Konecranes Oyj - Interim report (Q1 and Q3)

Konecranes Plc: Interim report January-September 2021

KONECRANES PLC INTERIM REPORT JANUARY-SEPTEMBER 2021 OCTOBER 28, 2021 8:30 am
EEST

Konecranes Plc: Interim report January-September 2021

Q3: strong performance and execution continued

This release is a summary of Konecranes Plc’s Interim report January-September
2021. The complete report is attached to this release in pdf format and is also
available on Konecranes’ website at www.konecranes.com.

The figures presented in this report are unaudited. Figures in brackets, unless
otherwise stated, refer to the same period a year earlier.

THIRD QUARTER HIGHLIGHTS

- Order intake EUR 713.7 million (565.5), +26.2 percent (+25.1 percent on a
comparable currency basis), driven by order intake increases in all three
Business Areas
- Service annual agreement base value increased 2.8 percent (+1.5 percent on a
comparable currency basis) to EUR 286.7 million (278.8). Service order intake
was EUR 257.9 million (218.9), +17.8 percent (+16.8 percent on a comparable
currency basis)
- Order book EUR 1,997.4 million (1,742.8) at the end of September, +14.6
percent (+13.3 percent on a comparable currency basis)
- Sales EUR 773.6 million (767.9), +0.7 percent (+0.1 percent on a comparable
currency basis), sales increased in Business Areas Service and Port Solutions
but decreased in Industrial Equipment
- Adjusted EBITA margin 10.0 percent (10.4) and adjusted EBITA EUR 77.4 million
(80.1); the decrease was mainly driven by temporary personnel cost savings in
the comparison period
- Operating profit EUR 49.9 million (40.3), 6.4 percent of sales (5.2),
restructuring and merger related costs totaled EUR 19.4 million (30.9)
- Earnings per share (diluted) EUR 0.40 (0.33)
- Free cash flow EUR 39.0 million (81.4)

JANUARY-SEPTEMBER 2021 HIGHLIGHTS

- Order intake EUR 2,283.2 million (1,884.0), +21.2 percent (+22.8 percent on a
comparable currency basis)
- Service order intake EUR 770.6 million (694.1), +11.0 percent (+13.4 percent
on a comparable currency basis)
- Sales EUR 2,236.8 million (2,242.1), -0.2 percent (+1.1 percent on a
comparable currency basis)
- Adjusted EBITA margin 8.9 percent (7.1) and adjusted EBITA EUR 199.0 million
(158.7); the adjusted EBITA margin improved in all three Business Areas
- Operating profit EUR 134.0 million (90.8), 6.0 percent of sales (4.0),
restructuring and merger related costs totaled EUR 40.1 million (41.0)
- Earnings per share (diluted) EUR 0.99 (0.85)
- Free cash flow EUR 72.0 million (188.9)
- Net debt EUR 592.8 million (742.7) and gearing 46.7 percent (61.5)

FOURTH QUARTER DEMAND OUTLOOK

The worldwide demand picture remains subject to volatility due to the COVID-19
pandemic.

In Europe and North America, the demand environment within the industrial
customer segments continues stable. In Asia-Pacific, the demand environment
remains below the pre-COVID-19 level outside China.

Global container throughput continues to be at a record high, and long-term
prospects related to global container handling remain good overall.

FINANCIAL GUIDANCE

Konecranes expects net sales to increase in full-year 2021 compared to 2020.
Konecranes expects the full-year 2021 adjusted EBITA margin to improve from
2020.

KEY FIGURES

[][][][][][][][]
                     Third                  January -
                    quarter                 September
              7-9/   7-9/  Change%     1-9/     1-9/  Change%     R12M    1-12/
              2021   2020              2021     2020                       2020
Orders       713.7  565.5     26.2  2,283.2  1,884.0     21.2  3,126.5  2,727.3
received,
MEUR
Order book                          1,997.4  1,742.8     14.6           1,715.5
at end of
period,
MEUR
Sales        773.6  767.9      0.7  2,236.8  2,242.1     -0.2  3,173.6  3,178.9
total, MEUR
Adjusted      98.6  103.2     -4.5    264.1    232.2     13.7    388.6    356.7
EBITDA,
MEUR
[1]
Adjusted     12.7%  13.4%             11.8%    10.4%             12.2%    11.2%
EBITDA, %
[1]
Adjusted      77.4   80.1     -3.4    199.0    158.7     25.4    301.1    260.8
EBITA, MEUR
[2]
Adjusted     10.0%  10.4%              8.9%     7.1%              9.5%     8.2%
EBITA, %
[2]
Adjusted      69.2   71.2     -2.7    174.1    131.8     32.1             224.9
operating                                                        267.1
profit,
MEUR [1]
Adjusted      9.0%   9.3%              7.8%     5.9%              8.4%     7.1%
operating
margin, %
[1]
Operating     49.9   40.3     23.7    134.0     90.8     47.6             173.8
profit,                                                          217.0
MEUR
Operating     6.4%   5.2%              6.0%     4.0%              6.8%     5.5%
margin, %
Profit        43.1   35.6     21.1    110.9     94.1     17.9    187.1    170.3
before
taxes,
MEUR
Net profit    31.4   25.9     21.2     78.2     67.7     15.4    133.3    122.9
for the
period,
MEUR
Earnings      0.40   0.33     21.6     0.99     0.85     15.4     1.68     1.54
per share,
basic, EUR
Earnings      0.40   0.33     21.6     0.99     0.85     15.4     1.68     1.54
per share,
diluted,
EUR
Interest                              46.7%    61.5%                      46.1%
-bearing
net
debt /
Equity, %
Net debt /                              1.5      2.2                        1.6
Adjusted
EBITDA,
R12M [1]
Return on                                                         9.3%     8.3%
capital
employed, %
Adjusted                                                         13.1%    11.1%
return on
capital
employed, %
[3]
Free cash     39.0   81.4              72.0    188.9             249.2    366.1
flow, MEUR
Average                              16,638   17,068     -2.5            17,027
number of
personnel
during the
period

1) Excluding adjustments, see also note 10 in the summary financial statements
2) Excluding adjustments and purchase price allocation amortization, see also
note 10 in the summary financial statements
3) ROCE excluding adjustments, see also note 10 in the summary financial
statements

PRESIDENT AND CEO ROB SMITH:

Konecranes delivered an impressively resilient result in Q3. We worked hard to
mitigate the impact of global component availability issues and reported an
adjusted EBITA margin of 10.0% - our second highest Q3 profitability ever.
Thanks to our record-high order book and the continued strong commitment and
performance across our whole organization, I am confident in our plans in place
to deliver the sales and adjusted EBITA margin growth we expect for full-year
2021.

In Q3, overall market sentiment continued to be good and similar to the previous
quarter, although COVID-19 related market volatility is not over. Year-on-year,
Konecranes’ Q3 order intake grew 25.1% in comparable currencies, reflecting the
impact on last year’s Q3 of the COVID-19 pandemic and resulting lockdowns. Once
again, we saw good order intake in our short-cycle products.

Component availability, customer delays and other supply chain constraints
continued to affect our sales in Q3, with a quarterly impact of approximately
EUR 60 million. As a result, our Q3 sales increased only marginally year-on
-year. Due to our strong year-to-date order intake and sales delays, our order
book broke a new record of EUR 1,997.4 million at the end of September.

Our Q3 adjusted EBITA margin was 10.0%, which is an excellent achievement given
global component and other supply chain issues and the disruptions the pandemic
is still causing in many countries. We ended 0.4 percentage points behind last
year’s record-high Q3 adjusted EBITA margin mainly due to temporary factors that
had a positive impact on our personnel expenses a year-ago.

As for our Q3 performance by each business, Service order intake improved by
16.8% year-on-year in comparable currencies, and orders grew in all three
regions. Although component shortages and logistics delays impacted Service
sales, the adjusted EBITA margin was 18.9%, an all-time high for Q3. The
agreement base value grew by 1.5% from the previous year in comparable
currencies, continuing to demonstrate the resiliency of our Service growth
engine during the pandemic.

Industrial Equipment’s external order intake grew by 32.1% in comparable
currencies. Net sales continued to be impacted by customer delays and supply
chain constraints, and as a result, Industrial Equipment’s adjusted EBITA margin
was 4.4%, 0.6 percentage points behind the previous year. We continued to make
good progress with our strategic initiatives.

In Port Solutions activity remained high within ports, but after three straight
quarters of exceptionally strong cumulative orders, the lumpy nature of our
project business and timing of customers’ decision-making led to lower Q3 orders
in comparison to the previous quarters. Overall, in our view, the long-term
prospects related to container handling orders remain good. Despite the
generally good sales execution in Port Solutions, mobile equipment sales were
impacted by component shortages, and as a result, Port Solutions’ adjusted EBITA
margin totaled 6.3% and was behind last year.

We have updated our demand outlook for Q4 to reflect the current market
sentiment, and we reiterate our full-year guidance for 2021 despite the supply
chain challenges that have impacted us since the beginning of this year. We
expect our net sales to increase in full-year 2021 compared to 2020 and our full
-year adjusted EBITA margin to improve from 2020. As for the component
availability issues, customer delays and other supply chain constraints, we
expect them to continue in Q4 and into 2022. Building upon our successful MHE
-Demag and MHPS integrations, and to enhance customer focus and drive further
efficiencies, we plan to assess even closer collaboration between our Service
and Industrial Equipment Business Areas.

Our announced merger with Cargotec is progressing well – merger control filings
and integration planning teams are making good headway. In August, Konecranes
and Cargotec received an unconditional approval for the planned merger from the
State Administration for Market Regulation, the competition authority in China.
Over the summer, several competition authorities, including the European
Commission, the UK Competition and Markets Authority (CMA) and the US Department
of Justice opened phase II reviews of the merger. The dialogue and cooperation
with all relevant competition authorities continues to be good, and Konecranes
and Cargotec are actively working on addressing concerns raised by some
competition authorities and considering ways to mitigate some of these concerns.
We are confident that the merger will be completed by the end of H1 2022, and
until all merger closing conditions are met and the deal is completed, both
companies continue to operate fully separately and independently.

Q4 will be my last quarter as the President and CEO of Konecranes, and I am
fully committed to Konecranes continuing its exciting track record of
outstanding performance for our customers, employees, investors and other
stakeholders. When I joined the company, I said Konecranes was a great company
with an impressive heritage, exceptional qualities, and talented people, and I
stand behind those words. I am proud of all the progress and the achievements
Konecranes has made and will continue to make, and the company has a bright and
promising future. Together with Cargotec, Konecranes will create a global leader
in sustainable material flow.

ANALYST AND PRESS BRIEFING

A live international webcast for analysts, investors and media will be held on
October 28, 2021, at 10:30 a.m. EEST. The interim report will be presented by
Konecranes’ President and CEO Rob Smith and CFO Teo Ottola.

Please see the press release dated October 14, 2021 for the conference call
details.

NEXT REPORT

Konecranes Plc plans to publish Financial Statement Release 2021 on February 3,
2022.

KONECRANES PLC
Kiira Fröberg
Vice President, Investor Relations

FURTHER INFORMATION
Kiira Fröberg,
Vice President, Investor Relations,
tel. +358 (0) 20 427 2050

IMPORTANT NOTICE

The Merger and the merger consideration securities have not been and will not be
registered under the U.S. Securities Act, and may not be offered, sold or
delivered within or into the United States, except pursuant to an applicable
exemption of, or in a transaction not subject to, the U.S. Securities Act.

The information in this release is not directed to, or intended for distribution
to or use by, any person or entity that is a citizen or resident of, or located
in, any locality, state, country or other jurisdiction where such distribution
or use would be contrary to law or regulation or which would require any
registration or licensing within such jurisdiction and it does not constitute an
offer of or an invitation by or on behalf of, Konecranes, or any other person,
to purchase any securities.

The information in this release contains forward-looking statements, which are
information on Konecranes’ current expectations and projections relating to its
financial condition, results of operations, plans, objectives, future
performance and business. These statements may include, without limitation, any
statements preceded by, followed by or including words such as “target,”
“believe,” “expect,” “aim,” “intend,” “may,” “anticipate,” “estimate,” “plan,”
“project,” “will,” “can have,” “likely,” “should,” “would,” “could” and other
words and terms of similar meaning or the negative thereof. Such forward-looking
statements involve known and unknown risks, uncertainties and other important
factors beyond Konecranes’ control that could cause Konecranes’ actual results,
performance or achievements to be materially different from the expected
results, performance or achievements expressed or implied by such forward
-looking statements. Such forward-looking statements are based on numerous
assumptions regarding Konecranes’ present and future business strategies and the
environment in which it will operate in the future.

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 of all makes. In 2020, Group
sales totaled EUR 3.2 billion. The Group has around 16,500 employees in 50
countries. Konecranes shares are listed on the Nasdaq Helsinki (symbol: KCR).

DISTRIBUTION
Nasdaq Helsinki
Major media
www.konecranes.com

Attachments:

10286945.pdf