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.
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.”