Konecranes Plc's Interim Report January-September 2016
KONECRANES PLC INTERIM REPORT October 26, 2016 at 9:00 a.m.
PROFITABILITY IMPROVEMENT CONTINUED
This stock exchange release is a summary of Konecranes Plc’s interim report January-September 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
THIRD QUARTER HIGHLIGHTS
- Order intake EUR 420.3 million (443.8), -5.3 percent
- Order book EUR 987.7 million (1,075.3) at end-September, -8.1 percent
- Sales EUR 517.6 million (506.7), +2.1 percent
- Adjusted operating profit* EUR 37.9 million (33.3), 7.3 percent of sales (6.6)
- Adjustments* EUR -12.9 million (-29.1)
- Operating profit EUR 25.0 million (4.1), 4.8 percent of sales (0.8)
- Earnings per share (diluted) EUR 0.27 (0.02)
- Net cash flow from operating activities EUR 33.4 million (47.1)
- Net debt EUR 183.5 million (228.5) and gearing 44.0 percent (53.1)
JANUARY-SEPTEMBER HIGHLIGHTS
- Order intake EUR 1,325.6 million (1,452.9), -8.8 percent
- Sales EUR 1,505.0 million (1,517.2), -0.8 percent
- Adjusted operating profit* EUR 88.7 million (73.2), 5.9 percent of sales (4.8)
- Adjustments* EUR -34.8 million (-40.9)
- Operating profit EUR 53.9 million (32.2), 3.6 percent of sales (2.1)
- Earnings per share (diluted) EUR 0.46 (0.31)
- Net cash flow from operating activities EUR 47.6 million (-1.6)
*Adjustments (corresponding to 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 and related activities, unwarranted payments due to identity theft and fraudulent actions (in the third quarter of 2015), and insurance indemnity and returned funds related to identity theft and fraudulent actions (in the second and third 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 due to the lack of volume growth in manufacturing and process industries, as well as container handling. The 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 is mixed. A decline in the global container throughput has led to a slower decision-making among container terminal operators. The quarterly Equipment order intake may fluctuate due to the timing of the large port crane projects.
FINANCIAL GUIDANCE
Based on the order book, service contract base and the near-term demand outlook, the sales in 2016 are expected to be at approximately the same level as in 2015. We expect the 2016 adjusted operating profit to improve from 2015.
| KEY FIGURES | Third quarter | January - September | ||||||
| 7-9/ 2016 | 7-9/ 2015 | Change % | 1-9/ 2016 | 1-9/ 2015 | Change % | R12M | 2015 | |
| Orders received, MEUR | 420.3 | 443.8 | -5.3 | 1,325.6 | 1,452.9 | -8.8 | 1,838.2 | 1,965.5 |
| Order book at end of period, MEUR | 987.7 | 1,075.3 | -8.1 | 1,036.5 | ||||
| Sales total, MEUR | 517.6 | 506,7 | 2.1 | 1,505.0 | 1,517.2 | -0.8 | 2,114.0 | 2,126.2 |
| Adjusted EBITDA, MEUR *) | 50.1 | 45.2 | 10.9 | 126.8 | 109.5 | 15.9 | 183.9 | 166.5 |
| Adjusted EBITDA, % *) | 9.7% | 8.9% | 8.4% | 7.2% | 8.7% | 7.8% | ||
| Adjusted operating profit, MEUR *) | 37.9 | 33.3 | 13.9 | 88.7 | 73.2 | 21.2 | 133.2 | 117.7 |
| Adjusted operating margin, % *) | 7.3% | 6.6% | 5.9% | 4.8% | 6.3% | 5.5% | ||
| EBITDA, MEUR | 37.3 | 16.2 | 130.0 | 94.9 | 74.4 | 27.6 | 137.6 | 117.1 |
| EBITDA, % | 7.2% | 3.2% | 6.3% | 4.9% | 6.5% | 5.5% | ||
| Operating profit, MEUR | 25.0 | 4.1 | 504.5 | 53.9 | 32.2 | 67.2 | 84.7 | 63.0 |
| Operating margin, % | 4.8% | 0.8% | 3.6% | 2.1% | 4.0% | 3.0% | ||
| Profit before taxes, MEUR | 21.3 | 2.0 | 962.7 | 36.6 | 26.8 | 36.9 | 65.2 | 55.4 |
| Net profit for the period, MEUR | 15.8 | 1.2 | 1,178.9 | 26.7 | 18.2 | 46.9 | 39.3 | 30.8 |
| Earnings per share, basic, EUR | 0.27 | 0.02 | 1,213.3 | 0.46 | 0.31 | 46.3 | 0.67 | 0.53 |
| Earnings per share, diluted, EUR | 0.27 | 0.02 | 1,209.5 | 0.46 | 0.31 | 46.3 | 0.67 | 0.53 |
| Gearing, % | 44.0% | 53.1% | 44.6% | |||||
| Return on capital employed % | 10.9% | 9.5% | ||||||
| Free cash flow, MEUR | 26.5 | 39.6 | 29.7 | -26.2 | 54.6 | -1.4 | ||
| Average number of personnel during the period | 11,509 | 11,946 | -3.7 | 11,934 | ||||
*) Adjustments (corresponding to 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 and related activities, unwarranted payments due to identity theft and fraudulent actions (in the third quarter of 2015), and insurance indemnity and returned funds related to identity theft and fraudulent actions (in the second and third quarter of 2016). See also note 12 in the interim report.
President and CEO Panu Routila:
“Our profitability continued to improve in the third quarter. The adjusted operating profit rose by EUR 4.6 million or by 14 percent in the quarter. Group adjusted operating margin rose from 6.6 percent to 7.3 percent. Sales grew by 2.1 percent on a year-on-year basis.
Lower fixed costs continued to support the operating margin in Business Area Service and Business Area Equipment. As a result of restructuring actions, the Group’s total number of personnel decreased by 790 employees in the first three quarters of 2016. A reduction of 347 employees was realized in the third quarter.
Group sales growth was generated by Business Area Equipment, in which port crane deliveries increased according to the delivery schedule of the order book. On the other hand, sales development in Business Area Service was still sluggish. The demand in various commodity-related markets continued to be depressed and industrial activity was slow in various parts of the world.
Our key target for the fourth quarter is to build our order book to secure a solid starting point for 2017. On October 24, we announced that Konecranes has received a Notice of Intent to Award Contracts (the Award) from the Virginia Port Authority in the USA. The Award covers the provision of 86 Automated Stacking Cranes. Deliveries are scheduled in phases for 2018-2020. The value of the contracts will exceed EUR 200 million. This will be the largest deal in the history of Konecranes.
The pending acquisition of the Material Handling & Port Solutions business from Terex Corporation reached important milestones in the third quarter. The committed financing facilities to fund the proposed acquisition were syndicated. We received approval from the European Commission that is conditional on the divestment of the STAHL CraneSystems business. Also, the United States Department of Justice cleared the pending acquisition. Furthermore, the Konecranes’ Extraordinary General Meeting made the necessary decisions to complete the acquisition. In the beginning of the fourth quarter, we received clearance from the Committee on Foreign Investment in the United States. Konecranes and Terex are working closely with the competition authorities in the remaining jurisdictions to obtain regulatory approvals allowing completion of the acquisition in early 2017 as planned.”
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 October 5, 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 11,100 employees at 600 locations in 48 countries. Konecranes is listed on Nasdaq Helsinki (symbol: KCR1V).
DISTRIBUTION
Nasdaq Helsinki
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