KONECRANES PLC INTERIM REPORT JANUARY-SEPTEMBER 2022 OCTOBER 26, 2022 8:30 am EEST
Konecranes Plc: Interim report January-September 2022
Solid performance in the quarter
This release is a summary of Konecranes Plc’s Interim report January-September 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.
Since the beginning of June, Service and Industrial Equipment have been focused under the same leadership. Following this change, Konecranes has two Business Areas: Industrial Service and Equipment, and Port Solutions. Konecranes continues to report three segments: Service, Industrial Equipment, and Port Solutions, and the segment figures are comparable with historical figures.
THIRD QUARTER HIGHLIGHTS
- Order intake EUR 1,012.5 million (713.7), +41.9 percent (+34.5 percent on a comparable currency basis), driven by order intake increase in all three segments
- Service annual agreement base value EUR 315.5 million (286.7), +10.1 percent (+1.8 percent on a comparable currency basis)
- Service order intake EUR 298.3 million (257.9), +15.6 percent (+6.8 percent on a comparable currency basis)
- Order book EUR 3,052.1 million (1,997.4) at the end of September, +52.8 percent (+44.8 percent on a comparable currency basis)
- Sales EUR 884.6 million (773.6), +14.4 percent (+8.8 percent on a comparable currency basis), sales increased in all three segments
- Adjusted EBITA margin 10.8 percent (10.0) and adjusted EBITA EUR 95.3 million (77.4); the increase in the adjusted EBITA margin was mainly attributable to sales growth driven by pricing, and positive sales mix
- Operating profit EUR 91.5 million (49.9), 10.3 percent of sales (6.4), adjustments totaled EUR -7.2 million (19.4), mainly comprising of the positive impact of revaluating the exposure related to projects cancelled in Q1 due to the war in Ukraine
- Earnings per share (diluted) EUR 0.77 (0.40)
- Free cash flow EUR -38.2 million (39.0)
JANUARY–SEPTEMBER 2022 HIGHLIGHTS
- Order intake EUR 3,049.9 million (2,283.2), +33.6 percent (+28.3 percent on a comparable currency basis)
- Service order intake EUR 878.6 million (770.6), +14.0 percent (+7.3 percent on a comparable currency basis)
- Sales EUR 2,343.9 million (2,236.8), +4.8 percent (+0.6 percent on a comparable currency basis)
- Adjusted EBITA margin 8.5 percent (8.9) and adjusted EBITA EUR 200.2 million (199.0); the adjusted EBITA margin increased in Service but decreased in Industrial Equipment and Port Solutions
- Operating profit EUR 120.1 million (134.0), 5.1 percent of sales (6.0), adjustments totaled EUR 55.3 million (40.1), mainly comprised of costs related to the impacts of the war in Ukraine and merger related costs
- Earnings per share (diluted) EUR 0.86 (0.99)
- Free cash flow EUR -66.2 million (72.0)
- Net debt EUR 749.7 million (592.8) and gearing 56.7 percent (46.7)
FOURTH QUARTER DEMAND OUTLOOK
The worldwide demand picture remains subject to volatility due to the war in Ukraine and COVID-19 having increased inflation, interest rates and material availability concerns.
Within industrial customer segments, in North America, the demand environment remains active. In Europe, the level of uncertainty is higher compared to North America, and the demand environment has started to show signs of weakening. In Asia-Pacific, the demand environment is stable.
Global container throughput continues high, and long-term prospects related to global container handling remain good overall.
FINANCIAL GUIDANCE
Konecranes expects net sales to remain on the same level or to increase in full-year 2022 compared to 2021. Konecranes expects the adjusted EBITA margin to remain on the same level or to decrease in full-year 2022 compared to 2021.
KEY FIGURES
|
|
Third quarter
|
January - September
|
|
|
|
|
7-9/
2022
|
7-9/
2021
|
Change
%
|
1-9/
2022
|
1-9/
2021
|
Change
%
|
R12M
|
1-12/
2021
|
|
Orders received, MEUR
|
1,012.5
|
713.7
|
41.9
|
3,049.9
|
2,283.2
|
33.6
|
3,942.2
|
3,175.5
|
|
Order book at end of period, MEUR
|
|
|
|
3,052.1
|
1,997.4
|
52.8
|
|
2,036.8
|
|
Sales total, MEUR
|
884.6
|
773.6
|
14.4
|
2,343.9
|
2,236.8
|
4.8
|
3,292.8
|
3,185.7
|
|
Adjusted EBITDA, MEUR 1
|
117.1
|
98.6
|
18.8
|
265.9
|
264.1
|
0.7
|
400.7
|
398.9
|
|
Adjusted EBITDA, % 1
|
13.2%
|
12.7%
|
|
11.3%
|
11.8%
|
|
12.2%
|
12.5%
|
|
Adjusted EBITA, MEUR 2
|
95.3
|
77.4
|
23.0
|
200.2
|
199.0
|
0.6
|
313.4
|
312.2
|
|
Adjusted EBITA, % 2
|
10.8%
|
10.0%
|
|
8.5%
|
8.9%
|
|
9.5%
|
9.8%
|
|
Adjusted operating profit, MEUR 1
|
84.3
|
69.2
|
21.8
|
175.4
|
174.1
|
0.8
|
280.4
|
279.1
|
|
Adjusted operating margin, % 1
|
9.5%
|
9.0%
|
|
7.5%
|
7.8%
|
|
8.5%
|
8.8%
|
|
Operating profit, MEUR
|
91.5
|
49.9
|
83.5
|
120.1
|
134.0
|
-10.3
|
206.1
|
220.0
|
|
Operating margin, %
|
10.3%
|
6.4%
|
|
5.1%
|
6.0%
|
|
6.3%
|
6.9%
|
|
Profit before taxes, MEUR
|
83.4
|
43.1
|
93.5
|
91.7
|
110.9
|
-17.3
|
173.3
|
192.5
|
|
Net profit for the period, MEUR
|
60.0
|
31.4
|
91.1
|
66.0
|
78.2
|
-15.6
|
135.2
|
147.4
|
|
Earnings per share, basic, EUR
|
0.77
|
0.40
|
94.2
|
0.86
|
0.99
|
-12.5
|
1.73
|
1.86
|
|
Earnings per share, diluted, EUR
|
0.77
|
0.40
|
93.4
|
0.86
|
0.99
|
-12.9
|
1.72
|
1.85
|
|
Gearing, %
|
|
|
|
56.7%
|
46.7%
|
|
|
39.8%
|
|
Net debt / Adjusted EBITDA, R12M 1
|
|
|
|
1.9
|
1.5
|
|
|
1.4
|
|
Return on capital employed, %
|
|
|
|
|
|
|
8.4%
|
9.3%
|
|
Adjusted return on capital employed, % 3
|
|
|
|
|
|
|
13.5%
|
13.4%
|
|
Free cash flow, MEUR
|
-38.2
|
39.0
|
|
-66.2
|
72.0
|
|
-0.6
|
137.7
|
|
Average number of personnel during the period
|
|
|
|
16,573
|
16,638
|
-0.4
|
|
16,625
|
1) Excluding adjustments, see also note 11 in the summary financial statements
2) Excluding adjustments and purchase price allocation amortization, see also note 11 in the summary financial statements
3) ROCE excluding adjustments, see also note 11 in the summary financial statements
INTERIM CEO TEO OTTOLA (until October 18, 2022):
Konecranes had a solid Q3 overall. Order intake continued high, and although we are still facing supply chain challenges, we managed to improve our delivery capability from the previous quarters. Our profitability improved, and we posted an adjusted EBITA margin of 10.8%. While the market uncertainty grows, as a global lifting industry leader and with a record-high order book, Konecranes is well positioned for the future.
The overall market sentiment remained good in Q3, despite geopolitical tensions and growing macroeconomic concerns have increased uncertainty particularly in Europe. On Group level, our order intake continued high, and year-on-year, Konecranes’ Q3 orders received grew almost 35% in comparable currencies, surpassing again €1 billion. The underlying order volume growth was driven by Port Solutions, while in Service and Industrial Equipment, order intake increased mainly because of pricing. Short-cycle orders declined sequentially but remained on a healthy level.
In Q3, component availability and other supply chain constraints, as well as COVID-19 related challenges continued to affect our revenues in all three business segments. That said, our sales execution improved versus the previous quarters, and sales were 8.8% higher year-on-year in comparable currencies. As a result of the continued high order intake and delivery challenges, our order book broke again a new record and was over €3 billion at the end of September.
Our adjusted EBITA margin improved year-on-year to 10.8%, mainly as a result from pricing driven sales growth and better sales mix. Profitability improved in Service and Port Solutions but declined in Industrial Equipment. At the same time, our free cash flow was negative mainly due to the increase in work-in-progress and semi-finished goods as material availability challenges and customer delays continued.
Service order intake improved by 6.8% year-on-year in comparable currencies. Supply chain constraints and COVID-19 related challenges impacted Service sales, yet sales increased 8.8% year-on-year in comparable currencies. Profitability improved and adjusted EBITA margin totaled 19.6% mainly thanks to pricing driven sales growth. The agreement base value grew by 1.8% from the previous year in comparable currencies.
Industrial Equipment’s external order intake grew by 1.1% in comparable currencies. Although customer delays and supply chain constraints continued to impact sales execution, external sales increased 13.5% in comparable currencies. Adjusted EBITA margin declined year-on-year and was 4.0%, mainly driven by the inflation. However, the year-on-year decline was smaller compared to the previous quarters, as the price increases implemented earlier this year have started to impact Industrial Equipment profitability.
Market environment continued favorable within ports, and Port Solutions’ booked record-high orders totaling €454 million. Order intake was strong across businesses and regions, and the growth was driven by mid- and small-size projects. Especially rubber-tire gantry cranes had a great order quarter. After two quarters with lower sales mainly due to orderbook timing, Port Solutions sales grew 5.6% year-on-year in comparable currencies and totaled €273 million. Adjusted EBITA margin increased to 7.7%.
We expect the market volatility caused by the ongoing war and other macroeconomic concerns, as well as the pandemic, to continue. Our demand environment has remained good so far, but uncertainty has increased especially in Europe. Within industrial customer segments, we have started to see signs of slowing down in the form of longer customer decision-making times, and we have updated our Q4 demand outlook to reflect the current market sentiment.
Despite our improved delivery capability, material availability issues and supply chain constraints are not over, and we expect them to continue to impact our performance both in Q4 and into next year. We have reiterated our guidance: we expect our net sales to remain on the same level or to increase in full-year 2022 compared to 2021 and our full-year adjusted EBITA margin to remain on the same level or to decline compared to 2021.
Turning to Konecranes’ long-term competitiveness, we plan to optimize our Industrial Service and Equipment operations globally. This is a natural next step after our decision to focus Service and Industrial Equipment segments under one leadership, and continuum to our successful MHPS and MHE-Demag integrations.
The planned efficiency improvement actions(1), and simplification of our industrial business model are essential for Konecranes’ long-term success. They are planned to cover several areas and functions, such as go-to-market model, product platform harmonization, streamlining of manufacturing and logistics, and business support functions, and target mainly at Industrial Equipment business segment primarily outside of Finland. The positive annual EBITA impact of the planned actions is currently estimated at €30-35 million, and we plan to achieve it by the end of 2025. The related restructuring costs are expected to total €30-35 million.
Last but not least, our new President and CEO Anders Svensson joined the company a week ago, and at Konecranes, we are all excited that he has now started in his new role. Together with Anders and the Konecranes Leadership Team, we look forward to hosting our Capital Markets Day in Helsinki on May 10, 2023, to share what’s next for Konecranes.
(1) Plans related to efficiency improvement and simplification of industrial business model are subject to separate decision-making and various local legal requirements. Konecranes has already started first required discussions with local employee representatives. The planned changes will not affect Konecranes’ current customer commitments.
ANALYST AND PRESS BRIEFING
A live international webcast and telephone conference for analysts, investors and media will be arranged on the publishing day at 11:30 a.m. EEST. The event will be held in English. The January-September 2022 interim report will be presented by President and CEO Anders Svensson and CFO Teo Ottola. Questions may be presented at the end of the conference. The conference will be recorded, and an on-demand version of the conference will be published on the company's website later during the day.
The webcast can be watched through the following link:
https://konecranes.videosync.fi/2022-q3
To ask questions, the telephone conference can be joined by registering through the following link:
https://call.vsy.io/access-9243
Phone numbers and the conference ID to access the conference will be provided after the registration. In case you would like to ask a question during the conference, please dial *5 on your telephone keypad to enter the question queue.
Questions can also be presented in writing through the question form, while watching the webcast.
NEXT REPORT
Konecranes Plc plans to publish its Financial statement release on February 2, 2023.
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 16,500 employees in around 50 countries. Konecranes shares are listed on the Nasdaq Helsinki (symbol: KCR).
DISTRIBUTION
Nasdaq Helsinki
Major media
www.konecranes.com
