Konecranes Plc’s Interim Report, January-September 2023: All-time high quarterly comparable EBITA margin

Konecranes has made changes in reporting its orders received and net working capital. The previous year’s figures presented in this report have been restated and are fully comparable with the current year figures.

THIRD QUARTER HIGHLIGHTS
– Order intake EUR 852.9 million (1,087.9), -21.6 percent (-18.7 percent on a comparable currency basis), order intake decreased in all three segments

– Service annual agreement base value EUR 321.0 million (315.5), +1.7 percent (+6.0 percent on a comparable currency basis)

– Service order intake EUR 359.6 million (369.5), -2.7 percent (+2.2 percent on a comparable currency basis)

– Order book EUR 3,282.1 million (3,052.1) at the end of September, +7.5 percent (+11.7 percent on a comparable currency basis)

– Sales EUR 1,005.1 million (884.6), +13.6 percent (+18.3 percent on a comparable currency basis), sales increased in all three segments

– Comparable EBITA margin 12.3 percent (10.8) and comparable EBITA EUR 123.2 million (95.3); the increase in the comparable EBITA margin was mainly attributable to higher sales volumes and pricing

– Operating profit EUR 97.2 million (91.5), 9.7 percent of sales (10.3), items affecting comparability totaled EUR 18.0 million (-7.2), mainly comprising of restructuring costs

– Earnings per share (diluted) EUR 0.88 (0.77)

– Free cash flow EUR 114.6 million (-38.2)

JANUARY–SEPTEMBER 2023 HIGHLIGHTS

– Order intake EUR 3,235.4 million (3,267.6). -1.0 percent (+1.0 percent on a comparable currency basis)

– Service order intake EUR 1,112.9 million (1,083.0), +2.8 percent (+5.0 percent on a comparable currency basis)

– Sales EUR 2,817.4 million (2,343.9), +20.2 percent (+22.8 percent on a comparable currency basis)

– Comparable EBITA margin 11.2 percent (8.5) and comparable EBITA EUR 316.9 million (200.2); the comparable EBITA margin increased in all three segments

– Operating profit EUR 280.9 million (120.1), 10.0 percent of sales (5.1), items affecting comparability totaled EUR 12.9 million (55.3), mainly comprising of restructuring costs

– Earnings per share (diluted) EUR 2.26 (0.86)

– Free cash flow EUR 344.6 million (-66.2)

– Net debt EUR 518.0 million (749.7) and gearing 34.3 percent (56.7)

DEMAND OUTLOOK
Our demand environment within industrial customer segments has remained good and continues on a healthy level, despite the weakened global macro indicators and some signs of weakening in all three regions.

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

FINANCIAL GUIDANCE
Konecranes expects net sales to increase in full-year 2023 compared to 2022. Konecranes expects the full-year 2023 comparable EBITA margin to improve from 2022.

CEO ANDERS SVENSSON:
Konecranes had a strong Q3. Sales grew 18.3% year-on-year in comparable currencies. As a result, we posted an all-time high comparable EBITA margin of 12.3%, reaching our financial target range of 12-15% for the first time on a quarterly basis. The excellent Q3 performance gives us confidence to deliver further sales growth and profitability improvement despite the weaker macro-environment around us.

Our demand environment remained good in general in Q3. Order intake decreased 18.7% year-on-year on a comparable currency basis, not due to the weakened macro-environment but rather the timing of Port Solutions’ customer decision-making. Our orderbook was €3.3 billion at the end of September, 11.7% higher than a year ago on a comparable currency basis.

Our delivery capability continued at the same good level as in previous quarters. Group sales exceeded €1.0 billion and were 18.3% higher versus a year ago on a comparable currency basis. Despite the good sales execution, we continued to encounter some deliveries postponed by customers and global supply chain challenges.

As a result of the higher sales and continued positive pricing impact, we posted an all-time high Group comparable EBITA margin of 12.3%. Profitability improved year-on-year in all three Business Segments, most notably in Industrial Equipment. Also cashflow remained on a strong level.

Turning to our Business Segments, Service’s order intake increased 2.2% year-on-year in comparable currencies. Sales increased 11.5% year-on-year in comparable currencies mainly due to volume growth and pricing. The comparable EBITA margin improved once again and was 20.9%. The agreement base value also continued to grow and in comparable currencies was 6.0% higher at the end of Q3 versus a year ago.

Both Industrial Equipment’s external orders and external sales increased by 3.7% year-on-year in comparable currencies. Accordingly, the comparable EBITA margin increased year-on-year to 7.1%, mainly driven by higher sales due to pricing and a positive sales mix. Our Industrial Service and Equipment optimization program progressed as planned, and as a result, we booked restructuring costs of €17.5 million in Industrial Equipment at the end of the quarter.

In Port Solutions, order intake totaled €232 million, decreasing 48.5% y

Our demand environment has remained good so far, although the macroeconomic indicators have signaled weakening operating conditions throughout the year. We continue to see some signs of slowing down within our industrial customer segments, but at the same time, we expect demand to remain on a healthy level. Regarding our port customers, container throughput continues to be on a high level, and long-term prospects related to container handling remain good. Our Port Solutions sales pipeline includes projects of all sizes, and we expect that Q3 was the trough for 2023 orders. That said, we do not expect Q4 orders to reach Q1-Q2 levels, as we are not expecting to sign any large projects due to the timing of customer decision-making.

We reiterate our financial guidance for 2023. We expect our net sales to increase in full-year 2023 compared to 2022 and our full-year comparable EBITA margin to improve from 2022. Despite our continued good sales execution in Q3, material availability challenges are not fully over, and supply chains remain fragile.

As a natural continuation to Konecranes’ purpose launched earlier this year – shaping next generation material handling for a smarter, safer and better world – we launched our new values in September. Every employee was invited to participate in the value determination process, and after months of extensive work, we now have a value set that reflects our company culture well. The four values – Putting customers first, Doing the right thing, Driving for the better, and Winning together – serve as the core foundation for our ambition to become the world leader in material handling solutions.

It has now been a year since I joined Konecranes as the President and CEO. I had high expectations when I started, and the past twelve months have only confirmed my initial positive impressions. I have traveled to multiple countries and met employees, customers, suppliers, investors and other stakeholders. The message from all these meetings has been clear: Konecranes is a great company and there is still potential for more.

This year, we have started to unlock that potential, as reflected in our strong Q3 performance. Despite the uncertainty around us, we keep working hard towards achieving our ambitious financial targets.
Source: Konecranes Plc.