Cargotec Reports Record-High Profitability in Half-Year 2023 Financial Report

Cargotec Reports Record-High Profitability in Half-Year 2023 Financial Report

(IN BRIEF) Cargotec Corporation has announced its half-year financial report for January-June 2023, revealing record-high profitability. The company experienced a strong rebound in orders received, reaching pre-COVID levels. Sales increased by 25%, and a record-high comparable operating profit margin of 13.2% was achieved. Cargotec’s planned separation of Kalmar and Hiab is progressing as scheduled. The report also provides a breakdown of the financial performance of each reporting segment. Cargotec’s President and CEO, Casimir Lindholm, expressed satisfaction with the results and affirmed the company’s outlook for 2023. A live telephone conference and webcast were held to discuss the financial report in detail.

(PRESS RELEASE) HELSINKI, 21-Jul-2023 — /EuropaWire/ — CARGOTEC CORPORATION, 2023 HALF-YEAR FINANCIAL REPORT, 20 JULY 2023 AT 9:00 AM EEST

Cargotec’s half-year financial report January–June 2023: Record-high profitability

• Orders received totalled EUR 999 (1,390) million, back to pre-covid level
• Strong development in sales, 25 percent increase
• Record-high comparable operating profit margin 13.2 percent
• Planned separation of Kalmar and Hiab progressing according to plan

April–June 2023 in brief: Record-high comparable operating profit

• Orders received decreased by 28 percent and totalled EUR 999 (1,390) million.
• Order book amounted to EUR 3,242 (31 Dec 2022: 3,541) million at the end of the period.
• Sales increased by 25 percent and totalled EUR 1,200 (959) million.
• Service sales increased by 14 percent and totalled EUR 344 (303) million.
• Service sales represented 29 (32) percent of consolidated sales.
• Eco portfolio sales increased by 26 percent and totalled EUR 362 (286) million.
• Eco portfolio sales represented 30 (30) percent of consolidated sales.
• Operating profit was EUR 151 (47) million, representing 12.5 (5.0) percent of sales. The operating profit includes items affecting comparability worth EUR -8 (-34) million.
• Comparable operating profit increased by 94 percent and amounted to EUR 158 (82) million, representing 13.2 (8.5) percent of sales.
• Cash flow from operations before finance items and taxes totalled EUR 41 (38) million.
• Profit for the period amounted to EUR 108 (41) million.
• Basic earnings per share was EUR 1.67 (0.64).

January–June 2023 in brief: Strong growth in sales and profitability

• Orders received decreased by 19 percent and totalled EUR 2,058 (2,525) million.
• Order book amounted to EUR 3,242 (31 Dec 2022: 3,541) million at the end of the period.
• Sales increased by 26 percent and totalled EUR 2,274 (1,810) million.
• Service sales increased by 18 percent and totalled EUR 690 (586) million.
• Service sales represented 30 (32) percent of consolidated sales.
• Eco portfolio sales increased by 24 percent and totalled EUR 707 (571) million.
• Eco portfolio sales represented 31 (32) percent of consolidated sales.
• Operating profit was EUR 254 (85) million, representing 11.2 (4.7) percent of sales. The operating profit includes items affecting comparability worth EUR -16 (-58) million.
• Comparable operating profit increased by 90 percent and amounted to EUR 271 (142) million, representing 11.9 (7.9) percent of sales.
• Cash flow from operations before finance items and taxes totalled EUR 68 (-32) million.
• Profit for the period amounted to EUR 180 (62) million.
• Basic earnings per share was EUR 2.80 (0.97).

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

Cargotec’s key figures

* 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: Record-high financial performance continued, potential separation of Kalmar and Hiab progressing as planned

The eventful second quarter was the first one for me as the CEO of Cargotec. Financially, the second quarter was twofold. The orders received are back to pre-covid level, declining from the all-time-high comparison period which included large non-recurring orders. However, our order book is clearly above the historical average level. Our sales increased by 25 percent and in comparable operating profit we again reached a new record level of EUR 158 million and a 13.2 percent margin, driven by higher deliveries and successful management of inflationary pressures and costs. Strategically important service businesses and eco portfolio sales continued to grow.

In Kalmar, there was some slowness in customer decision making and orders are back at pre-covid level. The decision process for larger project orders slowed down, while service orders remained stable. Kalmar’s sales increased by 29 percent to EUR 552 million as we are delivering from the strong order book. Sales growth was supported by improved efficiency in supply chain management despite persisting volatility of the component availability. Service sales continued to grow, driven by higher spare part capture rate. Kalmar’s comparable operating profit margin improved to a record level of 14.2 percent, supported by higher sales, deliveries of semi-finished products, successful management of inflationary pressures and component availability, and lower losses related to heavy cranes business.

In Hiab, underlying demand drivers remained at a good level but orders received declined from the record-high comparison period, which was boosted by pre-buying ahead of pricing increases. Order intake was also affected by inflation, high interest rates, and extended truck lead times. Hiab’s order book is at a strong level and, due to robust operational execution, Hiab’s sales grew by 20 percent to EUR 485 million. Hiab’s comparable operating profit increased by 31 percent to EUR 81 million stemming from higher sales, effective management of inflationary pressures and controlling costs.

In MacGregor, orders received decreased from a high comparison period level but the order book improved by 28 percent from the comparison period. Sales in MacGregor improved to EUR 164 million and MacGregor recorded its best quarterly comparable operating profit in over seven years, EUR 10 million, driven by service and merchant businesses. MacGregor’s offshore restructuring is progressing, but we still have challenges related to offshore projects we have committed to in the past.

On 27 April, we announced our plan to investigate and initiate a process to potentially separate our core businesses Kalmar and Hiab into two world-leading standalone companies. The planning of the potential partial demerger is intended to be carried out during 2023 and the potential separate listing of Kalmar on Nasdaq Helsinki would, if carried out, take place in 2024.

Analysing both internal and external feedback, the news about the potential partial demerger has been well received. The planning has progressed in line with previously communicated timeline and objectives and I am happy to announce that one of the key positions has been filled as Sakari Ahdekivi has been appointed Kalmar’s Chief Financial Officer. Planning will continue throughout 2023.

To conclude, we continued our strong performance through the first half of 2023. In the period, our core businesses’ comparable operating profit increased by 57 percent to EUR 263 million, representing 13.6 percent of sales. The MacGregor turnaround is progressing and the business is on path to deliver a positive comparable operating profit in 2023. Our order book remains above the historical average and to a large extent covers the second half equipment sales. With the strong order book, combined with a scenario tool box ready to be implemented in case of rapid changes in the market environment, we aim to keep our core businesses’ comparable operating profit above 10 percent even if the market situation would prove to be challenging. In the second half of the year, our intense planning of the potential separation of Kalmar and Hiab will continue, while at the same time we will maintain a strong focus on the business execution.

Reporting segments’ key figures

Orders received

Order book

Sales

Operating profit

Comparable operating profit*

*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=1009461. 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-q2. 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.

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 11,700 people. www.cargotec.com

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.

Media Contact:

Mikko Puolakka
CFO
tel. +358 20 777 4105

Aki Vesikallio
Vice President
Investor Relations
tel. +358 40 729 1670

SOURCE: CARGOTEC CORPORATION