KONECRANES PLC INTERIM REPORT JANUARY-MARCH 2019
KONECRANES PLC INTERIM REPORT April 26, 2019 at 9:00 am
KONECRANES PLC INTERIM REPORT JANUARY-MARCH 2019
STRONG GROWTH IN GROUP ORDERS
This release is a summary of Konecranes Plc’s Interim Report January-March 2019. The complete report is attached to this release in pdf format and is also available on Konecranes’ website at www.konecranes.com.
Konecranes has applied IFRS 16 Leases standard since January 1, 2019. The figures for comparison period 2018 have not been restated. Please refer to note 4 for more details on the implementation of IFRS 16 standard and other significant accounting policies.
Figures in brackets, unless otherwise stated, refer to the same period a year earlier.
FIRST QUARTER HIGHLIGHTS
- Order intake EUR 848.1 million (683.1), +24.2 percent (+22.2 percent on a comparable currency basis), with solid growth in all Business Areas.
- Service order intake EUR 255.4 million (238.5), +7.1 percent (+3.8 percent on a comparable currency basis)
- Order book EUR 1,877.6 million (1,575.8) at the end of March, +19.1 percent (+17.0 percent on a comparable currency basis)
- Sales EUR 758.2 million (672.8), +12.7 percent (+10.8 percent on a comparable currency basis), driven by all three Business Areas.
- Adjusted EBITA margin 6.4 percent (5.5) and adjusted EBITA EUR 48.3 million (37.2), reflecting sales volume growth and synergy cost saving measures
- Operating profit EUR 27.3 million (23.8), 3.6 percent of sales (3.5)
- Earnings per share (diluted) EUR 0.17 (0.11)
- Free cash flow EUR 28.0 million (-2.2)
- Net debt EUR 649.0 million (524.3) and gearing 53.8 percent (43.8), increase resulting from the implementation of the new IFRS 16 standard on leases
DEMAND OUTLOOK
Despite weakening global macro indicators, our overall demand environment within the industrial customer segments is stable and continues on a healthy level. Also, global container throughput is still on a good level, even with its decline in the beginning of 2019. Consequently, the prospects for orders related to container handling remain stable.
FINANCIAL GUIDANCE
Konecranes expects sales in full year 2019 to increase 5-7 percent year-on-year. Konecranes expects the adjusted EBITA margin to improve in full year 2019 compared to full year 2018.
KEY FIGURES
| January - March | |||||
| 1-3/2019 | 1-3/2018 | Change % | R12M | 1-12/2018 | |
| Orders received, MEUR | 848.1 | 683.1 | 24.2 | 3,255.3 | 3,090.3 |
| Order book at end of period. MEUR | 1,877.6 | 1 575.8 | 19.1 | 1,715.4 | |
| Sales total. MEUR | 758.2 | 672.8 | 12.7 | 3,241.5 | 3,156.1 |
| Adjusted EBITDA, MEUR 1 | 72.1 | 55.2 | 30.6 | 342.6 | 325.7 |
| Adjusted EBITDA, % 1 | 9.5% | 8.2% | 10.6% | 10.3% | |
| Adjusted EBITA, MEUR 2 | 48.3 | 37.2 | 29.9 | 268.2 | 257.1 |
| Adjusted EBITA, % 2 | 6.4% | 5.5% | 8.3% | 8.1% | |
| Adjusted operating profit, MEUR 1 | 42.2 | 27.8 | 51.7 | 234.0 | 219.6 |
| Adjusted operating margin, % 1 | 5.6% | 4.1% | 7.2% | 7.0% | |
| Operating profit, MEUR | 27.3 | 23.8 | 14.9 | 169.7 | 166.2 |
| Operating margin, % | 3.6% | 3.5% | 5.2% | 5.3% | |
| Profit before taxes, MEUR | 18.3 | 11.5 | 59.5 | 145.5 | 138.7 |
| Net profit for the period, MEUR | 13.2 | 8.3 | 59.5 | 103.2 | 98.3 |
| Earnings per share, basic, EUR | 0.17 | 0.11 | 58.5 | 1.35 | 1.29 |
| Earnings per share, diluted, EUR | 0.17 | 0.11 | 58.5 | 1.35 | 1.29 |
| Interest-bearing net debt, Equity, % | 53.8% | 43.8% | 42.5% | ||
| Net Debt / Adjusted EBITDA, R12M 1 | 1.9 | 1.8 | 1.7 | ||
| Return on capital employed % | 8.4% | 8.4% | 7.9% | ||
| Adjusted return on capital employed, % 3 | 13.5% | 13.5% | 12.5% | ||
| Free cash flow, MEUR | 28.0 | -2.2 | 103.3 | 73.1 | |
| Average number of personnel during the period | 16,024 | 16,278 | -1.6 | 16,247 | |
1 Excluding adjustments, see also note 11 in the summary financial statements
2 Excluding adjustments and purchase price allocation amortization, see also note
11 in the summary financial statements
3 ROCE excluding adjustments, see also note 11 in the summary financial statements
President and CEO Panu Routila:
We continued to book strong year-on-year order growth in Q1, making the quarter a good start for 2019. Our good order intake against weakening macro indicators demonstrates the late-cyclical nature of our industrial crane business and our strong offering in certain growing industry segments.
The growth was led by Business Area Port Solutions, which booked a significant order for the greenfield Hadarom container terminal in Israel. As we announced in February, the order consists of a complete line of automated container cranes and software intelligence, including our own terminal operating system and Equipment Control System. The Hadarom project is a landmark case for Konecranes and demonstrates well the capabilities of our Solutions business unit established last autumn.
On a comparable currency basis, order growth in Business Area Service was close to 4 percent in Q1. In addition, the annual value of the agreement base increased sequentially by approximately EUR 9 million, although a part of this was due to currency effect. In Business Area Industrial Equipment, the strong year-on-year order growth was driven by industrial cranes across all regions.
We made good progress towards our post-integration targets in the first quarter. Sales grew by double-digit percent, reflecting the order growth we saw last year. The sales growth was solid in all Business Areas.
Furthermore, our Group adjusted EBITA margin improved to 6.4 percent. The improvement was driven by Business Area Service, where the adjusted EBITA margin reached 15.7 percent, up by 3 percentage points from the year-ago period. The improvement in Service was largely due to operating leverage resulting from higher sales volume. We expect the sales growth in Service to slow down in the coming quarters, affecting the rate of the adjusted EBITA margin improvement.
Integration of MHPS continues to progress well and according to our plans. On a run-rate basis, we reached EUR 126 million of the total EUR 140 million synergy savings target in Q1. Cumulatively EUR 92 million of the amount was visible in our P&L at the quarter’s end. The program is nearing its end in Business Area Service and we are also close to our target for the overall procurement savings.
While we have completed many key synergy areas, a few important items remain in Business Area Industrial Equipment. First, our focus on product platform harmonization continues. Our long-term target is to reduce the number of platforms down to 11-14 from the current 20. In addition to cutting existing overlapping platforms, we will also launch completely new products. Consequently, we are planning to centralize the manufacturing of certain products to fewer sites.
Second, the optimization of our manufacturing operations is still ongoing in a couple of countries. While good progress has been made in Germany at our factory in Wetter, Konecranes is still in discussions with the employee representatives on the potential closing of the factory in Vernouillet, France. These processes continued to add temporary operational costs and weighed on both output and profitability in Industrial Equipment in Q1.
In addition, the adjusted EBITA margin in Industrial Equipment was affected by weaker mix within our process cranes business. Additionally, US custom tariffs had a negative impact in the quarter. While US custom tariffs and the changes in our supply network will likely continue to create additional costs, we expect the adjusted EBITA margin in Industrial Equipment to improve in full year 2019 compared to 2018.
Despite weakening global macro indicators, our overall demand environment remains on a healthy level. Our orderbook for 2019 is strong and we expect to reach the 5-7 percent guidance range for year-on-year sales growth in the full year. Furthermore, we continue to expect an improvement in the Group adjusted EBITA margin in 2019 compared to 2018.
ANALYST AND PRESS BRIEFING
An analyst and press conference will be held at the restaurant Savoy’s Salikabinetti (address: Eteläesplanadi 14, Helsinki) on April 26, 2019, at 11.00 am 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 am at www.konecranes.com. Please see the stock exchange release dated April 12, 2019 for the conference call details.
NEXT REPORT
Konecranes Plc plans to publish Half-Year Financial Report January-June 2019 on July 25, 2019.
KONECRANES PLC
Eero Tuulos
Vice President, Investor Relations, tel. +358 20 427 2050
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 2018, Group sales totaled EUR 3.16 billion. The Group has 16,000 employees in 50 countries. Konecranes shares are listed on the Nasdaq Helsinki (symbol: KCR).
DISTRIBUTION
Nasdaq Helsinki
Major media
www.konecranes.com