KCI KONECRANES PLC STOCK EXCHANGE RELEASE 14 February, 2007 10.00 a.m. 1(23)
KONECRANES IN YEAR 2006
- Orders received: 1,472.8 MEUR (+38.8 %), Q4 orders: 367,5 MEUR (+28.2%),
- Sales increased 52.7 % to 1,482.5 MEUR, Q4 sales: 460,1 MEUR (+55.5%)
- 2006 operating profit (EBIT) more than doubled to 105.5 (49.3) MEUR, EBIT
margin: 7.1 (5.1) %
- Cash flow from operations: 81.4 (48.4) MEUR
- Diluted earnings per share: 1.15 (0.42) EUR
- Dividend proposal: 0.45 (0.275) EUR per share
- 2007 sales growth target of 15 %
- New long-term Group EBIT margin target 10 %
Service 433.8 364.5 +19.0 +2.4
Standard Lifting 612.6 322.1 +90.2 +33.6
Heavy Lifting 519.2 463.3 +12.0 +6.1
Internal -92.9 -88.7
Total 1,473 1,061 +38.8 +13.8
In the fourth quarter, order intake totaled EUR 367.5 (286.6) million,
representing growth of 28.2 percent. Organic order intake continued strong in
Standard Lifting. Service orders, which vary from quarter to quarter due to
sporadic large repair and modernization orders, were in organic terms at the same
level as in the corresponding period in 2005. Order intake in Heavy Lifting also
shows considerably quarterly variations, and fourth quarter orders fell short of
the relatively high level achieved in the fourth quarter of 2005. Both Stahl
CraneSystems and MMH Holding Inc showed solid order intake in the fourth quarter.
Fourth Quarter Orders Received by Business Areas, MEUR
10-12/ 10-12/ Change Organic
2006 2005 percent growth
percent
Service 119.1 92.3 +29.0 -0.3
Standard Lifting 142.8 81.7 +74.8 +25.0
Heavy Lifting 128.8 138.6 -7.1 -18.5
Internal -23.1 -26.0
Total 367.5 286.6 +28.2 +0.3
Sales
Net sales rose 52.7 percent to EUR 1,482.5 (970.8) million. Organic sales growth
totaled 26.7 percent. Higher input prices were successfully compensated by higher
sales prices. Higher prices, however, contributed to organic growth by about five
percentage points. Currency rate changes had only a minor translational effect on
the reported sales figure. All Business Areas achieved exceptionally strong
growth, with sales in Standard Lifting growing by nearly 82 percent.
Sales in the acquired companies Stahl CraneSystems and MMH Holding Inc rose
clearly and exceeded the levels anticipated and communicated at the time of the
acquisitions. The net sales of MMH Holding Inc. amounted to EUR 104 million
during the seven-month period it was included in the Group figures. Somewhat over
half of MMH Holding's sales are reported in Service and the remainder is fairly
equally divided between Standard Lifting and Heavy Lifting. Stahl CraneSystems'
sales are reported in Standard Lifting, and these operations achieved
approximately the same level of growth as the rest of the Standard Lifting
operations.
Service sales continued to increase steadily, but decreased in proportion to
total sales due to the exceptionally strong new equipment sales. The tight labor
market in some geographical regions resulted in somewhat higher turnover in
service personnel and increased difficulty in recruiting skilled labor, which
limited the possibilities to grow faster in Service.
6 (23)
Organic growth was strongest in Heavy Lifting as a result of the strong market, a
competitive product offering, new key customers and expanding geographical
presence.
Sales in Standard Lifting continued to benefit from good demand in the general
manufacturing and warehousing customer segments, the expansion of the CXT hoist
offering and improved competitiveness. Stahl CraneSystems contributed to the
exceptionally strong sales growth in Standard Lifting.
2006 Net Sales by Business Areas, MEUR
2006 2005 Change Organic
percent growth
percent
Service 512.6 406.5 +26.1 +9.7
Standard Lifting 577.8 318.0 +81.7 +28.7
Heavy Lifting 490.8 331.1 +48.3 +42.2
Internal -98.8 -84.8
Total 1,482.5 970.8 +52.7 +26.7
In the fourth quarter, net sales rose 55.5 percent to EUR 460.1 (295.8) million
organic growth was 26.2 percent. Both Standard and Heavy Lifting succeeded in
fulfilling challenging production and delivery volumes despite the ongoing
streamlining of the supply chain, and some scarcity of subcontracted components.
In Service, fourth quarter organic sales growth was moderate and lower than
historical growth. This was due to the difficulty to take new modernization
orders and sign new maintenance contracts during the year as a result of a
shortage of skilled service personnel.
Standard Lifting continued to grow exceptionally strongly. Record-high delivery
volumes were successfully completed towards the end of the year.
Heavy Lifting also achieved record high delivery volumes and improved
profitability despite the challenging situation created by the combination of
extremely strong organic growth and ongoing supply chain restructuring.
The operating margin in Heavy Lifting was somewhat burdened by MMH Holding's
Heavy Lifting operations and the Business Area Margin is still clearly below the
10 percent long-term target.
Fourth Quarter Net Sales by Business Areas, MEUR
10-12/ 10-12/ Change Organic
2006 2005 percent growth
percent
Service 157.3 120.2 +30.8 +5.0
Standard Lifting 165.5 94.6 +74.9 +24.7
Heavy Lifting 162.7 111.8 +45.6 +35.9
Internal -25.3 -30.8
Total 460.1 295.8 +55.5 +26.2
Profitability
The Group's operating income more than doubled to EUR 105.5 (49.3) million and
the operating margin rose to 7.1 (5.1) percent. All Business Areas increased both
their operating income and operating margin. Currency rate changes had only a
minor translational effect on operating income. The profitability of the acquired
companies Stahl CraneSystems and MMH Holding exceeded expectations and
contributed positively to EBIT growth. The impact on Group EBIT margin of MMH
Holding was neutral, and Stahl CraneSystems had a minor negative impact as
expected. The decrease in Group overheads from 2.4 to 2.1 percent of sales
supported the Group's margin expansion.
7 (23)
Service exceeded the EBIT margin target of eight percent set for the Business
Area. The main contributing factors for the profitability increase were higher
productivity, a maintained high maintenance contract retention rate, price
increases that compensated for cost increases and a higher proportion of spare
parts sales.
Standard Lifting fell 1.4 percentage points short of its margin target of 12
percent. Disregarding the margin-diluting effect of the consolidation of Stahl
CraneSystems, Standard Lifting's operating margin would have been approximately
at the targeted level. Stahl CraneSystems was, however, able to clearly improve
its profitability from the level prior to the acquisition. The main reasons for
Standard Lifting's improved margins were higher volumes through broader
geographical presence, improved productivity, synergies from the acquired
businesses and improved cost-competitiveness. Especially the restructuring
program implemented in 2002-2005 contributed to improved productivity and
competitiveness.
Heavy Lifting more than doubled its operating profit and clearly increased its
operating margin from the low level in 2005. The Business Area started a similar
restructuring program in 2004 as Standard Lifting started in 2002. These measures
contributed to the increase in profitability despite the fact that the program is
still not completed. Implementing the restructuring while growing organically by
more than 40 percent created a very challenging environment in terms of
fulfilling orders and improving profitability. The operations of MMH Holding
allocated to Heavy Lifting also weighted slightly on the operating margin, which
is still clearly below the target of ten percent.
Operating income and margin by Business Area
2006 Percent 2005 Percent
MEUR of sales MEUR of sales
Service 43.4 8.5 29.4 7.2
Standard Lifting 61.1 10.6 28.8 9.1
Heavy Lifting 33.6 6.8 15.2 4.6
./. Group overheads -31.6 -2.1 -23.8 -2.5
./. Elimination of
internal profit -0.9 -0.1 -0.3 -0.0
Total 105.5 7.1 49.3 5.1
In Service, the fourth quarter is seasonally usually the strongest. This was also
the case in 2006 and fourth quarter operating profit was record high. This
seasonality has, however, decreased as the business has become more
geographically distributed. The strong growth also led to full capacity
utilization throughout the year.
Also Standard and Heavy Lifting continued their operating margin improvement and
achieved record-high operating profits.
Fourth Quarter operating income and margin by Business Area
Q4/2006 Percent Q4/2005 Percent
of sales of sales
MEUR MEUR
Service 14.9 9.5 10.8 9.0
Standard Lifting 19.0 11.5 9.4 9.9
Heavy Lifting 14.0 8.6 7.9 7.0
./. Group overheads -9.6 -2.1 -5.8 -2.0
./. Elimination of
internal profit -1.0 -0.1 0.6 -0.0
Total 39.3 8.5 22.9 7.7
8 (23)
Group EBITDA was EUR 128.0 (64.9) million or 8.6 (6.7) percent on sales.
Depreciations grew by EUR 6.9 million, from EUR 15.6 million to EUR 22.5 million.
The increase in depreciations was mainly attributable to acquisitions.
The share of associated companies result amounted to EUR 0.7 (0.5) million.
Group interest costs (the net of interest income and expenses) were EUR 9.5 (6.8)
million. The increase in interest costs was mainly due to higher net debt during
2006, which was a result of acquisitions made at the end of 2005 and in 2006.
Financial costs (net of expenses and income) were EUR 11.1 (15.8) million. The
corresponding figure for 2005 included a loss arising from a change in fair value
of approx. EUR 7.9 million on derivates used for hedging purposes.
Other financing costs relate to currency exchange rate changes and other costs.
Group income after financing items was EUR 95.1 (34.1) million. Income taxes were
EUR 26.5 (10.0) million corresponding to an effective tax rate of 27.9 percent
(29.3) for the year. The decrease in tax rate is mainly related to structural
changes
Group net income was EUR 68.6 (24.1) million. Basic earnings per share totaled
EUR 1.17 (0.43) and diluted earnings per share were EUR 1.15 (0.42). Net income
in the fourth quarter was EUR 27.6 (15.6) million or EUR 0.46 (0.27) per share.
The Group's return on capital employed was 29.5 (17.2) percent and return on
equity was 36.5 (16.6) percent.
Cash flow and balance sheet
Cash flow from operations before financing items and taxes, but after the change
in working capital was EUR 114.2 (66.5) million, representing EUR 1.96 (1.18) per
share. Higher profits and improved working capital management supported the
strong cash flow development. Fourth quarter cash flow before financial items and
taxes was strong despite a high level of accounts receivables due to record-high
sales in the quarter.
Cash flow from financing items and taxes was EUR -32.8 (-18.1) million. Net cash
flow from operating activities was EUR 81.4 (48.4) million, representing EUR 1.39
(0.86) per share.
In total, EUR 64.8 million (46.1) of cash was used to cover capital expenditures
including acquisitions. The cash-based capital expenditures in fixed assets were
EUR 17.1 (13.5) million.
The parent company paid EUR 15.8 (14.8) million in dividends.
Group interest-bearing debt was EUR 173.3 (178.4) million, and interest-bearing
net debt was EUR 128.2 (133.9) million. Gearing was 57.3 (88.1) percent.
The Solidity (equity) ratio was 28.3 (23.7) percent, and the current ratio was
1.4 (1.1).
The Group's has a EUR 200 million committed back-up financing facility to secure
running liquidity. At yearend, EUR 100.9 (23.7) million was in use.
9 (23)
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 USD (and USD-linked currencies) had a negative
transactional effect on operating income through export from the euro-area.
The consolidation exchange rates of some important currencies for the Group
developed as follows:
The period end rates:
2006 2005 Change %
USD 1.317 1.1797 -10.43
CAD 1.5281 1.3725 -10.18
GBP 0.6715 0.6853 2.06
CNY 10.2793 9.5204 -7.38
SGD 2.0202 1.9628 -2.84
SEK 9.0404 9.3885 3.85
NOK 8.238 7.985 -3.07
AUD 1.6691 1.6109 -3.49
The period average rates:
2006 2005 Change %
USD 1.2554 1.2441 -0.90
CAD 1.4234 1.5093 6.03
GBP 0.6817 0.6839 0.32
CNY 10.008 10.197 1.89
SGD 1.9938 2.0699 3.82
SEK 9.2548 9.2817 0.29
NOK 8.0487 8.0124 -0.45
AUD 1.6666 1.6324 -2.05
The Group continued its currency risk management policy of hedging. The aim for
the hedging policy is to minimize 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 16.3 (16.0)
million. These capital expenditures consisted mainly of replacement or capacity
expansion investments on machines, equipment and information technology. Capital
expenditures in acquisitions were EUR 51.9 (30.3) million.
Research and development
Total direct research and development costs in the Group were EUR 12.5 (8.8)
million. The increase in R&D expenditure includes Stahl CranesSystems R&D
expenses, as well as product development projects aimed at improving the quality
and cost-efficiency of both products and services.
R&D expenditure is not allocated to the Business Areas, but reported in Group
overheads, except for Stahl CranesSystems' R&D expenses, which are included in
the Standard Lifting Business Area.
10 (23)
Personnel and personnel development
At the end of 2006, the Group employed 7,549 (5,923) persons. The average number
of personnel was 6,859 (5,087). The increase in employment relates to mainly to
the acquisition on MMH Holding and personnel increases in the Asian operations.
On average, the Group recorded somewhat over three training days per employee,
which is a slight increase to previous the year. The main corporate wide-
development program is the three-year Konecranes Academy aimed for middle
management and experts. Approximately 160 employees entered the program in 2006.
The development program for the top management was continued in co-operation with
the London Business School.
Personnel by Business Area, end of period
2006 2005 Change
percent
Service 3,923 2,999 +31
Standard Lifting 2,333 1,898 +23
Heavy Lifting 1,131 890 +27
Group Staff 162 136 +19
Total 7,549 5,923 +26
Group costs
Unallocated Group overhead costs were EUR 31.6 (23.8) million. These costs
consist mainly of common development costs (personnel, R&D, systems), treasury
and legal functions, development of the company structure (M&A), and Group
management and administration.
Group structure
On 19 May 2006, HMM Acquisition Corp., a wholly owned Konecranes Inc. subsidiary,
acquired 59.2 percent 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 percent and on June 5 to approximately 90.9 percent. On June 7, HMM
Acquisition Corp. had increased its stake to 96.7 percent and completed a short
form merger as a result of which Konecranes, Inc. obtained 100 percent of the
shares in MMH Holdings, Inc. Morris Material Handling, Inc. has over 120 years of
history in crane industry and is a recognized 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
complement Konecranes' offering. The acquisition also brings new opportunities
for growth in Service 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. continued as an independent entity within
the Konecranes Group.
Konecranes continued making structural changes during 2006 aimed at increasing
sales and profitability by adding flexibility in the supply chain and improving
customer service. Konecranes core activities are product development, assembly
and maintenance services.
11 (23)
Important appointments
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
Pekka Päkkilä, Standard Lifting
Mikko Uhari, Heavy Lifting
Region Presidents:
Pierre Boyer, Europe, Middle East & Africa (EMEA)
Tom Sothard, Americas
Harry Ollila, Northeast Asia (NEA)
Edward Yakos, Southeast Asia-Pacific (SEAP)
Function Directors:
Teuvo Rintamäki, Chief Financial Officer
Sirpa Poitsalo, Director, General Counsel
Arto Juosila, Director, Administration and Business Development
Mikael Wegmüller, Director, Marketing and Communications
Peggy Hansson, Director, Competence Development
Ari Kiviniitty, Chief Technology Officer
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.
Risk management
The main purpose of the 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 has 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 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 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
centralized by Group Treasury.
Environment
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 Konecranes that use up to 40 percent 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 designs of cranes contribute to savings in space, heating,
and operating costs in buildings and harbor platforms.
The company strives to favor 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.
Incentive Programs and Share Capital
At the end of the year 2006, 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 programs are available on
our website at www.konecranes.com.
Pursuant to Konecranes' stock option plans 2,133,650 new shares (split-adjusted)
were subscribed for and registered in the Finnish Trade Register during year
2006. As a result of the subscriptions, Konecranes' share capital increased to
EUR 30,038,860, comprising 60,077,720 shares.
The remaining 1997, 1999B, 2001 and 2003 stock options at the end of the
accounting period entitle to subscription of a total of 2,050,800 shares, thereby
the share capital can be increased by EUR 1,025,400.
13 (23)
On 15 December, 2006, the Konecranes Board approved a long-term incentive program
directed to Pekka Lundmark, the Managing Director of the Company. The program
will be implemented by disposing of the Company's own shares held by the Company
on the basis of the authorization granted to the Board of Directors by the AGM on
8 March, 2006.
Pursuant to the incentive program a total of 50,000 shares were sold to the
Managing Director on 22 December 2006, and 50,000 shares are to be sold in
January-February 2007 on terms and conditions defined in the terms of
subscription. The shares sold are subject to a five-year transfer restriction. As
part of the scheme the Company will pay a separate bonus to the Managing Director
to cover the taxes levied as a result of the arrangement.
The purpose of the incentive scheme is to motivate the Managing Director to
contribute in the best possible manner to long-term success of the Company and
increased shareholder value for all shareholders of the Company.
Own Shares in the Company's Possession
At the end of 2006, Konecranes held 792,600 of the company's own shares. This
corresponds to 1.3 percent of the company's total outstanding shares and votes.
The shares were bought back between February 20 and March 5, 2003.
Shares and trading volume
Konecranes' share price increased by 114 percent during 2006 and closed at EUR
22.30. The period high was EUR 22.33 and period low EUR 10.23. The volume-
weighted average share price during the period was EUR 15.04. During 2006, the
OMX Helsinki Cap Index rose by 24 percent and the OMX Helsinki Industrials Index
by 43 percent.
At the end of 2006, Konecranes' total market capitalization was EUR 1,340 million
including own shares in the company's possession, making it the 29th largest
company on the Helsinki Stock Exchange.
The trading volume totaled 114 million shares (split-adjusted), representing a
turnover velocity of 192 percent. Total trading amounted to EUR 1,715 million,
which was the 21st highest on the Helsinki Exchange. The daily average trading
volume was 365,872 shares, representing a daily average turnover of EUR 6.8
million.
Flagging notifications
Date Shareholder Number of % of Prior
Shares shares and flagging, %
owned* votes** of shares and
votes
13 Oct. 2006 JPMorgan Chase & Co 2 951 289 4.94
and its subsidiaries
10 Oct. 2006 JPMorgan Chase & Co 3 001 262 5.02
and its subsidiaries
14 Sept. 2006 Fidelity 5 982 158 10.02
International
Limited and its
direct and indirect
subsidiaries
14 (23)
13 Sept. 2006 Fidelity Management 2 966 900 4.97
Research and its
direct and indirect
subsidiaries
11 Aug. 2006 Franklin Resources 2 774 610 4.99 9.74
Inc, funds and
accounts of
affiliated
investment advisors
4 Aug. 2006 Fidelity Management 2 955 850 5.03
Research and its
direct and indirect
subsidiaries
5 Apr. 2006 The Capital Group 2 895 560 4.90 6.91
Companies, Inc.
29 Mar. 2006 Fidelity 2 955 900 5.00
International
Limited and its
direct and indirect
subsidiaries
2 Mar. 2006 Fidelity 3 021 200 5.16
International
Limited and its
direct and indirect
subsidiaries
27 Feb. 2006 Deutsche Bank AG, 3 250 192 5.57
and its subsidiary
companies
23 Feb. 2006 Centaurus Capital 1 353 600 2.32 5.00
Limited and its
direct and indirect
subsidiaries
13 Feb. 2006 Orkla ASA 2 730 880 4.71 5.08
*Split-adjusted
**Percentage of shares at time of notification
Dividend proposal
The Board of Directors proposes to the AGM that a dividend of EUR 0.45 per share
will be paid for the fiscal year 2006. 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, 2007. The actual payment of dividend will take place on March 21, 2007.
New EBIT Margin Targets
New EBIT margin targets have been set for the Business Areas as a result of the
recent development in the company and a change in the reporting method regarding
spare parts. The new EBIT margin targets are: Service 12 percent, Standard
Lifting 12 percent and Heavy Lifting 10 percent. Achieving these profitability
levels in combination with the new target for unallocated Group costs of two
percent of sales would result in a Group EBIT margin of approximately ten
percent.
15 (23)
As of 2007, Konecranes-branded spare parts will mainly be reported in the Service
Business Area instead of in both Service and Standard Lifting, as has previously
been the case. This change will result in higher margins in Service and lower
margins in Standard Lifting. Based on the 2006 financial figures, the EBIT margin
in Service would have been approximately 1.5 percentage points higher and
Standard Lifting's margin 1.5 percentage points lower according to the new
reporting method. The reported 2006 quarterly figures will be restated according
to the new reporting method in Konecranes 2007 first quarter interim report.
Future prospects
Konecranes strong order book and the recent acquisitions form a strong base for
year 2007. Demand is expected to remain at a good level, and organic growth to
continue, however, at a more moderate rate than in the previous two years. The
company's target is to achieve net sales growth of approximately 15 percent
compared to 2006, and to continue improving the operating margin.
Hyvinkää 13 February, 2007
KCI Konecranes Plc
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.
16 (23)
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.
CONSOLIDATED STATEMENT OF INCOME - IFRS 1-12/2006 1-12/2005
(MEUR)
Sales 1,482.5 970.8
Other operating income 2.0 2.2
Depreciation and impairments -22.5 -15.6
Other operating expenses -1,356.5 -908.1
Operating income (EBIT) 105.5 49.3
Share of result of associates and joint
ventures 0.7 0.5
Financial income and expenses (1 -11.1 -15.8
Profit before taxes 95.1 34.1
Taxes -26.5 -10.0
Net profit for the period 68.6 24.1
Earnings per share, basic EUR) 1.17 0.43
Earnings per share, diluted (EUR) 1.15 0.42
Financial income and expenses (1 1-12/2006 1-12/2005
Dividend income 0.1 0.1
Interest income from current assets 2.1 9.8
Interest expenses -11.6 -16.6
Other financial income and expenses -0.6 -0.8
Exchange rate differences -1.2 -8.3
Total -11.1 -15.8
CONSOLIDATED BALANCE SHEET - IFRS (MEUR)
ASSETS 31.12.2006 31.12.2005
Non-current assets
Goodwill 54.0 54.8
Other intangible assets 55.0 42.2
Property, plant and equipment 67.5 60.8
Advance payments and construction in 9.6 8.8
progress
Investments accounted for using the equity
method 6.3 5.9
Available-for-sale investments 2.1 1.6
Long-term loans receivables 0.5 0.2
Deferred tax assets 24.6 23.3
Total non-current assets 219.6 197.6
Current assets
Inventories
Raw materials and semi-manufactured 92.7 73.6
goods
Work in progress 103.5 74.1
Advance payments 30.4 9.2
Total inventories 226.6 157.0
Accounts receivable 324.2 223.3
Loans receivable 0.2 0.2
Other receivables 27.0 18.3
Deferred assets 76.9 83.7
Cash and cash equivalents 44.4 44.0
Total current assets 699.4 526.4
TOTAL ASSETS 919.0 724.0
17 (23)
EQUITY AND LIABILITIES 31.12.2006 31.12.2005
Capital and reserves attributable to the
shareholders of the parent
Share capital 30.0 29.0
Share premium account 39.0 26.5
Fair value and other reserves 3.7 -4.9
Translation differences -5.8 -1.1
Paid in capital 0.5 0.0
Retained earnings 87.7 78.6
Net income for the period 68.6 24.1
Total Shareholders equity 223.7 152.0
Minority interests 0.1 0.1
Total equity 223.7 152.1
Liabilities
Non-current liabilities
Interest-bearing liabilities 120.9 27.4
Other non-current liabilities 58.7 61.6
Deferred tax liabilities 20.0 18.0
Total non-current liabilities 199.6 106.9
Provisions 28.2 20.1
Current liabilities
Interest-bearing liabilities 52.4 151.0
Advance payments received 128.9 81.0
Progress billings 7.0 0.0
Accounts payable 113.6 83.7
Other short-term liabilities
(non-interest 23.0 17.7
bearing)
Accruals 142.5 111.4
Total current liabilities 467.4 444.9
Total liabilities 695.2 571.9
TOTAL EQUITY AND LIABILITIES 919.0 724.0
STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY (MEUR)
Cash flow from operating activities
Operating income 105.5 49.3
Adjustments to operating profit
Depreciation and impairments 22.5 15.6
Profits and losses on sale of fixed -0.3 -0.7
assets
Other non-cash items 2.0 1.6
Operating income before chg in net working capital 129.7 65.8
Change in interest-free short-term receivables -69.1 -25.8
Change in inventories -48.2 -17.8
Change in interest-free short-term liabilities 101.9 44.2
Change in net working capital -15.4 0.7
Cash flow from operations before financing items
and taxes 114.2 66.5
Interest received 2.1 7.6
Interest paid -11.5 -10.6
Other financial income and expenses -1.4 -5.0
Income taxes paid -22.1 -10.0
Financing items and taxes -32.8 -18.1
Net cash flow from operating activities 81.4 48.4
Cash flow from investing activities
Acquisition of Group companies, net of cash -48.3 -30.3
Acquisition of shares in associated company -0.2 -3.3
Investments in other shares -0.6 -2.0
Capital expenditures -17.1 -13.5
Proceeds from sale of other and associated
company shares 0.0 2.4
Proceeds from sale of fixed assets 1.2 0.6
Dividends received 0.1 0.1
Net cash used in investing activities -64.8 -46.1
Cash flow before financing activities 16.6 2.3
Cash flow from financing activities
Proceeds from options exercised and share 14.1 4.6
issue
Proceeds from (+), payments of (-) long-term
borrowings 88.6 25.2
Proceeds from (+), payments of (-) short-term
-101.8 4.9
borrowings
Proceeds from (+), payments of (-) short-term
-0.2 -0.2
receivables
Dividends paid -15.8 -14.8
Net cash used in financing activities -15.2 19.7
Translation differences in cash -1.0 1.3
Change of cash and cash equivalents 0.3 23.3
Cash and cash equivalents at beginning of 44.0 20.7
period
Cash and cash equivalents at end of period 44.4 44.0
Change of cash and cash equivalents 0.3 23.3
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.
19 (23)
SEGMENT REPORTING
1. BUSINESS SEGMENTS (MEUR)
Order Intake by 2006 % of 2006 2005 % of 2005
Business Area total total
Services 433.8(1 28 364.5(1 32
Standard Lifting 612.6 39 322.1 28
Heavy Lifting 519.2 33 463.3 40
./. Internal -92.9 -88.7
Total 1,472.8(1 100 1,061.2(1 100
1) Excl. Service Contract Base
Order Book (2 2006 2005
Total 571.6 432.1
2) Percentage of completion deducted
Sales by Business Area 2006 % of 2006 2005 % of 2005
total total
Services 512.6 32 406.5 39
Standard Lifting 577.8 37 318.0 30
Heavy Lifting 490.8 31 331.1 31
./. Internal -98.8 -84.8
Total 1,482.5 100 970.8 100
Operating Income by 2006 % of 2006 2005 % of 2005
Business Area Operating total sales Operating total
Income Income sales
Services 43.4 8.5 29.4 7.2
Standard Lifting 61.1 10.6 28.8 9.1
Heavy Lifting 33.6 6.8 15.2 4.6
Group costs -31.6 -23.8
Consolidation items -0.9 -0.3
Total 105.5 7.1 49.3 5.1
2006 % of 2006 2005 % of 2005
Personnel by Business Area total total
(at the End of the Period)
Services 3,923 52 2,999 51
Standard Lifting 2,333 31 1,898 32
Heavy Lifting 1,131 15 890 15
Group Staff 162 2 136 2
Total 7,549 100 5,923 100
2. GEOGRAPHICAL SEGMENTS (MEUR)
Sales by Market 2006 % of 2006 2005 % of 2005
total total
Nordic and Eastern Europe 252.8 17 215.1 22
EU (excl. Nordic) 462.2 31 300.5 31
Americas 512.3 35 277.7 29
Asia-Pacific 255.1 17 177.4 18
Total 1,482.5 100 970.8 100
20 (23)
NET INTEREST BEARING LIABILITIES 31.12.2006 31.12.2005
(MEUR)
Long- and short-term interest bearing
liabilities -173.3 -178.4
Cash and cash equivalents and other interest
bearing assets 45.0 44.4
Total -128.2 -133.9
CONTINGENT LIABILITIES AND PLEDGED ASSETS 31.12.2006 31.12.2005
(MEUR)
Contingent Liabilities
For own debts
Mortgages on land and buildings 0.7 5.9
For own commercial obligations
Pledged assets 1.1 0.3
Guarantees 136.3 117.2
Other contingent and Financial Liabilities
Leasing liabilities
Next year 11.1 10.7
Later on 26.0 34.4
Other liabilities 1.0 0.7
Total 176.2 169.2
Leasing contracts follow the normal practices in corresponding countries.
Total by Category
Mortgages on land and buildings 0.7 5.9
Pledged assets 1.1 0.3
Guarantees 136.3 117.2
Other liabilities 38.1 45.8
Total 176.2 169.2
NOTIONAL AND FAIR 31.12.2006 31.12.2006 31.12.2005 31.12.2005
VALUES OF DERIVATIVE Fair value Fair value
FINANCIAL INSTRUMENTS Nominal Nominal
(MEUR) value value
Foreign exchange
forward contracts 279.7 3.0 304.0 -8.9
Electricity derivates 1.1 0.1 0.8 0.3
Total 280.8 3.1 304.8 -8.6
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 Heavy Lifting projects.
INVESTMENTS 1-12/2006 1-12/2005
Total (excl. Acquisitions) 16.3 16.0
21 (23)
KCI KONECRANES GROUP 2002-2006
Business development IFRS IFRS IFRS IFRS FAS FAS
2006 2005 2004 2003 2002
Order intake MEUR 1,472.8 1,061.2 736.9 611.9 598.9
Order book MEUR 571.6 432.1 298.8 211.2 206.0
Net sales MEUR 1,482.5 970.8 728.0 664.5 713.6
of which outside Finland MEUR 1,396.0 883.7 653.5 599.4 634.2
Export from Finland MEUR 519.6 334.2 273.4 258.9 256.9
Personnel on average 6,859 5,087 4,369 4,423 4,396
Capital expenditure MEUR 16.3 16.0 11.8 12.4 13.9
as a percentage of net % 1.1 1.6 1.6 1.9 1.9
sales
Research and development
costs MEUR 12.5 8.8 8.5 7.9 8.2
as % of Group net sales % 0.8 0.9 1.2 1.2 1.1
Profitability
Net sales MEUR 1,482.5 970.8 728.0 664.5 713.6
Income from operations
(before goodwill
amortization) MEUR 105.5 49.3 31.3 24.8 40.9
as percentage of net sales % 7.1 5.1 4.3 3.7 5.7
Operating income MEUR 105.5 49.3 31.3 21.5 37.6
as percentage of net sales % 7.1 5.1 4.3 3.2 5.3
Income before extraordinary MEUR 95.1 34.1 27.7 18.9 36.5
items as percentage of net
sales % 6.4 3.5 3.8 2.8 5.1
Income before taxes MEUR 95.1 34.1 27.7 10.7 36.5
as percentage of net sales % 6.4 3.5 3.8 1.6 5.1
Net income MEUR 68.6 24.1 18.4 6.7 24.6
as percentage of net sales % 4.6 2.5 2.5 1.0 3.4
Key figures and balance
sheet
Shareholders' equity MEUR 223.7 152.1 137.6 163.4 173.2
Balance Sheet MEUR 919.0 724.0 513.9 402.2 397.1
Return on equity % 36.5 16.6 12.5 7.5 14.2
Return on capital employed % 29.5 17.2 13.7 10.8 17.8
Current ratio 1.4 1.1 1.1 1.5 1.6
Solidity % 28.3 23.7 29.1 42.6 45.5
Gearing % 57.3 88.1 80.2 27.8 19.1
Shares in figures IFRS IFRS IFRS FAS FAS 2002
2006 2005 2004 2003
Earnings per share. basic EUR 1.17 0.43 0.33 0.22 0.42
Earnings per share.
diluted EUR 1.15 0.42 0.32 0.22 0.42
Equity per share EUR 3.77 2.66 2.44 2.81 3.03
Cash flow per share EUR 1.39 0.86 0.14 0.43 1.14
Dividend per share EUR 0.45* 0.28 0.26 0.50 0.24
Dividend/earnings % 38.5 64.3 80.2 227.3 56.2
Effective dividend yield % 2.0 2.6 3.2 7.2 4.1
Price/earnings 19.1 24.3 24.8 31.4 13.8
22 (23)
Trading low / EUR 10.23 / 7.45/ 6.80/ 4.30/ 4.95/
high 10.49 8.88 7.35 9.21
22.33
Average share price EUR 15.04 8.94 7.70 5.62 7.19
Year-end market
capitalization MEUR 1,322.0 594.1 458.4 387.6 333.2
Number traded (1000) 114,023 73,164 63,700 50,648 47,756
Stock turnover % 192.3 128.1 112.9 90.2 83.4
* 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
Note! The numbers are rounded to nearest EUR 0.1 million. The key figures are
calculated from exact data.
23 (23)
Events on 14 February, 2007
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
p.m. Finnish Time and can be followed at www.konecranes.com.
Dividend proposal
The Board of Directors proposes to the AGM that a dividend of EUR 0.45 per share
will be paid for the fiscal year 2006. 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, 2007. The actual payment of dividend will take place on March 21, 2007.
Annual General Meeting
The Annual General Meeting 2007 will be held on Thursday, 8 March, 2007 at 11.00
a.m. at the Company's auditorium (address: Koneenkatu 8, 05830 Hyvinkää). A press
release on the decisions made at the AGM will be published upon conclusion of the
meeting.
The proposals for the AGM 2007 will be published on 14 February, 2007.
Internet
This report and presentation material is available on the Internet at
www.konecranes.com immediately after publication. A recording of the webcast will
be available on the Internet later on the same day.
Next report
Konecranes Interim Report January - March 2007 will be published on 27 April,
2007 10.00 a.m..
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
OMX Helsinki Stock Exchange
Media
