KONECRANES PLC INTERIM REPORT October 21, 2015 at 9:00 a.m.
ORDER INTAKE UP, OPERATING PROFIT AT PREVIOUS YEAR’S LEVEL
Figures in brackets, unless otherwise stated, refer to the same period in the previous year.
THIRD QUARTER HIGHLIGHTS
- Order intake EUR 443.8 million (427.4), +3.8 percent; Service +12.7 percent and Equipment -1.9 percent.
- Order book EUR 1,075.3 million (1,026.2) at end-September, 4.8 percent higher than a year ago.
- Sales EUR 506.7 million (494.4), +2.5 percent; Service +7.3 percent and Equipment -1.7 percent.
- Operating profit excluding non-recurring items* EUR 33.3 million (34.8), 6.6 percent of sales (7.0).
- Non-recurring items* EUR 29.1 million (0.3).
- Operating profit EUR 4.1 million (34.5), 0.8 percent of sales (7.0).
- Earnings per share (diluted) EUR 0.02 (0.43).
- Net cash flow from operating activities EUR 47.1 million (64.8).
- Net debt EUR 228.5 million (200.4) and gearing 53.1 percent (46.4).
JANUARY-SEPTEMBER HIGHLIGHTS
- Order intake EUR 1,452.9 million (1,390.2), +4.5 percent; Service +10.7 percent and Equipment +0.4 percent.
- Sales EUR 1,517.2 million (1,403.2), +8.1 percent; Service +12.6 percent and Equipment +4.1 percent.
- Operating profit excluding non-recurring items* EUR 73.2 million (72.0), 4.8 percent of sales (5.1).
- Non-recurring items* EUR 40.9 million (1.6).
- Operating profit EUR 32.2 million (70.4), 2.1 percent of sales (5.0).
- Earnings per share (diluted) EUR 0.31 (0.77).
- Net cash flow from operating activities EUR -1.6 million (82.0).
*Non-recurring items include restructuring costs, transaction costs relating to the Terex merger, and the unwarranted payments due to identity theft and fraudulent actions (not deducted by crime insurance indemnity). The non-recurring items in 2014 included restructuring costs only.
MARKET OUTLOOK
Customers are cautious about investing as economic growth has slowed down across the globe. Companies operating in emerging and commodity markets are particularly under pressure to save costs. Demand outlook among customers in developed market is more stable. Continued contract base growth bodes well for the future of the service business. The quarterly Equipment order intake may fluctuate due to the timing of the large port crane projects.
Konecranes redefines its financial guidance due to booking the effect of the fraudulent actions against Konecranes as part of non-recurring items that is included in the operating profit.
PREVIOUS FINANCIAL GUIDANCE
Based on the order book, service contract base, and the near-term demand outlook, the year 2015 sales are expected to be slightly higher than in 2014. We expect the 2015 operating profit, excluding restructuring costs and transaction costs related to the Terex merger, to be approximately on the same level as in 2014.
NEW FINANCIAL GUIDANCE
Based on the order book, service contract base, and the near-term demand outlook, the year 2015 sales are expected to be slightly higher than in 2014. We expect the 2015 operating profit, excluding restructuring costs, transaction costs related to the Terex merger and the effect of the fraudulent actions against Konecranes, to be approximately on the same level as in 2014.
| KEY FIGURES | Third quarter | January-September | ||||||
|
7-9/ 2015 |
7-9/ 2014 |
Change % |
1-9/ 2015 |
1-9/ 2014 |
Change % | R12M | 2014 | |
| Orders received, MEUR | 443.8 | 427.4 | 3.8 | 1,452.9 | 1,390.2 | 4.5 | 1,966.2 | 1,903.5 |
| Order book at end of period, MEUR | 1,075.3 | 1,026.2 | 4.8 | 979.5 | ||||
| Sales total, MEUR | 506.7 | 494.4 | 2.5 | 1,517.2 | 1,403.2 | 8.1 | 2,125.4 | 2,011.4 |
| EBITDA excluding non-recurring items, MEUR *) | 45.2 | 45.7 | -1.0 | 109.5 | 103.5 | 5.8 | 168.2 | 162.2 |
| EBITDA excluding non-recurring items, % *) | 8.9% | 9.2% | 7.2% | 7.4% | 7.9% | 8.1% | ||
| Operating margin excluding non-recurring items, MEUR *) | 33.3 | 34.8 | -4.4 | 73.2 | 72.0 | 1.6 | 120.2 | 119.1 |
| Operating margin excluding non-recurring items, % *) | 6.6% | 7.0% | 4.8% | 5.1% | 5.7% | 5.9% | ||
| EBITDA, MEUR | 16.2 | 45.3 | -64.2 | 74.4 | 101.9 | -27.0 | 131.5 | 159.0 |
| EBITDA, % | 3.2% | 9.2% | 4.9% | 7.3% | 6.2% | 7.9% | ||
| Operating profit, MEUR | 4.1 | 34.5 | -88.0 | 32.2 | 70.4 | -54.2 | 77.7 | 115.8 |
| Operating margin, % | 0.8% | 7.0% | 2.1% | 5.0% | 3.7% | 5.8% | ||
| Profit before taxes, MEUR | 2.0 | 36.1 | -94.5 | 26.8 | 65.9 | -59.4 | 68.3 | 107.4 |
| Net profit for the period, MEUR | 1.2 | 24.7 | -95.0 | 18.2 | 45.1 | -59.6 | 47.7 | 74.6 |
| Earnings per share, basic, EUR | 0.02 | 0.43 | -95.2 | 0.31 | 0.78 | -59.9 | 0.82 | 1.28 |
| Earnings per share, diluted, EUR | 0.02 | 0.43 | -95.2 | 0.31 | 0.77 | -59.8 | 0.82 | 1.28 |
| Gearing, % | 53.1% | 46.4% | 33.3% | |||||
| Return on capital employed % | 11.8% | 17.0% | ||||||
| Free cash flow, MEUR | 39.6 | 55.9 | -26.2 | 53.3 | 29.9 | 109.4 | ||
| Average number of personnel during the period | 11,946 | 11,905 | 0.3 | 11,920 | ||||
*) Non-recurring items include transaction costs (-8.5 MEUR in 1-9/2015 and 7-9/2015) which contain advisory, legal and consulting fees related to Konecranes Terex merger, restructuring costs -15.5 MEUR in 1-9/2015 and -3.7 MEUR in 7-9/2015 and the unwarranted payments due to the identity theft and fraudulent actions in a total amount of up to EUR -17.0 million. The non-recurring items in 2014 included restructuring costs only.
Acting CEO Teo Ottola:
“Our third quarter was a combination of continued tough market conditions affecting our order intake and sales, as well as successful execution of cost savings actions. Business Area Service continued to improve its operating profit in a year-on-year comparison, although the rate of the improvement came in lower than in the first half of 2015 due to the lower-than-expected sales in the quarter. Sustained robust order intake and contract base suggest that this was mostly a timing issue. Hence, we look forward to a strong fourth quarter in Service. Operating profit in Business Area Equipment, which came in slightly below the previous year, reflected the low level of deliveries during the quarter. In fact, sales declined by 6 percent year-on-year at comparable currencies, which resulted in under absorption of fixed costs in manufacturing and other operations. Demand continued weak in emerging markets and sales in North America did not meet our expectations. Additionally, there have been some delays in customers’ decision-making on new investments and execution of on-going projects. Taking these challenges into account, the third-quarter result demonstrated that our cost savings are producing results and that we are on track to reach EUR 30 million cost savings by the end of the first quarter of 2016.
As indicated in the financial guidance issued in September, the market situation remains uncertain. Those operating in emerging markets or commodities are feeling the effect of the changes in trading conditions. The impact concerning developed markets is still unclear. Against this backdrop, we continue to streamline our cost base. In addition to the previously announced EUR 30 million cost savings program, we continuously adapt our cost structure to the current demand.
The merger process with Terex, including antitrust filings, is proceeding according to plan.”
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 interim report January-September 2015. 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 Savoy restaurant’s Salikabinetti (address: Eteläesplanadi 14) at 11.00 a.m. Finnish time. The Interim Report will be presented by Konecranes’ Deputy CEO 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 October 13, 2015 for the conference call details.
NEXT REPORT
Konecranes’ Financial Statements Bulletin 2014 will be published on February 3, 2016.
KONECRANES PLC
Miikka Kinnunen
Director, Investor Relations
FOR FURTHER INFORMATION, PLEASE CONTACT:
Mr. Teo Ottola, Deputy CEO and CFO, 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 Nasdaq Helsinki (symbol: KCR1V).
DISTRIBUTION
Nasdaq Helsinki
Media
www.konecranes.com
Forward Looking Statements
This document contains forward-looking statements regarding future events, including statements regarding Terex or Konecranes, the transaction described in this document and the expected benefits of such transaction and future financial performance of the combined businesses of Terex and Konecranes based on each of their current expectations. These statements involve risks and uncertainties that may cause results to differ materially from those set forth in the statements. When included in this document, the words “may”, “expects,” “intends,” “anticipates,” “plans,” “projects,” “estimates” and the negatives thereof and analogous or similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean that the statement is not forward-looking. Terex and Konecranes have based these forward-looking statements on current expectations and projections about future events. These statements are not guarantees of future performance.
Because forward-looking statements involve risks and uncertainties, actual results could differ materially. Such risks and uncertainties, many of which are beyond the control of Konecranes, include, among others: the ability of Terex and Konecranes to obtain shareholder approval for the transaction, the ability of Terex and Konecranes to obtain regulatory approval for the transaction, the possibility that the length of time required to complete the transaction will be longer than anticipated, the achievement of the expected benefits of the transaction, risks associated with the integration of the businesses of Terex and Konecranes, the possibility that the businesses of Terex and Konecranes may suffer as a result of uncertainty surrounding the proposed transaction, and other factors, risks and uncertainties that are more specifically set forth in Terex’ public filings with the SEC and Konecranes’ annual and interim reports. Konecranes disclaims any obligation to update the forward-looking statements contained herein.
IMPORTANT ADDITIONAL INFORMATION
This document relates to the proposed merger of Terex and Konecranes through which all of Terex’ common stock will be exchanged for Konecranes ordinary shares (or American depositary shares, if required). This document is for informational purposes only and does not constitute an offer to purchase or exchange, or a solicitation of an offer to sell or exchange, all of common stock of Terex, nor is it a substitute for the Preliminary Prospectus included in the Registration Statement on Form F-4 (the “Registration Statement”) to be filed by Konecranes with the SEC, the Prospectus/Proxy to be filed by Terex with the SEC, the listing prospectus of Konecranes to be filed by Konecranes with the Finnish Financial Supervisory Authority (and as amended and supplemented from time to time, the “Merger Documents”). No offering of securities shall be made in the United States except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE MERGER DOCUMENTS AND ALL OTHER RELEVANT DOCUMENTS THAT KONECRANES OR TEREX HAS FILED OR MAY FILE WITH THE SEC, NASDAQ HELSINKI, OR FINNISH FINANCIAL SUPERVISORY AUTHORITY WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION THAT INVESTORS AND SECURITY HOLDERS SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING THE PROPOSED MERGER.
The information contained in this document must not be published, released or distributed, directly or indirectly, in any jurisdiction where the publication, release or distribution of such information is restricted by laws or regulations. Therefore, persons in such jurisdictions into which these materials are published, released or distributed must inform themselves about and comply with such laws or regulations. Konecranes and Terex do not accept any responsibility for any violation by any person of any such restrictions. The Merger Documents and other documents referred to above, if filed or furnished by Konecranes or Terex with the SEC, as applicable, will be available free of charge at the SEC’s website (www.sec.gov) or by writing to Anna-Mari Kautto, Investor Relations Assistant, Konecranes Plc, P.O. Box 661, FI-05801 Hyvinkää, Finland or Elizabeth Gaal, Investor Relations Associate, Terex, 200 Nyala Farm Road, Westport, CT 06880, USA.
Konecranes and Terex and their respective directors, executive officers and employees and other persons may be deemed to be participants in the solicitation of proxies in respect of the transaction. Information regarding Konecranes' directors and executive officers is available in Konecranes’ annual report for fiscal year 2014 at www.konecranes.com. Information about Terex' directors and executive officers and their ownership of Terex ordinary shares is available in its Schedule 14A filed with the SEC on April 1, 2015. Other information regarding the interests of such individuals as well as information regarding Konecranes’ and Terex' directors and officers will be available in the proxy statement/prospectus when it becomes available. These documents can be obtained free of charge from the sources indicated above.
