Cargotec’s financial statements review 2020: Good performance in an exceptional year
CARGOTEC CORPORATION, FINANCIAL STATEMENTS REVIEW 2020, 4 FEBRUARY 2021 AT 1.30 PM EET
Cargotec’s financial statements review 2020: Good performance in an exceptional year
- Positive trend continued since May
- Service business remained resilient, sales decreased by 5 percent
- Share of eco portfolio sales increased to 24 percent
- Cargotec’s extraordinary general meeting approved merger with Konecranes. The implementation of the merger is subject to obtaining the necessary approvals from the competition authorities.
The figures in this financial statements review are based on Cargotec Corporation’s audited 2020
financial statements.
October–December 2020 in brief: Orders received at the previous year’s level
- Orders received remained at comparison period’s level and totalled EUR 963 (962) million.
- Order book amounted to EUR 1,824 (31 Dec 2019: 2,089) million at the end of the period.
- Sales decreased by 14 percent and totalled EUR 873 (1,015) million.
- Service sales decreased by 8 percent and totalled EUR 262 (285) million.
- Service and software sales represented 35 (33) percent of consolidated sales.
- Operating profit was EUR 18 (18) million, representing 2.0 (1.8) percent of sales. Operating profit includes items affecting comparability worth EUR -47 (-56) million.
- Comparable operating profit decreased by 14 percent and amounted to EUR 64 (74) million, representing 7.3 (7.3) percent of sales.
- Cash flow from operations before financial items and taxes totalled EUR 196 (208) million.
- Net income for the period amounted to EUR 7 (-0) million.
- Earnings per share was EUR 0.10 (-0.00).
January–December 2020 in brief: Satisfactory profitability and strong cash flow
- Orders received decreased by 16 percent and totalled EUR 3,121 (3,714) million.
- Sales decreased by 11 percent and totalled EUR 3,263 (3,683) million.
- Service sales decreased by 5 percent and totalled EUR 1,005 (1,062) million.
- Service and software sales represented 36 (33) percent of consolidated sales.
- Operating profit was EUR 70 (180) million, representing 2.2 (4.9) percent of sales. Operating profit includes items affecting comparability worth EUR -133 (-84) million.
- Comparable operating profit decreased by 23 percent and amounted to EUR 204 (264) million, representing 6.2 (7.2) percent of sales.
- Cash flow from operations before financial items and taxes totalled EUR 296 (361) million.
- Net income for the period amounted to EUR 8 (89) million.
- Earnings per share was EUR 0.13 (1.39). Earnings per share decreased due to lower sales, lower comparable operating profit and increased restructuring costs.
Outlook for 2021
Cargotec expects its comparable operating profit for 2021 to improve from 2020 (EUR 2281 million).
1Cargotec changed the definition of the alternative performance measure comparable operating profit starting from 1 January 2021 to align it with the definition used in the merger prospectus. In addition to the items significantly affecting comparability, the restated comparable operating profit will also exclude the impacts of the purchase price allocation, which amounted to EUR 24 million in 2020. Comparison figure has been calculated based on the new definition. Restatement for 2020 figures will be published before Q1/21 result announcement.
Cargotec’s key figures
| MEUR | Q4/20 | Q4/19 | Change | 2020 | 2019 | Change |
| Orders received | 963 | 962 | 0% | 3,121 | 3,714 | -16% |
| Service orders received | 265 | 277 | -4% | 987 | 1,079 | -9% |
| Order book, end of period | 1,824 | 2,089 | -13% | 1,824 | 2,089 | -13% |
| Sales | 873 | 1,015 | -14% | 3,263 | 3,683 | -11% |
| Service sales | 262 | 285 | -8% | 1,005 | 1,062 | -5% |
| Software sales* | 44 | 46 | -5% | 166 | 168 | -2% |
| Service and software sales, % of sales | 35% | 33% | 36% | 33% | ||
| Operating profit | 17.6 | 18.0 | -2% | 70.4 | 180.0 | -61% |
| Operating profit, % | 2.0% | 1.8% | 2.2% | 4.9% | ||
| Comparable operating profit | 64.1 | 74.3 | -14% | 203.6 | 264.4 | -23% |
| Comparable operating profit, % | 7.3% | 7.3% | 6.2% | 7.2% | ||
| Income before taxes | 4.5 | 8.2 | -45% | 34.5 | 145.9 | -76% |
| Cash flow from operations before financing items and taxes | 196 | 208 | -6 % | 296 | 361 | -18% |
| Net income for the period | 6.6 | -0.3 | > 100% | 8.1 | 89.4 | -91% |
| Earnings per share, EUR | 0.10 | -0,00 | > 100% | 0.13 | 1.39 | -91% |
| Interest-bearing net debt, end of period | 682 | 774 | -12% | 682 | 774 | -12% |
| Gearing, % | 52.4% | 54.2% | 52.4% | 54.2% | ||
| Interest-bearing net debt / EBITDA** | 3.2 | 2.5 | 3.2 | 2.5 | ||
| Return on capital employed (ROCE), last 12 months, %*** | 2.8% | 7.3% | 2.8% | 7.3% | ||
| Personnel, end of period | 11,552 | 12,587 | -8% | 11,552 | 12,587 | -8% |
*Software sales include the strategic business unit Navis and automation software
**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: Positive trend in orders received, sales and comparable operating profit continued in the last quarter
In many ways, 2020 was exceptional for the whole world and also for Cargotec. The rapid spread of Covid-19 and related regulatory restrictions closed our own and our suppliers’ production units and caused unprecedented uncertainty on the market. On the other hand, our actions during the year proved our strategic direction to be correct. Our investments over the years in services, digitalisation and research and development, as well as in our asset-light operating model brought about good results.
Market uncertainty affected customers’ decision making especially in the second and third quarter and our orders received decreased by 16 percent from the previous year. Customers considered carefully their larger investments in, for example, port automation and new vessels. On the other hand, the pandemic has further strengthened interest in automation. However, it is still too early to speculate when customers start making investment decisions. MacGregor’s market situation is expected to remain challenging, but for example new contracting of wind turbine installation and service vessels is expected to grow. After April and towards the end of the year, demand for Kalmar’s mobile equipment business and for Hiab increased strongly. In terms of orders received, Hiab’s fourth quarter was its best ever. Our year-end order book increased compared to the end of the third quarter, which gives us a good start for 2021.
Our sales decreased from the previous year. However, the decline was partly offset by an increased share of the stable service and software business. Customer interest towards our eco-efficiency solutions increased in all business areas despite the crises. The eco portfolio sales increased to almost a quarter of our total sales. Our electrified equipment is included in the portfolio, for example.
Despite the exceptional year, our profitability remained at a satisfactory level. Our comparable operating profit amounted to EUR 204 million. Comparable operating profits in Kalmar and in Hiab decreased due to lower sales whereas comparable operating profit in MacGregor increased. Thanks to synergies from TTS integration and other restructuring actions, MacGregor posted positive comparable operating profit in the second half of the year. Our rapid reaction to covid-19 pandemic as well as cost saving actions also supported our profitability. The full year comparable operating profit margin decreased and amounted to 6.2 percent. However, the margin improved to 7.3 percent during the second half of the year, which was close to the level of the second half in 2019 (Q3–Q4/2019: 7.4 percent). In addition, we enhanced our productivity with structural measures with our permanent headcount reductions amounting to approximately 1,000.
Our operative cash flow was strong and, thanks to net working capital reduction measures, our net debt was reduced especially in Q4. We continued determined investments in research and development. Our R&D investments increased by three percent and were particularly focused on themes supporting our climate ambition such as digitalisation, electrification and automation as well as projects that aim to improve the competitiveness and cost efficiency of products. Year 2021 will mark a considerable milestone for Kalmar as its entire portfolio becomes available as electrically powered.
In May, we introduced our climate ambition to be a 1.5 degree company. According to the commitment, we aim to reduce the CO2 emissions of raw material sourcing and product use phase by at least 50 percent from the 2019 levels by 2030. In addition, we aim to be carbon neutral in our own operations by 2030.
We are constantly developing our business structure. In 2020, we sold our stake in RCI joint venture in China and started the sales process of Navis business. On 1 October, we announced the plan to combine Cargotec and Konecranes through a merger. Extraordinary meetings held on 18 December by each of the companies resolved the resolution to approve the merger. The implementation of the merger is subject to obtaining the necessary approvals from the competition authorities. More information about the merger is available from the web address www.sustainablematerialflow.com.
Health and safety of our employees, customers and partners are our top priorities. Despite the challenging year, the results of our operational safety and Compass employee satisfaction survey improved from the previous year. I want to thank all our employees for their contribution during this exceptional year and our customers, partners and shareholders for the trust they have placed in us.
Reporting segments’ key figures
Orders received
| MEUR | Q4/20 | Q4/19 | Change | 2020 | 2019 | Change |
| Kalmar | 445 | 446 | 0% | 1,401 | 1,776 | -21% |
| Hiab | 417 | 322 | 30% | 1,210 | 1,310 | -8% |
| MacGregor | 100 | 193 | -48% | 511 | 630 | -19% |
| Internal orders | 0 | 0 | -1 | -1 | ||
| Total | 963 | 962 | 0% | 3,121 | 3,714 | -16% |
Order book
| MEUR | 31 Dec 2020 | 31 Dec 2019 | Change | |||
| Kalmar | 842 | 1,049 | -20% | |||
| Hiab | 503 | 406 | 24% | |||
| MacGregor | 480 | 633 | -24% | |||
| Internal orders | 0 | 0 | ||||
| Total | 1,824 | 2,089 | -13% | |||
Sales
| MEUR | Q4/20 | Q4/19 | Change | 2020 | 2019 | Change |
| Kalmar | 411 | 471 | -13% | 1,529 | 1,723 | -11% |
| Hiab | 295 | 368 | -20% | 1,094 | 1,350 | -19% |
| MacGregor | 168 | 176 | -5% | 642 | 611 | 5% |
| Internal sales | -1 | 0 | -1 | -1 | ||
| Total | 873 | 1,015 | -14% | 3,263 | 3,683 | -11% |
Operating profit
| MEUR | Q4/20 | Q4/19 | Change | 2020 | 2019 | Change |
| Kalmar | 19.5 | 41.2 | -53% | 61.8 | 154.4 | -60% |
| Hiab | 25.0 | 48.3 | -48% | 97.3 | 159.3 | -39% |
| MacGregor | -12.6 | -59.9 | 79% | -48.2 | -83.3 | 42% |
| Corporate administration and support functions | -14.3 | -11.5 | -23% | -40.7 | -50.4 | 19% |
| Total | 17.6 | 18.0 | -2% | 70.4 | 180.0 | -61% |
Comparable operating profit
| MEUR | Q4/20 | Q4/19 | Change | 2020 | 2019 | Change |
| Kalmar | 28.2 | 44.1 | -36% | 116.4 | 161.8 | -28% |
| Hiab | 41.1 | 51.8 | -21% | 126.5 | 170.2 | -26% |
| MacGregor | 3.0 | -12.5 | > 100% | -4.3 | -28.2 | 85% |
| Corporate administration and support functions | -8.2 | -9.0 | 9% | -34.9 | -39.5 | 12% |
| Total | 64.1 | 74.3 | -14% | 203.6 | 264.4 | -23% |
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. EET. The event will be held in English. The report will be presented by CEO Mika Vehviläinen and Executive Vice President, CFO Mikko Puolakka. The presentation material will be available at www.cargotec.com by the latest 2:30 p.m. EET.
The telephone conference, during which questions may be presented, can be accessed by registering here. The registration opens 15 minutes prior to the event. The event conferencing system will call the participant on the phone number provided and place the participant into the event.
The telephone conference can also be accessed without advance registration with code 507254 by calling to one of the following numbers:
FI +358 (0) 9 7479 0360
DE +49 (0) 89 2030 31236
SE +46 (0) 8 5033 6573
UK +44 (0) 330 336 9104
US +1 323-701-0223
The event can also be viewed as a live webcast at https://cargotec.videosync.fi/2020-q4-results. 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, Executive Vice President and CFO, tel. +358 20 777 4105
Hanna-Maria Heikkinen, Vice President, Investor Relations, tel. +358 20 777 4084
THE MERGER AND THE MERGER CONSIDERATION SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT AND MAY NOT BE OFFERED, SOLD OR DELIVERED WITHIN OR INTO THE UNITED STATES, EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION OF, OR IN A TRANSACTION NOT SUBJECT TO, THE U.S. SECURITIES ACT.
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 United Nations Global Compact’s Business Ambition for 1.5°C. The company's sales in 2020 totalled approximately EUR 3.3 billion and it employs around 11,500 people. www.cargotec.com