SATISFACTORY ORDER INTAKE, SECOND QUARTER OPERATING PROFIT LOWER THAN LAST YEAR
KONECRANES PLC INTERIM REPORT July 24, 2013 at 9:00 a.m.
Figures in brackets, unless otherwise stated, refer to the same period a year earlier
SECOND QUARTER HIGHLIGHTS
- Order intake EUR 503.0 million (553.7), -9.2 percent; Service +5.3 percent and Equipment -14.1 percent.
- Order book EUR 1,079.4 million (1,122.8) at end-June, 3.9 percent lower than a year ago, 0.4 percent lower than at end-March 2013.
- Sales EUR 519.9 million (562.5), -7.6 percent; Service -1.1 percent and Equipment -12.7 percent.
- Operating profit EUR 17.2 million (35.1), 3.3 percent of sales (6.2), was burdened by lower sales and additional project costs of approximately EUR 8 million.
- Earnings per share (diluted) EUR 0.19 (0.40).
- Net cash flow from operating activities EUR -32.3 million (16.6).
- Net debt EUR 269.6 million (275.2) and gearing 63.0 percent (64.3).
- EUR 30 million cost savings plan announced in a separate stock exchange release on July 24, 2013.
JANUARY-JUNE HIGHLIGHTS
- Order intake EUR 1,085.7 million (1,088.3), -0.2 percent; Service +2.2 percent and Equipment -0.6 percent.
- Sales EUR 1,015.8 million (1,036.5), -2.0 percent; Service +0.0 percent and Equipment -3.8 percent.
- Operating profit excluding restructuring costs EUR 40.3 million (59.0), 4.0 percent of sales (5.7).
- Restructuring costs EUR 4.3 million (0.0).
- Operating profit including restructuring costs EUR 36.1 million (59.0), 3.5 percent of sales (5.7).
- Earnings per share (diluted) EUR 0.38 (0.64).
- Net cash flow from operating activities EUR -0.1 million (28.6).
MARKET OUTLOOK
Demand is expected to be stable or slightly lower compared to the second quarter of 2013. However, due to the timing of large crane projects, the quarterly Equipment order intake may fluctuate.
FINANCIAL GUIDANCE
Based on the order book and the near-term demand outlook, the year 2013 sales are expected to be stable or slightly higher than in 2012. We expect the 2013 operating profit, excluding restructuring costs, to be approximately on the same level as in 2012.
The clear second half 2013 earnings recovery incorporated in the financial guidance is based on the good order intake during the first half of 2013, product mix in the order book as well as the announced restructuring actions. The financial guidance includes an assumption of a continued satisfactory order intake in the third quarter of 2013.
| KEY FIGURES | Second quarter | First half year | ||||||
| 4-6/2013 | 4-6/2012 | Change % | 1-6/2013 | 1-6/2012 | Change % | R12M | 2012 | |
| Orders received, MEUR | 503.0 | 553.7 | -9.2 | 1,085.7 | 1,088.3 | -0.2 | 1,967.5 | 1,970.1 |
| Order book at end of period, MEUR | 1,079.4 | 1,122.8 | -3.9 | 942.7 | ||||
| Sales total, MEUR | 519.9 | 562.5 | -7.6 | 1,015.8 | 1,036.5 | -2.0 | 2,150.8 | 2,171.5 |
| EBITDA excluding restructuring costs, MEUR | 28.3 | 45.9 | -38.3 | 61.6 | 79.6 | -22.6 | 161.8 | 179.7 |
| EBITDA excluding restructuring costs, % | 5.4 | 8.2 | 6.1 | 7.7 | 7.5 | 8.3 | ||
| Operating profit excluding restructuring costs, MEUR | 17.2 | 35.1 | -50.8 | 40.3 | 59.0 | -31.7 | 119.5 | 138.3 |
| Operating margin excluding restructuring costs, % | 3.3 | 6.2 | 4.0 | 5.7 | 5.6 | 6.4 | ||
| EBITDA, MEUR | 28.3 | 45.9 | -38.3 | 57.6 | 79.6 | -27.7 | 154.8 | 176.8 |
| EBITDA, % | 5.4 | 8.2 | 5.7 | 7.7 | 7.2 | 8.1 | ||
| Operating profit, MEUR | 17.2 | 35.1 | -50.8 | 36.1 | 59.0 | -38.9 | 109.5 | 132.5 |
| Operating margin, % | 3.3 | 6.2 | 3.5 | 5.7 | 5.1 | 6.1 | ||
| Profit before taxes, MEUR | 15.8 | 32.9 | -52.1 | 31.3 | 53.4 | -41.4 | 102.1 | 124.2 |
| Net profit for the period, MEUR | 11.1 | 23.1 | -52.0 | 22.0 | 37.5 | -41.4 | 69.3 | 84.8 |
| Earnings per share, basic, EUR | 0.19 | 0.40 | -51.8 | 0.38 | 0.65 | -41.2 | 1.20 | 1.47 |
| Earnings per share, diluted, EUR | 0.19 | 0.40 | -51.7 | 0.38 | 0.64 | -41.1 | 1.20 | 1.46 |
| Gearing, % | 63.0 | 64.3 | 39.3 | |||||
| Return on capital employed %, Rolling 12 Months (R12M) | 14.1 | 18.4 | ||||||
| Free cash flow, MEUR | -48.3 | 3.7 | -26.7 | 4.3 | 70.6 | 101.6 | ||
| Average number of personnel during the period | 12,056 | 11,777 | 2.4 | 11,917 | ||||
President and CEO Pekka Lundmark:
“As already announced in June, our second quarter result was short of the previous year's corresponding period, and it did not meet our expectations. The low delivery volume did not come as a surprise since the weak order intake at the end of 2012 now came through in deliveries. The result, however, was further burdened by unexpected high realized and estimated costs of EUR 8 million in certain heavy industrial crane projects. We expect a clear earnings recovery towards the year-end on the basis of the order intake during the first half of 2013, product mix in the order book as well as the announced restructuring actions.
The key positive element in the quarter was the all-time high order intake in our service business. Even though our order intake was reasonably good also in the equipment business, we cannot base our plans on the expectation that the world economy would provide a lot help to our growth. The tough pricing environment is also expected to continue. Our overall cost is too high for our volume outlook, and, therefore, we are now planning actions to lower our cost base by EUR 30 million by the end of 2014. In addition, we are preparing several initiatives in order to further rationalize our supply chain to push down our variable product cost. There is potential for savings in our non-personnel related spending as well, but, unfortunately, effects to personnel cannot be avoided.
Lowering fixed cost and improving supply chain efficiency are necessary in our current situation, but they are by no means our only way to improve profitability. The development of technology increasing differentiation from the competition and improving pricing power is intensifying. A good example is the recently launched Automated Rubber Tired Gantry (ARTG) crane that makes the automation of existing container yards a viable alternative. Second example is our new family of services, TRUCONNECT®, that provides real-time usage and condition monitoring of customers' equipment. Another major initiative is to create a totally new product family mainly for emerging markets. What is typical for these products is that they offer a good set of basic features without ever compromising safety or quality. The third investment area is the renewal of our ways of working and fragmented information systems. This program is currently about halfway and it offers a substantial potential for the internal productivity improvement. What is common to the above three strategic initiatives is that they all require new skills. The development of competence of our personnel will therefore, be the key in all of them.”
DISCLOSURE PROCEDURE
Konecranes follows the disclosure procedure enabled by Disclosure obligation of the issuer (7/2013) published by the Finnish Financial Supervision Authority. This stock exchange release is a summary of Konecranes Plc’s January-June 2013 interim report. The complete report is attached to this release in pdf format and is also available on Konecranes’ website at www.konecranes.com.
ANALYST AND PRESS BRIEFING
An analyst and press conference will be held at KÄMP Kansallissali (address Aleksanterinkatu 44 A, 2. floor) 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 dated July 5, 2013 for the conference call details.
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 2012, Group sales totaled EUR 2,170 million. The Group has 11,900 employees at 626 locations in 48 countries. Konecranes is listed on the NASDAQ OMX Helsinki (symbol: KCR1V).
DISTRIBUTION
NASDAQ OMX Helsinki
Media
www.konecranes.com