This release is a summary of Konecranes Plc’s Interim report January-March 2022. The figures presented in this report are unaudited. Figures in brackets, unless otherwise stated, refer to the same period a year earlier.

FIRST QUARTER HIGHLIGHTS
Order intake EUR 1,029.6 million (762.8), +35.0 percent (+32.4 percent on a comparable currency basis), driven by order intake increases in all three Business Areas

– Service annual agreement base value increased 6.0 percent (+2.6 percent on a comparable currency basis) to EUR 300.7 million (283.6). Service order intake was EUR 283.1 million (255.2), +10.9 percent (+6.9 percent on a comparable currency basis)

– Order book EUR 2,485.2 million (1,866.7) at the end of March, +33.1 percent (+30.7 percent on a comparable currency basis)

– Sales EUR 672.1 million (704.0), -4.5 percent (-6.7 percent on a comparable currency basis), sales increased in Business Areas Service and Industrial Equipment but decreased in Port Solutions

– Adjusted EBITA margin 6.6 percent (8.0) and adjusted EBITA EUR 44.1 million (56.2); the decrease in the adjusted EBITA margin was mainly attributable to lower sales, and cost inflation in Industrial Equipment

– Operating profit EUR -19.5 million (37.5), -2.9 percent of sales (5.3), adjustments totaled EUR 56.7 million (10.3), mainly comprised of costs related to the impacts of the war in Ukraine and merger related costs

– Earnings per share (diluted) EUR -0.26 (0.23)

– Free cash flow EUR 2.6 million (17.7)

– Net debt EUR 545.3 million (569.2) and gearing 40.3 percent (47.4)

– Impacts of the war in Ukraine: EUR 78.9 million of Russian orders written off and EUR 32.1 million of Russian sales reversed, result impact of the sales reversal and the impairments of assets in Ukraine EUR 46.9 million negative on the operating profit level, full amount included in adjustments

– The Board of Directors proposes a dividend of EUR 1.25 (0.88) per share for 2021

SECOND QUARTER DEMAND OUTLOOK
The worldwide demand picture remains subject to volatility due to the war in Ukraine having increased inflation and material availability concerns. Also the COVID-19 pandemic continues.

In Europe and North America, the demand environment within the industrial customer segments is on a healthy level. In Asia-Pacific, the demand environment remains below Europe and North America.

Global container throughput continues high, and long-term prospects related to global container handling remain good overall.

FINANCIAL GUIDANCE
Konecranes expects net sales to increase in full-year 2022 compared to 2021. Konecranes expects the full-year 2022 adjusted EBITA margin to improve from 2021.

INTERIM CEO TEO OTTOLA:
Konecranes’ Q1 was mixed. We booked record-high orders, but at the same time our profitability declined. The war in Ukraine appalled us all, and we are deeply concerned for our 400+ Ukrainian employees and their families. Given the increased inflation and material availability concerns, the war has made the market conditions even more volatile and unpredictable. We continue our hard work and performance focus, and with our record-high order book there remains a lot to achieve.

Despite the geopolitical tensions and the pandemic, the overall market sentiment continued good in Q1, and on Group level, our order intake was record-high. Year-on-year, Konecranes’ Q1 orders received grew 32.4% in comparable currencies and surpassed €1 billion. Order intake in our short-cycle products returned to a growth path and was better than expected.

Timing of customer deliveries, component availability and other supply chain constraints affected our revenues in Q1, and our sales decreased 6.7% year-on-year in comparable currencies. As a result of our record-high order intake, our order book broke again a new record of EUR 2,485 million at the end of March.

Our adjusted EBITA margin declined year-on-year to 6.6%. The decline was driven by the delayed sales, our Industrial Equipment business being affected by the inflation and the timing of our Port Solutions deliveries. Service continued its positive profitability trajectory and posted an all-time high Q1 adjusted EBITA margin.

Service order intake improved by 6.9% year-on-year in comparable currencies. Although sales were impacted by supply chain issues, good profitability development continued with an adjusted EBITA margin of 17.4%. The agreement base value grew by 2.6% from the previous year in comparable currencies, exceeding €300 million.
Industrial Equipment’s external order intake grew by 31.6% in comparable currencies. Customer delays and supply chain constraints continued, but external sales decreased slightly in comparable currencies mainly because of the reversed Russian sales. Adjusted EBITA margin declined year-on-year and was -2.1%, mainly driven by the inflation and delayed sales.

Activity remained high within ports, and Port Solutions’ orders grew by 55.1% in comparable currencies, totaling €427 million. However, sales were impacted by timing of customer deliveries. Also component shortages continued especially in our mobile equipment business, and the impact became visible even in our project business. As a result, adjusted EBITA margin totaled 2.9%.

The war in Ukraine has impacted our business and operations, and our personnel. We have over 400 employees in Ukraine, and Konecranes has supported them and their families throughout the war. The safety and wellbeing of our Ukrainian employees and their families are our number one priority. The resilience, courage and strength of our Ukrainian employees has been remarkable, and I am impressed by the sincere help and support demonstrated by Konecranes employees around the world, especially in Ukraine’s neighboring countries.

After the war started, production was stopped at our factory in Zaporizhzhia, and we have redirected production to our other manufacturing sites. We have also decided to not take any new business from Russia. Following our decision, in Q1, we wrote off €79 million of orders booked from Russia and reversed €32 million of Russian project revenues recognized prior to 2022. In addition, as the uncertainty level remains high, we have impaired the balance sheet values of our Ukrainian assets. The EBIT impact of these impairments and the cancelled project sales was approximately €47 million and the full amount has been included in our adjustments.

We expect the market volatility and uncertainty to continue due to the ongoing war. In addition, the pandemic and related lockdowns continue to impact global supply chains. We have updated our demand outlook for Q2 to reflect the current market sentiment. Although the demand environment is now healthy, we do not expect another record-high order quarter. We reiterate our full-year guidance and expect our net sales to increase in full-year 2022 compared to 2021 and our full-year adjusted EBITA margin to improve from 2021. As for the inflation, component availability and other supply chain constraints, we expect them to continue and to impact our performance this year.

Following the cancellation of our planned merger with Cargotec on March 29, 2022, we postponed our Annual General Meeting scheduled for the next day. As a result, the dividend payments were also postponed. The AGM is planned to be held on June 15, and Konecranes Board of Directors is proposing a dividend of EUR 1.25 per share. The AGM will be convened, and the proposals published, as soon as possible.

To further strengthen our role as the global lifting leader, we announced today that we will focus our Service and Industrial Equipment Business Areas under one leadership starting from June 1, 2022. This decision follows the assessment of closer collaboration between the two Business Areas, which was started in October last year. Fabio Fiorino, currently EVP, Service, will lead the two businesses, and the operating model will be developed further. Bringing the two Business Areas closer to one another will improve Konecranes’ customer experience and will simplify our industrial business model and strategy.

Considering everything that has occurred, Konecranes’ Q1 was indeed eventful and mixed. I am proud of the commitment of our people, which continues high. We have maintained and will maintain our focus on business excellence, continuous improvement, and sustainability, and delivering the best for our customers.
Source: KONECRANES PLC