Konecranes Plc: Interim Report January-March 2021
KONECRANES PLC INTERIM REPORT JANUARY-MARCH 2021 APRIL 28, 2021 8:30 am EEST
Konecranes Plc: Interim Report January-March 2021
STRONG ORDERS AND RECORD-HIGH Q1 PROFITABILITY
This release is a summary of Konecranes Plc’s Interim Report January-March 2021. The complete report is attached to this release in pdf format and is also available on Konecranes’ website at www.konecranes.com.
The figures presented in this report are unaudited. Figures in brackets, unless otherwise stated, refer to the same period a year earlier.
FIRST QUARTER HIGHLIGHTS
- Order intake EUR 762.8 million (737.0), +3.5 percent (+6.3 percent on a comparable currency basis), driven by order intake increase in Business Area Port Solutions particularly
- Service annual agreement base value increased 0.6 percent (+1.5 percent on a comparable currency basis) to EUR 283.6 million (281.9). Service order intake was EUR 255.2 million (266.1), -4.1 percent (+0.1 percent on a comparable currency basis)
- Order book EUR 1,866.7 million (1,961.3) at the end of March, -4.8 percent (-4.0 percent on a comparable currency basis)
- Sales EUR 704.0 million (769.6), -8.5 percent (-6.0 percent on a comparable currency basis), sales declined in all three Business Areas
- Adjusted EBITA margin 8.0 percent (2.7) and adjusted EBITA EUR 56.2 million (21.1). Focus on strategic initiatives and cost management continued. The comparison period included a large project cost overrun in Port Solutions and process crane project costs in Industrial Equipment.
- Operating profit EUR 37.5 million (7.8), 5.3 percent of sales (1.0), restructuring and transaction costs totaled EUR 10.3 million (4.3)
- Earnings per share (diluted) EUR 0.23 (0.14)
- Free cash flow EUR 17.7 million (53.8)
- Net debt EUR 569.2 million (771.3) and gearing 47.4 percent (61.7)
SECOND QUARTER DEMAND OUTLOOK
The worldwide demand picture remains subject to volatility due to the COVID-19 pandemic.
In Europe and North America, the current demand environment within the industrial customer segments has improved and is approaching the pre-COVID-19 level. In Asia-Pacific, demand environment has started to show signs of improvement also outside China but remains below the pre-COVID-19 level.
Global container throughput continues to be at a record high, and long-term prospects related to global container handling remain good overall.
Konecranes expects net sales to increase in full-year 2021 compared to 2020. Konecranes expects the full-year 2021 adjusted EBITA margin to improve from 2020.
|Orders received, MEUR||762.8||737.0||3.5||2,753.1||2,727.3|
|Order book at end of period, MEUR||1,866.7||1,961.3||-4.8||1,715.5|
|Sales total, MEUR||704.0||769.6||-8.5||3,113.4||3,178.9|
|Adjusted EBITDA, MEUR 1||79.0||46.0||71.9||389.8||356.7|
|Adjusted EBITDA, % 1||11.2%||6.0%||12.5%||11.2%|
|Adjusted EBITA, MEUR 2||56.2||21.1||167.1||296.0||260.8|
|Adjusted EBITA, % 2||8.0%||2.7%||9.5%||8.2%|
|Adjusted operating profit, MEUR 1||47.8||12.1||296.1||260.6||224.9|
|Adjusted operating margin, % 1||6.8%||1.6%||8.4%||7.1%|
|Operating profit, MEUR||37.5||7.8||381.0||203.5||173.8|
|Operating margin, %||5.3%||1.0%||6.5%||5.5%|
|Profit before taxes, MEUR||26.6||16.1||65.8||180.9||170.3|
|Net profit for the period, MEUR||18.4||11.5||60.0||129.8||122.9|
|Earnings per share, basic, EUR||0.23||0.14||58.7||1.63||1.54|
|Earnings per share, diluted, EUR||0.23||0.14||58.7||1.63||1.54|
|Interest-bearing net debt / Equity, %||47.4%||61.7%||46.1%|
|Net debt / Adjusted EBITDA, R12M 1||1.5||2.2||1.6|
|Return on capital employed, %||8.9%||8.3%|
|Adjusted return on capital employed, % 3||12.8%||11.1%|
|Free cash flow, MEUR||17.7||53.8||329.9||366.1|
|Average number of personnel during the period||16,738||17,023||-1.7||17,027|
1) Excluding adjustments, see also note 10 in the summary financial statements
2) Excluding adjustments and purchase price allocation amortization, see also note 10 in the summary financial statements
3) ROCE excluding adjustments, see also note 10 in the summary financial statements
PRESIDENT AND CEO ROB SMITH:
Konecranes delivered a strong start to 2021. High performance and improved business excellence across the whole organization resulted in an all-time high Q1 adjusted EBITA margin of 8.0%, our third consecutive quarter of record-breaking profitability. Strong Q1 orders, together with ongoing excellent execution and traction from strategic initiatives, give us a solid foundation for the whole year’s performance.
While COVID-19 related market volatility is not over, overall market sentiment continued to improve in Q1 compared to the previous quarters. Activity remained high in the port sector and also improved with our industrial customers. As a result, Konecranes’ Q1 order intake grew 6.3% year-on-year in comparable currencies and in all three Business Areas orders received were flat to higher versus a year ago. Boding well for the full year, we saw good order growth especially in our short-cycle products.
COVID-19, a lower orderbook, component availability and container shortages negatively impacted on our Q1 sales, which decreased 6.0% year-on-year in comparable currencies. Sales decreased in all three Business Areas. Despite the topline decline, we posted an all-time high adjusted EBITA margin of 8.0% for Q1, driven by high performance, improving business excellence and efficient cost management.
Q1 Service order intake improved by 0.1% year-on-year in comparable currencies. Order intake development was positive in EMEA and the Americas, but continues to lag in APAC due to COVID-19. Service’s focus remained on business excellence and cost management, and its 16.7% adjusted EBITA margin set a third consecutive quarterly profitability record. In addition, the agreement base value grew by 1.5% from the previous year and 0.7% from the previous quarter in comparable currencies, demonstrating the resiliency of our Service growth engine during the pandemic.
Industrial Equipment’s external order intake grew by 5.9% in comparable currencies, driven by the components business. Net sales were impacted negatively by supply chain issues resulting from COVID-19, component shortage and logistics delays. The adjusted EBITA margin was 0.1%, an improvement of 4.1 percentage points from the previous year, mainly driven by continued good progress with our strategic initiatives, especially in the process crane business.
In Port Solutions, the previous quarter’s good order momentum continued, and order intake grew 13.4% from the previous year in comparable currencies. Rubber Tire Gantry Cranes, Mobile Harbor Cranes and Lift Trucks had a strong order intake for the quarter. Port Solutions had a good start to the year in terms of profitability, with an adjusted EBITA margin of 7.5%. Improved project management execution and cost management continued, and part of the positive margin development came from reversing a project provision based upon having secured a change in supply concept with the customer.
Our announced merger with Cargotec is progressing to plan with merger control filings underway. Together with Cargotec we will create a global leader in sustainable material flow. The merger is fully aligned with our strategic plans and growth ambitions, and is expected to take place on 1 January 2022, given all conditions and approvals for completion are fulfilled. Until then, both companies will operate fully separately and independently.
For the coming quarters, while we expect market volatility to continue due to the pandemic, we have updated our demand outlook for Q2 to reflect improved market sentiment. We also reiterate our full-year guidance for 2021 despite component availability challenges which negatively impacted net sales in Q1 and continue to impact operations in Q2. We expect net sales to increase in full-year 2021 compared to 2020, and given our performance track record and the ongoing positive impact of our strategic initiatives, we expect our full-year adjusted EBITA margin to improve from 2020.
Although the pandemic continues, Konecranes has a rock-solid foundation for growth and future success. We maintain our clear strategic focus and our commitment to business excellence, high performance and sustainability. Q1 and the previous quarters have positioned Konecranes well for the future, and we will emerge from the pandemic strong and at new levels of capability and achievement.
ANALYST AND PRESS BRIEFING
A live international webcast for analysts, investors and media will be held on April 28, 2021, at 10:30 a.m. EEST. The interim report will be presented by Konecranes’ President and CEO Rob Smith and CFO Teo Ottola.
Please see the press release dated April 14, 2021 for the conference call details.
Konecranes Plc plans to publish half-year financial report January-June 2021 on July 28, 2021.
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The Merger and the merger consideration securities have not been and will not be registered under the U.S. Securities Act, and may not be offered, sold or delivered within or into the United States, except pursuant to an applicable exemption of, or in a transaction not subject to, the U.S. Securities Act.
The information in this release is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of, or located in, any locality, state, country or other jurisdiction where such distribution or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction and it does not constitute an offer of or an invitation by or on behalf of, Konecranes, or any other person, to purchase any securities.
The information in this release contains forward-looking statements, which are information on Konecranes’ current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “expect,” “aim,” “intend,” “may,” “anticipate,” “estimate,” “plan,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could” and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond Konecranes’ control that could cause Konecranes’ actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Konecranes’ present and future business strategies and the environment in which it will operate in the future.
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 of all makes. In 2020, Group sales totaled EUR 3.2 billion. The Group has around 16,600 employees in 50 countries. Konecranes shares are listed on the Nasdaq Helsinki (symbol: KCR).