Strong order intake, clear improvement in adjusted EBITA

This release is a summary of Konecranes Plc’s Interim Report January-March 2017. 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.

FIRST QUARTER HIGHLIGHTS (COMPARISON TO HISTORICAL KONECRANES FIGURES*)

- Order intake EUR 734.5 million (425.1), +72.8 percent
- Order book EUR 1,604.5 million (1,035.6) at the end of March, +54.9 percent
- Sales EUR 683.0 million (458.6), +48.9 percent
- Adjusted EBITA EUR 30.6 million (15.8), 4.5 percent of sales (3.4)
- Operating profit EUR 225.9 million (0.3), 33.1 percent of sales (0.1)
- Earnings per share (diluted) EUR 2.50 (-0.09)
- Free cash flow EUR 88.0 million (-6.9)
- Net debt EUR 535.6 million (206.9) and gearing 42.8 percent (52.7)

FIRST QUARTER HIGHLIGHTS (COMPARISON TO COMBINED COMPANY FIGURES*)

- Order intake EUR 734.5 million (656.9), +11.8 percent
- Sales EUR 683.0 million (716.4), -4.7 percent
- Adjusted EBITA EUR 30.6 million (8.7), 4.5 percent of sales (1.2)

* This Report contains comparisons to both Konecranes’ historical figures as well as combined company figures. Historical figures relate to Konecranes’ stand-alone financial information as reported for 2016 (including the divested STAHL CraneSystems business).

To provide a basis for comparison, this Report contains also under separate headings comparisons to combined company’s financial information on an unaudited basis estimated by the management for 2016. This financial information has been prepared to reflect the financial results of the combined company as if it had been operating as such for the full financial year of 2016. The comparable combined company’s operations comprise Konecranes’ operations without the divested STAHL CraneSystems business, but including the acquired MHPS business. See “Basis of preparation for comparable combined company” for further information.

Comparable combined company’s financial information concerns an assumed situation and does not therefore reflect the true financial position or result of the company during 2016.

MARKET OUTLOOK

Economic indicators related to manufacturing industries have strengthened, which appears to improve customers’ willingness to proceed with their investment plans. Demand situation in Europe is gradually improving. Business activity in the North American manufacturing industry remains mixed. Demand in emerging markets is showing signs of bottoming out. Global container throughput growth has improved and the prospects for small and medium-sized orders related to container handling have somewhat strengthened.

FINANCIAL GUIDANCE

The sales in 2017 are expected to be close to the comparable combined company sales in 2016 (EUR 3,278 million). We expect the adjusted EBITA to total EUR 195-215 million in 2017 (comparable combined company adjusted EBITA was EUR 184 million in 2016).

The comparable combined company’s operations comprise Konecranes’ operations without the divested STAHL CraneSystems business, but including the acquired MHPS business. See the stock exchange releases published on April 10, 2017, and April 13, 2017, for further financial information including the basis of preparation for the comparable combined company.

KEY FIGURES (comparisons to historical figures)

KEY FIGURES (comparisons to combined company figures)

¹ Excluding adjustments, see also note 12 in the summary financial statements
² Excluding adjustments and purchase price allocation amortization, see also note 12 in the summary financial statement
³ ROCE excluding adjustments, see also note 12 in the summary financial statements

President and CEO Panu Routila:

“The first quarter was a defining step in the history of Konecranes as the acquisition of MHPS business was completed on January 4. The first months of the combined company have been proceeding as planned. The acquisition has been very well-received by our customers and employees. The integration of the organizations is proceeding well and we can be satisfied that our sales organization has not been distracted by the integration. The high engagement and positive sentiment among the employees gives us good grounds for the next steps.

The integration of MHPS is underway in many areas. Most of the first realized synergy benefits have related to Business Area Service and procurement. Our North American frontline operations in Service have already been combined and it was executed even faster than we originally anticipated. Integration within Business Area Industrial Equipment and Port Solutions is now in the detailing phase as planned. We continue to be confident in the targeted EBIT level synergies of EUR 140 million p.a. within three years, EUR 35 million of which is expected to be implemented by the end of 2017. Approximately a half of the targeted synergies for 2017 have already been implemented on a run-rate basis.

The divestment of Stahl CraneSystems was succesfully completed on January 31. We booked a capital gain of EUR 218 million from the transaction in our first quarter result.

We had a strong start to 2017 as our comparable combined company order intake grew by 11.8 percent. Order growth was strongest in the Business Area Port Solutions, which saw a clear increase in the demand for most of its products and services. Within industrial customers, particularly the demand for parts and crane components improved in all regions. Also, industrial crane orders grew from the previous year on a comparable basis excluding the effect of some unusually large single heavy-duty crane orders that were received in the Americas in the comparison period; orders for industrial cranes rose in EMEA and APAC. Comparable Service orders were stable year-on-year on a basis, which matched our expectation for the first quarter.

Group sales were 4.7 percent below the previous year on a comparable basis mainly due to Business Area Port Solutions. The sales decrease in Business Area Port Solutions related to the timing of deliveries and exceptionally high sales of certain products in the comparison period. Comparable Service sales grew moderately, whereas Industrial Equipment sales declined slightly year-on-year on a basis.

Despite the sales decrease, our comparable adjusted EBITA margin expanded by 3.3 percentage points to 4.5 percent of sales. In Service, the adjusted EBITA margin increased by 1.9 percentage points thanks to the moderate sales growth and lower fixed costs. In Industrial Equipment, the 5.3 percentage points’ improvement in the adjusted EBITA margin related mainly to the cost-saving measures implemented in 2016, as well as successful deliveries. In 2016, Konecranes reduced industrial crane manufacturing capacity in several countries including China, India, Brazil, and the US. Sales growth in lift truck and service operations, as well as good project execution leading to better than expected margins from some completed projects lifted Port solutions’ EBITA margin by 1.4 percentage points. Comparable gross margin rose and fixed costs were below the previous year’s level in both Industrial Equipment and Port Solutions.

Free cash flow was very strong at EUR 88 million on the back of improved profitability and positive change in the net working capital. Coupled with the proceeds from the STAHL CraneSystems divestment, this significantly strengthened our balance sheet and our interest-bearing net debt amounted to EUR 536 million at the end of March.

The macroeconomic indicators started to support the order intake in the first quarter. Market sentiment has become more positive and this is reflected in our market outlook.”

ANALYST AND PRESS BRIEFING

An analyst and press conference will be held at the restaurant Savoy’s Salikabinetti (address: Eteläesplanadi 14) on April 27, 2017, 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 April 6, 2017 for the conference call details.

BASIS OF PREPARATION FOR COMPARABLE COMBINED COMPANY

The comparable combined company financial information is based on management’s estimates and is for illustrative purposes only. The comparable combined company financial information gives an indication of the combined company's key figures assuming the activities were included in the same company from the beginning of 2016.

The comparable combined company financial information is based on a hypothetical situation and should not be viewed as pro forma financial information as differences in accounting principles have not been taken into account. The unaudited comparable combined company financial information is based on Konecranes Group’s financial statements for the financial year 2016 (adjusted for restructuring costs, transaction costs and received insurance indemnity) according to IFRS and Terex Corporations’s (“Terex”) MHPS segment unaudited special purpose carve-out financial information for the financial year 2016 (adjusted for non-recurring items such as restructuring costs and impairments of goodwill and trademarks) according to USGAAP. The corporation allocations of Terex Group have been adjusted in MHPS income statement to illustrate the situation as the Group had been combined at the beginning of 2016.

As the financial information for MHPS has been prepared on a carve-out basis, this does not necessarily reflect what its results of operations would have been, had MHPS operated as an independent company and had it presented stand-alone financial information under IFRS during the period presented. Moreover, the carve-out financial information may not be indicative of MHPS’s future performance of the operative activities aggregated within Konecranes.

Konecranes is unable to present a reconciliation of the comparable combined company financial information as MHPS’ financials have been calculated according to USGAAP and using different accounting principles than Konecranes and as Terex has categorized MHPS as a discontinued operation in 2016.

KONECRANES PLC


Miikka Kinnunen
Vice President, 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, Vice President, 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 of all makes. In 2016, Group (comparable combined company) sales totaled EUR 3,278 million. The Group has 17,000 employees at 600 locations in 50 countries. Konecranes class A shares are listed on the Nasdaq Helsinki (symbol: KCR).


DISTRIBUTION
Nasdaq Helsinki
Media
www.konecranes.com