Konecranes Plc: Interim report January-March 2022

KONECRANES PLC INTERIM REPORT, JANUARY-MARCH 2022 APRIL 27, 2022 8:30 am EEST

 

Konecranes Plc: Interim report January-March 2022

 

Record-high orders in a challenging market environment

 

This release is a summary of Konecranes Plc’s Interim report January-March 2022. The complete report is attached to this release in pdf format and is also available on Konecranes’ website at www.konecranes.com.

 

The figures presented in this report are unaudited. Figures in brackets, unless otherwise stated, refer to the same period a year earlier.

 

FIRST QUARTER HIGHLIGHTS

 

- Order intake EUR 1,029.6 million (762.8), +35.0 percent (+32.4 percent on a comparable currency basis), driven by order intake increases in all three Business Areas

- Service annual agreement base value increased 6.0 percent (+2.6 percent on a comparable currency basis) to EUR 300.7 million (283.6). Service order intake was EUR 283.1 million (255.2), +10.9 percent (+6.9 percent on a comparable currency basis)

- Order book EUR 2,485.2 million (1,866.7) at the end of March, +33.1 percent (+30.7 percent on a comparable currency basis)

- Sales EUR 672.1 million (704.0), -4.5 percent (-6.7 percent on a comparable currency basis), sales increased in Business Areas Service and Industrial Equipment but decreased in Port Solutions

- Adjusted EBITA margin 6.6 percent (8.0) and adjusted EBITA EUR 44.1 million (56.2); the decrease in the adjusted EBITA margin was mainly attributable to lower sales, and cost inflation in Industrial Equipment

- Operating profit EUR -19.5 million (37.5), -2.9 percent of sales (5.3), adjustments totaled EUR 56.7 million (10.3), mainly comprised of costs related to the impacts of the war in Ukraine and merger related costs

- Earnings per share (diluted) EUR -0.26 (0.23)

- Free cash flow EUR 2.6 million (17.7)

- Net debt EUR 545.3 million (569.2) and gearing 40.3 percent (47.4)

- Impacts of the war in Ukraine: EUR 78.9 million of Russian orders written off and EUR 32.1 million of Russian sales reversed, result impact of the sales reversal and the impairments of assets in Ukraine EUR 46.9 million negative on the operating profit level, full amount included in adjustments

- The Board of Directors proposes a dividend of EUR 1.25 (0.88) per share for 2021

 

 

SECOND QUARTER DEMAND OUTLOOK

 

The worldwide demand picture remains subject to volatility due to the war in Ukraine having increased inflation and material availability concerns. Also the COVID-19 pandemic continues.

 

In Europe and North America, the demand environment within the industrial customer segments is on a healthy level. In Asia-Pacific, the demand environment remains below Europe and North America.

 

Global container throughput continues high, and long-term prospects related to global container handling remain good overall.

 

 

FINANCIAL GUIDANCE

 

Konecranes expects net sales to increase in full-year 2022 compared to 2021. Konecranes expects the full-year 2022 adjusted EBITA margin to improve from 2021.

 

 

KEY FIGURES

 

	1-3/ 2022	1-3/ 2021	Change %	R12M	1-12/ 2021
Orders received, MEUR	1,029.6	762.8	35.0	3,442.3	3,175.5
Order book at end of period, MEUR	2,485.2	1,866.7	33.1		2,036.8
Sales total, MEUR	672.1	704.0	-4.5	3,153.9	3,185.7
Adjusted EBITDA, MEUR 1	66.3	79.0	-16.1	386.1	398.9
Adjusted EBITDA, % 1	9.9%	11.2%		12.2%	12.5%
Adjusted EBITA, MEUR 2	44.1	56.2	-21.7	300.0	312.2
Adjusted EBITA, % 2	6.6%	8.0%		9.5%	9.8%
Adjusted operating profit, MEUR 1	37.1	47.8	-22.3	268.4	279.1
Adjusted operating margin, % 1	5.5%	6.8%		8.5%	8.8%
Operating profit, MEUR	-19.5	37.5	-152.1	162.9	220.0
Operating margin, %	-2.9%	5.3%		5.2%	6.9%
Profit before taxes, MEUR	-29.4	26.6	-210.3	136.5	192.5
Net profit for the period, MEUR	-21.3	18.4	-215.9	107.7	147.4
Earnings per share, basic, EUR	-0.26	0.23	-212.9	1.37	1.86
Earnings per share, diluted, EUR	-0.26	0.23	-212.3	1.36	1.85
Interest-bearing net debt / Equity, %	40.3%	47.4%			39.8%
Net debt / Adjusted EBITDA, R12M 1	1.4	1.5			1.4
Return on capital employed, %				7.1%	9.3%
Adjusted return on capital employed, % 3				13.4%	13.4%
Free cash flow, MEUR	2.6	17.7		122.6	137.7
Average number of personnel during the period	16,577	16,738	-1.0		16,625

 

1) Excluding adjustments, see also note 10 in the summary financial statements

2) Excluding adjustments and purchase price allocation amortization, see also note 10 in the summary financial statements

3) ROCE excluding adjustments, see also note 10 in the summary financial statements

 

 

INTERIM CEO TEO OTTOLA:

 

Konecranes’ Q1 was mixed. We booked record-high orders, but at the same time our profitability declined. The war in Ukraine appalled us all, and we are deeply concerned for our 400+ Ukrainian employees and their families. Given the increased inflation and material availability concerns, the war has made the market conditions even more volatile and unpredictable. We continue our hard work and performance focus, and with our record-high order book there remains a lot to achieve.

 

Despite the geopolitical tensions and the pandemic, the overall market sentiment continued good in Q1, and on Group level, our order intake was record-high. Year-on-year, Konecranes’ Q1 orders received grew 32.4% in comparable currencies and surpassed €1 billion. Order intake in our short-cycle products returned to a growth path and was better than expected.

 

Timing of customer deliveries, component availability and other supply chain constraints affected our revenues in Q1, and our sales decreased 6.7% year-on-year in comparable currencies. As a result of our record-high order intake, our order book broke again a new record of EUR 2,485 million at the end of March.

 

Our adjusted EBITA margin declined year-on-year to 6.6%. The decline was driven by the delayed sales, our Industrial Equipment business being affected by the inflation and the timing of our Port Solutions deliveries. Service continued its positive profitability trajectory and posted an all-time high Q1 adjusted EBITA margin.

 

Service order intake improved by 6.9% year-on-year in comparable currencies. Although sales were impacted by supply chain issues, good profitability development continued with an adjusted EBITA margin of 17.4%. The agreement base value grew by 2.6% from the previous year in comparable currencies, exceeding €300 million.

 

Industrial Equipment’s external order intake grew by 31.6% in comparable currencies. Customer delays and supply chain constraints continued, but external sales decreased slightly in comparable currencies mainly because of the reversed Russian sales. Adjusted EBITA margin declined year-on-year and was -2.1%, mainly driven by the inflation and delayed sales.

 

Activity remained high within ports, and Port Solutions’ orders grew by 55.1% in comparable currencies, totaling €427 million. However, sales were impacted by timing of customer deliveries. Also component shortages continued especially in our mobile equipment business, and the impact became visible even in our project business. As a result, adjusted EBITA margin totaled 2.9%.

 

The war in Ukraine has impacted our business and operations, and our personnel. We have over 400 employees in Ukraine, and Konecranes has supported them and their families throughout the war. The safety and wellbeing of our Ukrainian employees and their families are our number one priority. The resilience, courage and strength of our Ukrainian employees has been remarkable, and I am impressed by the sincere help and support demonstrated by Konecranes employees around the world, especially in Ukraine’s neighboring countries.

 

After the war started, production was stopped at our factory in Zaporizhzhia, and we have redirected production to our other manufacturing sites. We have also decided to not take any new business from Russia. Following our decision, in Q1, we wrote off €79 million of orders booked from Russia and reversed €32 million of Russian project revenues recognized prior to 2022. In addition, as the uncertainty level remains high, we have impaired the balance sheet values of our Ukrainian assets. The EBIT impact of these impairments and the cancelled project sales was approximately €47 million and the full amount has been included in our adjustments.   

 

We expect the market volatility and uncertainty to continue due to the ongoing war. In addition, the pandemic and related lockdowns continue to impact global supply chains. We have updated our demand outlook for Q2 to reflect the current market sentiment. Although the demand environment is now healthy, we do not expect another record-high order quarter. We reiterate our full-year guidance and expect our net sales to increase in full-year 2022 compared to 2021 and our full-year adjusted EBITA margin to improve from 2021. As for the inflation, component availability and other supply chain constraints, we expect them to continue and to impact our performance this year.

 

Following the cancellation of our planned merger with Cargotec on March 29, 2022, we postponed our Annual General Meeting scheduled for the next day. As a result, the dividend payments were also postponed. The AGM is planned to be held on June 15, and Konecranes Board of Directors is proposing a dividend of EUR 1.25 per share. The AGM will be convened, and the proposals published, as soon as possible.

 

To further strengthen our role as the global lifting leader, we announced today that we will focus our Service and Industrial Equipment Business Areas under one leadership starting from June 1, 2022. This decision follows the assessment of closer collaboration between the two Business Areas, which was started in October last year. Fabio Fiorino, currently EVP, Service, will lead the two businesses, and the operating model will be developed further. Bringing the two Business Areas closer to one another will improve Konecranes’ customer experience and will simplify our industrial business model and strategy.

 

Considering everything that has occurred, Konecranes’ Q1 was indeed eventful and mixed. I am proud of the commitment of our people, which continues high. We have maintained and will maintain our focus on business excellence, continuous improvement, and sustainability, and delivering the best for our customers.

 

 

ANALYST AND PRESS BRIEFING

 

A live international webcast for analysts, investors and media will be held on April 27, 2022, at 11:30 a.m. EEST. The interim report will be presented by Konecranes’ CFO and interim CEO Teo Ottola.

 

The teleconference can be joined, and the live webcast watched through the following link:

https://konecranes.videosync.fi/2022-q1

The link becomes active 15 minutes prior to start of the conference.

 

Participant Passcode: 58012341#

 

The event can be also attended by calling one of the following phone numbers:

 

Location	Phone number
Finland	+358 981710310
Sweden	+46 856642651
Germany	+49 6913803430
France	+33 170750711
United Kingdom	+44 3333000804
United States	+1 6319131422

 

 

NEXT REPORT

 

Konecranes Plc plans to publish its half-year financial report January–June 2022 on July 27, 2022.

 

 

KONECRANES PLC

Kiira Fröberg

Vice President, Investor Relations

 

FURTHER INFORMATION

Kiira Fröberg,

Vice President, Investor Relations,

tel. +358 (0) 20 427 2050

 

 

IMPORTANT NOTICE

 

The information in this release contains forward-looking statements, which are information on Konecranes’ current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “expect,” “aim,” “intend,” “may,” “anticipate,” “estimate,” “plan,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could” and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond Konecranes’ control that could cause Konecranes’ actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Konecranes’ present and future business strategies and the environment in which it will operate in the future.

 

 

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 2021, Group sales totaled EUR 3.2 billion. The Group has approximately 16,600 employees in around 50 countries. Konecranes shares are listed on the Nasdaq Helsinki (symbol: KCR).

 

DISTRIBUTION

Nasdaq Helsinki

Major media

www.konecranes.com