KCI KONECRANES: STRONG ORDERS PUSH FULL YEAR SALES GROWTH OVER 25 %
KCI KONECRANES PLC STOCK EXCHANGE RELEASE 1 November, 2005 10.00 a.m. 1 (17)
KCI KONECRANES: STRONG ORDERS PUSH FULL YEAR SALES GROWTH OVER 25 %
Another quarter with excellent order intake: EUR 278.1 M
First nine months order intake growth 47.8 % (organic 34 %)
Sales growth is accelerating: first nine months 38.4 % (organic 21 %), third
quarter 45.6 % (organic 31 %)
Operating profit improving: EUR 26.6 M (last year EUR 14.9 M)
Special cranes operating margin improved to 5.2 % in the third quarter
Full year top line growth expected to exceed 25 %
Process crane manufacturing in Berlin will end, restructuring charge of EUR 2.6 M
to be booked in fourth quarter
Third quarter Three quarters LY
MEUR 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
SALES 05 04 % 05 04 % 04
Maintenance Services 101.3 81.7 24.0 286.3 239.5 19.5 344.6
Standard Lifting
Equipment 89.8 58.6 53.3 223.4 157.8 41.6 231.2
Special Cranes 79.0 44.1 79.1 219.3 132.4 65.7 214.1
Internal Sales -22.5 -14.3 57.6 -54.0 -42.1 28.3 -62.0
Sales total 247.6 170.1 45.6 675.0 487.6 38.4 728.0
Operating profit 12.5 8.7 44.1 26.6 14.9 78.7 31.3
(EBIT)
Interests, net -1.7 -0.6 -4.8 -2.0 -3.5
Other financial income
and expenses 2.3 0.1 -9.6 0.5 -0.1
Income before taxes 13.2 8.2 61.1 12.3 13.4 -8.1 27.7
Net income 9.1 5.6 63.1 8.5 9.2 -8.4 18.4
Earnings per share,
EUR
- basic 0.64 0.40 0.60 0.66 1.31
- diluted 0.63 0.39 0.59 0.65 1.29
- excl. IAS 39 impact 0.71 0.65
Cash flow from
operations per share 1.87 1.29 1.20
ORDERS RECEIVED
Maintenance Services 109.2 72.9 49.8 272.1 226.9 20.0 308.4
Standard Lifting
Equipment 84.0 64.1 31.0 240.4 187.7 28.1 246.6
Special Cranes 114.0 53.5 113.0 324.7 157.6 106.1 243.7
Internal Orders -29.0 -18.7 55.0 -62.7 -47.9 30.9 -61.9
Orders Received total 278.1 171.8 61.9 774.6 524.3 47.8 736.9
Order book at end of
period 432.2 281.5 53.5 298.8
Comment on first nine months result:
The strong growth in the first half of the year continued and accelerated during
Q3/2005. Orders and sales accelerated in all business areas. In addition to
strong field services growth, also modernisation orders increased, improving year-
to-date Maintenance Services orders growth to 20 %. Higher volumes continue to
drive a solid margin improvement in Maintenance Services. Standard Lifting had
again a record order intake and record sales of 89.8 MEUR. Volumes on all key
markets developed well, North America being the strongest growth driver. Organic
sales growth at 28 % demonstrates improved market shares. Rolling 12-month EBIT
margin is stable at 9.0 %. Special Cranes had again strong order intake, with
year-to-date orders growing 72 % organically. Sales were on the
2 (17)
same level as in Q2, giving 31 % organic sales growth during the first three
quarters. The market for container handling equipment continued to be strong,
with North America being the most important growth driver in this segment.
Special Cranes EBIT margin improved to 5.2 % in Q3 from only 2.3 % in the first
half of the year.
Comment on full year 2005 result:
Strong order intake is expected to continue. KCI Konecranes now expects full year
sales growth to exceed 25 %. A one-time charge of 2.6 MEUR will be booked in Q4
in Special Cranes for costs related to the closure of process crane manufacturing
in Berlin. After this charge the full year EBIT margin is expected to be close to
or slightly above 5 %.
Pekka Lundmark, President & CEO:
KCI Konecranes delivered yet another quarter with growth rates that clearly
exceed market growth. We expect strong order intake to continue. We have several
important measures under way which all aim at improved margins. During the year
we have been able to improve our margins slightly while sales are up 38 %, giving
a significantly higher operating result in absolute terms. Our target is to
continue to improve margins in all business areas, in accordance with the earlier
announced long-term financial targets.
A major theme affecting our strategy going forward is the ongoing industry
consolidation. We made two important acquisitions last year, Morris Material
Handling in the UK and SMV Lifttrucks in Sweden. Both have contributed well to
both our volume and profit development this year. Last week we announced the next
step, the planned acquisition of the material handling division of R.STAHL AG in
Germany.
Joining forces with Stahl would serve several purposes. First, the two companies'
respective strengths and market positions complement each other in a very natural
way. Stahl's highly specialised lifting applications, such as explosion proof
systems, would together with our high volume standard lifting and heavy special
cranes applications create an attractive total offering for virtually any
industry. Second, the large installed base of Stahl cranes is an attractive
target for maintenance services. And third, Germany is by a far the largest crane
market in Europe and will continue to be so for a long time in the future. We see
currently a lot of dynamism in the German labour market, potentially to be
reflected in the level of industrial activity in the future. We want to be an
attractive supplier to the German companies, regardless in what parts of the
world they choose to operate.
Nine months (January-September) 2005 review
Orders received and order book
(All actual and comparable numbers - in brackets - from the previous year are in
accordance with IFRS unless otherwise indicated.) Group total orders received
were EUR 774.6 (524.3) million. The growth was 47.8 % (34 % organic). The order
intake in Q3/2005 was EUR 278.1 (171.8) million or 61.9 % more than in Q3/2004
(45 % organic).
The order activity in Q3/2005 continued at high level and the growth accelerated
in all three business areas.
3 (17)
The organic growth continued to be strong in Americas, Nordic, Eastern Europe and
in Australia, while the growth in the rest of Europe was mainly attributable to
acquisitions made last year.
The Group's total order book at the end of September reached again a new record
level, EUR 432.2 (281.5) million, up by 53.5 % compared to Q3/2004. The value of
the order book grew in all three business areas compared to Q3/2004 and the end
of last year. The Group's total order book grew by EUR 133.4 million or 44.6 %
compared to the end of last year.
The value of the maintenance contract base is not included in the order book. The
contract base continued to grow as well.
Sales
Group total sales during January-September 2005 were EUR 675.0 (487.6) million.
The growth was 38.4 % (21 % organic). The sales growth accelerated during Q3 to
45.6 % (31 % organic). Strong growth continued and accelerated during Q3 in all
three business areas.
Growth was recorded in all major markets, but the fastest growth came from Asia,
Australia, Nordic and North-East Europe.
Profitability
The Group's operating income was EUR 26.6 (14.9) million, up by EUR 11.7 million
or 78.7 %. The operating income margin was 3.9 (3.1) %. The Q3 operating income
was EUR 12.5 (8.7) million and corresponding margin 5.1 (5.1) %. The flat margin
development in Q3 was affected by the business area Special Cranes, which had the
fastest growth but the lowest margin.
Financing costs (the net of interest income and expenses) were EUR 4.8 (2.0)
million. The growth in interest costs is caused by increased net gearing due to
higher net working capital and acquisitions made at the end of last year. Other
financial income and expenses were negative EUR 9.6 (+0.5) million. The fair
value change on hedging instruments (IAS 39) had a negative impact of approx. EUR
8.1 million (H1/2005 = -10.9), which is recorded in other financial income and
expenses. The effect of these other financial items in Q3/2005 was positive EUR
2.8 million. The fair value changes are largely affected by the volume of the non-
euro based order book, receivables, payables and currency exchange rate changes.
These value changes do not have any direct cash flow impact, but they cause short
to medium term fluctuations on the Group's profitability and net income. The
profit impact of IFRS/IAS 39 valuation and the impact of the first time
application of hedge accounting is explained later in this review.
Group income before taxes was EUR 12.3 (13.4) million and EUR 13.2 (8.2) million
during the third quarter.
The reported Group's income taxes were EUR 3.8 (4.1) million for the period based
on an estimated 31 % tax rate.
Group net income was EUR 8.5 (9.2) million and the earnings per share EUR 0.59
(0.65). Group net income during the third quarter was EUR 9.1 (5.6) million or
EUR 0.63 (0.39) per share.
The Group's return on capital employed (ROCE) was 13.2 (10.7) % and return on
equity (ROE) 8.4 (8.3) %. The last twelve month (LTM) ROCE was 17.0 % and ROE
accordingly 12.7 %.
4 (17)
The Group's profit accumulation within the year has never been even between
different quarters, but there have been clear seasonal variations. The profit
accumulation has typically been slow during the first half year and then
accelerated towards the end of year. This earnings pattern is expected to repeat
itself again during the current year.
IAS 39 valuation
The change from FAS accounting and valuation principles to IAS 39 relating to
financial assets, liabilities and hedging derivatives has affected Group's
operating income, financing costs, income before taxes and net income during the
current year.
The January-September impact has been as follows:
Operating income EUR +5.5 million
Other financing items EUR -8.1 million
Income before taxes EUR -2.6 million
Net income EUR -1.8 million (-EUR 0.12 per share)
The Group's policy is to hedge non-euro based transactions (e.g. order book,
balance sheet items and estimated cash flows). The ultimate goal of this policy
is to minimise risks relating to order book margins and negative consequences of
currency exchange rate changes in general. This policy has been continued.
During the third quarter the Group started to apply hedge accounting to certain
large special crane projects where expected cash flows are highly probable.
Hedging instruments (effective forward contracts) were earmarked against
corresponding hedged projects. The transition was done by using so called FX-swap
contracts. The total positive effect of the change of accounting policy is EUR
5.5 million before taxes and EUR 4.1 million after taxes. The FX-swap contracts
caused a one-off positive result effect in Q3 (approx. EUR 3.6 million before
taxes and EUR 2.7 million after taxes). The change did not affect on the Group's
equity. This change into hedge accounting leads substantially to the same net
income for the year than had it been applied since the beginning of the year and
no difference in the Group's equity.
According to IAS 39 valuation principles hedging instruments, assets and
liabilities are valued at market value at the end of each quarter causing value
changes with no immediate cash impact. To the extent hedge accounting is applied
these valuation differences are reported directly in equity and otherwise through
statement of income.
The effect of forward points to the fair value is not part of the hedging
relationship and is recognised in income statement immediately. Gains or losses
that are reported in shareholder equity are transferred immediately as financial
income or expenses in the income statement if the hedged item is sold or expires.
The profit impact of these valuation changes are largely dependent on the total
volume of hedged items and EUR/USD exchange rate development. It is expected that
there will be positive and negative valuation changes also in the future.
However, because hedge accounting is now applied on certain special crane
projects it is expected that the profit impact of the value fluctuations in the
future will be less pronounced than earlier this year.
5 (17)
Cash flow and balance sheet
The cash flow before change in net working capital was EUR 38.4 (23.9) million
and the cash flow from operations before financing items and taxes EUR 26.4
(18.1) million or EUR 1.87 (1.29) per share. The cash flow remained strong
despite of fast growth.
Cash based financing costs, taxes and investing activities totalled EUR 22.2
(10.9) million. The cash flow before financing activities was 4.2 (7.2) million.
The Group's total net interest bearing debt was EUR 118.4 (50.6) million and the
net gearing was 89.7 (34.6) %. Both figures are clearly higher compared to
Q3/2004 due to acquisitions and continued growth. At the end of 2004 net debt was
EUR 110.4 million and gearing 80.2 %.
The Group's solidity was 27.0 (38.0) % and the current ratio 1.21 (1.47). To back-
up its financing the Group has EUR 200 million committed credit facility. At the
end of the period approx. EUR 31 million of this facility was in use.
Currencies
The currency exchange rate fluctuations had only marginal translation effect on
the Group's orders received, sales and operating income development. The strength
of the euro against the US-dollar (or related currencies) continued to have a
negative transactional effect on operating income through export from the euro-
area. This development is expected to reverse itself in the future as the US-
dollar (and related currencies) has continued to appreciate against the euro.
The IFRS/IAS 39 valuation impact on the Group's earnings has been explained in a
separate chapter earlier in this report.
The consolidation exchange rates of some important currencies for the Group
developed as follows:
The period end rates:
Q3/2005 Q3/2004 Change %
USD 1.2042 1.2413 3.08
CAD 1.4063 1.5661 11.36
GBP 0.68195 0.69095 1.32
CNY 9.7444 10.2737 5.43
SGD 2.0353 2.0908 2.73
SEK 9.3267 9.0288 -3.19
NOK 7.877 8.328 5.73
AUD 1.5828 1.7151 8.36
The average rates:
Q3/2005 Q3/2004 Change %
USD 1.2625 1.2256 -2.92
CAD 1.5463 1.6278 5.27
GBP 0.68506 0.67302 -1.76
CNY 10.391 10.227 -1.58
SGD 2.0913 2.0855 -0.28
SEK 9.2189 9.1625 -0.61
NOK 8.0525 8.4281 4.66
AUD 1.6434 1.6829 2.40
6 (17)
Capital expenditure
The Group's capital expenditures to tangible and intangible assets (including
investment in associated companies or minority shares) were EUR 11.8 (7.6)
million.
Personnel
At the end of September the total number of employees was 5068 (4345). The growth
in personnel relates to acquired operations and organic growth in China.
Review by Business Area
Maintenance Services
Maintenance Services sales January -September 2005 were EUR 286.3 (239.5)
million, up by 19.5 % (13 % organic). The operating income was EUR 18.6 (11.6)
million. The growth in operating income was 60.3 % and operating margin 6.5 (4.8)
%.
The positive profit development was delivered by higher volumes, improved
productivity and a positive customer base development. The acquisition of UK-
based Morris Material Handling Ltd (MMH) also contributed positively.
The maintenance contract base included 241,482 (226,648) cranes and hoists at the
end of the period and the value of the contract base grew by 6 % from the end of
last year.
The order intake was EUR 272.1 (226.9) million, up by 20.0 % (organic 12 %). The
order growth accelerated and it was further boosted by a large modernisation
order. The development was very favourable in North Americas, Nordic and
Australia. The acquisition of MMH contributed to the growth in UK.
During the third quarter the development in the business area was as follows:
EUR million Change %
Orders received 109.2 (72.9) +49.8
Sales 101.3 (81.7) +24.0
EBIT 7.1 (5.1) +39.2
EBIT margin % 7.0 (6.2)
At the end of September there were 2892 (2623) persons employed in Maintenance
Services. The growth relates to the acquisition of UK-based Morris Material
Handling Ltd (MMH) and organic growth.
Standard Lifting Equipment
Standard Lifting Equipment sales were EUR 223.4 (157.8) million, up by 41.6 %
(organic 28 %). The operating income was EUR 19.4 (13.3) million or 46.1 % higher
than in January-September 2004. The operating margin was 8.7 (8.4) %.
Growth in sales volume and increased cost efficiencies through purchasing and
outsourcing supported positive development in the business area's profitability.
The weakness of dollar continued to shadow growth benefits. However, US-dollar
has recovered reasonably from its twelve year low against euro only nine months
ago.
7 (17)
This development together with the completion of the integration program
regarding MMH's crane and hoist activities are expected to contribute positively
during Q4/2005 and beyond.
The orders received were EUR 240.4 (187.7) million. The order growth was 28.1 %
(organic 19 %) during three quarters and 30.9 % in Q3. The development was
particularly good in North and Eastern Europe as well as in North America.
The order book in Standard Lifting came somewhat down from the record level at
the end of June, but stayed 14.7 % higher than a year ago and it is 37.5 % up
from the level at the end of last year.
The development in the business area during the third quarter was as follows:
EUR million Change %
Orders received 84.0 (64.1) +31.0
Sales 89.8 (58.6) +53.3
EBIT 8.5 (5.6) +53.6
EBIT margin % 9.5 (9.6)
At the end of September there were 1186 (1023) persons employed in Standard
Lifting. The growth in personnel relates mostly to the acquisition of MMH.
Special Cranes
Special Cranes sales were EUR 219.3 (132.4) million, up by 65.7 % (organic 31 %).
The operating income was EUR 7.3 (7.6) million. The operating margin was 3.3
(5.7) %.
The profitability improved during the third quarter. The operating income was EUR
4.1 (2.9) million and the operating margin 5.2 (6.6) % compared to the margin of
2.3 % during H1/2005.
The rapid growth and related ramp up costs are still burdening profitability.
Process cranes are still too dependant on euro based high cost production. There
are several actions in progress to improve flexibility and cost efficiencies. The
new assembly plant in Shanghai, China is complete and production has started. An
ownership stake in the Ukrainian crane company Zaporozhcrane and a strategic
partnership with the Polish steel structure producer Mostostal Chojnice SA will
provide new capacity at competitive cost.
A decision was made on the closure of the Process crane manufacturing and
assembly operation located in Berlin. A one-time charge of EUR 2.6 million will
be booked in Q4/2005. The operation in Berlin will concentrate in the future to
the sales, marketing and project management of process cranes and related
customer support. The closure of fabrication will affect approx. 40 people.
The order intake was EUR 324.7 (157.6) million. The growth was 106.0 % (organic
72 %) boosting the order book again to a new record level. The development has
been strongest in the harbour and shipyard cranes.
The order book (the unrevenued portion of the total backlog) is now 84.8 % higher
than a year ago and 53.4 % up from the year-end 2004.
8 (17)
The development during the third quarter was as follows:
EUR million Change %
Orders received 114.0 (53.5) +113.0
Sales 79.0 (44.1) +79.1
EBIT 4.0 (2.9) +37.9
EBIT margin % 5.2 (6.6)
The total number of employees was 869 (574) at the end of September. The growth
relates mostly to the new factory in China and the acquisition of SMV Konecranes
AB.
Zaporozhcrane is not consolidated into Group financials as a subsidiary. The
Group aims to reduce its holding below 50 % and is in discussions with interested
parties to join the venture. Had the company been consolidated the impact would
not have been material.
Group costs and consolidation items
Group costs are not directly charged to the Business Areas and consist of common
development costs (personnel, R&D, systems, group structure etc.), Group
management, legal, finance and treasury functions. These costs were EUR 18.0
(17.3) million or slightly up from last year.
Group consolidation items were EUR -0.7 (-0.3) million. The growth relates to the
growth in internal profit elimination.
There were 121 (125) people employed in the Group staff.
Changes in the Group organisation and structure
Mr Ari Kiviniitty, 48, M.Sc. (Eng.) was appointed Chief Technology Officer (CTO)
and a member of the KCI Konecranes Group management team as of October 14, 2005.
CTO is responsible for the company's technology strategy and development as well
as quality management. Mr Kiviniitty reports to Pekka Lundmark, President and
CEO.
Mr Jarmo Juntunen, 49, M.Sc. (Eng.) was appointed Director of Ports business
unit. This newly established business unit focuses on growth in ports and
intermodal terminals, supplying both new cargo handling equipment and related
services. Mr Juntunen reports to Mr Mikko Uhari, President of Special Cranes
business area.
in July 2005, the Group acquired two Swedish machine tool maintenance companies.
Operations are small (combined annual sales close to EUR 2 million, 15
employees), but the acquisition marks the first entry to the machine tool
maintenance market outside Finland. These two companies have been consolidated to
the business area Maintenance Services since the acquisition.
During the third quarter the Group acquired a majority of the shares in
Zaporozhcrane, the leading crane manufacturing company in Ukraine. Zaporozhcrane
has manufacturing facilities with a railway connection including a foundry, forge
and heat treatment plant. The premises are leased and they include 10 hectares of
covered manufacturing space. The company is not consolidated in to the business
area Special Cranes as the Group aims to reduce its shareholding below 50 %. The
other shareholders would consist of the company's operative management and other
investors. In addition to crane manufacturing and assembly work the company is
well resourced for production of all kind of mechanical components and heavy
steel structures also for other than crane applications.
9 (17)
Important events after the close of the third quarter
In line with the Group's general strategy of increasing capacity and flexibility
by building up a network of certified manufacturing partners, KCI Konecranes
announced on 20 October, 2005 an expansion of its co-operation with Mostostal
Chojnice SA, the leading steel structure producer in Poland. KCI Konecranes and
Mostostal Chojnice SA signed an agreement for contract manufacturing of process
cranes intended primarily for the European market. The expanded co-operation was
celebrated on the same day with an Inauguration Ceremony held at the Mostostal
Chojnice factory in Poland.
On October 26, 2005 KCI Konecranes announced that it had entered into a
Memorandum of Understanding (MoU) and exclusive negotiations with R. STAHL AG,
Waldenburg, Germany, concerning a possible acquisition of their Material Handling
division. The management of R. STAHL is convinced that, united with KCI
Konecranes, R. STAHL Fördertechnik will be able to assume a better position
medium to long term in a highly competitive market than it would as part of the
R. STAHL technology group. The activities of KCI Konecranes and R.STAHL
Fördertechnik have a good strategic fit. The products and market segments are
highly complementary, with only limited overlap. The planned acquisition would
provide important synergies and the access to a large global installed base.
In case of successful completion of the negotiations, the agreement on the sale
of R. STAHL Fördertechnik to KCI Konecranes shall be signed by the end of
November 2005. Subject to clearance by the respective merger control authorities,
the transaction is expected to close by year-end 2005.
The planned transaction is expected to be EPS neutral in 2006 and contribute
positively to earnings per share from 2007.
Comment on full year 2005 result:
Strong order intake is expected to continue. KCI Konecranes now expects full year
sales growth to exceed 25 %. A one-time charge of 2.6 MEUR will be booked in Q4
in Special Cranes for costs related to the closure of process crane manufacturing
in Berlin. After this charge the full year EBIT margin is expected to be close to
or slightly above 5 %.
Helsinki, 1 November 2005
Board of Directors
Disclaimer
Certain statements in this report are forward looking and are based on
management's 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.
Shares and shareholders
Subscription of shares with stock options
Pursuant to KCI Konecranes stock options, a total of 1,600 new KCI Konecranes
shares were recorded in the Trade Register during Q3/2005. The new shares were
subscribed for under the 1997 series.
10 (17)
Following these subscriptions KCI Konecranes' share capital was at the end of
September 28,699,460 and the total number of shares was 14,349,730.
Share capital, share price performance and trading volume
KCI Konecranes Plc's share price increased by 18.43 % during January-September
and closed at EUR 38,50. The period high was EUR 39.99 and period low EUR 29.80.
The volume weighted average share price during the period was EUR 35.07. During
the same period the OMX Helsinki Index increased by 26.36 %, the OMX Helsinki CAP
Index by 28.63 % and the OMX Helsinki Industrials Index by 44.32 %.
The total market capitalization at the end of September 2005 was EUR 552 million,
including 210,650 own shares held by the company, the 44th largest market value
of companies listed on Helsinki Exchanges.
The trading volume totalled 14,168,942 shares of KCI Konecranes Plc, which
represents 99 % of the total amount of outstanding shares. In monetary terms the
trading was EUR 496,958,374 million, which was the 31st largest trading volume of
all companies listed on Helsinki Stock Exchange. The daily average trading volume
was 74573 shares representing a daily average turnover of EUR 2.6 million.
The company's own shares
At the end of September 2005, KCI Konecranes Plc held 210,650 of the company's
own shares with a nominal value of 421,300 euros. This corresponds to 1,47 % of
the company's total outstanding shares and votes. The shares were bought back
between February 20 and March 5, 2003 at an average price of EUR 20.75 per share.
Flagging notifications
The holdings of shares by the funds and separate accounts managed by the
affiliated investment advisers of Franklin Resources, Inc. (trade reg. 13-
2670991) in KCI Konecranes Plc, had on October 10, 2005 reached 9.74% of the
voting rights and 0.69% of the share capital in KCI Konecranes Plc.
Centaurus Capital J.P notified on 18 August 2005 that as a result of a share
transaction concluded on 15 August 2005, the holdings of Funds managed by
Centaurus Capital J.P and its direct and indirect subsidiaries had reached 5 % of
the voting rights and share capital in KCI Konecranes Plc.
Important Orders
Here are some examples on orders received during July-September 2005. The list
illustrates our reach, both in terms of customer base and geographical coverage.
Ports
KCI Konecranes was contracted for the design and supply of two Post Panamax Ship-
to-Shore (STS) container cranes for Baltic Container Terminal (BCT) in Gdynia,
Poland.
APM Terminals (APMT) ordered 10 RTGs for their US West Coast terminals- eight
units destined for Los Angeles and two for Tacoma.
Port of Houston Authority (PHA), USA, ordered 12 RTGs to their new Bayport
Terminal.
11 (17)
Georgia Ports Authority (GPA), USA, ordered 10 RTGs to their Garden City Terminal
in Savannah.
Multi-Link Terminals, the Irish joint venture company between Containerships from
Finland and Forth Ports Plc, ordered two RTGs for their terminal in St.
Petersburg, Russia.
DP World, one of the world's leading container terminal operators, ordered five
16-wheel RTGs to Constantza South Container Terminal, Romania and four 8-wheel
RTGs to the new green field Multimodal Caucedo terminal in the Dominican
Republic, Zona Franca.
P&O Nedloyd, a leader in global shipping and international logistics, has ordered
five 16-wheel all-electric RTGs for the new Los Angeles Container Terminal
(LACT).
Primary Metals
Voestalpine Stahl GmbH ordered several process cranes for material handling,
maintenance and repair purposes at their steel factory in Linz, Austria.
Alcan Primary Metals, Fort William, Scotland, ordered one 50 Ton CXT Industrial
crane to be used for support work in their smelter shop.
Bechtel Inc, Montreal Canada ordered for Alcoa's Fajoraal aluminium smelter in
Iceland, a 64 Ton CXT Industrial crane.
CST, part of Arcelor Group, ordered a process crane for a steel mill in Serra,
Espirito Santo state, Brazil.
Rokas of Greece ordered components for two process cranes for Halyvourgiki Steel
Mesh factory in Elefsis Greece.
SMI Steel - Alabama in Birmingham, AL, USA ordered a 110 Ton, CMAA Class F,
Charge Crane for their steel mill melt shop.
Guixi Copper Mill in China ordered two 2 process cranes for handling of molten
copper.
Power generation
Voith Siemens Hydro Kraftwerkstechnik GmbH & Co. ordered a power station crane
for Ethiopia Gigel Gibe-Omo II, Hydropower plant to be used for the erection and
maintenance of turbines.
ABB Hefei Transformer Co., Ltd in China ordered several process cranes for their
transformer factory.
Mitsubishi Heavy Ind, Tokyo, Japan, ordered one 115 Ton turbine crane for the
Huntstown Power Plant, near Dublin in Ireland.
Siemens AG of Germany ordered a 130 Ton turbine crane for the Kuriemat Power
plant in Egypt.
Mitsubishi ordered a 105 Ton power station crane for the San Isidro II power
plant in Chile.
SNC Lavalin Power, Inc in Redmond, WA, USA ordered four automated bucket cranes
for new poultry litter biomass WTE plant in Benson, Minnesota.
12 (17)
KCI Konecranes received its largest modernisation order ever from Ringhals AB
(part of the Vattenfall Group), Sweden covering twelve process cranes at the
Ringhals nuclear power plant in Varberg.
Pulp and Paper
Metsä-Botnia Corporation, Finland, ordered multiple process cranes and light duty
cranes to be used for various purposes at their pulp plant in Uruguay.
Statement of Income (MEUR)
1-9/2005 1-9/2004 1-12/2004
Sales 675.0 487.6 728.0
Share of result of participating
interest undertakings 0.2 0.0 0.0
Depreciation -11.3 -9.3 -12.4
Impairment 0.0 0.0 -1.2
Other operating expenses -637.2 -463.4 -683.1
Operating income 26.6 14.9 31.3
Interests, net -4.8 -2.0 -3.5
Other financial income and expenses -9.6 0.5 -0.1
Income before taxes 12.3 13.4 27.7
Taxes -3.8(1 -4.1(1 -9.2
Net Income for the period 8.5 9.2 18.4
Earnings per share, EUR
-basic 0.60 0.66 1.31
-diluted 0.59 0.65 1.29
1) According to estimated tax rate
Consolidated Balance Sheet (MEUR)
9/2005 9/2004 12/2004
Fixed Assets 115.6 86.4 112.1
Inventories 158.0 101.6 114.1
Receivables and other current assets 260.5 217.2 267.0
Cash in hand and at banks 29.8 21.3 20.7
Total assets 563.9 426.5 513.9
Equity 132.1 146.3 137.7
Provisions 16.3 15.6 17.5
Long-term debt 57.7 49.2 24.8
Current liabilities 357.8 215.5 334.1
Total shareholders' equity and
liabilities 563.9 426.5 513.9
Gearing % 89.7 34.6 80.2
Solidity % 27.0 38.0 29.1
Return on capital employed %, Last
Twelve Months (LTM) 17.0 * 13.7
Equity/share, EUR 9.34 10.42 9.76
* The year 2003 figures were reported only according to FAS
13 (17)
Net Interest bearing liabilities (MEUR)
9/2005 9/2004 12/2004
Long- and short-term
interest-bearing liabilities -148.7 -71.9 -131.4
Cash and cash equivalents and
other interest bearing assets 30.3 21.3 21.0
Total -118.4 -50.6 -110.4
Consolidated cash flow statement (MEUR)
1-9/2005 1-9/2004 1-12/2004
Operating income before change
in net working capital 38.4 23.9 42.8
Change in net working capital -12.0 -5.8 -26.0
Cash flow from operations
before financing items and 26.4 18.1 16.8
taxes
Financing items and taxes -11.2 -6.6 -9.2
Net cash from operating
activities 15.2 11.5 7.6
Net cash used in investing
activities -11.1 -4.4 -38.0
Cash flow before financing
activities 4.2 7.2 -30.4
Net cash used in financing
activities 3.9 0.8 38.3
Translation differences in 1.1 0.1 -0.4
cash
Change of cash and cash
equivalents 9.1 8.1 7.5
Cash and cash equivalents at
beginning of period 20.7 13.2 13.2
Cash and cash equivalents at
end of period 29.8 21.3 20.7
Change of cash and cash
equivalents 9.1 8.1 7.5
Statement of changes in Shareholders' Equity (MEUR)
Share Other Minority Transl. Fair Retained Total
Capital Restr. Interest Diff. value Earnings Equity
Capital Reserves
Equity
12/2003 28.6 21.8 0.1 -5.7 0.0 105.4 150.3
Dividend
distrib. -14.0 -14.0
Chg in
untaxed
reserves 0.1 0.1
Transl.
diff. -0.2 -0.2
Share based
payments
recognised
against
equity 0.6 0.6
Other
changes 0.1 0.2 0.3
14 (17)
Net profit
for the
period 9.2 9.2
Equity
9/2004 28.6 21.8 0.1 -5.8 0.0 101.5 146.3
Equity
12/2004 28.6 22.3 0.1 -6.1 0.0 92.7 137.6
Options
exercised 0.1 0.8 0.9
Dividend
distrib. -14.8 -14.8
Chg in
untaxed
reserves -0.6 -0.6
Cash flow
hedge -4.1 -4.1
Transl.
diff. 3.7 3.7
Share based
payments
recognised
against
equity 0.9 0.9
Net profit
for the
period 8.5 8.5
Equity
9/2005 28.7 23.1 0.1 -2.4 -4.1 86.7 132.1
Contingent Liabilities and Pledged Assets (MEUR)
9/2005 9/2004 12/2004
Mortgages and pledged assets
For own debts 5.9 5.9 5.9
For commercial guarantees 0.3 0.4 0.3
Own commercial guarantees 135.4 107.3 101.5
Guarantees
For associated company's debt 0.0 0.8 0.8
For others 0.0 0.1 0.1
Leasing liabilities 30.1 18.1 22.5
Other liabilities 1.0 0.9 1.2
Total 172.7 133.4 132.3
Notional Amounts of Derivative Financial Instruments (MEUR)
9/2005 9/2005 9/2004 12/2004
Nominal Market Nominal Nominal
value value value value
Foreign exchange
forward contracts 382.2 -4.3 556.0 538.5
Interest rate swap 25.0 0.1 25.0 25.0
Total 407.2 -4.2 581.0 563.5
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. The hedged orderbook represents approximately one half
of the total notional amounts.
15 (17)
Investments (MEUR)
1-9/2005 1-9/2004 1-12/2004
Investment total (excl.
acquisitions of subsidiaries) 11.8 7.6 11.8
Reconciliation of net income (MEUR)
1-9/2004 1-12/2004
Net income according to FAS 10.2 23.0
Reversal of amortization of
goodwill, IFRS 3 and IAS 36 1.9 2.6
Impairment, IAS 36 0.0 - 1.2
Employee benefits, IAS 19 - 0.8 - 1.1
Stock options, IFRS 2 - 0.6 - 0.8
Income taxes, IAS 12 0.9 1.5
Provisions, IAS 37 - 2.4 - 5.4
Other IFRS adjustments 0.0 - 0.2
Total IFRS adjustments - 1.0 - 4.6
Net income according to IFRS 9.2 18.4
Reconciliation of shareholders' equity (MEUR)
12/2003 9/2004 12/2004
Equity according to FAS 163.4 159.7 157.9
IFRS adjustments:
Reversal of amortization of
goodwill, IFRS 3 and IAS 36 0.0 1.9 2.6
Impairment, IAS 36 - 0.1 - 0.1 - 1.3
Employee benefits, IAS 19 - 15.0 - 15.8 - 16.1
Reserve for own shares, IAS 32 - 5.5 - 5.5 - 4.4
Income taxes, IAS 12 3.8 4.7 5.3
Provisions, IAS 37 5.4 3.0 0.0
Minority interest, IAS 1 0.1 0.1 0.1
Changes in accounting policy, IAS 0.0 0.0 - 4.9
8
Other IFRS adjustments - 1.8 - 1.7 - 1.5
Total IFRS adjustments - 13.1 - 13.4 - 20.2
Equity according to IFRS 150.3 146.3 137.7
Segment reporting:
Sales by Business Area (MEUR)
1-9/2005 1-9/2004 LTM* 1-12/2004
Maintenance Services 286.3 239.5 391.4 344.6
Standard Lifting Equipment 223.4 157.8 296.8 231.2
Special Cranes 219.3 132.4 301.1 214.1
./. Internal -54.0 -42.1 -73.8 -62.0
Total 675.0 487.6 915.4 728.0
LTM = last 12 months (full year 2004 ./. nine months 2004 + nine months 2005)
16 (17)
Operating Income by Business Area (MEUR)
1-9/2005 1-9/2004 1-12/2004 LTM*
MEUR % MEUR % MEUR % MEUR
Maintenance Services 18.6 6.5 11.6 4.8 22.1 6.4 29.1
Standard Lifting
Equipment 19.4 8.7 13.3 8.4 20.7 9.0 26.8
Special Cranes 7.3 3.3 7.6 5.7 15.9 7.4 15.6
Group costs -18.0 -17.3 -27.3 -28.0
Consolidation items -0.7 -0.3 -0.1 -0.5
Total 26.6 14.9 31.3 43.0
LTM = last 12 months (full year 2004 ./. nine months 2004 + nine months 2005)
Personnel by Business Area (at the End of the Period)
9/2005 9/2004 12/2004
Maintenance Services 2.892 2.623 2.685
Standard Lifting Equipment 1.186 1.023 1.028
Special Cranes 869 574 675
Group staff 121 125 123
Total 5.068 4.345 4.511
Average number of personnel
during period 4.878 4.334 4.369
Order Intake by Business Area (Excl. Service Contract Base) (MEUR)
1-9/2005 1-9/2004 LTM* 1-12/2004
Maintenance Services 272.1 226.9 353.7 308.4
Standard Lifting Equipment 240.4 187.7 299.4 246.6
Special Cranes 324.7 157.6 410.9 243.7
./. Internal -62.7 -47.9 -76.7 -61.9
Total 774.6 524.3 987.2 736.9
LTM = last 12 months (full year 2004 ./. nine months 2004 + nine months 2005)
Order Book (Excl. Service Contract Base) (MEUR)
9/2005 9/2004 12/2004
Order Book total 432.2 281.5 298.8
Sales by Market (MEUR)
1-9/2005 1-9/2004 LTM* 1-12/2004
Nordic and Eastern Europe 153.1 76.9 217.0 140.9
EU (excl. Nordic) 214.9 158.5 279.0 222.5
Americas 185.5 149.2 251.5 215.1
Asia Pacific 121.5 103.0 167.9 149.4
Total 675.0 487.6 915.4 728.0
LTM = last 12 months (full year 2004 ./. nine months 2004 + nine months 2005)
17 (17)
Events on 1 November, 2005
Analyst and press briefing
A luncheon presentation for media and analysts will be held at Helsinki World
Trade Center, Marski Hall at 12.00 noon Finnish Time (address Aleksanterinkatu
17).
Live webcast
A live webcast of the presentation will begin at 12.00 noon Finnish Time and can
be followed at www.konecranes.com/investor.
Telephone conference
A telephone conference for analysts and investors, in English, will begin at 4.00
p.m. Finnish Time (2.00 p.m. UK Time). Please call in at 3.50 p.m. The dial-in
number is +44-20 7162 0181 (replay available for 48 hours at +44-20 7031 4064,
code 631239).
Internet
This report and graphic material is available on the Internet at
www.konecranes.com/investor immediately after publication. A recording from the
webcast presentation and teleconference will be available on the Internet later
on 1 November.
Next report
KCI Konecranes will publish its Full Year 2005 report on 15 February 2006.
Graphics
A graphical presentation of this report is available on the Internet at
www.konecranes.com/investor.
KCI KONECRANES PLC
Franciska Janzon
IR Manager
FURTHER INFORMATION
Mr. Pekka Lundmark, President and 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 Stock Exchange
Media
