Cargotec’s half year financial report January–June 2021: Record-high orders

Cargotec’s half year financial report January–June 2021: Record-high orders

• Orders received increased by 101 percent and totalled EUR 1,276 million in the second quarter
• Service orders received increased by 27 percent in the second quarter
• Excellent quarter for Hiab
• Profitability improved
• Global logistics and supply chain challenges affected delivery times

April–June 2021 in brief: Strong order book

• Orders received increased by 101 percent and totalled EUR 1,276 (637) million.
• Order book amounted to EUR 2,606 (31 Dec 2020: 1,824) million at the end of the period.
• Sales increased by 13 percent and totalled EUR 853 (756) million.
• Service sales increased by 12 percent and totalled EUR 268 (239) million.
• Service and software sales represented 36 (37) percent of consolidated sales.
• Operating profit was EUR 45 (-20) million, representing 5.2 (-2.6) percent of sales. Operating profit includes items affecting comparability worth EUR -25 (-69) million.
• Comparable operating profit increased by 41 percent and amounted to EUR 70 (49) million, representing 8.2 (6.5) percent of sales.
• Cash flow from operations before financial items and taxes totalled EUR 13 (4) million.
• Net income for the period amounted to EUR 26 (-36) million.
• Earnings per share was EUR 0.40 (-0.56).

January–June 2021 in brief: Operating profit increased

• Orders received increased by 69 percent and totalled EUR 2,392 (1,417) million.
• Order book amounted to EUR 2,606 (31 Dec 2020: 1,824) million at the end of the period.
• Sales decreased by 2 percent and totalled EUR 1,583 (1,614) million.
• Service sales increased by 5 percent and totalled EUR 523 (499) million.
• Service and software sales represented 38 (36) percent of consolidated sales.
• Operating profit was EUR 69 (7) million, representing 4.4 (0.4) percent of sales. Operating profit includes items affecting comparability worth EUR -52 (-88) million.
• Comparable operating profit increased by 28 percent and amounted to EUR 121 (95) million, representing 7.7 (5.9) percent of sales.
• Cash flow from operations before financial items and taxes totalled EUR 64 (26) million.
• Net income for the period amounted to EUR 35 (-25) million.
• Earnings per share was EUR 0.55 (-0.39).

Outlook for 2021

Cargotec reiterates its outlook published on 4 February 2021 and expects its comparable operating profit for 2021 to improve from 2020 (EUR 227* million).

*The comparable operating profit has been specified from EUR 228 million to EUR 227 million. Additional information about the comparable operating profit definition is presented in the stock exchange release published on 29 March 2021.

Cargotec’s key figures

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 on one row.

Cargotec changed the definition of the alternative performance measure comparable operating profit starting from 1 January 2021 to align it with the definition used in the merger prospectus. In addition to the items significantly affecting comparability, the restated comparable operating profit will also exclude the impacts of the purchase price allocation. 2020 comparison figures have been restated according to the new definition. As a result, in 2020 the comparable operating profit increased by EUR 6 million in the second quarter, EUR 12 million in January-June and EUR 23 million in the financial year. Additional information regarding the changed definition is presented in the stock exchange release published on 29 March 2021.

Cargotec’s CEO Mika Vehviläinen: Record-high orders in Hiab and Kalmar

The second quarter of 2021 was significantly different from the comparison period. The demand for our solutions was further increased by the market recovery after last year’s difficult pandemic situation and the increase in economic activity that started at the end of 2020. Our main demand drivers – number of containers handled at ports globally, construction activity, and the level of new vessel contracting – were all growing strongly in early 2021.

Our orders received more than doubled, reaching an all-time record of almost EUR 1.3 billion. A strong mobile equipment demand pushed Kalmar’s orders received to a record-high level of EUR 600 million. Orders for Kalmar’s automation solutions remained moderate as customers continue to consider their larger investments carefully. Hiab’s demand remained exceptionally strong, with orders received reaching a record number for a third consecutive quarter. MacGregor’s orders received increased by 41 percent from the comparison period as shipbuilding recovered in both merchant ship and offshore sectors.

Our order book increased by 43 percent from the end of 2020, driven by high orders in Kalmar mobile equipment and Hiab. We estimate that, in addition to the strong market, high demand is due to the pent-up demand from last year as well as customers preparing for longer delivery times and price increases.

Our sales increased by 13 percent from the comparison period, although global logistics challenges and component shortages in the supply chain have extended our delivery times and limited our ability to meet the increasing demand.

The economic recovery from the pandemic is also reflected in the prices of raw materials, components and freight transportation. We are prepared to respond to the situation with price increases and active cooperation with our suppliers. Challenges in the supply chain and the related price increases mainly affected Kalmar’s results. Cargotec’s comparable operating profit increased by 41 percent, driven by higher comparable operating profit in Hiab. Comparable operating profit increased also in MacGregor while Kalmar’s comparable operating profit was at the comparison period’s level.

The impact of extended delivery times and increased costs will also be seen in the next quarter, but we expect the situation to improve towards the end of the year.

Our service business developed strongly in the second quarter with service orders received increasing by 27 percent compared to the comparison period. Service sales grew by 12 percent and, together with the software business, constituted 36 percent of our total sales.

After the reporting period, in early July, we announced that we had completed the sale of the Navis business to Accel-KKR, a Silicon Valley-based investment firm for an enterprise value of EUR 380 million. Accel-KKR has transferred EUR 350 million of the enterprise value to Cargotec and, on 1 July 2021, obtained control of Navis’ business. The remaining EUR 30 million will be transferred to Cargotec by the end of 2021. The proceeds enable further investments in acquisitions and R&D investments in the fields of electrification, digitalisation and automation.

On 1 October 2020, Cargotec Corporation and Konecranes Plc announced their combination agreement and a merger plan to combine the two companies through a merger. Extraordinary general meetings of Cargotec and Konecranes held on 18 December 2020 approved the merger. Various competition authorities in the EU, UK, US, and China, among others, are currently reviewing the proposed transaction. In July, The European Commission and Competition and Markets Authority in the UK opened a phase II review in connection with the planned transaction. In terms of the European Commission’s phase II review, we expect it to continue during H2/2021. Both Cargotec and Konecranes are confident that the approvals are received to allow completion of the transaction by the end of H1/2022. Until then, both companies will operate fully separately and independently. More information about the merger is available from the web address www.sustainablematerialflow.com.

During this spring, we have refined our strategy and during the second half of the year we will continue our determined investments in sustainable and profitable growth. Our key business driver is to reduce the carbon footprint of the logistics industry. We have continued our product development investments and, during the end of this year, Kalmar’s entire portfolio becomes available as electrically powered versions.

Reporting segments’ key figures

Orders received

Source: Cargotec