KCI KONECRANES PLC: JANUARY - SEPTEMBER 2006 INTERM REPORT
KCI KONECRANES PLC STOCK EXCHANGE RELEASE 2 November, 2006 10.00 a.m. 1(16)
KCI KONECRANES PLC: JANUARY - SEPTEMBER 2006 INTERM REPORT
New All-Time High Quarterly Order Intake and Operating Profit
- Q3 order intake 403,4 MEUR; growth 45.1 %, organic growth 15.5 %
- Q3 sales 385,8 MEUR; growth 55.8 %, organic growth 23.4 %
- Q3 EBIT set new record: 31.2 (12.6) MEUR, Q3 EBIT margin: 8.1 (5,1)%
- On a last-twelve month basis, return on capital employed was 26.6 % and return
on equity rose to 34.7 %
- Upgraded 2006 guidance: Sales growth is anticipated to exceed 45 % and the EBIT
margin is expected to be approximately 7 % or slightly above
Third quarter Jan-Sept/2006 2005
MEUR 7-9/06 7-9/05 Change 1-9/06 1-9/05 Change 1-12/05
SALES % %
Service 133.0 101.3 31.3 353.3 286.3 24.1 406.5
Standard
Lifting 158.2 89.8 76.1 412.4 223.4 84.6 318.0
Heavy Lifting 125.3 79.0 58.6 328.1 219.3 49.6 331.1
Internal Sales -30.7 -22.5 -73.4 -54.0 36.0 -84.8
Sales total 385.8 247.6 55.8 1,022.4 675.0 51.5 970.8
Operating
profit (EBIT) 31.2 12.6 147.9 66.2 26.4 150.2 49.3
Operating
margin, % 8.1 5.1 6.5 3.9 5.1
Share of
result of
associated
companies and
joint ventures 0.1 -0.0 0.4 0.2 0.5
Interests, net -2.9 -1.7 -7.4 -4.8 -6.8
Other
financial
income and
expenses 0.5 2.3 -0.8 -9.6 -9.0
Income before
taxes 28.9 13.2 119.3 58.5 12.3 376.6 34.1
Net income 20.3 9.1 122.4 40.9 8.5 383.5 24.1
Earnings per
share, basic
(EUR) 0.35 0.16 0.70 0.15 0.43
Earnings per
share, diluted
(EUR) 0.34 0.16 0.69 0.15 0.42
ORDERS
RECEIVED
Service 113.9 109.2 4.4 314.8 272.1 15.7 364.5
Standard
Lifting 162.8 84.0 93.9 469.9 240.4 95.4 322.1
Heavy Lifting 150.9 114.0 32.4 390.4 324.7 20.2 463.3
Internal
Orders -24.3 -29.0 -69.7 -62.7 11.7 -88.7
Orders
Received total 403.4 278.1 45.1 1,105.3 774.6 42.7 1061.2
Order book at
end of period 681.9 432.2 57.8 432.1
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Summary of Konecranes' financial performance in the third quarter of 2006:
The strong demand for Konecranes' products and services continued, and third
quarter order intake again set a record, having posted records also in the
previous three quarters. Total sales growth rose to 55.8 % and organic growth was
23.5. The integration of Stahl CraneSystems continued and had a positive impact
on order intake, sales and profits in Standard Lifting. Initial steps were taken
in the integration of MMH Holding Inc and only limited synergy savings and
dynamic synergies are visible. The financial development was geographically well
balanced. All three Business Areas reported strong sales and order growth,
although service growth was somewhat restricted by the availability of skilled
labour in some regions. The unusually high level of modernisation project orders
in the comparison quarter makes the third quarter service order growth appear
low. Field service growth met our expectations. Internal actions and higher
volumes led to better operational efficiency and increased profitability.
Increasing raw material and component costs were offset by improved cost-
efficiency and higher sales prices. The third quarter EBIT margin was 8.1 %
compared with 5.1 % in the third quarter of 2005. Margins improved in all
Business Areas. Return on capital employed increased to 26.6 % and return on
equity to 34.7 % on a last twelve-month basis.
Outlook
The demand is expected to stay on a high level. The record-high third quarter
order intake leads us to raise the full-year sales growth expectation to above 45
%. The full year EBIT margin is expected to be approximately 7 %, or slightly
above. Both fourth quarter sales and EBIT margin will, as in previous years,
depend heavily on delivery completions during the last few weeks of the year.
Pekka Lundmark, President & CEO:
"We have every reason to be pleased with our third quarter performance. All key
financial measures - orders, sales, margins and capital returns - continued to
develop positively. Year 2006 sales growth is now expected to exceed 45 %, while
our growth already last year was 33 %. Operating margins improved in all Business
Areas. In Service we exceeded our published target of 8 % on a last twelve-month
basis. Margins in Standard Lifting and Heavy Lifting improved strongly, but still
remain below our 12 % and 10 % targets. Standard Lifting would also already have
reached its target level without the expected dilution caused by the recent
acquisitions. Our last-twelve month group margin now stands at 6,8 %, which is a
notable improvement from the 2005 margin of 5,1 %.
We have been paying a lot of attention to managing our capital employed,
especially working capital. This has yielded strong cash flow, and has decreased
the gearing level from a year ago in spite of completing the two largest
acquisitions ever in our history. Our ability to deliver returns of 26,6 % on
capital employed and 34,7 % on equity on a last-twelve month basis with a 6,8 %
EBIT margin demonstrates the capital efficiency of our operations.
Our margins have continued to improve this year, but our ambition level is
higher. We now expect the 2006 EBIT margin to be approximately 7 % or slightly
above. The margin targets will be revisited when we publish our 2006 result in
February 2007.
We are still positive regarding the demand outlook and potential for further
organic growth. Our scanning of the market for good, value-creating acquisitions
to complement organic growth continues."
3 (16)
Interim Report January-September 2006
Markets
Demand for both industrial and port crane maintenance grew strongly as a result
of high industrial output and increased container traffic, as well as the
continued trend of customers outsourcing their crane and machine tool
maintenance.
Standard Lifting benefited from strong demand in the general manufacturing
customer segment. The continued good demand in steel, warehousing and logistics
also boosted demand for standard lifting equipment. Through the integration of
Stahl CraneSystems, Konecranes has made inroads in new customer segments in
Germany, including the automotive and steel industries. This had a positive
impact, especially as German demand is at a high level.
The increase in steel prices resulted in a pick-up in demand from steel mills,
which particularly benefited Heavy Lifting. Demand from other primary metal
customers continued at a high level. Power generation industry demand, including
the waste-to-energy industry, continued to improve, and boosted Heavy Lifting
orders. Industrial investments in the paper and automotive segments remained at a
low level.
Investment in the container-handling business and in shipyards continued strong,
which resulted in solid demand for container-handling equipment. In the third
quarter, Konecranes' port business was especially successful in North America, as
well as in Southern and Eastern Europe.
Growth in general manufacturing, primary metals and power generation supported
Asian demand.
The Russian market continued to show solid growth, particularly in primary
metals, mining, petrochemical industries and in ports.
The pricing environment was mainly affected by increasing raw material and
component costs. In some regions also labour costs rose relatively strongly.
Konecranes was able to offset these cost increases through improved efficiency,
and successful sourcing solutions. The cost increases were also partially offset
by higher sales prices.
Orders received and order book
Orders received in January - September 2006 totalled EUR 1,105 (1-9/2005: 774.6)
million, representing growth of 42.7 %, organic growth was 18.9 %. The acquired
operations of Stahl CraneSystems (consolidated as of 1 Jan. 2006) and MMH
Holdings (consolidated as of 1 June, 2006 i.e. for four months) accounted for the
major part of non-organic growth.
Konecranes recorded strong order growth in all its Business Areas and main
markets in the period under review.
Orders received by Business Areas, MEUR
1-9/2006 1-9/2005 Change % Organic
growth %
Service 314.8 272.1 +15.7 +3.5
Standard Lifting 469.9 240.4 +95.4 +40.1
Heavy Lifting 390.4 324.7 +20.2 +16.5
Internal -69.7 -62.7
Total 1,105.3 774.6 +42.7 +18.9
4 (16)
7-9/2006 7-9/2005 Change % Organic
growth %
Service 113.9 109.2 +4.4 -14.2
Standard Lifting 162.8 84.0 +93.9 +35.0
Heavy Lifting 150.9 114.0 +32.4 +22.5
Internal -24.2 -29.0
Total 403.4 278.1 +45.1 +15.5
Third quarter order intake reached record high levels for the fourth consecutive
quarter, and totalled EUR 403.4 (278.1) million. Total order growth was 45.1 %,
and organic growth was 15.5 %. Organic growth continued strong in both Standard
and Heavy Lifting, while organic order intake in Service decreased due to lower
modernisation orders compared to the strong third quarter in 2005. Also the
difficulty in recruiting skilled labour in some regions limited possibilities to
increase service order intake.
There were no significant changes in the high quotation activity in either
Standard or Heavy Lifting.
Order book and contract base
The order book at the end of September totalled EUR 681.9 (432.2), which
represents growth of 57.8 % compared to the end of September 2005. When the
acquired operations of Stahl CraneSystems and MMH holdings where consolidated in
Konecranes' figures, they increased the order book by approx. EUR 129 million.
The order book increased 6.4 % from the high level at the end of June.
Order book by Business Areas, MEUR
September September Change % Dec 31,2005
2006 2005
Service 119.9 89.3 +34 78.0
Standard Lifting 202.7 80.6 +151 64.5
Heavy Lifting 413.6 281.9 +47 319.8
Internal -54.3 -19.6 -30.3
Total 681.9 432.2 +58 432.1
The order book (which does not include the value of maintenance contract base)
grew significantly in all Business Areas as a result of the strong order intake.
The length of the order book in Standard Lifting represents approximately four
months sales, and the delivery times usually vary from a couple of weeks to a few
months. Delivery times in Heavy Lifting, on the other hand, are typically between
three months and two years. Together, the length and high level of the order book
in Heavy Lifting provide good visibility for sales in 2007. The margin of the
order book in both Standard and Heavy lifting has been increasing as a result of
increased operational efficiency and higher volumes, which is visible in the
increased profitability in the businesses.
The steady positive development in the maintenance contract base both in terms of
units and value also provides good visibility for future sales. At the end of
September, the contract base comprised 259,141 (241,482) cranes and hoists, and
the annual value totalled EUR 86 million. No major changes occurred in the
contract retention rate, which remains at over 90 %.
5 (16)
Sales
Net sales in January - September 2006 totalled EUR 1,022 (675.0) million,
representing growth of 51.5 %, organic growth was 26.9 %. Most of the sales
growth stemmed from higher volumes. A minor part of the sales increase is due to
higher sales prices. Some product prices were raised to offset higher raw
material, component and labour costs.
Sales by Business Area, MEUR
1-9/2006 1-9/2005 Change % Organic
growth %
Service 355.3 286.3 +24.1 +11.6
Standard Lifting 412.4 223.4 +84.6 +30.4
Heavy Lifting 328.1 219.3 +49.6 +45.4
Internal -73.5 -54.0
Total 1,022.4 675.0 +51.5 +26.9
The operations of Stahl CraneSystems (consolidated from the beginning of 2006)
contributed to sales growth in Standard Lifting, while somewhat over half of MMH
Holdings' sales (for four months) contributed to Service sales, and the remainder
fairly equally to sales in Standard and Heavy Lifting.
Quarterly sales by Business Area, MEUR
7-9/2006 7-9/2005 Change % Organic
growth %
Service 133.0 101.3 +31.1 +4.8
Standard Lifting 158.2 89.8 +76.1 +24.9
Heavy Lifting 125.3 79.0 +58.6 +49.2
Internal -30.7 -22.5
Total 385.8 247.6 +55.8 +23.4
Third quarter net sales rose 55.8 % to EUR 385.8 (247.6) million, organic growth
was 23.4 %.
Sales by Market, MEUR
1-9/2006 1-9/2005 Change %
Nordic and Eastern Europe 178.0 153.1 16.3
EU (excl. Nordic) 325.1 214.9 51.3
Americas 343.8 185.5 85.3
Asia-Pacific 175.4 121.5 44.4
Profitability
Operating income in January - September 2006 was EUR 66.2 (26.4) million, which
is an increase of EUR 39.8 million or 150 % compared to January - September 2005.
(The reported operating income for January - September 2005 of EUR 26.6 million
included a EUR 0.2 million share of associated companies' result, which is now
reported below operating income for better comparison.) The operating income
margin was 6.5 (3.9) %. Third quarter operating income was at a record high level
for one quarter, and amounted to EUR 31.2 (12.6) million. The operating profit
margin improved to 8.1 (5.1) %.
6 (16)
Operating income by Business Areas, MEUR
1-9/2006 % of 1-9/2005 % of
sales sales
Service 28.5 8.0 18.6 6.5
Standard Lifting 42.1 10.2 19.4 8.7
Heavy Lifting 19.5 5.9 7.3 3.3
./. Group overheads -22.0 -2.2 -18.0 -2.7
./. Elimination of
internal profit -1.9 -0.2 -0.7 -0.1
Total 66.2 6.5 26.6 3.9
7-9/2006 % of 7-9/2005 % of
sales sales
Service 11.9 9.0 7.1 7.0
Standard Lifting 17.8 11.2 8.5 9.5
Heavy Lifting 8.3 6.6 4.0 5.1
./. Group overheads -5.8 -1.5 -6.0 -2.4
./. Elimination of
internal profit -1.0 -0.3 -1.1 -0.4
Total 31.2 8.1 12.5 5.1
Profitability continued improving clearly during the third quarter in all
Business Areas. The improvement is mainly attributable to strong volume growth,
improved productivity and higher efficiency. The somewhat more favourable USD/EUR
currency rate also contributed to higher profitability.
Sourcing, supply and technical synergy benefits from the integration of Stahl
CraneSystems had a positive impact on profits, but Stahl's operations, which are
reported in Standard Lifting, diluted the profit margin in this Business Area as
was expected and communicated.
Financial costs (net of expenses and income) were EUR 8.1 (14.4) million. The
corresponding figure for January - September 2005 included a loss arising from a
change in fair value of approx. EUR 8.1 million on derivates used for hedging
purposes. Hedge accounting on forward contracts for cash flow hedging was
initiated in Heavy Lifting sales projects in the third quarter of 2005.
January - September income before taxes were EUR 58.5 (12.3) million and third
quarter income before taxes was EUR 28.9 (13.2) million.
Corporate income taxes for January - September totalled EUR 17.5 (3.8) million
corresponding to a 30 percent tax rate. Third quarter taxes totalled EUR 8.7
(4.1) million.
Net income for January - September was EUR 40.9 (8.5) million or EUR 0.70 (0.15)
per share. Third quarter net income was EUR 20.3 (9.1) million or EUR 0.35 (0.16)
per share.
The return on capital employed for January - September 2006 was 24.4 (13.2) % and
the return on equity 31.5 (8.4) %. On a last-twelve month basis, return on
capital employed was 26.6 (17.0) % and return on equity was 34.7 (12.7) %. The
higher capital return ratios are a consequence of improved profitability and
higher efficiency in capital utilisation.
The profit accumulation in Konecranes has historically been slow in the beginning
of the year and accelerated towards the yearend. This seasonal earnings pattern
is expected to repeat itself also during this year, but it is expected to be less
pronounced compared to previous years.
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Cash flow and balance sheet
Cash flow from operations before financing items and taxes for January -
September 2006 was EUR 76.6 (26.4) million. Cash flow remained at a good level
despite large production output increases and strong sales growth. Net cash flow
from operating activities (after financing and taxes) was EUR 58.8 (15.2) million
or EUR 1.32 (0.47) per share.
Net debt totalled EUR 147.0 (118.4) million and gearing was 75.8 (89.7) %. The
Group's total equity/total assets ratio (solidity) was 25.7 (27.0) %. Taking into
account the latest acquisitions (Stahl CraneSystems and MMH Holdings Inc), the
gearing and solidity ratio developments were very satisfactory.
Capital expenditure
In January - September 2006, capital expenditure, excluding acquisitions,
totalled EUR 10.5 (11.8) million. Capital expenditures including acquisitions
totalled EUR 64.1 (14.2) million.
Personnel
At the end of September 2006, Konecranes had 7,444 (5,068) employees in total.
Personnel by Business Areas:
9/2006 9/2005 Change %
Service 3,873 2,892 +34 %
Standard Lifting 2,362 1,186 +99 %
Heavy Lifting 1,046 869 +20 %
Group Staff 163 121 +35 %
Total 7,444 5,068 +47 %
Approximately one fourth of the growth in personnel is attributable to organic
growth and the rest to acquisitions.
Important Events
Refreshed Brand Identity
On September 1, KCI Konecranes Plc unveiled a new global masterbrand strategy and
identity, which includes dropping KCI from the brand name and logo. The
streamlined brand will focus on the core brand equity, which lies in the
Konecranes name. The aim of the Group's identity development is to increase
cumulative brand value growth and efficiency, and drive internal integration in
the value-added solutions strategy, while reducing complexity.
Group company names will start with 'Konecranes' and the three business area
names were changed to Standard Lifting, Heavy Lifting and Service. The Board of
Directors will propose a new parent company name, Konecranes Plc, to a
shareholders meeting.
Group company brands that do not have clear complementary roles will be
integrated in the Group and main global brand. However, the brands Morris, Stahl
CraneSystems, SWF, R&M, Verlinde, Meiden and P&H will be retained in order to
optimise coverage in all markets and segments.
8 (16)
The implementation of the new identity is proceeding according to plan, and a
platform for integrating marketing communications within the Group is being
established.
Our new corporate credo "Lifting Businesses" will be used as a tagline to the new
Konecranes logo worldwide. The promise of Lifting Businesses reflects a company-
wide commitment to develop advanced lifting solutions and services that help
increase our customers' productivity and profitability, thus showing that we're
not just lifting things, but entire businesses.
Acquisitions
On 19 May 2006 HMM Acquisition Corp., a wholly owned Konecranes Inc. subsidiary,
acquired 59.2% of the shares of MMH Holdings, Inc., the owner of U.S. based
Morris Materials Handling, Inc. The holding was further increased on May 26 to
74.5% and on June 5 to approx. 90.9%. On June 7 HMM Acquisition Corp. had
increased its stake to 96.7% and completed a short form merger as a result of
which Konecranes, Inc. obtained 100% of MMH Holdings, Inc. shares. Morris
Material Handling, Inc. has over 120 years of history in crane industry and is a
recognised player in the maintenance service and overhead crane industry,
especially in the North-American market. The addition of MMH's product ranges
especially for the steel and power industries complements Konecranes' offering.
The acquisition also brings new opportunities for growth in Services through the
large installed base of MMH cranes. Through its subsidiaries MMH also has local
operations in Canada, Mexico and Chile. MMH Holdings, Inc was consolidated into
the Konecranes Group figures as of 1 June 2006. Operationally MMH Holdings, Inc.
continues as an independent entity within the Konecranes Group.
Organisation Changes
Paul Lönnfors was appointed Investor Relations Manager for KCI Konecranes Group
as of 1 September, 2006. He will report to Teuvo Rintamäki, Chief Financial
Officer.
Mikael Wegmüller was appointed Director, Marketing and Communications and member
of the Executive Board of KCI Konecranes Group as of 18 September, 2006. He will
report to Pekka Lundmark, President & CEO.
Franciska Janzon was appointed Manager, Corporate Branding and Communications.
She will report to Mikael Wegmüller. Ms Janzon previously held the position of
Investor Relations Manager.
Following the appointment of new Group Executive Board members, the Board has as
of 1 October 2006 consisted of the following members:
Pekka Lundmark, President and CEO
Business Area Presidents:
Hannu Rusanen, Service (SER)
Pekka Päkkilä, Standard Lifting (STD)
Mikko Uhari, Heavy Lifting (HVY)
Region Presidents:
Pierre Boyer, Europe, Middle East & Africa (EMEA)
Tom Sothard, Americas
Harry Ollila, Northeast Asia (NEA)
Edward Yakos, Southeast Asia-Pacific SEAP)
9 (16)
Function Directors:
Teuvo Rintamäki, Chief Financial Officer
Sirpa Poitsalo, Legal Counsel
Arto Juosila, Director, Administration and Business Development
Mikael Wegmüller, Director, Marketing and Communications
Peggy Hansson, Director, Competence Development
Ari Kiviniitty, Chief Technology Officer
Shares and shareholders
Change in share capital and subscription of shares with stock options
Pursuant to Konecranes stock options, a total of 178,800 new Konecranes shares
were recorded in the Trade Register during Q3/2006.
Following these subscriptions, Konecranes' share capital at the end of September
was EUR 29,860,110 and the total number of shares was 59,720,220.
At the end of September, Konecranes had 4,290 shareholders, which is 48 % higher
than at the end of 2005.
Shares and trading volume
Konecranes Plc's share price increased by 43.8 % during January - September and
closed at EUR 14.97. The period high was EUR 17.70 and period low EUR 10.23. The
volume weighted average share price during the period was EUR 13.98. During the
same period the OMX Helsinki Index rose 8.4%, the OMXH25 Helsinki Index 12.7% and
the OMX Helsinki Industrials Index 16.7%.
At the end of September, Konecranes Plc's total market capitalization was EUR 894
million including own shares in the company's possession, making it the 35th
largest company on the Helsinki Stock Exchange.
The trading volume totalled 87,505,862 shares (share-split adjusted),
representing a turnover velocity of 197%, which is the third highest on the
Helsinki Exchange disregarding extraordinary trading of shares in companies being
taken over. Total trading amounted to EUR 1,222 million, which was the 23rd
highest on the Helsinki Exchange. The daily average trading volume was 462,583
shares representing a daily average turnover of EUR 6.5 million.
As of 1 August 2006, the Konecranes share was included in the OMXH25 stock index,
which is a market-value weighted share price index. The OMXH25 index contains the
Helsinki Exchange's 25 most traded stocks in terms of monetary daily median
trading volume, which is measured semi-annually.
The Konecranes share is included in the OMX Nordic list, introduced on 2 October
2006, in Mid Cap Industrials.
Flagging notifications
On 5 April, 2006, the holdings of Capital Group Companies, Inc. decreased to 4.90
percent of the share capital and voting rights of KCI Konecranes Plc.
On 4 August, 2006, the holdings Fidelity Management
Research Corp. (FMR) and its direct and indirect subsidiaries increased to 5.03
percent of the share capital and voting rights of KCI Konecranes Plc.
10 (16)
On 11 August, 2006, the holdings of mutual funds and separate accounts managed by
the affiliated investment advisors of Franklin Resources, Inc. decreased to 4.99
percent of the share capital and voting rights of KCI Konecranes Plc.
On 13 September, 2006, the holdings of Fidelity Management
Research Corp. (FMR) and its direct and indirect subsidiaries decreased to 4.97
percent of the share capital and voting rights of KCI Konecranes Plc.
On 14 September, 2006, the holdings of Fidelity Management
Research Corp. (FMR) and its direct and indirect subsidiaries increased to 10.02
percent of the share capital and voting rights of KCI Konecranes Plc.
Flagging notifications after the period under review
On 10 October, 2006, the holdings of JPMorgan Chase & Co and its subsidiaries
increased to 5.02 % of the share capital and voting rights of KCI Konecranes Plc.
On 13 October, 2006, the holding of JPMorgan Chase & Co and its subsidiaries
decreased to 4.94 % of the share capital and voting rights of KCI Konecranes Plc.
Own Shares in the Company's Possession
At the end of September, KCI Konecranes Plc held 842 600 of the company's own
shares. This corresponds to 1.42 % of the company's total outstanding shares and
votes. The shares were bought back between February 20 and March 5, 2003.
Litigations
Konecranes is a party to various litigations and disputes relating to its normal
business in different countries. At the moment, Konecranes does not expect any of
these ongoing litigations or disputes to have a material effect on the profits or
future outlook of the Group.
Outlook
The demand is expected to stay on a high level. The record-high third quarter
order intake leads us to raise the full-year sales growth expectation to above 45
%. The full year EBIT margin is expected to be approximately 7 %, or slightly
above. Both fourth quarter sales and EBIT margin will, as in previous years,
depend heavily on delivery completions during the last few weeks of the year.
Helsinki, 1 November, 2006
Board of Directors
Disclaimer
Certain statements in this report, which are not historical fact, including,
without limitation those regarding expectations for market growth and
developments, expectations for growth and profitability and statements preceded
by "believes", "expects", "anticipates", "foresees" or similar expressions, are
forward-looking statements. Therefore they involve risks and uncertainties, which
may cause actual results to materially differ from the results expressed in such
forward-looking statements. Such factors include but are not limited to the
company's own operating factors, industry conditions and general economic
conditions.
11 (16)
Important orders
Here are some examples of orders received in the third quarter of 2006. The list
illustrates our reach, both in terms of customer base and geographical coverage.
September
Georgia Ports Authority (GPA), U.S.A. ordered four Super Post Panamax Ship-to-
Shore container cranes and 15 all-electric Rubber Tired Gantry cranes to the
Garden City Terminal in the Port of Savannah, Georgia. Deliveries will start in
the spring of 2007 and continue until April 2008. The value of the order is over
USD 50 million.
The Port of Houston Authority ordered six all-electric rubber-tired gantry cranes
valued at approximately USD 10 million as part of the expansion of Bayport
Container and Cruise Terminal. The cranes will be delivered by July 2007.
ZAO First Container Terminal in St. Petersburg ordered two Panamax Ship-to-Shore
(STS) container cranes. The value of the contract is approximately EUR 10
million, and the cranes will be delivered at the end of 2007.
INOVA ordered two automatic refuse handling cranes and two slag handling cranes
to be delivered to Liège, Belgium.
BSRM Steels Ltd, a subsidiary of the H. Akberali Group of Industries ordered four
steel mill process cranes with a 24-ton lifting capacity, designed to handle
billets and hot bundles with magnets, and four industrial cranes for their green
field plant in Chittagong, Bangladesh. The equipment will be delivered by May
2007 for the first phase of the project, which will increase annual production
output by 300,000 tons. The value of the order is over EUR 2 million.
August
Konecranes received three significant orders from the energy sector in July-
August 2006 for a total value of approximately EUR 6.5 million. Konecranes will
deliver one 44-ton coker crane featuring several Konecranes load control
technologies to Tesoro Corporation's Golden Eagle Refinery in Martinez,
California, one 17-ton coker crane to the BP Oil Castellón Refinery in Spain, and
two turbine cranes and two maintenance cranes to Siemens by autumn 2007. The two
250-ton turbine house cranes have a span of 32 meters and are equipped with a 25-
ton auxiliary trolley. This order is part of the Power Generation Group of
Siemens AG's investment in a new combined cycle power plant in Irsching, Germany,
which will be the world's largest and highest-output gas turbine.
In addition to these three orders to the energy sector, Reliance Petroleum, LTD
from Mumbai, India ordered a 35-ton coker handling bucket crane for the Reliance
refinery in Jamnagar, India, and Fluor Enterprises, Inc from Long Beach, CA, USA
ordered a 44-ton coker handling bucket crane to be delivered to the Tesoro
Corporation, Golden Eagle refinery in Martinez, California, USA. The value of
these orders is over EUR 10 million.
July
One of the world's premier engineering, construction, and project management
companies Bechtel ordered nine industrial cranes ranging from 3-54 ton capacities
for its aluminium plant expansion in Sohar, Oman.
Significant orders in the third quarter of 2006 also include orders to shipyards,
steel mills and paper mills in China.
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The presented Financial information is construed according to the recognition and
measurement principles of International Financial Reporting Standards (IFRS).
The figures presented in the tables below have been rounded to one decimal, which
should be taken into account when reading the sum figures.
The interim report has not been subject to audit.
CONSOLIDATED STATEMENT OF INCOME - IFRS (MEUR)
1-9/2006 1-9/2005 1-12/2005
Sales 1022.4 675.0 970.8
Other operating income 1.5 1.7 2.2
Depreciation -15.6 -11.3 -15.6
Other operating expenses -942.2 -638.9 -908.1
Operating income (EBIT) 66.2 26.4 49.3
Share of result of associates
and joint ventures 0.4 0.2 0.5
Financial income and expenses -8.1 -14.4 -15.8
Income before taxes 58.5 12.3 34.1
Taxes -17.5(1 -3.8(1 -10.0
Net Income 40.9 8.5 24.1
Earnings per share, basic 0.70 0.15 0.43
(EUR)
Earnings per share, diluted 0.69 0.15 0.42
(EUR
1) According to estimated tax rate
CONSOLIDATED BALANCE SHEET - IFRS (MEUR)
9/2006 9/2005 12/2005
Non-current assets 219.8 131.2 197.6
Inventories 237.0 158.0 157.0
Receivables and other current 383.4 244.9 325.4
assets
Cash and cash equivalents 54.8 29.8 44.0
Total assets 895.0 563.9 724.0
Equity 194.0 132.1 152.1
Non-current liabilities 171.6 57.7 106.9
Provisions 27.6 16.3 20.1
Current liabilities 501.8 357.8 444.9
Total equity and liabilities 895.0 563.9 724.0
Gearing % 75.8 89.7 88.1
Solidity % 25.7 27.0 23.7
Return on capital employed %,
26.6 17.0 17.2
Last Twelve Months (LTM)
Return on equity %,
Last Twelve Months (LTM) 34.7 12.7 16.6
Equity/share, EUR 3.29 2.34 2.66
13 (16)
STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY (MEUR)
Share Other Other Transl. Fair Ret. Min. Tot.
Cap. Restr. Differ. value Earnings Int. Eqy
Cap. Reser Reser-v
-ves es
Equity
12/2004 28.6 22.3 0.0 -6.1 0.0 92.7 0.1 137.6
Options
exercised 0.1 0.8 0.9
Dividend
distribution -14.8 -14.8
Change in
untaxed
reserves -0.6 -0.6
Cash flow
hedge -4.1 -4.1
Translation
difference 3.7 3.7
Share based
payments
recognized
against
equity 0.9 0.9
Net profit
for the
period 8.5 8.5
Equity
9/2005 28.7 23.1 0.0 -2.4 -4.1 86.7 0.1 132.1
Equity
12/2005 29.0 26.5 0.0 -1.2 -4.9 102.7 0.1 152.1
Options
exercised 0.9 10.4 11.3
Dividend
distribution -15.8 -15.8
Share issue 0.0 0.0
Change in
untaxed
reserves 0.0 0.0
Cash flow
hedge 7.4 7.4
Translation
difference -2.5 -2.5
Share based
payments
recognized
against
equity 0.6 0.6
Net profit
for the 40.9
period 40.9
Equity
9/2006 29.9 36.9 0.0 -3.7 2.5 128.3 0.1 194.0
14 (16)
CONSOLIDATED CASH FLOW STATEMENT - IFRS (MEUR)
1-9/2006 1-9/2005 1-12/2005
Operating income before chg in net 81.9 38.4 65.8
working capital
Change in net working capital -5.3 -12.0 0.7
Cash flow from operations before
financing items and taxes 76.6 26.4 66.5
Financing items and taxes -17.8 -11.2 -18.1
Net cash flow from operating 58.8 15.2 48.4
activities
Net cash used in investing activities -57.9 -11.1 -46.1
Cash flow before financing activities 0.9 4.2 2.3
Net cash used in financing activities 10.6 3.9 19.7
Translation differences in cash -0.7 1.1 1.3
Change of cash and cash equivalents 10.8 9.1 23.3
Cash and cash equivalents at 44.0 20.7 20.7
beginning of period
Cash and cash equivalents at end 54.8 29.8 44.0
of
period
Change of cash and cash equivalents 10.8 9.1 23.3
SEGMENT REPORTING
1. BUSINESS SEGMENTS (MEUR)
Order Intake by Business 1-9/2006 1-9/2005 LTM* 1-12/2005
Area
Service 314.81) 272.1 407.1 364.5
Standard Lifting 469.9 240.4 551.5 322.1
Heavy Lifting 390.4 324.7 529.0 463.3
./. Internal -69.7 -62.7 -95.8 -88.7
Total 1105.31) 774.6 1391.9 1061.2
1) Excl. Service Contract Base
*LTM = last 12 months (full year 2005 ./. nine months 2005 + nine months 2006)
Order Book total (2 9/2006 9/2005 12/2005
Total 681.9 432.2 432.1
2) Percentage of completion deducted
Sales by Business Area 1-9/2006 1-9/2005 LTM* 1-12/2005
Service 355.3 286.3 475.6 406.5
Standard Lifting 412.4 223.4 507.0 318.0
Heavy Lifting 328.1 219.3 439.9 331.1
./. Internal -73.4 -54.0 -104.2 -84.8
Total 1022.4 675.0 1318.2 970.8
*LTM = last 12 months (full year 2005 ./. nine months 2005 + nine months 2006)
Operating Income by 1-9/2006 1-9/2005 1-12/2005 LTM*
Business Area
MEUR % MEUR % MEUR % MEUR
Service 28.5 8.0 18.6 6.5 29.4 7.2 39.3
Standard Lifting 42.1 10.2 19.4 8.7 28.8 9.1 51.5
Heavy Lifting 19.5 6.0 7.3 3.3 15.2 4.6 27.4
Group costs -22.0 -18.0 -23.8 -27.8
Consolidation items -1.9 -0.9 -0.3 -1.4
Total 66.2 26.4 49.3 89.1
15 (16)
Personnel by Business Area 9/2006 9/2005 12/2005
(at the End of the Period)
Service 3,873 2,892 2,999
Standard Lifting 2,362 1,186 1,898
Heavy Lifting 1,046 869 890
Group staff 163 121 136
Total 7,444 5,068 5,923
Average number of personnel
during period 6,687 4,878 5,087
2. GEOGRAPHICAL SEGMENTS (MEUR)
Sales by Market 1-9/2006 1-9/2005 LTM* 1-12/2005
Nordic and Eastern Europe 178.0 153.1 240.1 215.1
EU (excl. Nordic) 325.1 214.9 410.7 300.5
Americas 343.8 185.5 436.0 277.7
Asia-Pacific 175.4 121.5 231.3 177.4
Total 1022.4 675.0 1318.2 970.8
*LTM = last 12 months (full year 2005 ./. nine months 2005 + nine months 2006)
INVESTMENTS (MEUR) 1-9/2006 1-9/2005 1-12/2005
Total (excl. Acquisitions) 10.5 11.8 16.0
NET INTEREST BEARING LIABILITIES 9/2006 9/2005 12/2005
(MEUR)
Long- and short-term interest bearing
liabilities -202.4 -148.7 -178.4
Cash and cash equivalents and other
interest bearing assets 55.4 30.3 44.4
Total -147.0 -118.4 -133.9
CONTINGENT LIABILITIES AND PLEDGED
ASSETS (MEUR) 9/2006 9/2005 12/2005
Contingent Liabilities
For own debts
Mortgages on land and buildings 5.9 5.9 5.9
For own commercial obligations
Pledged assets 1.9 0.3 0.3
Guarantees 131.7 135.4 117.2
Other contingent and financial
liabilities
Leasing liabilities 37.6 30.1 45.1
Other liabilities 1.1 1.0 0.7
Total 178.2 172.7 169.2
16 (16)
NOTIONAL AND FAIR
VALUES OF 9/2006 9/2006 9/2005 9/2005 12/2005 12/2005
DERIVATIVE Nominal Fair Nominal Fair Nominal
FINANCIAL value value value value value Fair
INSTRUMENTS (MEUR) value
Foreign exchange
forward contracts 250.8 1.7 382.2 -4.3 304.0 -8.9
Interest rate swap 0.0 0.0 25.0 0.1 0.0 0.0
Electricity 0.9 0.5 0.0 0.0 0.8 0.2
derivates
Total 251.7 2.2 407.2 -4.2 304.8 -8.7
Derivatives are used for hedging currency and interest rate risks as well as risk
of price fluctuation of electricity. Company applies hedge accounting on
derivatives used to hedge cash flows in special cranes projects.
Events on 2 November, 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 presentation material is available on the Internet at
www.konecranes.com/investor immediately after publication. A recording of the
webcast will be available on the Internet later on 2 November.
Next report
Konecranes 2006 Financial Statements will be published on 14 February, 2007.
KCI KONECRANES PLC
Paul Lönnfors
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,
Mr Paul Lönnfors, IR Manager, tel. +358-20 427 2050
DISTRIBUTION
Helsinki Stock Exchange
Media
