Cargotec’s interim report January–March 2022: Improved profitability despite supply chain challenges

CARGOTEC CORPORATION, INTERIM REPORT JANUARY–MARCH 2022, 27 APRIL 2022 AT 1:30 PM (EEST)

Cargotec’s interim report January–March 2022: Improved profitability despite supply chain challenges

- New strategy focusing on sustainability and higher financial performance
- Excellent progress in services and in Hiab continued
- Uncertainty on deliveries due to component availability continues

January–March 2022 in brief: Strong demand continued

• Orders received increased by 2 percent and totalled EUR 1,135 (1,115) million.
• Order book amounted to EUR 3,151 (31 Dec 2021: 2,847) million at the end of the period.
• Sales increased by 17 percent and totalled EUR 851 (730) million.
• Service sales increased by 12 percent and totalled EUR 284 (254) million.
• Service sales represented 33 (35) percent of consolidated sales.
• Eco portfolio sales increased by 38 percent and totalled EUR 202 (147) million.
• Eco portfolio sales represented 24 (20) percent of consolidated sales.
• Operating profit was EUR 37 (25) million, representing 4.4 (3.4) percent of sales. The operating profit includes items affecting comparability worth EUR -28 (-27) million.
• Comparable operating profit increased by 26 percent and amounted to EUR 65 (52) million, representing 7.7 (7.1) percent of sales.
• Cash flow from operations before financial items and taxes totalled EUR -70 (51) million. Cash flow was negative due to increase in net working capital stemming mainly from higher inventories.
• Net income for the period amounted to EUR 21 (10) million.
• Earnings per share was EUR 0.33 (0.15).

Outlook for 2022
Cargotec expects its comparable operating profit for 2022 to improve from 2021 (EUR 232 million).

Cargotec’s key figures

MEUR	Q1/22	Q1/21	Change	2021
Orders received	1,135	1,115	2%	4,427
Service orders received	307	299	2%	1,162
Order book, end of period	3,151	2,217	42%	2,847
Sales	851	730	17%	3,315
Service sales	284	254	12%	1,076
Service sales, % of sales	33%	35%		32%
Eco portfolio sales	202	147	38%	626
Eco portfolio sales, % of sales	24%	20%		19%
Operating profit	37.5	24.5	53%	355.7
Operating profit, %	4.4%	3.4%		10.7%
Comparable operating profit	65.3	51.6	26%	231.5
Comparable operating profit, %	7.7%	7.1%		7.0%
Income before taxes	30.2	18.3	65%	333.1
Cash flow from operations before financing items and taxes	-70.3	51.2	< -100 %	169.3
Net income for the period	21.1	9.6	> 100 %	246.7
Earnings per share, EUR	0.33	0.15	> 100 %	3.82
Interest-bearing net debt, end of period	573	739	-22%	414
Gearing, %	37.8%	58.6%		26.8%
Interest-bearing net debt / EBITDA*	1.2	3.5		0.9
Return on capital employed (ROCE), last 12 months, %	15.3%	2.9%		14.5%
Personnel, end of period	11,282	11,449	-1%	11,174

* Last 12 months’ EBITDA

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’s CEO Mika Vehviläinen: New refocused strategy, improved profitability despite supply chain challenges

The year 2022 has started eventfully. We refocused our strategy at the end of March. Sustainability and profitable growth remain our breakthrough objectives but, going forward, we focus on developing Hiab, Kalmar mobile equipment and straddle and shuttle carriers, as well as related services (Core businesses). The decision to refocus the strategy follows the decision of the Boards of Directors of Cargotec and Konecranes to cancel the planned merger after the negative resolution of the UK Competition & Markets Authority. Along with the strategy refocus, we announced our plans to exit Kalmar's heavy port cranes business, and started an evaluation of strategic options of MacGregor.

Hiab and refocused Kalmar offer their customers lifecycle services as well as market leading equipment and technologies. During the last eight years, their comparable operating profit margins have been above 10 percent. A large installed base with related services forms the basis of these businesses with both of them holding leading market positions in structurally attractive markets.

Our refocused strategy enables additional investments in research, development and M&A in our core businesses, providing us a good position to further enhance our business through electrification, robotics and digitalisation.

The market environment has also evolved strongly during the first quarter. The persisting coronavirus pandemic and the related restriction measures have caused global delivery and logistics challenges, as a result of which also the level of inflation has risen. China’s strong blockage measures pose a risk that these challenges will continue.

Russia’s attack on Ukraine is cruel and unjustified. We comply with the international sanctions imposed on Russia and have stopped our sales in Russia and Belarus. The direct impacts of the attack on Cargotec's business have so far been limited. However, in the form of component availability challenges and accelerating inflation, for example, the indirect effects of the crisis on the global economy and our business are significant.

We have responded to these challenges by continuing the price increases we started last year, engaging in an active supplier cooperation, and building alternative supply chains.

Despite the uncertain market situation, demand for our core businesses continued strong. Hiab reached its all-time second highest orders received while Kalmar’s demand remained on a strong level. Our sales increased by 17 percent during the first quarter, even when component challenges still had a negative effect on our sales development. We estimate the supply chain challenges to continue also during the rest of the year.

The positive development of our service business continued with orders received increasing by two percent to 307 million euros, which is close to an all-time record. Service sales increased by 12 percent to 284 million euros.

Also the customer interest towards our eco portfolio is strong. As examples, Hiab received a record order for electric truck mounted forklifts and Kalmar was awarded its first orders for the world’s first fully electric reachstackers. Kalmar’s order to provide the world's first electric reachstacker with a combined charging system to Norway as well as Hiab’s record order also include five-year service agreements. The eco portfolio sales also progressed well, increasing as much as by 38 percent from the comparison period and reaching a 24 percent share of Cargotec total sales. In the future, as 28 new products were added to the eco portfolio and Hiab presented its third all-electric truck mounted forklift model, we will be able to respond even better to the demand for sustainable equipment.

Our comparable operating profit increased by 26 percent to 65 million euros. This illustrates well the excellent resilience and agility of our business when, despite supply chain challenges, we were able to improve our profitability.

Reporting segments’ key figures

Orders received

MEUR	Q1/22	Q1/21	Change	2021
Kalmar	499	529	-6%	2,063
Hiab	482	425	13%	1,713
MacGregor	154	161	-5%	652
Internal orders	0	0		0
Total	1,135	1,115	2%	4,427

Order book

MEUR					31 Mar 2022	31 Dec 2021	Change
Kalmar					1,449	1,302	11%
Hiab					1,125	985	14%
MacGregor					577	560	3%
Internal order book					0	0
Total					3,151	2,847	11%

Sales

MEUR	Q1/22	Q1/21	Change	2021
Kalmar	372	324	15%	1,512
Hiab	340	287	18%	1,250
MacGregor	140	119	18%	553
Internal sales	0	0		-1
Total	851	730	17%	3,315

Operating profit

MEUR	Q1/22	Q1/21	Change	2021
Kalmar	22.7	18.0	26%	344.5
Hiab	43.5	33.1	31%	144.7
MacGregor	-5.7	-7.9	28%	-40.0
Corporate administration and support functions	-23.0	-18.6	-23%	-93.5
Total	37.5	24.5	53%	355.7

Comparable operating profit

MEUR	Q1/22	Q1/21	Change	2021
Kalmar	28.5	20.2	41%	120.1
Hiab	48.6	38.8	25%	166.3
MacGregor	0.1	3.3	-96%	-14.7
Corporate administration and support functions	-12.0	-10.7	-12%	-40.1
Total	65.3	51.6	26%	231.5

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 3:00 p.m. EEST. The event will be held in English. The report will be presented by CEO Mika Vehviläinen and CFO Mikko Puolakka. The presentation material will be available at www.cargotec.com by latest 2:30 p.m. EEST.
The telephone conference can be accessed with code 51056245# by calling one of the following numbers:

• Finland: +358 981 710 310
• France: +33 170 750 711
• Germany: +49 691 380 3430
• Singapore: +65 642 98 349
• Sweden: +46 856 642 651
• Switzerland: +41 225 809 034
• United Kingdom: +44 333 300 0804
• United States: +1 631 913 1422

The event can also be viewed as a live webcast at https://cargotec.videosync.fi/2022-q1. The conference call will be recorded and an on-demand version of the conference will be published at Cargotec’s website later during the day.
Note that by dialling in to the conference call, the participant agrees that personal information such as name and company name will be collected.

For further information, please contact:
Mikko Puolakka, CFO, tel. +358 20 777 4105
Aki Vesikallio, Director, Investor Relations, tel. +358 40 729 1670

Cargotec (Nasdaq Helsinki: CGCBV) enables smarter cargo flow for a better everyday with its leading cargo handling solutions and services. Cargotec's business areas Kalmar, Hiab and MacGregor are pioneers in their fields. Through their unique position in ports, at sea and on roads, they optimise global cargo flows and create sustainable customer value. Cargotec has signed the United Nations Global Compact Business Ambition for 1.5°C. The company's sales in 2021 totalled approximately EUR 3.3 billion and it employs around 11,000 people. www.cargotec.com

Attachment

• Cargotec's interim report January–March 2022, pdf

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