large
upgrades decreased by 22.9%. Modernisations and upgrades accounted for
less than 20% of Business Area sales at yearend. Cranes under
maintenance agreement increased by 12% y-o-y and amounted to 208.270
cranes. The monetary value of the service contract base also developed
favourably. The growth was approximately 4%.
In geographic terms the fastest growth within the Group was recorded
in China. In Europe the development was stable with the exception of
Germany, where order intake decreased further due to a shrinking
market. Group Order Intake in the Americas decreased by 5% y-o-y, but
turned to clear growth in Q4/02, up 30% compared to Q4/01.
The value of the order backlog at yearend 2002 stood at EUR 206
million which is EUR 73.7 million or 26.3% less than it was at yearend
2001. The order backlog consists mainly of Special crane orders which,
in spite of the decrease secure a good operational level 6-8 months
ahead. In Standard Lifting Equipment and Maintenance Services the
order backlog decreased slightly, but in these Business Areas the
order backlog does not give guidance in the same way as it does in
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Special Cranes. Our target is to minimise both delivery and response
times.
Investments
Group investments into tangible assets (excl. acquisition related
investments) were EUR 12.9 million (2001: EUR 10.0 million). Most of
the investments were replacement investments targeting machinery,
information technology and facilities. The investments were aimed at
improved efficiency. Investments into intangible assets (excl.
acquisition related investments) were EUR 1.0 million (2001: EUR 1.3
million).
Total investments exceeded the level of depreciations of related
assets by approximately EUR 1.7 million.
Research and development
Total direct R&D costs were EUR 8.2 million, up with 6.5% from EUR 7.7
million at yearend 2001. This represented 2% of new equipment business
area Sales, but almost 6% of the value of related component and key
technology production. Additionally, EUR 7.3 million was spent on the
development of the new container handling technology.
Again, R&D costs were mainly related to the development of electrical
and electronical components as well as mechanical features. A new
focus area for R&D is the development of technical tools used in
Maintenance Services.
Human resources development
The Group continued its training and development efforts. The KCI
Konecranes Academy, with its focus on middle management and experts
continued according to plan. The development program for top
executives together with IMD (Lausanne, Switzerland) continued. The
training efforts in the Groups new products and technologies
continued. The Group invested some 9000 training days in personnel
training and development.
Personnel
At the end of 2002 the Group had 4,441 employees. The net increase in
personnel was 40 persons from 4401 persons at the end of year 2001.
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In Maintenance Services the number of employees increased by 217
persons or 8.7%, whereas there was a reduction of 180 employees in the
new equipment Business Areas. During the year 140 persons joined the
KCI Konecranes Group through acquisitions. The average number of
employees during year 2002 was 4396 persons (2001: 4434).
Insurance
The Group continuously reviews its insurance policies as part of its
overall risk management. Insurances are used to provide sufficient
cover to all risks that are economically or otherwise reasonably
insurable. As the insurance market has sharpened the Group has
intensified the use of other risk management methods within its units.
Litigation
The arbitration process in Stockholm between Baan Company N.V. and KCI
Konecranes International Plc continues but progress in the arbitration
has been slow. Final hearings are now expected to be held at the end
of year 2003. KCI Konecranes claims damages from Baan and Baan has a
counterclaim against KCI Konecranes. The Consolidated Balance Sheet
includes a receivable (approx. EUR 14.0 million) relating to costs for
the project. KCI Konecranes claim exceeds the amount that has been
included in the Balance Sheet. Baans counterclaim is slightly below
that amount. KCI Konecranes has taken a number of precautionary
measures in the Netherlands against Baan Company N.V. and Invensys
International B.V..
During 2002, Invensys International B.V., Baan Development B.V. and
BAAN USA, Inc. initiated a lawsuit against KCI Konecranes and its US
subsidiary Konecranes, Inc. and Novasoft Information Technology, Inc
in the United States District Court of the Northern District of
California. Invensys/Baan claim, among other things, an unspecified
amount of damages, to be proven at trial, but which the Plaintiffs
state to believe not to be less than USD 50 million and punitive and
treble damages for an alleged breach of contract and various other
alleged acts. KCI Konecranes considers the dispute to relate closely
to the above mentioned arbitration proceedings pending in Stockholm
and has asked the claims to be dropped or assigned to the arbitration
process. The first hearing in this matter has been held, but the
decision has not been rendered.
At year end the Group did not have any other pending legal processes
or business claims with material effect.
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Group structure
On March 5, 2002 the Group agreed to acquire the hoist and cranes
business of Shepard Niles, Inc. of Montour Falls, New York, USA. At
the end of March 2002 the Group finalised the acquisition and Shepard
Niles was consolidated into Group figures starting from 1 April, 2002.
On June 3, 2002 the Group acquired the crane and maintenance business
of Burlington Engineering Division (Boston, Massachusetts, USA). The
business was included in Group figures as of the purchase date.
The acquired businesses strengthen our position in the North East
corner of USA and expands our sales and service market coverage.
On October 16, 2002 the Group acquired the assets related to the
replacement parts and service business of Crane Manufacturing &
Service Corporation (CMS) in Milwaukee, Wisconsin. CMS was included in
Group figures as of the purchase date. Additionally, the Group
acquired the business assets of some minor companies mainly in
Finland. Altogether, the acquired businesses will add to Group annual
sales approximately EUR 15 million.
On 6 November 2002, the Group signed an agreement with Meidensha
Corporation of Japan (the Sumitomo sphere) to become joint venture
partners in their subsidiary, Meiden Hoist System Company Ltd,
targeting the Japanese hoist and crane market. The Group will become a
49% shareholder in the joint venture with a further call option to
increase its share to 65%. Meiden is the oldest hoist brand in Japan.
With annual sales of EUR 17 million, Meiden has a 10% market share in
Japan. Meiden Hoist System will become operative under the JV
agreement during Q1/03.
Our standard lifting equipment factory in Shanghai, China started
operations. To accelerate the penetration of our hoists and cranes,
KCI Konecranes entered into three joint venture agreements in which
the Group will have a minority equity position as well as also other
co-operation agreements with no equity involvement.
The Group will continue to pursue new acquisitions and other forms of
co-operation.
Shares price performance and trading volume
KCI Konecranes share price decreased with 18.28% during year 2002 and
closed at EUR 23.29 (2001: EUR 28.50). The year high was EUR 36.83
(2001: EUR 38.46) and year low EUR 19.80 (2001: EUR 25.00). During the
same period the HEX All-Share Index fell 34.41%, the HEX Portfolio
Index by 16.68% and the HEX Metal & Engineering index by 4.06%.
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Total market capitalisation was at year-end EUR 333.2 million (2001:
EUR 427.5 million), the 33rd largest market value of companies listed
on Helsinki Exchanges.
The trading volume totalled 11,938,647 shares of KCI Konecranes, which
represents 83.44% of the outstanding shares. In monetary terms trading
was EUR 343.1 million, which was the 23rd largest trading of companies
listed on Helsinki Exchanges.
The companys own shares
KCI Konecranes International Plc repurchased 300,000 of the Companys
own shares in 1999 and an additional 391,370 shares in year 2002. The
nominal value of shares in the company acquired by the company
amounted to EUR 1,382,740. The shares represented 4.6 % of the
companys total number of outstanding shares and voting rights. An
Extraordinary General Meeting held on December 20, 2002 decided upon
an invalidation of the shares. The aggregate purchase price of the
invalidated shares was approximately EUR 17.4 million. On December 31,
2002 the decrease in share capital was entered into the Trade
Register. Since the share capital was decreased through an
invalidation of shares in the company owned by the company, the
invalidation of shares did not affect the distribution of voting
rights in the company. The invalidation of the shares increased the
portion of the share capital held by other shareholders accordingly.
At year end the Group held no shares in the company. According to the
decisions at the Annual General Meeting 2002 the board still has the
authorisation to acquire a maximum of 358.630 of the companys own
shares.
Dividend proposal
The Board of Directors proposes to the AGM that a dividend of EUR 0.95
per share will be paid for fiscal year 2002. The dividend will be paid
to shareholders, who are entered as shareholders in the share register
on the record date March 11, 2003. Dividend payment date is March 18,
2003.
11 (26)
Review by Business Area
Maintenance Services
Maintenance Services Sales was EUR 372.4 million, up 2 % from EUR
365.2 million in year 2001. Operating Income amounted to EUR 26.2
million, up 8.7% year-on-year from EUR 24.1 million. The operating
income margin grew from 6.6% to 7.0%.
Profitability improved mainly due to improved operating efficiency and
improvements in the quality of operations. At 9 % in Q4/02, the
Operating Income margin reached the Groups short term goal (over 8%).
Maintenance Services developed favourably during the year; Field
Services, the core of Maintenance Services, grew clearly year-on-year,
orders were up 12% and sales up 6%, whereas the activity in
modernisation projects decreased, orders were down by 23% and sales by
17% as customers postponed decision making. The project type business
within Maintenance Services decreased to below 20% of total Business
Area sales. The development is a logical consequence of the general
development in the main markets.
The Order Intake was EUR 310.2 million, up 1.0% from EUR 307.2 million
in year 2001.
The Maintenance services agreement base developed favourably both in
terms of units and in value. The number of cranes in the contract base
increased by 12% year-on-year to 208,270 cranes at the end of 2002.
Future prospects
There are no signs of an immediate increase in customer plant
utilisation rates, which would increase the demand for Maintenance
Services. However, if markets remain at a low level with no new
capacity increases or replacement investment into production machinery
the consequence will be an increase in the demand for repair and
maintenance services.
The core of Maintenance Services, Field services developed favourably
in every aspect during 2002. We do not foresee any reasons for this
development not to continue.
The opportunities for accelerating growth through geographical
expansion and acquisitions are good.
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Standard Lifting Equipment
Standard Lifting Equipment Sales was EUR 204.5 million, down by 16.5%
compared to EUR 244.9 million at year end 2001. The operating income
was EUR 19.5 million, down by 33.2% compared to 29.2 million at
yearend 2001. The operating income margin decreased from 11.9% to
9.5%.
Our operating margin target for the Business Area is 12% on sales.
The decrease in profitability was mainly caused by lower sales volumes
and to some extent lower sales prices. However, the profitability was
well supported by cost cuttings and other efficiency improvements, the
new wire rope hoist line and a clear growth in chain hoist sales. The
net decrease in personnel in the Business Area was 160 persons or
14.4% of the workforce compared to yearend 2001.
Our efforts to improve efficiency continued. In the development of the
new hoist line the largest frame size is becoming complete for market
launch. Over 91% of all hoist orders and over 70% of deliveries are
for the new line. Costs related to the development, production and
launching of the new hoist line included in the Business Area costs
amounted to EUR 1.3 million compared to EUR 1.4 million in 2001.
The Order intake was EUR 203.2 million, down 11.3% compared to EUR
229.2 million in 2001. The decrease in Orders was smaller than the
decrease in sales. The order backlog stayed at approx. the level as in
the end of year 2001.
Future prospects
There are no clear signs of growth in the European and American
markets. In Asia, however, the development is good, and growth is
driven by the Chinese market.
The Groups expansion in China, market entry into Japan, new wire rope
hoist line and the increased use of the Maintenance Services for the
distribution of products will support the development of Standard
Lifting Equipment in a challenging environment. Actions for further
efficiency improvements will continue.
Special Cranes
Special Cranes sales was EUR 209.2 million, down by 8.0% from EUR
227.3 million in 2001. Operating income amounted to EUR 16.7 million,
with only a decrease of 2.3% compared to EUR 17.1 million in 2001. The
operating income margin grew from 7.5% to 8.0%.
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The Groups Operating margin target in Special Cranes is 10%. The
target was reached only in Q4/02.
The profitability improved due to improved cost efficiency, but it was
urdened by lower sales volumes.
Order Intake amounted to EUR 154.9 million, which is EUR 54.7 million
or 26.1% less compared to yearend 2001.
Orders for harbour and shipyard cranes decreased over 50% year-on-year
as customers hesitated and postponed decision making. Instead orders
for large overhead travelling cranes mainly to the paper, primary
metals and power industries grew by approx. 11% year-on-year, although
slowness in decision making was also seen in these segments.
The order backlog at the end of the year was approx. one third down
year-on-year, but still remained at a level that secures good
capacity utilisation, even without new orders, for 6-8 months ahead.
However, there are big variations between countries and operating
units.
Several efforts targeting enhanced efficiency are going forward in the
Business Area. The net reduction in Business Area employees was 20
persons or 2.8%.
Future prospects
In the year 2002, the Group saw slowness in decision making both in
the North-American and European markets. Mostly for this reason
Special Crane orders decreased clearly compared to the previous year.
Although the order backlog was at year end approx. one third lower
compared to last year, it still secures good operating levels for 6-8
months ahead.
The Groups new competitive products combined with a relatively strong
order backlog and a high inquiry level should lead to increasing sales
numbers. Operational efficiency will be further increased by
rationalising capacity utilisation, lowering delivery times and by
increasing further outsourcing of lower added value structures and
components. These actions will support margins enhancement. The market
environment is highly dependent on world politics. Our planning
assumes no improvements from the situation of 2002.
Important orders
Here are some examples on new equipment orders during the year. The
list illustrates our reach, both in terms of customer base and
geographical coverage.
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Elsner Stahlbau Maschinenbau GmbH ordered a special crane and 3
industrial cranes for its new steel structure manufacturing facilities
in Schrobenhausen, Germany.
BILK Kombiterminal Rt. (BILK = Budapest Intermodal Logistics Centre)
of Hungary, ordered two container gantry cranes for a new Intermodal
terminal south of Budapest.
KCI Konecranes received several orders for waste to-energy cranes
among these several cranes to Hässleholm Fjärrvärme, Osby Fjärrvärme,
Norrenergi Solna värmeverk of Sweden, Silea Spa of Italy and Hjorring
Energy of Denmark.
CNIM ordered six Refuse handling Cranes for two Waste-to-Energy plants
in France, in Lillebonne and in Compiegne and two Waste-to-Energy
grabbing cranes for a plant in Marchwood, UK.
VA Tech Hydro GmbH of Austria ordered 4 cranes of various lifting
capacities for the hydro power plant located in Ankara, Turkey and 5
cranes for a power plant in Northern Ireland.
Toshiba ordered two power plant cranes for the end customer Asia
Cement Group in Taiwan.
Bechtel ordered a power house crane of 130 ton lifting capacity for a
project in Rotterdam, Holland.
APM, S.A. de C.V. ordered totally 11 overhead travelling process
cranes for its steel Mill in Monterrey, Mexico.
Alcan Rolled Products ordered a special crane for handling rolled
products of aluminium at their plant in Rogerstone, South Wales, U.K.
Nucor Corporation ordered two hot metal cranes and a service crane to
a steel mill in Jewett, Texas, USA. The transaction marks the first
time one of Americas big steel mills chooses KCI Konecranes, and the
first time an American steelmaker has purchased hot metal cranes
featuring new AC technology.
Hamburger Stahlwerke GmbH in Hamburg, Germany ordered the
modernisation of a double girder gantry crane that handles scrap
metal.
Daimler Chrysler Corporation (USA) ordered 3 special 80/40 ton
overhead cranes for the continuing expansion of the Kokomo, Indiana
engine/transmission casting facility.
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Volkswagen Sachsen GmbH ordered a double girder bridge crane for the
press line at its stamping plant in Mosel, Germany and Volkswagen de
Mexico, Puebla, Mexico ordered two double girder EOT cranes for die
handling to their expanded Die press Facility.
General Motors Pontiac, USA placed an order for a stamping crane with
one auxiliary hoist.
Jaguar Cars, Halewood, Liverpool, England ordered a new Press shop
crane.
Important orders from the paper industry in China included orders for
paper machine cranes from Chandong Huatai Paper Co., Taishan Paper Co.
and Shandong Bohui Paper.
M-real ordered several paper mill cranes and modernisation on existing
cranes at its mill in Sittingbourne, Kent, U.K.
UPM Kymmene for Shotton Paper in North Wales UK, ordered two process
cranes for a new Recycled Fibre Mill and Svenska Cellulosa
Aktiebolaget (SCA) ordered one paper mill crane to Laakirchen in
Austria.
Metso Paper of Sweden ordered a 45 ton special crane to a paper
machine factory.
Konecranes VLC signed a contract with ZAO First Container Terminal
(FCT) for two Panamax Ship-to-Shore (STS) Container cranes for St
Petersburg, Russia.
KCI Konecranes received a repeat order from TMM Puertos y Terminales,
S.A. de C.V. for four Rubber Tyred Gantry Cranes (RTG) to Mexicos
second largest port, Operadora Portuaria de Manzanillo (OPM).
The worlds third largest operator in the world, APM Terminals (part
of the A.P.Moller/Maersk Group of Denmark) also placed a repeat order
for six RTG cranes to go to APM Terminals terminal in Elizabeth and
New Jersey, USA.
KCI Konecranes was chosen to supply the design and component package
for two Shipyard Goliath Gantry Cranes to Dalian Shipyard in the
People's Republic of China.
Future prospects
Against a backdrop of low investment spending and low utilisation
rates Maintenance continued its growth, and the other Business Areas
held their positions well. Business Areas successfully
16 (27)
defended their Operating Income margins, and our market shares
increased.
Group income shrunk, but due to continuous cost cutting, less than the
sales decline would suggest. Forward looking actions in R&D and M&A
increased, also taxing income.
Maintenance growth continues. The order intake in Standard Lifting
Equipment and Special Cranes is stabilising. Order backlog is stable
on a satisfactory level.
New market openings in Asia contain considerable growth opportunities.
Our strong market position, our geographical spread and our up-to-date
technology are all factors that will contribute to continued good
development, especially compared to other actors in our market. With
our strong balance sheet, our intent is to consolidate the industry
further.
Helsinki, 11 February, 2003
Board of Directors
Formal statement
Certain statements in this report are forward looking and are based on
managements expectation at the time they are made. Therefore they
involve risks and uncertainties and are subject to change due to
changes in general economic or industry conditions.
DEVELOPMENT BY BUSINESS AND MARKET AREAS
Order Intake by Business Area
2002 % of 2001 % of
MEUR 2002 MEUR 2001
total total
Maintenance
Services 310.2(1 47 307.2(1 41
Standard Lifting
Equipment 203.2 30 229.2 31
Special Cranes 154.9 23 209.6 28
./. Internal -69.4 -66.9
Total 598.9(1 100 679.1(1 100
1) Excl. Service Contract Base
Order Book(2
2002 2001
MEUR MEUR
Total 206.0 279.7
2) Percentage of completion deducted
17 (26)
Sales by Business Area
2002 % of 2001 % of
MEUR 2002 MEUR 2001
total total
Maintenance
Services 372.4 47 365.2 44
Standard Lifting
Equipment 204.5 26 244.9 29
Special Cranes 209.2 27 227.3 27
./. Internal -72.5 -81.1
Total 713.6 100 756.3 100
Operating Income by Business Area (MEUR)
2002 2001
Operating % of Operating % of
Income 2002 Income 2001
total total
sales sales
Maintenance
Services 26.2 7.0 24.1 6.6
Standard Lifting
Equipment 19.5 9.5 29.2 11.9
Special Cranes 16.7 8.0 17.1 7.5
Group costs -23.8 -11.9
Consolidation
items -1.0 -3.2
Total 37.6 55.3
Sales by Market
2002 % of 2001 % of
MEUR 2002 MEUR 2001
total total
Nordic and Central
Europe 179.4 25 183.4 24
EU (excl. Nordic) 220.9 31 213.6 28
Americas 242.4 34 277.4 37
Asia-Pacific 70.9 10 81.9 11
Total 713.6 100 756.3 100
18 (26)
Personnel by Business Area (at the End of the Period)
2002 % of 2001 % of
2002 2001
total total
Maintenance Services 2,698 61 2,481 56
Standard Lifting
Equipment 949 21 1,109 25
Special Cranes 685 15 705 16
Group Staff 109 3 106 3
Total Company 4,441 100 4,401 100
FINANCIAL PERFORMANCE
Statement of Income 2002 2001
MEUR MEUR
Sales 713.6 756.3
Other operating income (1 2.9 12.2
Share of result of participating
interest undertakings -0.2 -0.3
Depreciation and reduction in value -15.5 -16.0
Other operating expenses -663.2 -697.0
Operating profit 37.6 55.3
Financial income and expenses -1.1 -2.8
Income before taxes 36.5 52.4
Taxes -11.8 -17.1
Net income 24.6 35.3
1) In 2001 includes 9.9 MEUR profit from the sale of shares in Vacon
Oyj.
2002 2001
MEUR MEUR
Dividend income 0.0 0.3
Interest income from current assets 1.9 2.7
Other financial income 1.5 0.7
Interest expenses -3.9 -6.1
Other financial expenses -0.7 -0.5
Total -1.1 -2.8
Investments
2002 2001
MEUR MEUR
Total (excl. Acquisitions) 13.9 11.3
19 (26)
CONSOLIDATED BALANCE SHEET
ASSETS 31.12.2002 31.12.2001
Non-current assets MEUR MEUR
INTANGIBLE ASSETS
Intangible rights 6.0 3.7
Goodwill 17.9 18.9
Group goodwill 5.6 6.6
Advance payments 5.8 3.7
35.3 32.9
TANGIBLE ASSETS
Land 3.8 4.1
Buildings 22.0 21.7
Machinery and equipment 29.8 29.1
Advance payments and construction in
progress 0.6 1.8
56.2 56.7
INVESTMENTS
Participating interests 1.0 1.2
Other shares and similar rights of
ownership 1.0 0.7
Own shares 0.0 7.5
2.0 9.4
Current assets
INVENTORIES
Raw materials and semi-manufactured 39.6 39.7
goods
Work in progress 30.4 48.1
Advance payments 4.0 3.0
73.9 90.8
LONG-TERM RECEIVABLES
Loans receivable 0.2 0.6
Other receivables 0.3 0.3
Deferred assets 0.0 0.1
0.5 1.1
SHORT-TERM RECEIVABLES
Accounts receivable 123.4 138.5
Amounts owed by participating
interest undertakings 3.0 2.6
Loans receivable 0.0 0.1
Other receivables 21.5 21.6
Deferred tax assets 4.0 4.9
Deferred assets 62.2 80.6
214.1 248.3
CASH IN HAND AND AT BANKS 15.2 16.8
Total current assets 303.7 356.9
TOTAL ASSETS 397.1 455.9
20 (26)
SHAREHOLDERS EQUITY AND LIABILITIES 31.12.2002 31.12.2001
MEUR MEUR
Equity
Share capital 28.6 30.0
Share premium account 21.8 20.5
Reserve for own shares 0.0 7.5
Equity share of untaxed reserves 3.3 3.3
Translation difference -4.3 -3.6
Retained earnings 99.2 87.2
Net income for the period 24.6 35.3
173.2 180.2
Minority share 0.1 0.1
Provisions 12.0 12.9
Liabilities
LONG-TERM DEBT
Bonds 25.0 25.0
Loans from credit institutions 0.0 25.0
Pension loans 2.0 2.5
Bond with warrants 0.0 0.1
Other loans 1.8 0.6
Deferred tax liability 2.6 2.8
31.4 56.0
CURRENT LIABILITIES
Loans from credit institutions 10.3 0.4
Pension loans 0.5 0.5
Bond with warrants 0.1 0.0
Advance payments received 16.5 31.4
Accounts payable 50.0 58.4
Amounts owed to participating
interest undertakings 0.0 0.1
Other short-term liabilities 21.7 29.9
Accruals 81.2 85.9
180.4 206.7
Total liabilities 211.9 262.7
TOTAL SHAREHOLDERS EQUITY AND
LIABILITIES 397.1 455.9
Interest-bearing debts 48.4 67.5
21 (26)
Contingent Liabilities and Pledged Assets (MEUR)
CONTINGENT LIABILITIES 2002 2001
For own debts
Mortgages on land and buildings 5.9 5.9
For own commercial obligations
Pledged assets 0.9 0.8
Guarantees 141.6 143.7
For associated companys debt
Guarantees 0.8 0.7
For others
Guarantees 0.1 0.2
OTHER CONTINGENT AND FINANCIAL
LIABILITIES
Leasing liabilities
Next year 7.3 8.6
Later on 11.5 9.4
Other liabilities 1.0 2.2
Total 169.1 171.6
Leasing contracts follow the normal
practices in corresponding countries.
Total by Category
Mortgages on land and buildings 5.9 5.9
Pledged assets 0.9 0.8
Guarantees 142.5 144.6
Other liabilities 19.8 20.3
Total 169.1 171.6
Notional Amounts of Derivative Financial Instruments (MEUR)
2002 2001
Foreign exchange forward contracts 411.4 582.7
Interest rate swap 25.0 25.0
Total 436.4 607.7
Derivatives are used for currency and interest rate hedging only. The
notional amounts do not represent amounts exchanged by the parties and
are thus not a measure of the exposure. A clear majority of the
transactions relate to closed positions, and these contracts set off
each other. The hedged orderbook and equity represent approximately
one half of the total notional amounts.
22 (26)
CONSOLIDATED CASHFLOW 2002 2001
MEUR MEUR
Operating income (1 37.9 45.4
Depreciation 15.5 16.0
Financial income and expenses 4.4 -4.7
Taxes -11.6 -16.7
Free cashflow 46.2 40.0
Increase in current assets 26.1 -5.2
Increase (-), decrease (+) in
inventories 11.6 3.6
Increase (+), decrease (-) in
current liabilities -17.6 4.6
Cashflow from operations 66.3 43.0
Capital expenditure and advance
payments to machines -12.1 -9.3
Capital expenditure and advance
payments to intangible and
financial assets -3.4 -4.5
Fixed assets of acquired
companies -6.8 -0.8
Purchase of own shares -9.9 0.0
Disposals of fixed assets 1.2 15.7
Investments total -31.0 1.1
Cashflow before financing 35.4 44.1
Change of long-term debt
Increase (+), decrease (-) -25.5 12.1
Change of short-term interest-
bearing debt
Increase (+), decrease (-) 3.1 -40.5
Dividend paid -13.2 -10.4
External financing -35.6 -38.8
Correction items (2 -1.4 0.3
Net financing -1.6 5.6
Cash in hand and at banks at 1.1. 16.8 11.2
Cash in hand and at banks at
31.12 15.2 16.8
Change in cash -1.6 5.6
1) Operating income after depreciation has been corrected by the
result of associated companies and the profit / loss of disposal of
assets.
2) Translation difference in cash in hand and at banks.
23 (26)
KCI KONECRANES GROUP 1998-2002
Business development 2002 2001 2000 1999 1998
Order intake MEUR 598.9 679.1 764.4 538.7 542.8
Order book MEUR 206.0 279.7 308.8 178.4 194.8
Net sales MEUR 713.6 756.3 703.0 591.5 597.0
of which outside
Finland MEUR 634.2 679.2 644.2 538.3 542.3
Export from Finland MEUR 256.9 263.5 217.8 180.7 213.0
Personnel on average 4,396 4,434 4,244 4,050 3,968
Capital expenditure MEUR 13.9 11.3 14.7 12.9 15.1
as a percentage of net
sales % 1.9 1.5 2.1 2.2 2.5
Research and
development costs MEUR 8.2 7.7 6.9 7.8 7.2
as % of Standard
Lifting Equipment 1) % 4.0 3.1 2.7 3.6 3.5
as % of Group net sales % 1.1 1.0 1.0 1.3 1.2
Profitability
Net sales MEUR 713.6 756.3 703.0 591.5 597.0
Income from operations
( before goodwill
amortization) MEUR 40.9 59.4 43.7 34.8 44.5
as percentage of net
sales % 5.7 7.9 6.2 5.9 7.5
Operating income MEUR 37.6 55.3 39.6 32.1 42.6
as percentage of net
sales % 5.3 7.3 5.6 5.4 7.1
Income before
extraordinary items MEUR 36.5 52.4 34.0 30.2 43.3
as percentage of net
sales % 5.1 6.9 4.8 5.1 7.2
Income before taxes MEUR 36.5 52.4 34.0 30.2 43.3
as percentage of net
sales % 5.1 6.9 4.8 5.1 7.2
Net income MEUR 24.6 35.3 23.4 21.8 31.4
as percentage of net
sales % 3.4 4.7 3.3 3.7 5.3
24 (26)
Key figures and
balance sheet
Shareholders equity MEUR 173.2 180.2 155.3 143.7 131.2
Balance Sheet MEUR 397.1 455.9 450.0 352.3 308.3
Return on equity % 14.2 22.0 16.4 16.3 25.7
Return on capital
employed % 17.8 24.3 19.4 21.7 32.6
Current ratio 1.6 1.6 1.4 1.7 1.3
Solidity % 45.5 41.4 35.8 42.2 47.0
Gearing % 19.1 28.9 57.7 35.8 7.2
Shares in figures
Earnings per share EUR 1.69 2.40 1.59 1.48 2.09
Equity per share EUR 12.11 11.75 10.06 9.27 8.75
Cashflow per share EUR 4.54 2.93 - 0.29 - 0.33 2.36
Dividend per share EUR 0.95* 0.90 0.71 0.71 0.71
Dividend/earnings % 56.2 37.5 44.7 48.0 34.2
Effective dividend
yield % 4.1 3.2 2.6 1.9 1.8
Price/earnings 13.8 11.9 17.0 25.8 18.5
Trading low / EUR 19.80/ 25.00/ 25.10/ 23.05/ 26.07/
high 36.83 38.46 39.90 38.30 53.48
Average share price EUR 28.74 31.72 32.67 30.24 37.50
Year-end market MEUR 333.2 427.5 405.0 572.7 580.2
capitalisation
Number traded (1000) 11,939 8,581 7,379 13,198 8,039
Stock turnover % 83.4 57.2 49.2 88.0 53.6
* The Boards proposal to the AGM
1) R&D serves mainly Standard Lifting Equipment
CALCULATION OF KEY FIGURES
Return on equity = ((Income before extraordinary items - taxes) :
(Equity - own shares (average during the period)) x 100
Return on capital employed = ((Income before taxes + interest paid +
other financing cost) : (Total amount of equity and liabilities - non-
interest bearing debts - own shares (average during the period)) x
100
Current ratio = Current assets : Current liabilities
25 (26)
Solidity = ((Shareholders equity - own shares) : (Total amount of
equity and liabilities - advance payment received - own shares)) x 100
Gearing = ((Interest-bearing liablilities - liquid assets - loans
receivable) : (Shareholders equity + minority share - own shares)) x
100
Earnings per share = (Net income +/- extraordinary items) : (Number of
shares - number of own shares)
Equity per share = (Shareholders equity in balance sheet - own
shares) : (Number of shares - number of own shares)
Cashflow per share = Cashflow from operations : (Number of shares
number of own shares)
Effective dividend yield = (Dividend per share : Share price at the
end of financial year) x 100
Price per earnings = Share price at the end of financial year :
Earnings per share
Year-end market capitalization = Number of shares multiplied by the
share price at the end of year
Average number of personnel = Calculated as average of number of
personnel in quarters
Note!
The numbers are rounded to nearest EUR 0,1 million. The key figures
are calculated from exact data.
Dividend proposal
The Board of Directors propose to the AGM that a dividend of EUR 0.95
per share will be paid for the fiscal year 2002. The dividend will be
paid to shareholders, who are entered as shareholders in the share
register on the record date February 24, 2003. Dividend payment day is
March 18, 2003.
Teleconference
An international teleconference will be arranged today on 11 February,
2003 at 4.00 Finnish time (2.00 p.m. London time). The dial-in number
is +44-(0)20 8401 1043 (Please call in at 3.50 p.m.). The graphics of
the presentation are attached to the report on the Internet. A replay
of the teleconference will be available for two working days at +44-
(0)20 8288 4459, code 976622.
26 (26)
Internet
This report is also available on the Internet at www.kcigroup.com. An
audio recording of Mr Gustavsons presentation at the teleconference
will be available on the Internet later on February 11.
Annual General Meeting
The Annual General Meeting 2003 will be held on 6 March, 2003 at 11.00
a.m. at Group headquarters (address: Koneenkatu 8, 05830 Hyvinkää,
Finland). A press release on the decisions made at the AGM will be
published upon conclusion of the meeting.
The proposals for the AGM 2003 will be published on Wednesday, 12
February, 2003.
Next report
Interim report, 1st quarter, will be published on 6 May, 2003 at 10.00
a.m. Finnish time (8.00 a.m. London time).
Graphics
A graphical presentation of this report is available on the Internet
at www.kcigroup.com.
KCI KONECRANES INTERNATIONAL PLC
Franciska Janzon
IR Manager
FURTHER INFORMATION
Mr Stig Gustavson, President & CEO,
tel. +358-20 427 2000,
Mr Teuvo Rintamäki, Chief Financial Officer,
tel. +358-20 427 2040,
Ms Franciska Janzon, IR Manager,
tel. +358-20 27 2043
DISTRIBUTION
Helsinki Exchanges
Media
