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Cargotec’s interim report January–March 2023: Record-high comparable operating profit

Cargotec Corporation
Cargotec Corporation

CARGOTEC CORPORATION, INTERIM REPORT JANUARY–MARCH 2023, 27 APRIL 2023 AT 9:00 AM EEST

Cargotec’s interim report January–March 2023: Record-high comparable operating profit
₋ Demand remained at a good level
₋ Strong sales development, increase by 26 percent
₋ Comparable operating profit improved in core businesses by 62 percent

January–March 2023 in brief: Comparable operating profit margin above 10 percent

  • Orders received decreased by 7 percent and totalled EUR 1,059 (1,135) million.

  • Order book amounted to EUR 3,467 (31 Dec 2022: 3,541) million at the end of the period.

  • Sales increased by 26 percent and totalled EUR 1,074 (851) million.

  • Service sales increased by 22 percent and totalled EUR 346 (284) million.

  • Service sales represented 32 (33) percent of consolidated sales.

  • Eco portfolio sales increased by 21 percent and totalled EUR 346 (285) million.

  • Eco portfolio sales represented 32 (34) percent of consolidated sales.

  • Operating profit was EUR 104 (37) million, representing 9.7 (4.4) percent of sales. The operating profit includes items affecting comparability worth EUR -8 (-23) million.

  • Comparable operating profit increased by 85 percent and amounted to EUR 112 (61) million, representing 10.5 (7.2) percent of sales.

  • Cash flow from operations before finance items and taxes totalled EUR 26 (-70) million.

  • Profit for the period amounted to EUR 73 (21) million.

  • Basic earnings per share was EUR 1.13 (0.33).

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Outlook for 2023 unchanged
Cargotec estimates its core businesses’1  2023 comparable operating profit to improve from 2022 (EUR 3842 million) and MacGregor’s comparable operating profit in 2023 to be positive (EUR -472 million).3

1) Hiab and Kalmar excluding heavy cranes and including corporate administration and support functions
2) Cargotec has changed the definition of the alternative performance measure comparable operating profit starting from 1 January 2023. Comparison figures have been calculated based on the new definition. Additional information about the definition is presented in the stock exchange release published on 4 April 2023.
3) The outlook for 2023 does not include the comparable operating profit of Kalmar's heavy crane business which will be discontinued.

Cargotec’s key figures

MEUR

Q1/23

Q1/22

Change

2022

Orders received

1,059

1,135

-7%

4,862

Service orders received

362

307

18%

1,286

Order book, end of period

3,467

3,151

10%

3,541

Sales

1,074

851

26%

4,089

Service sales

346

284

22%

1,264

Service sales, % of sales

32%

33%

 

31%

Eco portfolio sales

346

285

21%

1,288

Eco portfolio sales, % of sales

32%

34%

 

31%

Operating profit

104.0

37.5

> 100%

106.1

Operating profit, %

9.7%

4.4%

 

2.6%

Comparable operating profit

112.4

60.9

85%

316.4

Comparable operating profit, %

10.5%

7.2%

 

7.7%

Profit before taxes

95.7

30.2

> 100%

79.0

Cash flow from operations before finance items and taxes

26.5

-70.3

> 100%

231.2

Profit for the period

72.6

21.1

> 100%

23.2

Basic earnings per share, EUR

1.13

0.33

> 100%

0.37

Interest-bearing net debt, end of period

393

573

-31%

378

Gearing, %

26.4%

37.8%

 

24.8%

Interest-bearing net debt / EBITDA*

1.0

1.2

 

1.2

Return on capital employed (ROCE), last 12 months, %

7.5%

15.3%

 

4.6%

Personnel, end of period

11,640

11,282

3%

11,526

* Last 12 months’ EBITDA

Cargotec changed the definition of the alternative performance measure comparable operating profit starting from 1 January 2023. The restated comparable operating profit will also include the impacts of the purchase price allocation, which amounted to EUR 16 million in 2022. Of these items, EUR 1 million were related to Kalmar, EUR 3 million to Hiab, and EUR 12 million to MacGregor. Additional information regarding the changed definition is presented in the stock exchange release published on 4 April 2023.

Cargotec’s eco portfolio criteria has been revised and the 2022 eco portfolio sales has been restated accordingly.

Cargotec’s President and CEO Casimir Lindholm: Core businesses drove strong development in sales and comparable operating profit

The first quarter provided a strong start to the year 2023 and a solid base for me to enter as Cargotec’s new CEO as of 1 April. Despite a 7 percent decrease in orders received, demand remained at a good level. Service orders continued to grow significantly and increased by 18 percent. Stemming from our solid order book, our sales increased by 26 percent to EUR 1,074 million. Driven by our core businesses Kalmar and Hiab, we reached a record-high comparable operating profit of EUR 112 million and a comparable operating profit margin of 10.5 percent.

In Kalmar, demand was steady. We saw some delays in purchase decisions in larger projects whereas demand for services and eco portfolio solutions remained strong. Sales increased by 31 percent to EUR 485 million. Sales growth was supported by successful supply chain management despite persisting tightness and volatility of the component availability. Service sales increased, driven by improved spare parts capture rates. Kalmar’s comparable operating profit margin improved to a record level of 13 percent, driven by higher sales, improved management of supply chain and lower losses related to heavy cranes business.

In Hiab, underlying demand drivers remained at a good level. Orders received declined from the comparison period, which was partly due to large orders received in the first quarter of 2022. Order intake was also affected by inflation, high interest rates, and extended truck lead times. Bottlenecks in truck chassis supply also limited Hiab’s sales growth. However, the operational execution was strong and Hiab’s sales grew by 27 percent to EUR 432 million and comparable operating profit by 29 percent to EUR 61 million.

In MacGregor, orders received improved, driven by strong container vessel and car carrier markets. Going forward, the order pipeline looks healthy but, due to limited shipyard capacity, container vessel contracting is estimated to be slower. MacGregor’s orders received increased also in offshore and service businesses. Sales in MacGregor were still at a relatively low level of EUR 157 million with 56 percent of sales coming from services. MacGregor’s comparable operating profit improved to EUR 1 million stemming from higher service sales. As announced earlier, we will continue to focus on a turnaround of the business and to look for a solution for MacGregor in 2024.

To conclude, the first quarter was a robust start to the year. Despite elevated market uncertainty, many of our customers and partners are performing well. We have a solid order book covering almost the entire 2023 equipment sales and we are tracking well against our outlook for 2023 as well as performance targets for core businesses. The MacGregor restructuring is progressing and the business is on path to deliver a positive comparable operating profit in 2023. Our core businesses' comparable operating profit increased by 62 percent and posted a comparable operating profit margin of 12.4 percent. Share of eco portfolio orders in our core business continued to increase and core businesses’ sales grew clearly faster than the global GDP.

Reporting segments’ key figures

Orders received

MEUR

Q1/23

Q1/22

Change

2022

Kalmar

471

499

-6%

2,081

Hiab

380

482

-21%

1,807

MacGregor

208

154

35%

976

Internal orders

0

0

 

0

Total

1,059

1,135

-7%

4,862

Order book

MEUR

 

31 Mar 2023

31 Dec 2022

Change

Kalmar

1,390

1,428

-3%

Hiab

1,121

1,185

-5%

MacGregor

956

927

3%

Internal order book

1

1

 

Total

 

3,467

3,541

-2%

Sales

MEUR

Q1/23

Q1/22

Change

2022

Kalmar

485

372

31%

1,943

Hiab

432

340

27%

1,578

MacGregor

157

140

12%

569

Internal sales

0

0

 

-1

Total

1,074

851

26%

4,089

Operating profit

MEUR

Q1/23

Q1/22

Change

2022

Kalmar

62.8

22.7

> 100%

142.1

Hiab

61.4

43.5

41%

217.1

MacGregor

-7.4

-5.7

-28%

-190.2

Corporate administration and support functions

-12.8

-23.0

44%

-62.9

Total

104.0

37.5

> 100%

106.1

Comparable operating profit*

MEUR

Q1/23

Q1/22

Change

2022

Kalmar

63.2

28.2

> 100%

189.2

Hiab

61.4

47.4

29%

220.9

MacGregor

0.7

-2.8

> 100%

-47.5

Corporate administration and support functions

-12.8

-12.0

-7%

-46.3

Total

112.4

60.9

85%

316.4

*Cargotec changed the definition of the alternative performance measure comparable operating profit starting from 1 January 2023. The restated comparable operating profit will also include the impacts of the purchase price allocation, which amounted to EUR 16 million in 2022. Of these items, EUR 1 million were related to Kalmar, EUR 3 million to Hiab, and EUR 12 million to MacGregor. Additional information regarding the changed definition is presented in the stock exchange release published on 4 April 2023.

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 10:00 a.m. EEST. The event will be held in English. The report will be presented by President and CEO Casimir Lindholm, CFO Mikko Puolakka, Kalmar’s President Michel van Roozendaal, and Hiab’s President Scott Phillips. The presentation material will be available at www.cargotec.com by the latest 9:30 a.m. EEST.

To ask questions, please join the teleconference by registering via the following link: https://palvelu.flik.fi/teleconference/?id=1009460. 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. For questions, please press *5 on your telephone keypad to join the queue.

The event can also be viewed as a live webcast at https://cargotec.videosync.fi/2023-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 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, Vice President, 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 2022 totalled approximately EUR 4.1 billion and it employs around 11,500 people. www.cargotec.com

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