Strong results in all Business Segments
This release is a summary of Konecranes Plc’s Interim report, January-March 2023. The complete report is attached to this release in pdf format and is also available on Konecranes’ website at www.konecranes.com.
The figures presented in this report are unaudited. Figures in brackets, unless otherwise stated, refer to the same period a year earlier.
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.
FIRST QUARTER HIGHLIGHTS
- Order intake EUR 1,289.6 million (1,097.5), +17.5 percent (+17.0 percent on a comparable currency basis), order intake increased in all three segments
- Service annual agreement base value EUR 311.1 million (300.7), +3.5 percent (+4.2 percent on a comparable currency basis)
- Service order intake EUR 378.8 million (346.7), +9.2 percent (+8.0 percent on a comparable currency basis)
- Order book EUR 3,281.4 million (2,485.2) at the end of March, +32.0 percent (+32.8 percent on a comparable currency basis)
- Sales EUR 899.3 million (672.1), +33.8 percent (+33.0 percent on a comparable currency basis), sales increased in all three segments
- Comparable EBITA margin of 10.6 percent (6.6) and comparable EBITA EUR 95.4 million (44.1); the increase in the comparable EBITA margin was mainly attributable to higher sales volumes and pricing
- Operating profit EUR 85.8 million (-19.5), 9.5 percent of sales (-2.9), items affecting comparability totaled EUR 2.6 million (56.7), mainly comprising of restructuring costs
- Earnings per share (diluted) EUR 0.66 (-0.26)
- Free cash flow EUR 116.0 million (2.6)
- Net debt EUR 586.1 million (545.3) and gearing 42.3 percent (40.3)
SECOND QUARTER DEMAND OUTLOOK
The worldwide demand picture remains subject to volatility and uncertainty.
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 high, and long-term prospects related to global container handling remain good overall.
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.
1) Previous year restated due to including agreement base sales in orders received
2) Excluding items affecting comparability, see also note 11 in the summary financial statements
3) ROCE excluding items affecting comparability, see also note 11 in the summary financial statements
CEO ANDERS SVENSSON:
Konecranes had a record-breaking Q1 result powered by a strong performance from all three Business Segments. Our ability to deliver strong earnings was the result of better-than-expected orders, improved delivery capability, and a positive pricing impact. As a result, we reached a record-high Q1 comparable EBITA margin of 10.6%.
Order intake increased 17.0% year-on-year on a comparable currency basis and totaled nearly €1.3 billion, an all-time high. Orders received grew in all three Business Segments. Short-cycle orders remained on a good level.
Our delivery capability continued to improve in Q1 despite the sequential sales decline. Group sales totaled €899 million and were 33% higher versus a year ago on a comparable currency basis. This was an excellent achievement given the continued fragility of global supply chains.
At the end of March, our order book was nearly €3.3 billion, 32.8% higher than a year ago on a comparable currency basis. The increase reflects the strong order intake during the quarter.
As a result of the good sales execution and positive pricing impact, we posted a record-high Q1 comparable EBITA margin of 10.6%. Profitability improved in all three business segments, most notably in Industrial Equipment.
Turning to our Business Segments, the Service’s order intake increased by 8.0% year-on-year in comparable currencies. Sales increased 16.0% year-on-year in comparable currencies mainly thanks to volume growth and pricing. The comparable EBITA margin improved once again and was 18.7%. The agreement base value also continued to grow and was 4.2% higher in comparable currencies at the end of Q1 versus a year ago.
Industrial Equipment’s external orders grew 23.6% year-on-year in comparable currencies. Growth was supported by a large portal jib crane order in the US. External sales increased 37.1% in comparable currencies following the improved delivery capability. Accordingly, the comparable EBITA margin increased year-on-year to 6.8%, mainly driven by sales volumes. The record-high Q1 profitability also reflected the impact of the price increases that were implemented last year.
In Port Solutions, the market environment remained favorable. A record order intake of €513 million included our largest-ever rubber-tired gantry crane order. Sales increased 56.5% year-on-year in comparable currencies, as the previous year’s sales were unusually low mainly due to order book timing. Also, the comparable EBITA margin improved to 6.5%. Following the record-high Q1 order intake, Port Solutions ended the quarter with an all-time high order book of €1.8 billion.
Regarding the market outlook for the remainder of 2023, market volatility and uncertainty will continue. While Q1 demand was better than expected, we continue to see some signs of slowing down within our industrial customer segments but expect our demand to remain on a healthy level.
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. We also note that despite our high Q1 sales, material availability challenges are not over and supply chains remain fragile.
Regarding Konecranes’ long-term competitiveness, we have continued our Industrial Service and Equipment optimization actions. They cover several areas and functions, such as the go-to-market model, product platform harmonization, streamlining of manufacturing and logistics, and business support functions. The progress has been good, and we raise the expected annual comparable EBITA impact to €40-50 million from the earlier €30-35 million. Accordingly, the related restructuring costs are expected to be somewhat higher, in the range of €30-40 million euros.
In the first quarter, we also announced the divestment of MHE-Demag’s Industrial Products (IPD) business, allowing us to sharpen our focus on lifting equipment and services in Southeast Asia as well as globally. The transaction was closed in April and will have a €30-35 million negative impact on Industrial Equipment and €7-8 million on Service’s annual sales. The profitability impact and costs related to the transaction are included in the Industrial Service and Equipment optimization program.
In addition, in early April, we announced the acquisition of Whiting Corporation’s industrial and nuclear crane and crane service businesses to strengthen our presence in the strategically important North American market. The acquisition will give Konecranes access to Whiting’s large installed base and will have a positive impact of some €30 million on the Service’s annual sales.
Overall, I am very pleased with our Q1 performance. Strong results in what has historically been our seasonally weakest quarter – and amid volatile market conditions – reflect our capabilities as a company and put us well on track to deliver the sales and profitability growth we expect for the full-year 2023. We continue our hard work and focus on performance, and will provide an update on Konecranes’ strategic direction and financial targets on our Capital Markets Day on May 10, 2023.
ANALYST AND PRESS BRIEFING
A live international webcast and telephone conference for analysts, investors, and media will be arranged on the publishing day at 11:30 a.m. EEST. The event will be held in English. The Interim report will be presented by President and CEO Anders Svensson and CFO Teo Ottola. Questions may be presented at the end of the conference. The conference will be recorded, and an on-demand version of the conference will be published on the company's website later in the day.
Konecranes Plc plans to publish its Half-year financial report, January-June 2023 on July 26, 2023.