Kalmar's half-year financial report January–June 2024: Continued solid profitability

KALMAR CORPORATION, HALF-YEAR FINANCIAL REPORT JANUARY–JUNE 2024, 8 August 2024 AT 9:20 AM (EEST)

Kalmar's half-year financial report January–June 2024:
Continued solid profitability

• Demerger of Cargotec and listing of Kalmar successfully completed
• Orders received totalled EUR 375 (437) million in the second quarter, demand sequentially on a stable level
• Order book at the end of June totalled EUR 925 (1,281) million
• Sales declined by 25 percent from the same quarter previous year and amounted to EUR 417 (552) million in the second quarter
• Share of eco portfolio¹ sales represented 40 (33) percent of consolidated sales in the second quarter
• The comparable operating profit margin amounted to 12.6 (13.0) percent in the second quarter, presenting a solid profitability
• Kalmar's reporting segments are Equipment and Services. Equipment's orders received totalled EUR 238 (302) million and Services' totalled EUR 137 (135) million in the second quarter
• Kalmar is planning to reach approximately EUR 50 million gross efficiency improvements by the end of 2026, in line with the aim of reaching the previously communicated 15 percent comparable operating profit margin target by 2028.

April–June 2024 in brief: Continued solid profitability and successful listing of Kalmar

• Orders received decreased by 14 percent and totalled EUR 375 (437) million
• Order book amounted to EUR 925 (31 Dec 2023: 1,024) million at the end of the period
• Sales decreased by 25 percent and totalled EUR 417 (552) million
• Eco portfolio sales represented 40 (33) percent of consolidated sales
• Eco portfolio sales decreased by 7 percent and totalled EUR 168 (181) million
• Operating profit was EUR 36 (72) million, representing 8.6 (13.0) percent of sales. The operating profit includes items affecting comparability worth EUR -16 (0) million
• Comparable operating profit decreased by 27 percent and amounted to EUR 52 (72) million representing 12.6 (13.0) percent of sales
• Cash flow from operations before finance items and taxes totalled EUR 11 (-1) million
• Profit for the period amounted to EUR 31 (56) million
• Basic earnings per share was EUR 0.49 (0.87).²

January–June 2024 in brief: Solid profitability and stable demand

• Orders received decreased by 14 percent and totalled EUR 777 (908) million
• Order book amounted to EUR 925 (31 Dec 2023: 1,024) million at the end of the period
• Sales decreased by 17 percent and totalled EUR 856 (1,037) million
• Eco portfolio sales represented 40 (33) percent of consolidated sales
• Eco portfolio sales increased by 1 percent and totalled EUR 344 (341) million
• Operating profit was EUR 82 (128) million, representing 9.5 (12.3) percent of sales. The operating profit includes items affecting comparability worth EUR -25 (0) million
• Comparable operating profit decreased by 17 percent and amounted to EUR 106 (128) million representing 12.4 (12.3) percent of sales
• Cash flow from operations before finance items and taxes totalled EUR 113 (-3) million
• Profit for the period amounted to EUR 65 (101) million
• Basic earnings per share was EUR 1.01 (1.57).²

Outlook for 2024 unchanged

According to the stock exchange release published by Kalmar on 1 July 2024, Kalmar’s comparable operating profit margin as a standalone company is estimated to be above 11 percent in 2024.

Vision and strategy

Kalmar is a market leader in heavy material handling equipment with deep-rooted foundations in customer proximity, attractive market, experienced and talented people and strong financial profile. Kalmar’s industry and customers are facing pressure from different megatrends, which drive renewal across the whole industry. Kalmar is working to solve the challenges customers face, the most significant of which are:

• Safety
• Productivity
• Decarbonisation and electrification
• Changing logistics landscape
• Labour shortage
• Intelligent operations.

To address these challenges, Kalmar is focusing on three strategic areas:

• Investing in sustainable innovation in the area of decarbonised and electric equipment, and equipment with driver assistance and autonomous functions to create added customer value
• Growing services by driving growth and profitability by increasing the capture rate of spare part orders for Kalmar's installed base, increasing the share of recurring business through service contracts and creating customer lifecycle value through an intelligent service offering
• Driving excellence by improving profitability and cash flow generation to fund further investments into R&D and organic growth, inorganic growth and distributing profits to shareholders.
  
  

Performance targets

Kalmar's Board of Directors has set the following performance targets for 2028:

Financial targets

• Sales growth of 5 percent p.a. over the cycle;
• Comparable operating profit margin of 15 percent;
• ROCE above 25 percent;
  
  

Capital structure and sustainability framework

• Aligned with SBTi targets with 1.5 °C commitment;³
• Leverage (Net debt to EBITDA) under 2x;
• Dividend payout ratio of 30-50 percent per annum.

Corporate information and basis for preparation

Kalmar Corporation was formed as a result of the partial demerger from Cargotec Corporation (“demerger”), which was completed on 30 June 2024. The trading in Kalmar Corporation shares on the main market of Nasdaq Helsinki commenced on 1 July 2024.

In this half-year report, financial information is presented on an actual basis for the consolidated balance sheet as at 30 June 2024, and on a carve-out basis for the earlier periods. Statement of income is presented on a carve-out basis for all periods presented. The differences in carve-out and actual basis of preparation impacts the presentation of certain key figures. Key figures calculated based on equity, interest bearing debt and net debt are presented only for 30 June 2024 information as the previous periods with carve-out information do not reflect the capital structure and financing of Kalmar Group. Key figures based on number of shares are calculated based on the number of shares upon listing of Kalmar Corporation on 1 July 2024 for all periods presented. Key figures that are based on market value or trading volume are not presented for periods prior to 1 July 2024.

The carve-out financial statements do not necessarily reflect what the financials would have been had Kalmar operated as an independent consolidated group and had it therefore presented stand-alone consolidated financial information during the periods presented. Further, the carve-out financial information may not be indicative of Kalmar’s future performance. The carve-out reporting principles are described in note 2. Basis of preparation.

Kalmar’s key figures

MEUR	Q2/24	Q2/23	Change	Q1–Q2/24	Q1–Q2/23	Change	2023
	Carve-out	Carve-out		Carve-out	Carve-out		Carve-out
Orders received	375	437	-14%	777	908	-14%	1,705
Order book, end of period	925	1,281	-28%	925	1,281	-28%	1,024
Sales	417	552	-25%	856	1,037	-17%	2,050
Eco portfolio sales	168	181	-7%	344	341	1%	718
Eco portfolio sales, % of sales	40%	33%		40%	33%		35%
Operating profit	35.9	71.6	-50%	81.6	127.5	-36%	240.2
Operating profit, %	8.6%	13.0%		9.5%	12.3%		11.7%
Comparable operating profit	52.3	71.6	-27%	106.3	127.9	-17%	254.7
Comparable operating profit, %	12.6%	13.0%		12.4%	12.3%		12.4%
Profit before taxes	39.7	71.4	-44%	87.5	127.0	-31%	241.5
Cash flow from operations before finance items and taxes	11.3	-1.5	> 100%	113.0	-3.5	> 100 %	256.8
Profit for the period	31.2	55.8	-44%	64.7	100.7	-36%	193.8
Basic earnings per share, EUR*	0.49	0.87	-44%	1.01	1.57	-36%	3.01
Interest-bearing net debt, end of period	157	-173	> 100%	157	-173	> 100%	-123
Gearing, %	27.3%	n/a		27.3%	n/a		n/a
Interest-bearing net debt / EBITDA**	0.6	n/a		0.6	n/a		n/a
Return on capital employed (ROCE), last 12 months, %	20.2%	22.7%		20.2%	22.7%		24.4%
Personnel, end of period	5,198	5,170	1%	5,198	5,170	1%	4,991
* Based on the number of shares upon listing of Kalmar Corporation on 1 July 2024
** Last 12 months’ EBITDA

Basic earnings per share is calculated based on the number of shares upon listing of Kalmar Corporation on 1 July 2024 for all periods presented. Gearing, % and interest bearing net debt / EBITDA are presented only for 30 June 2024 information as the previous periods with carve-out information do not reflect the capital structure and financing of Kalmar Group.

President & CEO Sami Niiranen: Successful listing of Kalmar and continued solid profitability

I am proud to present the first financial results of the new, stock-listed Kalmar. This quarter is a landmark for Kalmar as the demerger of Cargotec was completed at the end of June followed by the successful listing of Kalmar on the main market of Nasdaq Helsinki on 1 July 2024. This milestone represents not only a new chapter in our journey but also an opportunity to further enhance our commitment to delivering added value to our customers, partners, and shareholders. We celebrated this milestone together at our new headquarters in Ruoholahti, Helsinki, and across all our global locations.

As we embark on a new era for Kalmar, we are pleased to report a stable second quarter marked by continued solid profitability. However, the demand picture continued to be mixed with some softness especially in the North American distribution customer segment and some delayed decision making in larger orders. Consequently, our orders received amounted to EUR 375 million with a decline of 14 percent year-on-year, presenting a sequentially stable demand. Sales declined by 25 percent from the previous year and amounted to EUR 417 million, impacted by slower market activity and lower order book. The service sales remained more stable than the equipment sales, demonstrating resilience. The comparable operating profit margin amounted to 12.6 percent, presenting a solid profitability primarily driven by good business performance and a cost structure that has already been adjusted to lower sales. The comparable operating profit amounted to EUR 52.3 million and cash flow from operations before finance items and taxes January-June was EUR 113.0 million. Our leverage is 0.6x, giving us an excellent foundation for the future.

Kalmar's strength lies in our global leadership in the mission-critical heavy material handling market and our ability to create customer value. We've built a trusted reputation by partnering closely with our customers, consistently delivering solutions that make a real difference in their operations. A testament to this trust is the fact that we have retained all of our top 20 customers since 2016.

In May 2024, as part of the demerger and listing prospectus, Kalmar announced its new strategy and plan towards sustainable and profitable growth. The driving excellence initiative is a crucial step towards achieving Kalmar’s long-term performance targets. Detailed planning has advanced and Kalmar is planning to reach approximately EUR 50 million gross efficiency improvements by the end of 2026, in line with reaching the previously communicated 15 percent comparable operating profit margin target by 2028. These efficiency improvements enable enhanced investments in sustainable innovations and service growth. The main measures are related to commercial and operational excellence actions that include active pricing management, supply chain and process optimisation and continuous focus on competitive operational cost-base and faster decision-making.

By continuously managing our portfolio and implementing commercial and operational excellence initiatives, we aim to enhance efficiency and achieve best-in-class performance. This focus has enabled us to grow above the market in recent years, supporting higher profitability and a strong return on capital employed (ROCE).

As we look to the future, our strategy is clear: to drive sustainable growth by leading the industry towards greater electrification, accelerate service growth and drive business excellence. In the second quarter, approximately 40 percent of the value of our total sales was attributed to our eco portfolio, underscoring our commitment to sustainable innovation. Our extensive and active installed base of 65,000 machines globally provides a solid foundation for significant services growth, fueled by our innovative offerings.

At the heart of Kalmar's success is our dedicated and talented team of approximately 5,200 employees worldwide. Their commitment, expertise, and innovation drive our progress and set us apart in the industry. Thank you to each of you for your hard work and commitment to Kalmar's success.

The first half of 2024 has laid a solid foundation for our future as an independent company. An important milestone has been achieved and I want to thank all our colleagues for a fantastic job up to this point. I would also like to take this opportunity to welcome all shareholders to Kalmar. As an independent company we are fully committed to execute our growth strategy and focus on capital allocation in the best interest of Kalmar and our shareholders.

Reporting segments’ key figures

Orders received

MEUR	Q2/24	Q2/23	Change	Q1–Q2/24	Q1–Q2/23	Change	2023
	Carve-out	Carve-out		Carve-out	Carve-out		Carve-out
Equipment	238	302	-21%	485	631	-23%	1,167
Services	137	135	2%	292	277	5%	538
Other	0	0		0	0		0
Total	375	437	-14%	777	908	-14%	1,705

Order book

MEUR	30 Jun 2024	31 Dec 2023	Change
		Carve-out
Equipment	809	928	-13%
Services	110	90	22%
Other	5	7	-18%
Total	925	1,024	-10%

Sales

MEUR	Q2/24	Q2/23	Change	Q1–Q2/24	Q1–Q2/23	Change	2023
	Carve-out	Carve-out		Carve-out	Carve-out		Carve-out
Equipment	279	390	-28%	582	729	-20%	1,442
Services	139	142	-2%	275	287	-4%	567
Other	0	20	< -100%	0	21	< -100%	41
Internal sales	0	0		0	0		0
Total	417	552	-25%	856	1,037	-17%	2,050

Operating profit

MEUR	Q2/24	Q2/23	Change	Q1–Q2/24	Q1–Q2/23	Change	2023
	Carve-out	Carve-out		Carve-out	Carve-out		Carve-out
Equipment	36.4	56.8	-36%	75.7	100.7	-25%	201.8
Services	24.0	25.6	-6%	46.8	52.6	-11%	95.6
Other	-24.6	-10.8	< -100%	-40.8	-25.8	-58%	-57.2
Total	35.9	71.6	-50%	81.6	127.5	-36%	240.2

Comparable operating profit

MEUR	Q2/24	Q2/23	Change	Q1–Q2/24	Q1–Q2/23	Change	2023
	Carve-out	Carve-out		Carve-out	Carve-out		Carve-out
Equipment	36.4	56.8	-36%	75.7	100.7	-25%	201.8
Services	24.0	25.6	-6%	46.8	52.6	-11%	95.6
Other	-8.1	-10.8	25%	-16.2	-25.4	36%	-42.7
Total	52.3	71.6	-27%	106.3	127.9	-17%	254.7

Comparable operating profit, %

MEUR	Q2/24	Q2/23	Change	Q1–Q2/24	Q1–Q2/23	Change	2023
	Carve-out	Carve-out	%-points	Carve-out	Carve-out		Carve-out
Equipment	13.1%	14.6%	-1.5	13.0%	13.8%	-0.8	14.0%
Services	17.3%	18.1%	-0.8	17.0%	18.3%	-1.3	16.9%
Other	n/a	n/a		n/a	n/a		n/a
Total	12.6%	13.0%	-0.4	12.4%	12.3%	0.1	12.4%

Telephone conference for analysts, investors and media

A live international telephone conference for analysts, investors and media will be arranged on the publishing day at 11:00 a.m. EEST. The event will be held in English. The report will be presented by the President & CEO Sami Niiranen and CFO Sakari Ahdekivi. The presentation material will be available at www.kalmarglobal.com by the latest 11:00 a.m. EEST.

To ask questions, please join the teleconference by registering via the following link: https://palvelu.flik.fi/teleconference/?id=50050084. After the registration, the conference phone numbers and a conference ID to access the conference will be provided. Questions can be presented during the conference.

The event can also be viewed as a live webcast at https://kalmar.videosync.fi/q2-2024. The conference call will be recorded and an on-demand version of the conference will be published at Kalmar’s website later during the day.

Please note that by dialling to the conference call, the participant agrees that personal information such as name and company name will be collected.

For further information, please contact:
Sakari Ahdekivi, CFO, tel. +358 50 400 3557

Carina Geber-Teir, SVP, IR, Marketing and Communications, tel. +358 40 502 4697

About Kalmar
Kalmar (Nasdaq Helsinki: KALMAR) is moving goods in critical supply chains around the world, with the vision to be the forerunner in sustainable material handling equipment and services. The company offers a wide range of industry shaping heavy material handling equipment and services to ports and terminals, distribution centres, manufacturing and heavy logistics. Headquartered in Helsinki, Finland, Kalmar operates globally in over 120 countries and employs approximately 5,200 people. In 2023, the company's sales totalled approximately EUR 2.0 billion. www.kalmarglobal.com

¹ The eco portfolio includes the equipment and services that are defined to be either aligned with the EU Taxonomy or expected to be aligned in the near future.

² Based on the number of shares upon listing of Kalmar Corporation on 1 July 2024

³ Plan following criteria of the Science Based Targets initiative.

Attachment

• Kalmar Q2 half-year report 2024 en