KCI KONECRANES GROUP YEAR 2005
KCI KONECRANES PLC STOCK EXCHANGE RELEASE 15 February, 2006 10.00 a.m. 1 (25)
KCI KONECRANES GROUP YEAR 2005:
The fourth quarter set yet another record in new orders: 287 MEUR
Full year orders 1061 MEUR (+44 %, organic growth 30 %), sales 971 MEUR (+33 %,
organic +20 %)
Fourth quarter operating income margin was 7,7 % (6,8 %); full year operating
income 49,3 MEUR (+ 57,5 %)
Very strong cash flow kept gearing at 88,1 % in spite of the acquisition of
R.Stahl Fördertechnik
Return on capital employed 17,2 % (13,7 %)
2006 sales growth expected to exceed 20 %, positive EBIT margin trend expected to
continue
Board proposes a dividend of EUR 1.10 (1.05) per share and thereafter a share
split 1:4
Million EUR 1-12/05 % 1-12/04 % Change
SALES %
Maintenance Services 406.5 344.6 18.0
Standard Lifting Equipment 318.0 231.2 37.5
Special Cranes 331.1 214.1 54.6
Internal Sales -84.8 -62.0 -36.8
Sales total 970.8 100 728.0 100 33.4
Operating income 49.3 5.1 31.3 4.3 57.5
Share of result of associated
companies and joint ventures 0.5 0.0
Financial income and expenses -15.8 -3.6 333.0
Income before taxes 34.1 3.5 27.7 3.8 23.2
Taxes -10.0 -9.2
Net income 24.1 2.5 18.4 2.5 30.8
Earnings per share, basic (EUR) 1.71 1.31 39.2
Earnings per share, diluted 1.67 1.29 29.7
(EUR)
Cash flow from operations per
share (EUR) 3.43 0.54 535.2
Dividend per share (EUR) 1.10(1 1.05 4.76
ORDERS RECEIVED
Maintenance Services 364.5 308.4 18.2
Standard Lifting Equipment 322.1 246.6 30.6
Special Cranes 463.3 243.7 90.1
Internal Orders -88.7 -61.9 -43.2
Orders received total 1061.2 736.9 44.0
Order book at end of period 432.1 298.8 44.6
1) Board's proposal
Million EUR 10-12/05 % 10-12/04 % Change%
SALES
Maintenance Services 120.2 105.1 14.4
Standard Lifting Equipment 94.6 73.4 28.9
Special Cranes 111.8 81.7 36.7
Internal Sales -30.8 -19.9 54.9
Sales total 295.8 100 240.4 100 23.1
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Operating income 22.9 7.7 16.4 6.8 39.4
Share of result of associated
companies and joint ventures 0.3 0.0
Financial income and expenses -1.4 -2.1 -32.3
Income before taxes 21.8 7.4 14.3 6.0 52.3
Taxes -6.2 -5.1
Net income 15.6 5.3 9.2 3.8 70.3
Earnings per share, basic (EUR) 1.11 0.65 69.4
Earnings per share, diluted 1.09 0.65 68.2
(EUR)
Cash flow from operations per
share (EUR) 2.35 -0.28
Dividend per share (EUR)
ORDERS RECEIVED
Maintenance Services 92.3 81.5 13.2
Standard Lifting Equipment 81.7 58.9 38.6
Special Cranes 138.6 86.1 60.9
Internal Orders -26.0 -14.0 -85.4
Orders received total 286.6 212.6 34.8
Comments on the full year result
2005 results came very close to expectations. The strong volume growth continued
within all Business Areas and Regions. Volume and margin development in
Maintenance Services have been satisfactory throughout the year. In Standard
Lifting, the volume growth was strong, and margins stable. Special Cranes' one
third volume growth caused significant supply chain ramp-up costs pressing down
margins in the first half of the year. Fourth quarter showed clear improvement.
The Group succeeded in net working capital management in spite of strong growth.
The cash flow was strong and kept gearing at 88.1 % after the acquisition of
R.Stahl Fördertechnik.
Future prospects
The strong new equipment order backlog and momentum in maintenance services,
together with the recent acquisition, give a good starting point for 2006. Based
on the current market outlook, the total sales growth is expected to exceed 20%.
Selected acquisitions will be considered also in the future.
The acquisition of R.Stahl Fördertechnik is expected to add EUR 120 - 130 million
to the Group's sales in its Standard Lifting Equipment Business Area. For the
Group EBIT margin, the dilutive effect is expected to be 0.5 %-points. The
acquisition is expected to be EPS neutral in 2006 and accretive from 2007.
Notwithstanding the dilutive effect caused by the acquisition, the positive EBIT
margin development seen during 2005 is expected to continue.
Pekka Lundmark, President & CEO:
2005 gave us a solid foundation for continuing to build the world's best material
handling equipment and maintenance service company. Strong sales, which grew 33%
on 2004, further strengthened our market share in a year that saw good demand in
most of our key markets. The fact that we set new records in respect
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of all of our key business indicators - orders, sales, profits, and cash flow -
in the last quarter of the year gives us good cause for optimism for the future.
Despite these positive developments, however, we still have a lot of work left to
do, particularly in improving our margins. We are nevertheless moving in the
right direction, thanks to the various measures that we have already launched,
and our operating margin moved up from 4.3% in 2004 to 5.1% in 2005. We also
improved our return on capital employed, to 17.2%, a clear improvement on the
13.7% recorded in 2004.
This performance is still below what we are aiming for, and we remain committed
to the mid-term operating margin targets for our three business areas that we
announced previously. Achieving these targets would provide us with a return on
capital employed of well above 20%.
In terms of strategic direction, we remain on course. Our business is not only
about delivering cranes and other lifting equipment, but also about providing
responsive, high-quality service designed to ensure that customers always have
the lifting capacity they need.
Building long-term customer relationships focused on providing true service
excellence for our customers is a central factor here. Having the best crane
technology is another key factor, which is why we are committed to continuously
developing and introducing the latest innovations, and to investing in our R&D
organisation to give us the resources to do this.
Maintenance Services also plays an important part, above and beyond its core
function, by working in close cooperation with crane sales to generate valuable
leads for our organic growth. Acquisitions have a part to play as well, and we
will continue to make selected acquisitions in the future.
Our healthy flow of orders indicates that demand for our products and services
remains strong. We also have many development opportunities within our portfolio
that are not directly related to fluctuations in our customers' investment
cycles. There are geographical areas where we have still little or no presence,
for example. And even within some of our largest markets, our share of our key
customers' total spending on lifting capacity - whether in terms of new
equipment, modernisations, or maintenance - is still relatively small.
Maintenance in general is a genuine growth market, since outsourced crane
maintenance is growing steadily around the world.
Achieving our targeted margin levels will require a lot of work. We have grown in
a very short time from a company with EUR 600-700 million of sales to a billion
euro company, targeting at least 20% growth in 2006.
This growth will require investments not only in manufacturing and sourcing
capacity, but also in several other aspects of our business infrastructure. We
have carried out various restructuring projects in Special Cranes to address the
business' under-performing profitability and improve margins in the future. We
are investing in lower-cost manufacturing and sourcing in Asia and Eastern Europe
and developing a flexible partner network for fabricating heavy steel structures,
to reduce the role of higher-cost manufacturing in Western Europe.
But we recognise that this alone will not be enough. To leverage the full
benefits of low-cost manufacturing, we are investing in our supply chain
processes and information systems to secure the platform we need as a company
generating EUR 1 billion in sales annually, and will need as we continue to grow.
4 (25)
Board of Directors' report
Orders received, order book and market development
The strong development in the order intake continued in 2005 and accelerated
towards the end of the year. Group total orders received were EUR 1061.2 (736.9)
million. The growth was 44.0 % of which 30 % was organic. At yearend the value of
the Group's total order backlog was EUR 432.1 (298,8) million, up by 44,6%.
Orders received during the fourth quarter reached a new record level, EUR 286.6
million. Orders received grew in all Business Areas.
Both external and internal factors contributed to the positive development. The
positive market development continued in America and in emerging markets in
particular: in Asia and Eastern Europe, and in Australia. In Western Europe the
development was slow. Group's orders received increased in almost all main
markets. The strongest organic growth occurred in America, Australia and in the
Nordic countries, whereas growth in other markets was mainly a consequence of the
acquisitions made at the end of 2004 (UK-based Morris Material Handling Ltd and
Sweden-based SMV Lifttrucks AB).
Almost all customer industries developed favourably. Market development was
particularly strong in harbours, primary metals and petrochemicals. Of the
Group's main customer segments only pulp and paper and the automotive industries
posted a weak demand.
The Group believes it has increased its market shares considerably during the
year.
Sales
Group sales were EUR 970.8 (728.0) million. The growth was 33.4% with an organic
growth of 20%. Currency rate changes had only a minor translational effect on the
sales development. The sales growth was considerable in all Business Areas.
Growth was strong also in all of KCI Konecranes' main markets. Most of the growth
in America, Asia and Australia as well as in the Nordic and Eastern European
countries was of organic nature, whereas the major part of the growth in Western
Europe was related to operations acquired at the end of 2004.
Profitability
The Group's operating income was EUR 49.3 (31.3) million which is an increase of
EUR 18.0 million or 57.6% compared to the previous year. The full year operating
margin was 5.1 (4.3) % and the fourth quarter margin was 7.7 (6.8)%.
The comparable figure for last year includes a non-recurring restructuring cost
of EUR 5.4 million, which according to the Finnish accounting standards (FAS) was
recorded already in 2003. A one-time charge of EUR 2.6 million was recorded in
the fourth quarter of 2005, reflecting costs for closing Special Cranes
manufacturing operations in Germany. Adjusted for these costs the growth in
operating income was EUR 15.2 million or 41.4%.
The operating income grew both in Maintenance Services and Standard Lifting
Equipment, but decreased in Special Cranes. Special Cranes profitability was
burdened by substantial structural changes in operations and additional costs
related to the major ramp-up of production volumes. The operating income in
Special Cranes was also burdened by a one-time charge (EUR 2.6 million) related
to the closure of manufacturing operations in Germany. Adjusted for this one-off
charge the operating income grew also in Special Cranes. The operating margin
improved in Maintenance Services, remained on the previous year's level in
Standard Lifting equipment and decreased in Special Cranes.
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Group EBITDA was EUR 64.9 (43.7) million or 6.7 (6.0)% on sales. Depreciations
grew by EUR 3.2 million, from EUR 12.4 million to EUR 15.6 million. The increase
in depreciations was mainly attributable to acquisitions.
The business and profitability development is discussed by segment under Business
Area reviews.
The share of associated companies result amounted to EUR 0.5 (0.0) million.
Group interest costs (the net of interest income and expenses) were EUR 6.8 (3.5)
million. The growth in interest costs was the result of acquisitions made at the
end of 2004 and an increase in capital employed related to the growth.
Other financial income and expenses burdened the result by EUR 9.0 (-0.1)
million. The fair value change on hedging instruments (IAS 39) had a negative
impact of approx. EUR 7.9 million. The Group used the exemption to apply IAS 32
and IAS 39 for the first time in the 2005 accounts, without having to restate the
2004 figures. Therefore a direct comparison in this respect between the years is
not possible.
The Group started to apply hedge accounting during the third quarter for large
special crane projects where expected cash flows demonstrate a high degree of
certainty. Hedging instruments (effective forward contracts) were earmarked
against corresponding hedged projects. The transition was carried out by using so
called FX-swap contracts. The total positive effect of the change of accounting
policy in the third quarter was approx. EUR 3.6 million before taxes and EUR 2.7
million after taxes. On a full year level the change into hedge accounting leads
substantially to the same net income for the year as had it been applied already
from the beginning of the year. Also for the Group's equity the timing of the
change made no difference. The fair value change of hedging instruments had a
positive impact of approx. EUR 0.2 million in the fourth quarter.
Other financing costs relate to currency exchange rate changes and other costs.
The change from FAS accounting and valuation principles to IFRS has affected
Group's result development in 2005 as follows:
Sales + EUR 1.1 million
Operating income (EBIT) EUR + 6.4 million
Other financial income and expenses EUR -7.9 million
Income before taxes EUR -1.5 million,
Net income EUR -1.1 million
Earnings per share EUR -0.07
The valuation changes are largely dependent on the total volume of hedged items
and the 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, it is expected that the profit impact of the
value fluctuations in the future will be less pronounced than during the first
half of 2005.
The Group's income after financing items was EUR 34.1 (27.7) million. Income
taxes were EUR 10.0 (9.2) million corresponding to an effective tax rate of 29.4
(33.4)% for the year. The decrease in tax rate is mainly related to the improved
profits and lower Finnish tax rates.
Group net income or income after tax was EUR 24.1 million (18.4) and earnings per
share EUR 1.71 (1.31) or EUR 1.67 (1.29) diluted.
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The Group's return on capital employed was 17.2% (13.7) and the return on equity
was 16.6% (12.5). R. Stahl AG's Material Handling Division, acquired on 30
December 2005 was included in the Group's year end balance sheet. The effect was
a decrease in the Group's return on capital employed. Disregarding this
acquisition, the return on capital employed was 18.1%. The acquisition had no
effect on the Group's 2005 statement of income.
Both sales and operating income grew during the year towards the yearend. This
seasonal pattern was visible again in 2005 numbers, but less pronounced than
before. Both sales at EUR 295.8 million and the operating income excluding one-
off restructuring charge at EUR 25.3 million during the fourth quarter set a new
one quarter all time high.
Cash flow and balance sheet
The cash flow from operations before financing items and taxes, but after the
change in working capital was EUR 66.5 (16.8) million, and per share EUR 4.71
(1.20). The strong cash flow development was supported by improved profits and
improved working capital management. In the fourth quarter the cash flow before
financial items and taxes was EUR 40.1 (-1.3) million.
The cash from financing items and taxes was EUR -18.1 (-9.2) million and the net
cash flow from operating activities was EUR 48.4 (7.6) million.
In total EUR 46.1 million (38.0) of cash was used to cover capital expenditures
including acquisitions. The capital expenditures to fixed assets were EUR 13.5
(9.4) million.
Cash flow before financing activities was EUR 2.3 (-30.4) million.
The parent company paid EUR 14.8 million (In 2004 the company paid: EUR 14.0
million as an ordinary dividend and EUR 14.1 million as an extraordinary
dividend) dividends.
The Group's interest bearing debt was EUR 178.4 (131.4) million, and the interest
bearing net debt was EUR 133.9 (110.4) million. Gearing was 88.1 (80.2) %. The
Group's interest bearing debts increased at the very end of the year due to the
acquisition of R. Stahl AG's Material Handling Division. However, because of the
strong cash flow and good profit development, the gearing decreased from the end
of September 2005 level. Disregarding the effects of the acquisition, gearing
would have been approximately 68%.
The Solidity ratio was 23.7 (29.1)% and excluding the Stahl acquisition 29.2%.
The current ratio was 1.14 (1.11).
The Group's has a EUR 200 million committed back-up financing facility to secure
running liquidity. At yearend EUR 23.7 (0) million was in use.
Currencies
The currency exchange rate fluctuations had only a marginal translational effect
on the Group's orders received, sales and operating income development. The
strength of the euro against the US-dollar (or related currencies) had a negative
transactional effect on operating income through export from the euro-area.
However, the appreciation of the US-dollar and increased sourcing and
manufacturing in non-euro areas reduced this effect during the fourth quarter.
The consolidation exchange rates of some important currencies for the Group
developed as follows:
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The period end rates:
2005 2004 change %
USD 1.1797 1.3621 15.46
CAD 1.3725 1.6416 19.61
GBP 0.6853 0.7055 2.88
NOK 7.985 8.2365 3.15
SEK 9.3885 9.0206 -3.92
CNY 9.5204 11.2734 18.41
SGP 1.9628 2.2262 13.42
AUD 1.6109 1.7587 9.17
The period average rates:
2005 2004 change %
USD 1.2441 1.2437 -0.03
CAD 1.5093 1.616 7.07
GBP 0.6839 0.6786 -0.77
NOK 8.0124 8.3666 4.42
SEK 9.2817 9.1244 -1.69
CNY 10.197 10.358 1.58
SGP 2.0699 2.1011 1.51
AUD 1.6324 1.6912 3.60
The Group continued its currency risk management policy of hedging. The aim for
the hedging policy is to minimise currency risk relating to non-euro nominated
export and import from or to the euro zone. Hedging was mainly carried out
through currency forward exchange transactions.
Capital expenditure
The Group's capital expenditures excluding acquisitions were EUR 16.0 million
(11.8). These capital expenditures consisted mainly of replacement or capacity
expansion investments on machines, equipment and information technology. The
capital expenditures included also a 40 % ownership stake in a Ukrainian special
crane manufacturing. Additional investments in acquired operations were EUR 30.3
million (30.3).
In the fourth quarter a new factory for assembly of hoisting trolleys and
electrics for special cranes was started in Shanghai, China. The new factory is
located next to the standard hoist factory which started operations in 2002.
Research and development
Total direct research and development costs in the Group were EUR 8.8 (8.5)
million. The very moderate increase in R&D spending relates to the Group's modern
range of products. The launch of the Group's new wire rope hoist line was
completed only two years ago. Product development projects related to new chain
hoist technology (a new gear adjustment technology and inverter control in
hoisting), a new wire rope hoist for the 1-2 ton lifting capacity range and
standardisation of the heavy-duty SM hoisting trolley range.
For some time now the main emphasis in R&D has focused on the development of
maintenance technologies with a specific focus on special crane applications.
Personnel and personnel development
At the end of 2005 the Group employed 5923 (4511) persons. Disregarding the Stahl
acquisition the Group employed 5,211 persons. The average number of personnel was
5087 (4369). The increase in employment relates to acquisitions and personnel
increases in the group's Asian operations in particular.
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The Group recorded on average 3 training days per employee, which is an increase
to previous year (approx. 2 days). The main corporate wide development programs
are the KCI Konecranes Academy aimed for middle management and experts and the
Academy+ for KCI Academy alumni. The development program for the top management
was continued in co-operation with the London Business School.
Review by Business Area
Maintenance Services
Business development
Maintenance Services sales totalled EUR 406.5 (344.6) million, an increase of
18.0% over 2004, of which organic growth accounted for 12%. Operating income
totalled EUR 29.4 (22.1) million, and the operating margin stood at 7.2% (6.4%).
Growth was strongest in field activities, which account for some 85% of
Maintenance Services' operations. Sales grew in all of KCI Konecranes' main
markets and profitability improved. The upward trend was supported by stronger
sales, favourable developments in the contract base, and the integration of the
maintenance activities of UK-based Morris Materials Handling Ltd, acquired in
December 2004. Port crane maintenance and modernisation sales, which accounts for
some 15% of Maintenance Services' operations decreased due to the timing of sales
recognition for certain large modernisation projects. The order backlog for
modernisations increased. The profitability of port crane maintenance and
modernisation operations improved.
The operating income and margin development accelerated towards the end of the
year, but exhibited a lesser degree of seasonal variation compared to 2004.
Operating income in the fourth quarter totalled EUR 10.8 (10.5) million. The
operating margin came in at 9.0% (10.0%), somewhat lower than in 2004 because of
the periodisation of certain large modernisation projects.
Maintenance Services orders received (excluding the service agreement base)
totalled EUR 364.5 (308.4) million, an increase of 18.2% over 2004, of which
organic growth accounted for 11%. Field orders grew rapidly, while modernisation
orders fell back slightly from previous year's level. The size of the service
agreement base grew, and closed the year at 242,209 (224,825) lifting equipment
units, an increase of 7.7% compared to 2004. The value of the contract base
increased correspondingly.
Maintenance Services' order backlog totalled EUR 78.0 (65.8) million, an increase
of 18.5% on 2004, mainly driven by large repair and modernisation projects.
As of the end of the year, Maintenance Services employed 2,999 people (2,685).
Around half of this increase was organic and half related to acquisitions.
Future prospects
Maintenance Services organic growth target of 10%, was exceeded in 2005. The
operating margin still fell short in 2005 of the set target of 8%. In terms of
profitability, the upward trend in sales, favourable developments in the service
agreement base, and the size of its order backlog will give Maintenance Services
a good basis for achieving its targets in 2006.
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Standard Lifting Equipment
Business development
Standard Lifting Equipment sales totalled EUR 318.0 (231.2) million, an increase
of 37.5% on 2004, of which organic growth accounted for 27%. Operating income
totalled EUR 28.8 (20.7) million and the margin was at previous year's level, at
9.1% (9.0%).
Sales increased in all main market areas, with particularly strong organic growth
in North America, Asia, and Australia. The acquisition of Morris Material
Handling Ltd (MMH) at the end of 2004 supported sales growth in the UK and in the
Middle and Far East.
While higher sales contributed to an improvement in profitability, the
improvement was held back by faster-than-average growth in sales denominated in
US dollars or currencies linked to the dollar and acquired operations. The
restructuring of operations at Morris Material Handling Ltd was completed in the
fourth quarter, and saw a reduction of 70 in the company's personnel numbers. The
costs for these redundancies had been reserved for earlier. After these changes
the basis for profitable crane and hoist operations has now been established.
Although sales and operating income accelerated towards the end of the year,
performance was more evenly distributed throughout the year overall than in 2004.
Fourth-quarter sales totalled EUR 94.6 (73.4) million, and operating income EUR
9.4 (7.4) million. Sales rose by 28.9% during the quarter, and an operating
margin of 9.9% (10.1%) was recorded.
Standard Lifting Equipment received orders totalled EUR 322.1 (246.6) million
during 2005, an increase of 30.6% on 2004, of which organic growth accounted for
22%. North America, the Nordic countries, Southeast Asia and Australia all posted
strong growth numbers. Due to the acquisition of MMH, the order intake grew
considerably in the UK and also in the Middle and Far East. As of the end of the
year, the order backlog stood at EUR 64.5 (58.6) million, an increase of 10% on
2004.
Excluding the Stahl acquisition Standard Lifting Equipment employees numbered
1,186 (1,028) at year-end, most of the increase being attributable to the
acquisition of Morris Material Handling Ltd. Including Stahl Crane Systems'
personnel, the number of employees rose to 1,898.
Future prospects
Standard Lifting Equipment's strong sales momentum, together with the new
products (the small capacity wire rope hoist of 1-2 lifting capacity) and product
improvements launched in 2005, the completion of the restructuring of MMH
operations and the increasing volumes of products being manufactured and sourced
in lower-cost countries, particularly China and Eastern Europe, will help enhance
profitability in 2006. The Stahl acquisition will increase sales by almost a
third. While the acquired operation is profitable, its profit levels will not
meet the Business Area's operating margin target yet in 2006.
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Special Cranes
Business development
Special Cranes sales totalled EUR 331.1 (214.1) million, an increase of 54.6% on
2004, of which the organic growth accounted for 30%. Operating income before
costs related to the closure of manufacturing operations in Germany was EUR 17.7
(15.9) million. Including these one-time charges, operating income was EUR 15.2
million. The operating margin was 5.4% (7.4%) and 4.6% (7.4%) respectively.
Organic growth was strongest on the Russian, Chinese, and other Asian markets.
Sales growth in America and Northern and Western Europe was modest, with the
exception of the UK where strong growth was recorded. Growth was strong in the
lift truck and reachstacker business acquired in October 2004, significantly
increasing overall total sales. Sales growth from the wave of new orders booked
for harbour and shipyard cranes did not yet contribute to sales growth in 2005.
Special Cranes' weak profitability development was impacted by two main reasons:
1) The transfer of production and outsourcing of heavy steel structures and
components to more cost-efficient locations These changes resulted in substantial
additional costs, which can be seen as investments for the future (i.e. opening a
new process crane trolley assembly factory in China, discontinuation of steel
structure fabrication in Germany, start of assembly of large steel structures in
China, increase of manufacturing in Ukraine and Poland). 2) Ramping up production
volumes by a third during these structural changes in manufacturing and sourcing
operations proved very challenging.
The negative effect of currency-related developments, particularly associated
with the US dollar, could not be fully passed on to sales prices.
The Group continued to focus on increasing the flexibility in manufacturing and
sourcing to reduce its dependency on costly Western European manufacturing.
Standardisation of the product ranges was also increased during the year. A
higher degree of standardization creates scale benefits and enables higher
flexibility in manufacturing and sourcing operations.
Sales and profitability both improved as the year progressed. Fourth quarter
sales totalled EUR 111.8 (81.7) million and the operational income (excl. one-off
cost) was EUR 10.5 (8.3) million. The operational margin during the fourth
quarter was 9.4% (10.2%).
Orders received totalled EUR 463.3 (243.7) million, an increase of 90.1% on 2004,
of which organic growth accounted for 65%. The strongest demand occurred in the
harbour and shipyard cranes segment, and in the lift trucks and reachstackers
segment, but orders for heavy-duty process cranes grew also considerably in North
America, the UK, France and Asia. The market development in the Nordic countries
and in Germany remained weak. The fourth quarter saw a new record of EUR 138.6
million of new orders. The order backlog at the end of the year stood at EUR
319.8 (183.8) million, an increase of 74.0 % on 2004.
As of the end of the year, Special Cranes employed 890 (675), the increase is
mainly related to the growth in Asian operations.
Future prospects
The operating income margin target set for Special Cranes is 8%. In 2005 this
target was not achieved.
The firm focus in 2005 on enhancing competitiveness by introducing greater
flexibility in manufacturing and sourcing, increasing the standardisation and
developing new products will make for a solid start for 2006. The record-high
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order backlog reduces considerably risks related to sales volume development.
Overall, the prospects for an improvement in profitability in 2006 are good.
Group costs and consolidation items
Group level fixed costs, which are not allocated directly to Business Areas, were
EUR 23.8 (27.3) million. The corresponding number for 2004 included a one-time
restructuring cost of EUR 5.4 million, which according to FAS was already
recorded in 2003. With this adjustment, the comparable underlying costs grew by
EUR 1.9 million or 8.7%. Group costs consist mainly of common development costs
(personnel, R&D, systems), common treasury and legal functions, development of
the Group's structure (M&A) and Group management and administration.
Consolidation items included the elimination of internal profit, which was EUR
-0.3 (-0.1) million.
Group costs are expected to grow also in the future, probably slightly less
compared to sales growth in 2006.
Group structure
KCI Konecranes made several structural changes during 2005, which are aimed at
improving sales and profitability by further increasing flexibility in production
and improving customer service. KCI Konecranes own activities focus on product
development, assembly and maintenance services.
The acquisition of UK-based hoist and crane manufacturer Morris Materials
Handling Ltd was finalised on December 31, 2004 and was integrated into Group
operations during 2005 as planned. The Morris wire rope hoist series was replaced
during the year with Group technology and production of old product was ceased.
At the end of April the Group outsourced its production of end carriages for
standard cranes, which was based in Urjala, in Finland. Approximately 70 persons
were affected by the transaction.
During the second half of the year the Group acquired a minority shareholding and
signed a license agreement with the Spanish crane manufacturer Eydimen. The Group
also acquired a 30 % shareholding in the German technology company, Consens
Transport Systeme GmbH. Later the group, however, sold its shareholding in
agreement with the main owner. The transaction did not have an effect on the full
year results.
On July 1, 2005 two small sized operations focusing on machine tool maintenance
were acquired in Sweden. They have joint annual sales of approximately EUR 2
million. The transaction meant the first step into providing machine tool
maintenance outside Finland.
During the third quarter the Group acquired a majority stake in the leading
Ukranian special cranes manufacturer Zaporozhcrane. The company has some 1100
employees and 10 hectares of covered factory space. In addition to fabrication of
large steel structures the company has knowledge and capacity in manufacture of
mechanical components (such as steel structures for trolleys) and other large
steel structures for other applications. The company also has its own forge and
foundry. The company has know-how but uses partly old production technology. The
group can utilise spare production equipment from its operations in the UK and
Germany. The initial investment in the shares was a little over EUR 3 million
and the intention was to reduce the shareholding below 50%. In a transaction made
with Finnfund Oy in late December the group sold 46 % of its share in the
Zaporozhcrane Holding company. After this transaction the Group owns 49% of the
12 (25)
holding company, Finnfund 46 % and the management of Zaporozhcrane (manufacturing
company) own 5 %. The sale of the shares had no affect of the Group's financial
result and the Zaporozhcrane has been recorded as an associated company in the
group accounts.
In order to further increase manufacturing capacity and flexibility the Group
signed on October 10, 2005, an agreement with the leading Polish steel structure
manufacturer Mostostal Chojnice SA. The manufacturing capacity in Poland is
primarily intended for deliveries to the growing markets in Eastern Europe and
Central Europe.
The assembly and manufacture of Process cranes was ceased in Germany at the end
of the year. This resulted in a one-time charge of EUR 2.6 million, which was
reported in the Special Cranes fourth quarter results. In the future the
operation focuses on process crane sales, project management and customer
support. The closing of the factory resulted in the reduction of 40 employees.
The inauguration of a new factory in Shanghai, China for the assembly of special
crane trolleys and electrics was celebrated at the end of November. The factory
has a planned annual capacity of 400-500 trolleys which equals a doubling of the
Group's capacity. The production is primarily intended for the growing markets in
Asian steel and paper industry, power generation and general manufacturing.
Sourcing of large steel structures in China was increased in China and the
assembly capacity of RTGs (rubber tired gantry cranes) was increased from two to
three cranes per month.
The acquisition of R. Stahl AG's material handling division, R. Stahl
Fördertechnik was finalised on December 12, 2005. Stahl has over 100 years of
history as a supplier of standard cranes and hoists. Stahl is a well recognised
strong brand in the industry. The company has a strong exposure in specialised
applications for the automotive and petrochemical industries. The acquisition
complements the group's product offering and strengthens the group's position in
particular in the European standard lifting equipment market. In addition the
company has a large installed base of cranes and hoists, which bring
opportunities within the development of maintenance services. The Stahl material
handling operations have been included in the Group's balance sheet at the end of
2005. The operations will be fully included in Group numbers as of January 1,
2006.
Important appointments
KCI Konecranes' Board of Directors appointed in its meeting on June 17, 2005 Mr.
Pekka Lundmark as President and CEO of KCI Konecranes. At the same meeting Mr.
Stig Gustavson, who had been the President and CEO for the last 17 year, was
appointed Chairman of the Board of Directors and the former Chairman Mr. Björn
Savén, was appointed vice Chairman of the Board.
Litigations
The lawsuit filed by Morris Material Handling, Inc. against the company in the
United States Court, Eastern District of Wisconsin, still continues. Morris
Material Handling, Inc., one of KCI Konecranes' competitors in North America,
filed in 2003 a lawsuit against KCI Konecranes Plc and Konecranes, Inc. (KCI
Konecranes' US subsidiary) alleging violation of Morris's intellectual property
rights and acts of unfair competition. The Group has issued counterclaims against
Morris Material Handling, Inc. A court decision is likely to be issued during the
third quarter in 2006. The Company does not at the moment have reason to expect
the case to have a material effect but the company has regularly commented on the
case as the lawsuit has been commented in the public.
13 (25)
At the end of year 2005 there were no pending legal processes or disputes that
the Group evaluates to have a material effect.
Risk management
The main purpose of the KCI Konecranes risk management is to guarantee the
continuity of the business under all circumstances.
Risk management is part of the control system of the company. CEO and Group
management team are responsible for the risk management. The importance of risk
management have increased due to the fast growth of the Group as well as due to
the need to identify and control the risk of a more complex business environment.
The change in the Group's operational model from traditional manufacturing to
increasingly supply chain driven activity demands for additional efforts to
secure the availability of components, materials and services. To guarantee the
quality of sourcing demands a lot of continuous quality development work from KCI
Konecranes experts. Continuous quality training for suppliers and long term
supply agreements guarantee the steady development of our operations.
Special attention has also been paid to the risk control of new geographical
areas. Continuous control of specific contract terms for both sales and purchase
contracts ease the control of risks.
The Group continuously reviews its insurance policies as part of its overall
global risk management. According to the risk management principles all insurable
risk related to personnel, property and operation are covered by insurances. In
risk management the business units are responsible for financial needs and for
identifications of their financial risks. Almost all funding, cash management and
foreign exchange with banks and other external counter parties is done
centralised by Group Treasury.
Environment
KCI Konecranes recognizes environmental management as an important aspect in its
business and strives to conduct operations in an environmental sound manner.
Environmental concerns are taken into account from the product development stage
onwards. Good examples of what this means in practice are the inverter drives
developed by KCI Konecranes that use up to 40% less energy than conventional
solutions, and the fine machined components used in our transmissions that
contribute to extended service life and significantly reduced noise levels. We
also develop crane structures that use less steel and other raw materials.
Lighter and compact design of cranes contribute to savings in space, heating, and
operating costs in buildings and harbour platforms.
The company strives to favour products and materials that impose the lowest
possible impact on the environment in procurement choices, and to pay particular
attention to keeping energy and material consumption at a low level. Local
regulations and recommendations are taken into account in waste management and
disposal. The company prioritizes developing the environmental awareness of both
own people and partners, with the aim of making an enlightened approach to the
environment and environmental protection a natural part of day-to-day operations
in all of our activities.
14 (25)
Incentive Programs and Share Capital
At the end of the year 2005, KCI Konecranes had four ongoing stock option plans
(1997, 1999, 2001 and 2003). The option plans include approximately 300 key
employees. The terms and conditions of the stock option schemes are available on
our Investor homepage at www.konecranes.com/investor.
Pursuant to KCI Konecranes Plc's stock option plans 176,000 new shares were
subscribed for and registered in the Finnish Trade Register during year 2005. As
a result of the subscriptions, KCI Konecranes' share capital increased to EUR
28,972,060, comprising 14,486,030 shares.
The remaining 1997, 1999B, 2001 and 2003 stock options at the end of the
accounting period entitle to subscription of a total of 1,051,500 shares, thereby
the share capital can be increased by EUR 2,103,000. The subscription period of
the series A 1999 stock options ended on March 31, 2005.
The company's own shares
At the end of the year 2005, KCI Konecranes Plc held 210,650 of the company's own
shares with a nominal value of 421,300 euros. This corresponds to 1,45 % 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.
Shares and trading volume
KCI Konecranes Plc's share price increased by 18.43 % during the reporting period
and closed at EUR 41.62. The year high was EUR 41.95 and year low EUR 29.80. The
volume weighted average share price during the period was EUR 35.77. During the
same period the OMX Helsinki Index increased by 31.13 %, the OMX Helsinki CAP
Index by 30.14 % and the OMX Helsinki Industrials Index by 61.12 %.
At the end of the year 2005 KCI Konecranes Plc's total market capitalisation was
EUR 603 million (2004: EUR 465 million) including the company's own shares, the
36th largest market value of companies listed on the Helsinki Stock Exchange.
The trading volume totalled 18,290,888 shares of KCI Konecranes Plc, which
represents 126% of the company's total amount of outstanding shares. In monetary
terms trading was EUR 653 million, which was the 32nd largest trading value of
companies listed on Helsinki Stock Exchange. The daily average trading volume was
72,296 shares representing a daily average turnover of EUR 2.57 million.
Flagging notifications
On 28 December 2005, KCI Konecranes was notified that the holding of Varma Mutual
Pension Insurance Company in KCI Konecranes Plc's voting rights and share capital
had decreased to 4.96 %.
On 3 November 2005, KCI Konecranes was notified that, on 1 November 2005, the
holding of the Capital Group Companies, Inc's (Taxpayer I.D. 86-0206507) in KCI
Konecranes Plc's voting rights and share capital had increased to 6.91%.
On 11 October 2005, KCI Konecranes was notified that, on 10 October 2003, the
combined holding of Franklin Resources, Inc. (trade reg. 13-2670991) through the
funds and separate accounts managed by its affiliated advisers had decreased to
9.74% of voting rights and 0.697% of the share capital of KCI Konecranes Plc.
15 (25)
Dividend proposal
The Board of Directors proposes to the AGM that a dividend of EUR 1.10 per share
will be paid for the fiscal year 2005. The dividend will be paid to shareholders,
who are entered in the company's share register maintained by the Finnish Central
Securities Depository Ltd. on the record date for payments of dividends on March
13, 2006. The actual payment of dividend will take place on March 20, 2006.
Future prospects
The strong new equipment order backlog and momentum in maintenance services,
together with the recent acquisition, give a good starting point for 2006. Based
on the current market outlook, the total sales growth is expected to exceed 20%.
Selected acquisitions will be considered also in the future.
The acquisition of R.Stahl Fördertechnik is expected to add EUR 120 - 130 million
to the Group's sales in its Standard Lifting Equipment Business Area. For the
Group EBIT margin, the dilutive effect is expected to be 0.5 %-points. The
acquisition is expected to be EPS neutral in 2006 and accretive from 2007.
Notwithstanding the dilutive effect caused by the acquisition, the positive EBIT
margin development seen during 2005 is expected to continue.
Hyvinkää 15 February, 2006
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.
16 (25)
CONSOLIDATED STATEMENT OF INCOME - IFRS 1-12/2005 1-12/2004
(MEUR)
Sales 970.8 728.0
Other operating income 2.2 2.3
Depreciation -15.6 -12.4
Impairment losses 0.0 -1.3
Other operating expenses -908.1 -685.3
Operating income (EBIT) 49.3 31.3
Share of result of associates and joint
ventures 0.5 -0.0
Financial income and expenses (1 -15.8 -3.6
Profit before taxes 34.1 27.7
Taxes -10.0 -9.2
Net income 24.1 18.4
Earnings per share, basic EUR) 1.71 1.31
Earnings per share, diluted (EUR) 1.67 1.29
Financial income and expenses (1 1-12/2005 1-12/2004
Dividend income 0.1 0.2
Interest income from current assets 9.8 1.3
Interest expenses -16.6 -4.8
Other financial expenses -0.8 -0.7
Fair value of derivative financial -7.9 0.0
instruments
Exchange rate difference -0.4 0.4
Total -15.8 -3.6
CONSOLIDATED BALANCE SHEET - IFRS (MEUR)
ASSETS 31.12.2005 31.12.2004
Non-current assets
Goodwill 54.8 38.0
Other intangible assets 42.2 9.7
Property, plant and equipment 60.8 53.5
Advance payments and construction in 8.8 5.5
progress
Investments accounted for using the equity 5.9 3.9
method
Available-for-sale investments 1.6 1.5
Long-term loans receivables 0.2 0.2
Deferred tax assets 23.3 13.6
Total non-current assets 197.6 126.0
17 (25)
Current assets
Inventories
Raw materials and semi-manufactured 73.6 53.2
goods
Work in progress 74.1 57.8
Advance payments 9.2 3.2
Total inventories 157.0 114.1
Accounts receivable 223.3 153.1
Loans receivable 0.2 0.0
Other receivables 18.3 14.2
Deferred assets 83.7 85.9
Cash and cash equivalents 44.0 20.7
Total current assets 526.4 387.9
TOTAL ASSETS 724.0 513.9
EQUITY AND LIABILITIES 31.12.2005 31.12.2004
Capital and reserves attributable to the
shareholders of the parent
Share capital 29.0 28.6
Share premium account 26.5 22.3
Fair value and other reserves -4.9 0.0
Translation differences -1.1 -6.1
Retained earnings 78.6 74.4
Net income for the period 24.1 18.4
Total Shareholders equity 152.0 137.6
Minority interests 0.1 0.1
Total equity 152.1 137.7
Liabilities
Non-current liabilities
Interest-bearing liabilities 27.4 4.8
Other non-current liabilities 61.6 15.9
Deferred tax liabilities 18.0 4.0
Total non-current liabilities 106.9 24.7
Provisions 20.1 17.5
Current liabilities
Interest-bearing liabilities 151.0 126.5
Advance payments received 81.0 41.1
Accounts payable 83.7 68.2
Other short-term liabilities (non-interest 17.7 14.5
bearing)
Accruals 111.4 83.7
Total current liabilities 444.9 334.1
Total liabilities 571.9 376.3
TOTAL EQUITY AND LIABILITIES 724.0 513.9
18 (25)
STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY (MEUR)
Share Other Transl. Fair Retaine Minorit Total
Capita Restrict differen value d y Equity
l ed ce Reserve Earning Interes
Capital s s t
Equity
31.12.2004 28.6 22.3 -6.1 0.0 92.7 0.1 137.6
Options
exercised 0.4 4.3 4.6
Dividend
distribution -14.8 -14.8
Change in -0.6 -0.6
untaxed
reserves
Cash flow
hedge -4.9 -4.9
Translation
difference 4.9 4.9
Equity 152.1
31.12.2005 29.0 26.5 -1.2 -4.9 102.7 0.1
RECONCILIATION OF NET INCOME (MEUR) 1-12/ 2004
Net income according to FAS 23.0
Reversal of amortization of
goodwill, 2.6
IFRS 3 and IAS 36
Impairment, IAS 36 -1.2
Employee benefits, IAS 19 -1.1
Stock options, IFRS 2 -0.8
Income taxes, IAS 12 1.5
Provision, IAS 37 -5.4
Other IFRS adjustments -0.2
Total IFRS adjustments -4.6
Net income according to IFRS 18.4
RECONCILIATION OF SHAREHOLDERS`EQUITY (MEUR) 31.12.2004
Equity according to FAS 157.9
IFRS adjustments:
Reversal of amortization of goodwill,
IFRS 3 and IAS 36 2.6
Impairment, IAS 36 -1.3
Employee benefits, IAS 19 -16.1
Reserve for own shares, IAS 32 -4.4
Income taxes, IAS 12 5.3
Provision, IAS 37 0.0
Minority interest, IAS 1 0.1
Changes in accounting policy, IAS 8 -4.9
Other IFRS adjustments -1.5
Total FRS adjustments -20.2
Equity according to IFRS 137.7
19 (25)
CONSOLIDATED CASH FLOW STATEMENT - IFRS 1-12/2005 1-12/2004
(MEUR)
Cash flow from operating activities
Operating income 49.3 31.3
Adjustments to operating profit
Depreciation and impairments 15.6 13.7
Profits and losses on sale of fixed assets -0.7 -0.7
Other non-cash items 1.6 0.9
Operating income before chg in net working capital 65.8 45.2
Change in interest-free short-term receivables 25.8 -27.5
Change in inventories -17.8 -27.5
Change in interest-free short-term liabilities 44.2 26.7
Change in net working capital 0.7 -28.4
Cash flow from operations before financing items
and taxes 66.5 16.8
Interest received 7.6 1.3
Interest paid -10.6 -4.7
Other financial income and expenses -5.0 1.5
Income taxes paid -10.0 -7.3
Financing items and taxes -18.1 -9.2
Net cash flow from operating activities 48.4 7.6
Cash flow from investing activities
Acquisition of Group companies, net of cash -30.3 -30.3
Acquisition of shares in associated company -3.3 -0.1
Investments in other shares -2.0 0.0
Capital expenditures -13.5 -9.4
Proceeds from sale of other and associated 2.4 0.0
company shares
Proceeds from sale of fixed assets 0.6 1.6
Dividends received 0.1 0.2
Net cash used in investing activities -46.1 -38.0
Cash flow before financing activities 2.3 -30.4
Cash flow from financing activities
Proceeds from options exercised 4.6 0.0
Proceeds from (+), payments of (-) long-term 25.2 -24.4
borrowings
Proceeds from (+), payments of (-) short-term 4.9 91.1
borrowings
Proceeds from (+), payments of (-) short-term -0.2 -0.2
receivables
Dividends paid -14.8 -28.1
Net cash used in financing activities 19.7 38.3
Translation differences in cash 1.3 -0.4
Change of cash and cash equivalents 23.3 7.5
Cash and cash equivalents at beginning of 20.7 13.1
period
Cash and cash equivalents at end of period 44.0 20.6
Change of cash and cash equivalents 23.3 7.5
The effect of changes in exchange rates has been eliminated by converting the
beginning balance at the rates current on the last day of the year.
20 (25)
SEGMENT REPORTING
1. BUSINESS SEGMENTS (MEUR)
Order Intake by Business 2005 % of 2005 2004 % of 2004
Area total total
Maintenance Services 364.5(1 32 308.4(1 39
Standard Lifting Equipment 322.1 28 246.6 31
Special Cranes 463.3 40 243.7 30
./. Internal -88.7 -61.9
Total 1061.2(1 100 736.9(1 100
1) Excl. Service Contract Base
Order Book (2 2005 2004
Total 432.1 298.8
2) Percentage of completion deducted
Sales by Business Area 2005 % of 2005 2004 % of
total 2004
total
Maintenance Services 406.5 39 344.6 44
Standard Lifting Equipment 318.0 30 231.2 29
Special Cranes 331.1 31 214.1 27
./. Internal -84.8 -62.0
Total 970.8 100 728.0 100
Operating Income by 2005 % of 2005 2004 % of
Business Area Operating total sales Operating 2004
Income Income total
sales
Maintenance Services 29.4 7.2 22.1 6.4
Standard Lifting Equipment 28.8 9.1 20.7 9.0
Special Cranes 15.2 4.6 15.9 7.4
Group costs -23.8 -27.3
Consolidation items -0.3 -0.1
Total 49.3 31.3
2005 % of 2005 2004 % of
Personnel by Business Area total 2004
total
(at the End of the Period)
Maintenance Services 2,999 51 2,685 59
Standard Lifting Equipment 1,898 32 1,028 23
Special Cranes 890 15 675 15
Group Staff 136 2 123 3
Total 5,923 100 4,511 100
2. GEOGRAPHICAL SEGMENTS (MEUR)
Sales by Market 2005 % of 2005 2004 % of 2004
total total
Nordic and Eastern Europe 215.1 22 140.9 19
EU (excl. Nordic) 300.5 31 222.5 31
Americas 277.7 29 215.1 30
Asia-Pacific 177.4 18 149.4 20
Total 970.8 100 728.0 100
21 (25)
NET INTEREST BEARING LIABILITIES 31.12.2005 31.12.2004
(MEUR)
Long- and short-term interest bearing -178.4 -131.4
liabilities
Cash and cash equivalents and other interest
bearing assets 44.4 21.0
Total -133.9 -110.4
CONTINGENT LIABILITIES AND PLEDGED ASSETS 31.12.2005 31.12.2004
(MEUR)
Contingent Liabilities
For own debts
Mortgages on land and buildings 5.9 5.9
For own commercial obligations
Pledged assets 0.3 0.3
Guarantees 117.2 101.5
For associated company's debt
Guarantees 0.0 0.8
For others
Guarantees 0.0 0.1
Other contingent and Financial Liabilities
Leasing liabilities
Next year 10.7 6.8
Later on 34.4 15.7
Other liabilities 0.7 1.2
Total 169.2 132.3
Leasing contracts follow the normal practices in corresponding countries.
Total by Category
Mortgages on land and buildings 5.9 5.9
Pledged assets 0.3 0.3
Guarantees 117.2 102.4
Other liabilities 45.8 23.7
Total 169.2 132.3
NOTIONAL AND FAIR VALUES OF 31.12.2005 31.12.2005 31.12.2004
DERIVATIVE Nominal Nominal
FINANCIAL INSTRUMENTS (MEUR) Fair value value value
Foreign exchange forward contracts -8.9 304.0 538.5
Interest rate swap 0.0 0.0 25.0
Electricity derivates 0.3 0.8 0.0
Total -8.6 304.8 563.5
INVESTMENTS 1-12/2005 1-12/2004
Total (excl. Acquisitions) 16.0 11.8
22 (25)
KCI KONECRANES GROUP 2001-2005
Business development IFRS IFRS FAS FAS FAS
2005 2004 2003 2002 2001
Order intake MEUR 1061.2 736.9 611.9 598.9 679.1
Order book MEUR 432.1 298.8 211.2 206.0 279.7
Net sales MEUR 970.8 728.0 664.5 713.6 756.3
of which outside Finland MEUR 883.7 653.5 599.4 634.2 679.2
Export from Finland MEUR 334.2 273.4 258.9 256.9 263.5
Personnel on average 5,087 4,369 4,423 4,396 4,434
Capital expenditure MEUR 16.0 11.8 12.4 13.9 11.3
as a percentage of net % 1.6 1.6 1.9 1.9 1.5
sales
Research and development
costs MEUR 8.8 8.5 7.9 8.2 7.7
as % of Standard Lifting
Equipment (1 % 2.8 3.7 3.7 4.0 3.1
as % of Group net sales % 0.9 1.2 1.2 1.1 1.0
Profitability
Net sales MEUR 970.8 728.0 664.5 713.6 756.3
Income from operations
(before goodwill
amortization) MEUR 49.3 31.3 24.8 40.9 59.4
as percentage of net sales % 5.1 4.3 3.7 5.7 7.9
Operating income MEUR 49.3 31.3 21.5 37.6 55.3
as percentage of net sales % 5.1 4.3 3.2 5.3 7.3
Income before extraordinary MEUR 34.1 27.7 18.9 36.5 52.4
items as percentage of net
sales % 3.5 3.8 2.8 5.1 6.9
Income before taxes MEUR 34.1 27.7 10.7 36.5 52.4
as percentage of net sales % 3.5 3.8 1.6 5.1 6.9
Net income MEUR 24.1 18.4 6.7 24.6 35.3
as percentage of net sales % 2.5 2.5 1.0 3.4 4.7
Key figures and balance
sheet
Shareholders' equity MEUR 152.1 137.6 163.4 173.2 180.2
Balance Sheet MEUR 724.0 513.9 402.2 397.1 455.9
Return on equity % 16.6 12.5 7.5 14.2 22.0
Return on capital employed % 17.2 13.7 10.8 17.8 24.3
Current ratio 1.1 1.1 1.5 1.6 1.6
Solidity % 23.7 29.1 42.6 45.5 41.4
Gearing % 88.1 80.2 27.8 19.1 28.9
1) R&D serves mainly Standard Lifting Equipment
23 (25)
Shares in figures IFRS IFRS FAS FAS FAS
2005 2004 2003 2002 2001
Earnings per share. basic EUR 1.71 1.31 0.88 1.69 2.40
Earnings per share.
diluted EUR 1.67 1.29 n/a n/a n/a
Equity per share EUR 10.66 9.76 11.24 12.11 11.75
Cash flow per share EUR 3.43 0.54 1.72 4.54 2.93
Dividend per share EUR 1.10* 1.05 2.00 0.95 0.90
Dividend/earnings % 64.3 80.2 227.3 56.2 37.5
Effective dividend yield % 2.6 3.2 7.2 4.1 3.2
Price/earnings 24.3 24.8 31.4 13.8 11.9
Trading low / EUR 29.80/ 27.20/ 17.20/ 19.80/ 25.00/
high 36.83
41.95 35.50 29.39 46.00
Average share price EUR 35.77 30.79 22.49 28.74 31.72
Year-end market
capitalization MEUR 594.1 458.4 387.6 333.2 427.5
Number traded (1000) 18,291 15,925 12,662 11,939 8,581
Stock turnover % 128.1 112.9 90.2 83.4 57.2
* The Board's proposal to the AGM
CALCULATION OF KEY FIGURES
Return on equity (%) = (Income before extraordinary items - taxes) x 100 : Total
equity (average during the period)
Return on capital employed (%) = (Income before taxes + interest paid + other
financing cost) x 100 : (Total amount of equity and liabilities - non-interest
bearing debts (average during the period))
Current ratio = Current assets : Current liabilities
Solidity (%) = Shareholders' equity x 100 : (Total amount of equity and
liabilities - advance payment received)
Gearing (%) = (Interest-bearing liabilities - liquid assets - loans receivable) x
100 : Total equity
Earnings per share = (Net income +/- extraordinary items) : Average number of
shares outstanding
Earnings per share, diluted = (Net income +/- extraordinary items) : Average
fully diluted number of shares outstanding
Equity per share = Shareholders' equity : Number of shares outstanding
Cash flow per share = Net cash flow from operating activities : Average number of
shares outstanding
Effective dividend yield (%) = Dividend per share x 100 : Share price at the end
of financial year
Price per earnings = Share price at the end of financial year : Earnings per
share
Year-end market capitalization = Number of shares outstanding multiplied by the
share price at the end of year
Average number of personnel = Calculated as average of number of personnel in
quarters
24 (25)
Note!
The numbers are rounded to nearest EUR 0.1 million. The key figures are
calculated from exact data.
Events on 15 February, 2006
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 for analysts and media will begin at 12.00
noon Finnish Time and can be followed at www.konecranes.com/investor.
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 will be available on the Internet later on 15 February.
Dividend proposal
The Board of Directors propose to the AGM that a dividend of EUR 1.10 per share
will be paid for the fiscal year 2005. The dividend will be paid to shareholders,
who are entered in the share register on the record date on March 13, 2006.
Dividend payment date is March 20, 2006.
Annual Report
The Annual Report for 2005 will be published during the week 9 of 2006.
Annual General Meeting
The Annual General Meeting 2005 will be held on Wednesday, 8 March, 2006 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 2006 will be published on 15 February, 2006.
Next report
Interim Report, January-March 2006, will be published on 10 May, 2006.
Graphics
A graphical presentation of this report is available on the Internet at
www.konecranes.com/investor.
25 (25)
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. +358-20 427 2043
DISTRIBUTION
Helsinki Stock Exchange
Media
-----------------------
KCI KONECRANES PLC
