KONECRANES PLC FINANCIAL STATEMENTS BULLETIN February 4, 2015 at 9:00 a.m.
ORDER INTAKE GREW AND PROFITABILITY IMPROVEMENT CONTINUED IN THE FOURTH QUARTER
Figures in brackets, unless otherwise stated, refer to the same period a year earlier.
FOURTH QUARTER HIGHLIGHTS
- Order intake EUR 513.3 million (422.2), +21.6 percent; Service +21.2 percent and Equipment +23.1 percent.
- Service contract base value EUR 196.0 million (178.2), +10.0 percent; +5.9 percent at comparable currency rates.
- Order book EUR 979.5 million (893.5) at year-end, +9.6 percent compared with a year before.
- Sales EUR 608.1 million (580.9), +4.7 percent; Service +4.4 percent and Equipment +3.4 percent.
- Operating profit excluding restructuring costs EUR 47.1 million (42.8), 7.7 percent (7.4) of sales.
- Restructuring costs EUR 1.6 million (3.1).
- Operating profit including restructuring costs EUR 45.5 million (39.7), 7.5 percent of sales (6.8).
- Earnings per share (diluted) EUR 0.51 (0.38).
- Net cash flow from operating activities EUR 66.4 million (79.6).
- Net debt EUR 149.5 million (187.3) and gearing 33.3 percent (42.1).
FULL-YEAR 2014 HIGHLIGHTS
- Orders received EUR 1,903.5 million (1,920.8), -0.9 percent; Service +4.9 percent and Equipment -4.3 percent.
- Sales EUR 2,011.4 million (2,099.6), -4.2 percent; Service +0.7 percent and Equipment -8.1 percent.
- Operating profit excluding restructuring costs EUR 119.1 million (115.5), 5.9 percent (5.5) of sales.
- Restructuring costs EUR 3.2 million (30.9).
- Operating profit including restructuring costs EUR 115.8 million (84.5), 5.8 percent of sales (4.0).
- Earnings per share (diluted) EUR 1.28 (0.85).
- Net cash flow from operating activities EUR 148.4 million (120.2).
- Dividend proposed by Board of Directors is EUR 1.05 (1.05) per share.
MARKET OUTLOOK
European customers are still cautious about investing. The Purchasing Managers’ Indexes are giving a reason for the continued optimism regarding the U.S. market. The near-term market outlook in emerging markets remains uncertain. Continued contract base growth bodes well for the future of the service business.
FINANCIAL GUIDANCE
Based on the order book, service contract base and the near-term demand outlook, the year 2015 sales are expected to be higher than in 2014. We expect the 2015 operating profit, excluding restructuring costs, to improve from 2014.
| KEY FIGURES | Fourth quarter | January-December | ||||
| 10-12/ 2014 |
10-12/ 2013 |
Change % | 1-12/ 2014 |
1-12/ 2013 |
Change % | |
| Orders received, MEUR | 513.3 | 422.2 | 21.6 | 1,903.5 | 1,920.8 | -0.9 |
| Order book at end of period, MEUR | 979.5 | 893.5 | 9.6 | |||
| Sales total, MEUR | 608.1 | 580.9 | 4.7 | 2,011.4 | 2,099.6 | -4.2 |
| EBITDA excluding restructuring costs, MEUR | 58.7 | 52.3 | 12.3 | 162.2 | 154.6 | 4.9 |
| EBITDA excluding restructuring costs, % | 9.7 | 9.0 | 8.1 | 7.4 | ||
| Operating profit excluding restructuring costs, MEUR | 47.1 | 42.8 | 10.0 | 119.1 | 115.5 | 3.1 |
| Operating margin excluding restructuring costs, % | 7.7 | 7.4 | 5.9 | 5.5 | ||
| EBITDA, MEUR | 57.1 | 49.9 | 14.5 | 159.0 | 140.5 | 13.1 |
| EBITDA, % | 9.4 | 8.6 | 7.9 | 6.7 | ||
| Operating profit, MEUR | 45.5 | 39.7 | 14.5 | 115.8 | 84.5 | 37.1 |
| Operating margin, % | 7.5 | 6.8 | 5.8 | 4.0 | ||
| Profit before taxes, MEUR | 41.6 | 35.9 | 15.8 | 107.4 | 75.5 | 42.3 |
| Net profit for the period, MEUR | 29.5 | 22.1 | 33.4 | 74.6 | 49.4 | 50.9 |
| Earnings per share, basic, EUR | 0.51 | 0.38 | 34.1 | 1.28 | 0.85 | 51.0 |
| Earnings per share, diluted, EUR | 0.51 | 0.38 | 34.2 | 1.28 | 0.85 | 51.2 |
| Dividend per share, EUR | 1.05* | 1.05 | 0.0 | |||
| Gearing, % | 33.3 | 42.1 | ||||
| Return on capital employed % | 17.0 | 11.6 | ||||
| Free cash flow, MEUR | 56.1 | 61.8 | 109.4 | 64.0 | ||
| Average number of personnel during the period | 11,920 | 11,987 | -0.6 | |||
*The Board’s proposal to the AGM
President and CEO Pekka Lundmark:
“Year 2014 ended with a good quarter. Noteworthy is that both our business areas – Service and Equipment – improved from the fourth quarter 2013 in all key aspects: orders, sales, operating profit, and operating margin were all higher than a year ago. Service operating margin excluding restructuring costs increased to 12.1 percent and also Equipment improved to 5.4 percent. In addition, service contract base continued to grow and it now stands at EUR 196 million, 10 percent up from a year ago.
Summarizing full year 2014, we can be reasonably satisfied with the fact that our operating profit excluding restructuring costs improved, in spite of net sales dropping by EUR 88 million, to EUR 2,011 million. The operating margin excluding restructuring costs improved from 5.5 percent in 2013 to 5.9 percent in 2014, which is a good achievement in a volume decline, though still way below our target 10 percent.
The twofold development between our two businesses sustained throughout the year. Service business continued on the steady path it has had for the last three years and the operating margin excluding restructuring costs climbed to 10.0 percent from 9.1 percent the year before. This was the third consecutive year of operating margin improvement. Systematic restructuring of non-performing units, introduction of new services, and focus on sales management were the principal contributors to the improvement. The main issue in the Service business has been the weak topline growth, but the promising order intake in the second half of the year combined with strong contract base development bodes well for both growth and profitability prospects in 2015.
While the Equipment business was able to lower the cost and improve the project execution to mitigate the effects of the lower volume, we obviously cannot be satisfied with the 3.8 percent operating margin excluding restructuring costs. There were, however, big performance differences between the different product lines and geographical market areas. I want to highlight the excellent performance of our lifttruck business that posted both good growth and result. The new management of the Equipment business launched a comprehensive turnaround plan in the second half of 2014. As part of the plan, we decided to simplify our operational model and reduce our cost base by a further EUR 30 million by the end of the first quarter 2016.
Cash flow was strong and it helped to lower our gearing to 33.3 percent and improve return on capital employed to 17.0 percent from 11.6 percent the year before. Earnings per share grew to EUR 1.28 from EUR 0.85 in 2013.
I am cautiously optimistic about the year 2015. We started the year with an order backlog that was 9.6 percent higher than a year ago. The funnel of new opportunities we are working on is also promising. The weakening euro is increasing the competitiveness of our European manufacturing units. Our newly launched products provide new growth opportunities, and cost efficiency programs are moving forward. The continuous improvement of skill sets, knowledge, and expertise of our employees through new tools and processes, extensive training and best work practices gives us a solid base for capturing the new era of digitalization. We are of course always dependent on the general economic and geopolitical development, but I am confident that these matters that we can affect are developing in the right direction.”
BOARD OF DIRECTORS’ PROPOSAL FOR DISPOSAL OF DISTRIBUTABLE FUNDS
The parent company’s non-restricted equity is EUR 155,516,009.16, the net income of which for the year is EUR 10,535,589.49. The Group’s non-restricted equity is EUR 388,418,000.
According to the Finnish Companies Act, the distributable funds of the company are calculated based on the parent company’s non-restricted equity. For the purpose of determining the amount of the dividend, the Board of Directors has assessed the liquidity of the parent company and the economic circumstances subsequent to the end of fiscal year.
Based on such assessments the Board of Directors proposes to the Annual General Meeting that a dividend of EUR 1.05 be paid on each share and that the remaining non-restricted equity is retained in shareholders’ equity.
CORPORATE GOVERNANCE STATEMENT 2014
Konecranes complies with the Finnish Corporate Governance Code 2010 approved by the Board of the Securities Market Association. Konecranes has issued a Corporate Governance Statement based on the recommendation 54 of the Code, which is attached to this release in pdf format and can be reviewed on the corporate website of Konecranes at www.konecranes.com.
DISCLOSURE PROCEDURE
Konecranes follows the disclosure procedure enabled by Disclosure obligation of the issuer (7/2013) published by the Finnish Financial Supervision Authority. This stock exchange release is a summary of Konecranes Plc’s financial statements bulletin 2014. The complete report is attached to this release in pdf format and is also available on Konecranes’ website at www.konecranes.com.
ANALYST AND PRESS BRIEFING
An analyst and press conference will be held at restaurant Savoy’s Salikabinetti (address Eteläesplanadi 14) at 11.00 a.m. Finnish time. The 2014 financial statements will be presented by Konecranes’ President and CEO Pekka Lundmark and CFO Teo Ottola.
A live webcast of the conference will begin at 11.00 a.m. at www.konecranes.com. Please see the stock exchange release on January 13, 2015 for the conference call details.
KONECRANES PLC
Miikka Kinnunen
Director, Investor Relations
FURTHER INFORMATION
Mr Pekka Lundmark, President and CEO, tel. +358 20 427 2000
Mr Teo Ottola, Chief Financial Officer, tel. +358 20 427 2040
Mr Miikka Kinnunen, Director, Investor Relations, tel. +358 20 427 2050
Mr Mikael Wegmüller, Vice President, Marketing and Communications, tel. +358 20 427 2008
Konecranes is a world-leading group of Lifting Businesses™, serving a broad range of customers, including manufacturing and process industries, shipyards, ports and terminals. Konecranes provides productivity-enhancing lifting solutions as well as services for lifting equipment and machine tools of all makes. In 2014, Group sales totaled EUR 2,011 million. The Group has 12,000 employees at 600 locations in 48 countries. Konecranes is listed on the Nasdaq Helsinki (symbol: KCR1V).
DISTRIBUTION
Nasdaq Helsinki
Media
www.konecranes.com
