Cargotec announces savings measures in MacGregor to respond to the weakening market situation due to the low oil price and low number of new merchant ship orders.

MacGregor is planning to reach savings by reviewing resourcing and making the necessary adjustments with a plan to reduce the use of external workforce and the number of own personnel. Simultaneously MacGregor continues to have a strong focus on the earlier announced development programmes to improve the internal effectiveness.

The planned measures are estimated to have an effect of reducing some 220 employees globally. The possible measures for the personnel reductions will be initiated locally according to the requirements and legislation of each country. The target is to achieve annual savings of EUR 20 million.

MacGregor employs globally approximately 2,750 persons in 33 countries, with the biggest number of personnel in Norway 630, Germany 460, China 350 and Sweden 300. The countries where the impact of the planned measures is estimated to be biggest are Sweden, Singapore and Norway. The initiated measures are estimated to create restructuring costs of EUR 5 million in 2015.

Order book amounted to EUR 2,469 (31 Dec 2014: 2,200) million at the end of the period.

Sales grew 18% to EUR 889 (751) million.

Operating profit excluding restructuring costs was EUR 52.3 (24.6) million, representing 5.9% (3.3%) of sales.
Operating profit was EUR 51.3 (23.8) million, representing 5.8% (3.2%) of sales.

Cash flow from operations before financial items and taxes totalled EUR 51.6 (32.5) million.

Net income for the period amounted to EUR 36.4 (12.9) million.

Earnings per share was EUR 0.56 (0.20).

Outlook for 2015 unchanged

Cargotec’s 2015 sales are expected to grow from 2014. Operating profit excluding restructuring costs for 2015 is expected to improve from 2014.

Cargotec’s President and CEO Mika Vehviläinen: 2015 began positively for Cargotec. We saw year-on-year improvement in all of our key figures. I am extremely pleased with the way our profit improvement measures are progressing with regard to Kalmar and Hiab. Our new product launches together with the improving market situation are demonstrating as growth in our order book and sales. Our profitability is improving step by step towards our 8% EBIT margin target set for 2016.

We are also satisfied with the 9% growth seen in orders received in the first quarter. During the first quarter, the market situation related to Kalmar and Hiab developed favourably, while that of MacGregor weakened. We do not expect to see rapid improvement in MacGregor’s market situation, which is why we have added a savings programme to our current programmes in order to safeguard the profitability of this business area.

The new agreement is designed to meet the contractual needs of small to medium sized shippers, which, despite the large number and global value of the shipments they transport, often lack the legal resources to develop their own agreements with carriers.

Following a two year period of discussions between carrier and shipper representatives, the BIMCO/GSF SERVICECON Standard Service Contract has been developed to provide a basis for container volume agreements. It provides a comprehensive starting point for negotiations and helps to smooth and speed up the contractual process. Shippers and carriers can amend the contract to suit their individual commercial needs, providing the flexibility needed for making commercial agreements.

Grant Hunter, Chief Officer Legal and Contractual Affairs at BIMCO, said: “We are delighted to have worked together with GSF to produce this new standard service agreement that will benefit the industry by its simple wording and fair reflection of the interests of shippers and carriers. It has been designed to be used as a framework container volume service-level agreement for the liner trades – and to be adaptable for commercial parties’ individual needs and circumstances. Whilst we expect this to be of great value to small and medium sized shippers – we expect that many larger multi-national shippers may find it useful for contracts that fall outside their usual scope.”

Søren Larsen, Deputy Secretary General at BIMCO said: “This service agreement represents a milestone in BIMCO’s documentary work as it is the first time that we have entered into an agreement with an organisation like the Global Shipping Forum – which represents shippers across the industry.”