OREANDA-NEWS. Konecranes operating profit improved in the second quarter

Figures in brackets, unless otherwise stated, refer to the same period a year earlier

SECOND QUARTER HIGHLIGHTS

- Order intake EUR 490.3 million (523.5), -6.4 percent; Service +14.3 percent and Equipment -16.9 percent.
- Service contract base value EUR 209.5 million (186.6), +12.3 percent; +3.4 percent at comparable currency rates.
- Order book EUR 1,100.4 million (1,029.9) at end-June, 6.8 percent higher than a year ago.
- Sales EUR 535.6 million (481.6), +11.2 percent; Service +17.3 percent and Equipment +6.2 percent.
- Operating profit excluding restructuring costs EUR 25.7 million (21.6), 4.8 percent of sales (4.5).
- Restructuring costs EUR 9.5 million (0.9).
- Operating profit including restructuring costs EUR 16.3 million (20.7), 3.0 percent of sales (4.3).
- Earnings per share (diluted) EUR 0.19 (0.20).
- Net cash flow from operating activities EUR 5.7 million (42.1).
- Net debt EUR 261.9 million (256.5) and gearing 59.9 percent (64.7).

JANUARY-JUNE HIGHLIGHTS

- Order intake EUR 1,009.1 million (962.8), +4.8 percent; Service +9.7 percent and Equipment +1.4 percent.
- Sales EUR 1,010.5 million (908.9), +11.2 percent; Service +15.5 percent and Equipment +7.2 percent.
- Operating profit excluding restructuring costs EUR 39.9 million (37.2), 3.9 percent of sales (4.1).
- Restructuring costs EUR 11.8 million (1.3).
- Operating profit including restructuring costs EUR 28.1 million (35.9), 2.8 percent of sales (4.0).
- Earnings per share (diluted) EUR 0.29 (0.35).
- Net cash flow from operating activities EUR -48.7 million (17.2).

MARKET OUTLOOK

Orders from European industrial customers increased in the second quarter, but the customers are still cautious about investing. In the U.S., the offer base for industrial customers remains stable, but customers’ decision-making has become slower and there are less large-contract opportunities available. The near-term market outlook in emerging markets remains uncertain. Continued contract base growth bodes well for the future of the service business. 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 year 2015 sales are expected to be higher than in 2014. We expect the 2015 operating profit, excluding restructuring costs, to improve from 2014.

KEY FIGURES

 

Second quarter

First half year

    
 

4-6/

2015

4-6/

2014

Change %

1-6/

2015

1-6/

2014

Change %

R12M

2014

Orders received, MEUR

490.3

523.5

-6.4

1,009.1

962.8

4.8

1,949.8

1,903.5

Order book at end of period, MEUR

      

1,100.4

1,029.9

6.8

  

979.5

Sales total, MEUR

535.6

481.6

11.2

1,010.5

908.9

11.2

2,113.0

2,011.4

EBITDA excluding restructuring costs, MEUR

38.4

32.7

17.5

64.3

57.8

11.2

168.7

162.2

EBITDA excluding restructuring costs, %

7.2%

6.8%

  

6.4%

6.4%

  

8.0%

8.1%

Operating profit excluding restructuring costs, MEUR

25.7

21.6

19.0

39.9

37.2

7.3

121.8

119.1

Operating margin excluding restructuring costs, %

4.8%

4.5%

  

3.9%

4.1%

  

5.8%

5.9%

EBITDA, MEUR

33.5

31.9

5.2

58.2

56.5

2.9

160.6

159.0

EBITDA, %

6.3%

6.6%

  

5.8%

6.2%

  

7.6%

7.9%

Operating profit, MEUR

16.3

20.7

-21.6

28.1

35.9

-21.7

108.0

115.8

Operating margin, %

3.0%

4.3%

  

2.8%

4.0%

  

5.1%

5.8%

Profit before taxes, MEUR

16.7

17.1

-2.2

24.8

29.8

-16.8

102.4

107.4

Net profit for the period, MEUR

11.4

11.7

-2.9

17.0

20.4

-16.8

71.2

74.6

Earnings per share, basic, EUR

0.19

0.20

-2.8

0.29

0.35

-16.8

1.23

1.28

Earnings per share, diluted, EUR

0.19

0.20

-2.7

0.29

0.35

-16.6

1.22

1.28

Gearing, %

      

59.9%

64.7%

    

33.3%

Return on capital employed %

            

15.0%

17.0%

Free cash flow, MEUR

-3.3

30.1

  

-65.9

-2.5

  

46.1

109.4

Average number of personnel during the period

      

11,929

11,879

0.4

  

11,920

President and CEO Pekka Lundmark:

“Our overall performance in the second quarter of 2015 was largely in line with our own expectations. Service continued on its steady profit improvement path, and the full-year outlook for the business remains promising. Equipment business recovered after a loss making first quarter, but the result is still below target. Lifttruck business continued to be the best performing equipment business, with both volumes and profit increasing steadily.

After a weaker first quarter, our Group operating profit, excluding restructuring costs, exceeded that of last year. We are now cumulatively EUR 2.7 million above last year. This supports our forecast to deliver a higher full-year operating profit, excluding restructuring costs, than last year.

As communicated earlier, we are addressing the below-target performance of the equipment business, among other things, by a cost reduction program that targets to deliver EUR 30 million cost reduction run-rate by the end of the first quarter of 2016. This program is proceeding according to plan. We are continuing our product development to increase differentiation and to lower variable product cost. The new IT systems targeted to improve the productivity of the supply chain have now reached more than 50 percent coverage of our business. In addition, to lower the cost base in the equipment business, we are preparing more profound structural changes.

Since this is the 41st and the last quarterly report that I publish as the President & CEO of Konecranes Plc, I would like to take this opportunity to thank all our customers, employees, shareholders, and other parties with whom I have had the pleasure to share this exciting journey. Konecranes is today a very different company than 10 years ago. Nevertheless, there is still so much to do. Digitalization will fundamentally change how world’s industries operate, and Konecranes is well-positioned to take advantage of this development. The material handling equipment and service market are still fragmented, and there are a lot of growth and consolidation opportunities, even in a scenario where the world economy would not drive any market growth.”

DISCLOSURE PROCEDURE

Konecranes follows the disclosure procedure enabled by Standard 5.2b published by the Finnish Financial Supervision Authority. This stock exchange release is a summary of Konecranes Plc’s January-June 2015 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 the restaurant Savoy’s Salikabinetti (address Etel?esplanadi 14) at 11.00 a.m. Finnish time. The Interim Report will be presented by Konecranes’ President and CEO Pekka Lundmark and CFO Teo Ottola.