Konecranes Plc Interim Report January-June 2016
KONECRANES PLC INTERIM REPORT July 22, 2016 at 9:00 a.m.
ADJUSTED OPERATING PROFIT IMPROVED, SALES GUIDANCE SLIGHTLY REDUCED, OPERATING PROFIT GUIDANCE INTACT
This stock exchange release is a summary of Konecranes Plc’s interim report January-June 2016. The complete report is attached to this release in pdf format and is also available on Konecranes’ website at www.konecranes.com.
Figures in brackets, unless otherwise stated, refer to the same period a year earlier
SECOND QUARTER HIGHLIGHTS
- Order intake EUR 480.2 million (490.3), -2.1 percent.
- Order book EUR 1,043.3 million (1,100.4) at end-June, -5.2 percent.
- Sales EUR 528.8 million (535.6), -1.3 percent; Service -1.4 percent and Equipment -2.6 percent.
- Adjusted operating profit* EUR 36.0 million (25.7), 6.8 percent of sales (4.8).
- Adjustments* EUR -7.4 million (-9.5).
- Operating profit EUR 28.6 million (16.3), 5.4 percent of sales (3.0).
- Earnings per share (diluted) EUR 0.27 (0.19).
- Net cash flow from operating activities EUR 17.3 million (5.7).
- Net debt EUR 258.7 million (261.9) and gearing 64.4 percent (59.9).
JANUARY-JUNE HIGHLIGHTS
- Order intake EUR 905.3 million (1,009.1), -10.3 percent mainly due to lower port cranes orders in the first quarter.
- Sales EUR 987.4 million (1,010.5), -2.3 percent; Service -1.7 percent and Equipment -4.4 percent.
- Adjusted operating profit* EUR 50.8 million (39.9), 5.1 percent of sales (3.9).
- Adjustments* EUR -21.9 million (-11.8).
- Operating profit EUR 28.9 million (28.1), 2.9 percent of sales (2.8).
- Earnings per share (diluted) EUR 0.19 (0.29).
- Net cash flow from operating activities EUR 14.2 million (-48.7).
*Adjustments (corresponding term non-recurring items in 2015) include restructuring costs, transaction costs related to the terminated merger plan with Terex and proposed acquisition of Terex MHPS, unwarranted payments due to identity theft and fraudulent actions (in the third quarter of 2015), and insurance indemnity related to identity theft and fraudulent actions (in the second quarter of 2016). Konecranes’ management believes that the adjusted operating profit is relevant to understanding the comparable financial performance when comparing the result for the current period with the previous periods.
MARKET OUTLOOK
Customers are cautious about investing because economic growth has decelerated across the globe. Companies operating in emerging and commodity markets are particularly under pressure to save costs. Certain market uncertainty continues in North America. The demand situation in Europe has somewhat improved. The decline in the global container throughput has led to slower decision-making among container terminal operators.
NEW FINANCIAL GUIDANCE
Based on the order book, service contract base and near-term demand outlook, the sales in 2016 are expected to be approximately on the same level as in 2015. We expect the 2016 adjusted operating profit to improve from 2015.
PREVIOUS FINANCIAL GUIDANCE
Based on the order book, service contract base and near-term demand outlook, the sales in 2016 are expected to be higher than in 2015. We expect the 2016 adjusted operating profit to improve from 2015.
| KEY FIGURES | Second quarter | First half year | ||||||
| 4-6/ 2016 | 4-6/ 2015 | Change % | 1-6/ 2016 | 1-6/ 2015 | Change % | R12M | 2015 | |
| Orders received, MEUR | 480.2 | 490.3 | -2.1 | 905.3 | 1,009.1 | -10.3 | 1,861.7 | 1,965.5 |
| Order book at end of period, MEUR | 1,043.3 | 1,100.4 | -5.2 | 1,036.5 | ||||
| Sales total, MEUR | 528.8 | 535.6 | -1.3 | 987.4 | 1,010.5 | -2.3 | 2,103.1 | 2,126.2 |
| Adjusted EBITDA, MEUR *) | 49.6 | 38.4 | 29.1 | 76.7 | 64.3 | 19.3 | 178.9 | 166.5 |
| Adjusted EBITDA, % *) | 9.4% | 7.2% | 7.8% | 6.4% | 8.5% | 7.8% | ||
| Adjusted operating profit, MEUR *) | 36.0 | 25.7 | 40.2 | 50.8 | 39.9 | 27.3 | 128.6 | 117.7 |
| Adjusted operating margin, % *) | 6.8% | 4.8% | 5.1% | 3.9% | 6.1% | 5.5% | ||
| EBITDA, MEUR | 43.3 | 33.5 | 29.1 | 57.6 | 58.2 | -1.0 | 116.5 | 117.1 |
| EBITDA, % | 8.2% | 6.3% | 5.8% | 5.8% | 5.5% | 5.5% | ||
| Operating profit, MEUR | 28.6 | 16.3 | 76.1 | 28.9 | 28.1 | 2.9 | 63.9 | 63.0 |
| Operating margin, % | 5.4% | 3.0% | 2.9% | 2.8% | 3.0% | 3.0% | ||
| Profit before taxes, MEUR | 22.4 | 16.7 | 34.1 | 15.4 | 24.8 | -38.0 | 46.0 | 55.4 |
| Net profit for the period, MEUR | 16.0 | 11.4 | 40.6 | 10.9 | 17.0 | -35.7 | 24.7 | 30.8 |
| Earnings per share, basic, EUR | 0.27 | 0.19 | 40.1 | 0.19 | 0.29 | -36.2 | 0.42 | 0.53 |
| Earnings per share, diluted, EUR | 0.27 | 0.19 | 40.1 | 0.19 | 0.29 | -36.1 | 0.42 | 0.53 |
| Gearing, % | 64.4% | 59.9% | 44.6% | |||||
| Return on capital employed % | 8.2% | 9.5% | ||||||
| Free cash flow, MEUR | 10.2 | -3.3 | 3.3 | -65.9 | 67.8 | -1.4 | ||
| Average number of personnel during the period | 11,647 | 11,929 | -2.4 | 11,934 | ||||
*) Adjustments in 2016 include transaction costs, which contain advisory, legal and consulting fees related to terminated merger plan with Terex and proposed acquisition of Terex MHPS, restructuring costs and the insurance indemnity related to identity theft. Full year 2015 adjustments included transaction costs, restructuring costs and the unwarranted payments due to the identity theft and fraudulent actions. See also note 12 in the interim report.
President and CEO Panu Routila:
“We managed to deliver a profitability improvement in the second quarter driven by robust performance in both Service and Equipment. The fact that our second-quarter adjusted EBIT rose by EUR 10.3 million or by 40 percent on a year-on-year basis despite a sales decline of 1.3 percent shows that our cost savings actions deliver. Group’s adjusted EBIT margin rose from 4.8 percent in the previous year to 6.8 percent.
In the second quarter, we continued cost savings actions related to restructuring, which supported our gross margin and lowered our fixed costs in both Service and Equipment. Group’s total number of personnel decreased by 443 employees in the first half of 2016, 165 of which realized in the second quarter. Service has continued to restructure the underperforming units across its operations, whereas Equipment has reduced its manufacturing capacity in China, India, Brazil, and the US. In addition, both business areas and corporate functions have streamlined their support resources.
Our new operating model based on direct product line organization and P&L responsibilities became effective on July 1. This will improve the efficiency and agility of our operations. Proximity to business and customer intimacy will increase. The benefits of this change will be visible in our results in the coming quarters, and, therefore, lend further support to our promising profitability development.
May 16 marked a milestone in building our future as we signed an agreement to acquire from Terex Corporation its Material Handling & Port Solutions business. This acquisition will prove crucial to improving our position as a global partner in services, industrial lifting and port solutions. The combination makes it possible for us to realize a long list of synergies, it opens new growth opportunities in the service business and creates critical mass for future technology development.”
ANALYST AND PRESS BRIEFING
An analyst and press conference will be held at the restaurant Savoy’s Salikabinetti (address: Eteläesplanadi 14) at 11.00 a.m. Finnish time. The Interim Report will be presented by Konecranes’ President and CEO Panu Routila 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 dated July 4, 2016 for the conference call details.
KONECRANES PLC
Miikka Kinnunen
Director, Investor Relations
FURTHER INFORMATION
Mr. Panu Routila, 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 2015, Group sales totaled EUR 2,126 million. The Group has 11,400 employees at 600 locations in 48 countries. Konecranes is listed on Nasdaq Helsinki (symbol: KCR1V).
DISTRIBUTION
Nasdaq Helsinki
Media
www.konecranes.com