Cargotec’s interim report January–September 2022

Oct 26, 2022

Cargotec’s interim report January–September 2022: Strong performance continued in core businesses

- All-time high comparable operating profit

- Orders received increased in all business areas

- Supply chain challenges and market uncertainties are expected to continue

- Outlook for 2022 specified

July–September 2022 in brief: Eco portfolio sales nearly doubled

Orders received increased by 16 percent and totaled EUR 1,147 (985) million.
Order book amounted to EUR 3,732 (31 Dec 2021: 2,847) million at the end of the period.
Sales increased by 27 percent and totaled EUR 1,041 (822) million.
Service sales increased by 22 percent and totaled EUR 323 (264) million.
Service sales represented 31 (32) percent of consolidated sales.
Eco portfolio sales increased by 97 percent and totaled EUR 276 (140) million.
Eco portfolio sales represented 27 (17) percent of consolidated sales.
Operating profit was EUR 50 (278) million, representing 4.8 (33.8) percent of sales. The operating profit includes items affecting comparability worth EUR -43 (213) million. The decrease in the operating profit is mainly due to the sales gain of the Navis software business divestment.
Comparable operating profit increased by 43 percent and amounted to EUR 93 (65) million, representing 8.9 (7.9) percent of sales.
Cash flow from operations before financial items and taxes totaled EUR 116 (45) million.
Net income for the period amounted to EUR 29 (219) million.
Earnings per share were EUR 0.45 (3.40).

January–September 2022 in brief: Order book at a record level

Orders received increased by 9 percent and totaled EUR 3,672 (3,377) million.
Order book amounted to EUR 3,732 (31 Dec 2021: 2,847) million at the end of the period.
Sales increased by 19 percent and totaled EUR 2,850 (2,405) million.
Service sales increased by 16 percent and totaled EUR 910 (787) million.
Service sales represented 32 (33) percent of consolidated sales.
Eco portfolio sales increased by 51 percent and totaled EUR 696 (460) million.
Eco portfolio sales represented 24 (19) percent of consolidated sales.
Operating profit was EUR 135 (347) million, representing 4.7 (14.4) percent of sales. The operating profit includes items affecting comparability worth EUR -109 (161) million.
Comparable operating profit increased by 31 percent and amounted to EUR 243 (186) million, representing 8.5 (7.7) percent of sales.
Cash flow from operations before financial items and taxes totaled EUR 84 (110) million.
Net income for the period amounted to EUR 91 (255) million.
Earnings per share were EUR 1.41 (3.95).

Outlook for 2022 specified

Cargotec expects its comparable operating profit for 2022 to improve by EUR 88–118 million from 2021 (from EUR 232 million to EUR 320–350 million). In its outlook reiterated on 20 July 2022, Cargotec expected its comparable operating profit for 2022 to improve from 2021 (EUR 232 million).

Cargotec’s key figures

MEUR Q3/22 Q3/21 Change Q1-Q3/22 Q1-Q3/21 Change 2021

Orders received 1,147 985 16% 3,672 3,377 9% 4,427

Service orders received 325 271 20% 941 854 10% 1,162

Order book, end of period 3,732 2,696 38% 3,732 2,696 38% 2,847

Sales 1,041 822 27% 2,850 2,405 19% 3,315

Service sales 323 264 22% 910 787 16% 1,076

Service sales, % of sales 31% 32% 32% 33% 32%

Eco portfolio sales 276 140 97% 696 460 51% 626

Eco portfolio sales, % of sales 27% 17% 24% 19% 19%

Operating profit 50.0 278.2 -82% 134.9 347.5 -61% 355.7

Operating profit, % 4.8% 33.8% 4.7% 14.4% 10.7%

Comparable operating profit 92.7 64.8 43% 243.5 186.0 31% 231.5

Comparable operating profit, % 8.9% 7.9% 8.5% 7.7% 7.0%

Income before taxes 43.2 272.6 -84% 119.6 328.4 -64% 333.1

Cash flow from operations before financing items and taxes 116.1 45.3 > 100% 84.0 109.6 -23% 169.3

Net income for the period 28.9 219.5 -87% 90.8 254.9 -64% 246.7

Earnings per share, EUR 0.45 3.40 -87% 1.41 3.95 -64% 3.82

Interest-bearing net debt, end of period 481 465 3% 481 465 3% 414

Gearing, % 30.3% 30.6% 30.3% 30.6% 26.8%

Interest-bearing net debt / EBITDA* 1.8 1.0 1.8 1.0 0.9

Return on capital employed (ROCE), last 12 months, % 5.8% 14.3% 5.8% 14.3% 14.5%

Personnel, end of period 11,525 10,868 6% 11,525 10,868 6% 11,174

* Last 12 months’ EBITDA

In the calculation of the balance sheet-related key figures, the assets held for sale and liabilities related to assets held for sale are included in the applicable account groups, even though in the balance sheet they are presented in one row.

Cargotec’s CEO Mika Vehviläinen: Yet another record quarter, determined steps in executing our refocused strategy

The performance of the core businesses of our refocused strategy, Hiab and new Kalmar, continued to be strong also in the third quarter. Following this, we made record results in comparable operating profit, order book, sales, and service sales. I am particularly pleased that the comparable operating profit margin of the core businesses was about 11 percent when the reported comparable operating profit margin was slightly below 9.

Our third quarter comparable operating profit was an all-time high, and the combined comparable operating profit for the three first quarters was as much as EUR 12 million higher than the whole of last year. We are therefore specifying our outlook for the rest of the year: we expect the comparable operating profit for 2022 to improve to EUR 320–350 million from EUR 232 million in 2021.

Orders received increased in all businesses. Our order book reached yet another record, increasing by 38 percent from the comparison period and 4 percent from the previous quarter. Component shortages, delays in truck deliveries as well as global logistics challenges still limited our ability to fully respond to demand, but we managed to increase our sales by 27 percent from the comparison period. The general cost increases are affecting us as well but we have mostly been able to transfer the increased costs to our prices.

The performance of our service business during the third quarter was excellent. Sales were at an all-time high level and service orders received increased by 20 percent from the comparison period. The utilization of our connected equipment remained at a high level and supported spare parts sales which, among other things, explains the good development.

We have been executing our refocused strategy now for six months. Going forward, we will focus on sustainability and profitable growth in Hiab and in Kalmar mobile equipment and exit from Kalmar’s heavy cranes business. We announced in July that Kalmar is planning to transfer heavy cranes-related intellectual properties and assets to Rainbow Industries Co. Ltd. in China. The process is at its final stages with the transfer of the last assets presently ongoing.

In accordance with our strategy, we have also evaluated our operating model for it to serve the refocused company in the best possible way. Based on the evaluation, we will increase the independence of our business areas even further. As an example, tasks related to sourcing and information management are planned to be transferred from the group level to businesses. Cargotec’s centralized work in the field of digitalization has been successful. As per our new operating model, this work transfers to business areas in its entirety. Increasing the independence of the business areas speeds up decision-making and our operational capabilities, and improves our customer centricity even further.

In March, we announced the evaluation of strategic options for MacGregor including also a potential sale of the business. The evaluation is still ongoing.

Our investments in developing sustainable offerings are producing results. Our eco portfolio sales almost doubled from the comparison period, constituting 27 percent of the consolidated sales. The number of orders for Kalmar’s hybrid straddle and shuttle carriers has exceeded 500 worldwide. When comparing these hybrid devices to conventional ones, more than 400,000 tonnes CO2 emission reductions are achieved over the life cycle, which corresponds to the annual emissions of 174,000 passenger cars. We continue our strong investments in product development. As an example, during the quarter Hiab introduced the world's first hook lift made mostly from fossil-free steel.

Cargotec’s Capital Markets Day will be held on 15 November with the possibility to attend both on-location in Helsinki, Finland, as well as online. The event focuses on our refocused strategy, core businesses Hiab and Kalmar as well as future shareholder potential. We welcome the analysts and investors to hear and discuss Cargotec’s business now and in the future.

Reporting segments’ key figures

Orders received

MEUR Q3/22 Q3/21 Change Q1-Q3/22 Q1-Q3/21 Change 2021

Kalmar 470 421 12% 1,537 1,550 -1% 2,063

Hiab 425 396 7% 1,430 1,329 8% 1,713

MacGregor 252 168 50% 706 499 42% 652

Internal orders 0 0 0 0 0

Total 1,147 985 16% 3,672 3,377 9% 4,427

Order book

MEUR 30 Sep 2022 31 Dec 2021 Change

Kalmar 1,569 1,302 20%

Hiab 1,301 985 32%