First quarter highlights:
– Order intake EUR 425.1 million (518.8), -18.1 percent; Service -0.8 percent and Equipment -28.9 percent.
– Order book EUR 1,035.6 million (1,111.1) at the end of March, 6.8 percent lower than a year ago.
– Sales EUR 458.6 million (474.9), -3.4 percent; Service -2.0 percent and Equipment -6.3 percent.
– Adjusted operating profit* EUR 14.8 million (14.2), 3.2 percent of sales (3.0).
– Adjustments* EUR -14.4 million (-2.3).
– Operating profit EUR 0.3 million (11.8), 0.1 percent of sales (2.5).
– Earnings per share (diluted) EUR -0.09 (0.10).
– Net cash flow from operating activities EUR -3.1 million (-54.4).
– Net debt EUR 206.9 million (199.4) and gearing 52.7 percent (46.8).
*Adjustments (earlier term non-recurring items included the same items affecting the operating profit) include restructuring costs, transaction costs relating to the proposed merger with Terex, and the unwarranted payments due to identity theft and fraudulent actions (only in the third quarter of 2015, not deducted by crime insurance indemnity). The corresponding terminology change has been made to the financial guidance. Konecranes’ management believes that the adjusted operating profit is relevant for understanding the financial performance when comparing the result for the current period with previous periods.
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. Business activity in the North American manufacturing industry is showing signs of bottoming out. Demand situation in Europe is stable. The decline in the global container throughput has led to slower decision-making among container terminal operators.
FINANCIAL GUIDANCE
Based on the order book, the service contract base and the near-term demand outlook, the sales in 2016 are expected to be higher than in 2015. We expect the 2016 adjusted operating profit to improve from 2015.
*) Adjustments in 2016 include transaction costs, which contain advisory, legal and consulting fees related to Konecranes Terex merger and restructuring costs. Full year 2015 adjustments included transaction costs, restructuring costs and the unwarranted payments due to the identity theft and fraudulent actions. See also note 12 in the interim report.
President and CEO Panu Routila said: “Our first-quarter figures were a reflection of tough market conditions, but there are signs of improving earnings capacity thanks to restructuring actions. Business Area Equipment order intake came in 29 percent below the last year’s level. The decline was entirely explained by the port cranes business; the port cranes order intake was low in the first three months of the year. Our recently announced shipyard crane order and offer base point to stronger port crane orders in the second quarter. Otherwise, the first-quarter orders received were basically flat overall in the other equipment businesses whereas order intake decreased by 1 percent from the previous year in Business Area Service.
Sales in Business Area Equipment fell 6 percent below last year’s level due to a lower order book for industrial cranes and timing of deliveries in the port cranes and lift trucks businesses. Despite the sales decline, its adjusted EBIT rose by EUR 4 million from the previous year, which shows that the restructuring and cost savings actions are showing results. Business Area Service’s sales decreased by 2 percent and adjusted EBIT by 12 percent on a year-on-year basis due to temporary business interruption related to the implementation of the new IT systems and processes, timing of deliveries and market softness in commodity driven industries, and changes in spare parts distribution, which affected deliveries during the quarter.
Our efficiency improvement actions and organizational changes announced in February are proceeding as planned, which will support the EBIT in the coming quarters. We expect the full-year 2016 sales growth to be generated in the second half of the year given the timing of port crane deliveries.”