KONECRANES PLC - FINANCIAL STATEMENT BULLETIN

KONECRANES PLC FINANCIAL STATEMENTS BULLETIN February 3, 2011 at 9:00 a.m.

GOOD RESULT ON LOWER SALES IN 2010, DEMAND IMPROVING

Figures in brackets, unless otherwise stated, refer to the same period a year earlier.

FOURTH QUARTER HIGHLIGHTS

- Order intake EUR 477.7 million (361.1), increase of 32.3 percent: Service +26.7 percent and Equipment +33.2 percent.
- Order book EUR 756.2 million (607.0) at year-end, +24.6 percent compared with a year before.
- Sales EUR 469.4 million (428.9), +9.5 percent: Service +24.0 percent and Equipment +1.6 percent.
- Operating profit EUR 45.8 million (22.2), 9.8 percent of sales (5.2). Comparison period included restructuring costs of EUR 5.1 million.
- Earnings per share (diluted) EUR 0.55 (0.23).
- Net cash flow from operating activities EUR 31.2 million (89.9).
- Net cash EUR 17.4 million (77.7) and gearing of -3.8 percent (-19.1).

FULL YEAR 2010 HIGHLIGHTS

- Orders received EUR 1,536.0 million (1,348.9), +13.9 percent: Service +21.5 percent and Equipment +7.5 percent.
- Sales EUR 1,546.3 million (1,671.3), -7.5 percent: Service +6.1 percent and Equipment -14.9 percent.
- Operating profit before restructuring costs EUR 115.1 million (118.8), 7.4 percent (7.1) of sales.
- Restructuring costs EUR 2.7 million (20.9).
- Operating profit, including restructuring costs, EUR 112.4 million (97.9), 7.3 percent of sales (5.9).
- Earnings per share (diluted) EUR 1.34 (1.08).
- Net cash flow from operating activities EUR 57.4 million (223.0).
- Dividend proposed by Board of Directors is EUR 1.00 (0.90) per share.

MARKET OUTLOOK

The demand for maintenance services is expected to be above last year’s level due to higher capacity utilization within customer industries. The demand for new equipment is expected to continue to grow in Asia-Pacific and in emerging markets in general. Also, customers in Western Europe and North America are gradually gaining confidence to increase their new equipment investments.

FINANCIAL GUIDANCE

We forecast year 2011 sales and operating profit to be higher than in 2010.
 

President and CEO Pekka Lundmark:

“The market conditions affecting our industry took a positive turn in the second half of 2010, after some 1.5 years of very low demand among our most important customer segments. This improvement was driven by gradually improving capacity utilization rates in our key markets. The recovery remained fragile, however, as many customers continued to be cautious in taking decisions on new equipment investments. Excellent fourth-quarter orders boosted our total equipment orders for the year above those booked in 2009. The demand for services was throughout the year stronger than in 2009, and also the future potential in this area looks promising. Most geographical markets recovered well, especially emerging markets and North America. The weak point continued to be equipment demand in the large markets of Western Europe.

We have every reason to be satisfied with our financial result in 2010. Our operating margin, before restructuring costs, actually increased from 7.1 percent to 7.4 percent, which is an achievement that our team should be particularly proud of in a year of declining sales. Our variable costs (in-house manufacturing and material procurement) developed well and helped us even slightly increase our sales margin, despite the price erosion that took place in smaller and more standard equipment.

We are planning to increase our development spending in 2011. One of the most important pieces of our strategy going forward will be to increase our technology development to further improve our ability to enhance our customers’ productivity. We have several important new products and services in the pipeline, some of which will hit the market already this year. Some of the key development themes are safety, eco-efficiency, automation, maintenance and control systems, and software in general.

I would also like to highlight the investments we are making in increasing our internal efficiency. Beginning with field service, we will gradually renew all our key information systems, with the aim to get a full real-time visibility to our business, and yielding another leap in productivity. We are not changing all our systems in one ‘big bang’, however, rather on a gradual basis, through a multi-year program.”

OTHER IMPORTANT MATTERS

On October 8, 2010, Konecranes confirmed that it had approached Demag Cranes AG (“Demag Cranes”) on September 8, 2010, to discuss a potential combination of the two companies. The management of Demag Cranes has responded that Demag Cranes has no interest in engaging in any dialogue regarding such a potential combination. Under these circumstances, we will not pursue the matter.

BOARD OF DIRECTORS’ PROPOSAL FOR DISPOSAL OF DISTRIBUTABLE FUNDS

The parent company’s non-restricted equity is EUR 190,712,992.28 of which the net income for the year is EUR 56,371,908.44. The Group’s non-restricted equity is EUR 380,422,000.

According to the Finnish Companies Act, the distributable funds of the company are calculated based on the parent company’s non-restricted equity. For the purpose of determining the amount of the dividend the Board of Directors has assessed the solvency of the parent company and the economic circumstances subsequent to the financial year end.

Based on such assessments the Board of Directors proposes to the Annual General Meeting that a dividend of EUR 1.00 be paid on each share and that the remaining non-restricted equity is retained in shareholders’ equity.

NEW DISCLOSURE PROCEDURE

Starting with the fourth quarter and full year 2010 results,Konecranes Plc follows the new disclosure procedure enabled by Standard 5.2b published by the Finnish Financial Supervision Authority and hereby publishes its financial statement bulletin enclosed to this stock exchange release. Konecranes Plc’s financial statement bulletin is attached to this release in pdf format and is also available on the company’s web site at www.konecranes.com.

ANALYST AND PRESS BRIEFING

An analyst and press conference will be held at G.W. Sundmans’ Auditorium (address Eteläranta 16) at 11.00 a.m. Finnish time. The Interim Report will be presented by Konecranes’ President and CEO Pekka Lundmark and CFO Teo Ottola.

A live webcast of the conference will begin at 11.00 a.m. at www.konecranes.com. Please see the stock exchange release of January 19, 2011, for the conference call details.

CORPORATE GOVERNANCE STATEMENT 2010

Konecranes complies with the Finnish Corporate Governance Code 2010 approved by the Board of the Securities Market Association. Konecranes has issued a Corporate Governance Statement based on the recommendation 54 of the Code, which is attached to this release in pdf format and can be reviewed on the corporate website of Konecranes at www.konecranes.com.

KONECRANES PLC

Miikka Kinnunen
Director, Investor Relations

FURTHER INFORMATION
Mr Pekka Lundmark, President and CEO, tel. +358 20 427 2000
Mr Teo Ottola, Chief Financial Officer, tel. +358 20 427 2040
Mr Miikka Kinnunen, Director, Investor Relations, tel. +358 20 427 2050
Mr Mikael Wegmüller, Vice President, Marketing and Communications, tel. +358 20 427 2008

Konecranes is a world-leading group of Lifting Businesses™, serving a broad range of customers, including manufacturing and process industries, shipyards, ports and terminals. Konecranes provides productivity-enhancing lifting solutions as well as services for lifting equipment and machine tools of all makes. In 2010, Group sales totaled EUR 1,546 million. The Group has 10,000 employees at 578 locations in 46 countries. Konecranes is listed on the NASDAQ OMX Helsinki (symbol: KCR1V).

DISTRIBUTION
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NASDAQ OMX Helsinki
www.konecranes.com