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2007-04-27 09:00:07 CEST 2007-04-27 09:00:07 CEST REGULATED INFORMATION Konecranes Oyj - Quarterly reportKONECRANES PLC: JANUARY - MARCH 2007 INTERIM REPORTKONECRANES PLC: JANUARY - MARCH 2007 INTERIM REPORT - Orders received increased 29 % to record-high 429.4 (332.7) MEUR - Net sales rose 28 % to 380.5 (296.7) MEUR, - Operating profit (EBIT): 30.8 (14.0) MEUR, EBIT margin: 8.1 (4.7) % - Profit before taxes: 27.4 (11.9) MEUR - Earnings per share: 0.33 (0.15) EUR - 2007 sales growth target raised to 20 % (previous target: 15 %) -------------------------------------------------------------------------------- | | | First | | R12 MTH | LY | | | | quarter | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/200 | 1-3/2006 | Change % | 4/06-3/07 | 2006 | | | 7 | | | | | -------------------------------------------------------------------------------- | SALES | | | | | | -------------------------------------------------------------------------------- | Service | 147.8 | 105.6 | 39.9 | 568.7 | 526.6 | -------------------------------------------------------------------------------- | Standard Lifting | 144.7 | 114.0 | 26.9 | 589.1 | 558.4 | -------------------------------------------------------------------------------- | Heavy Lifting | 113.9 | 98.4 | 15.8 | 506.4 | 490.8 | -------------------------------------------------------------------------------- | Internal Sales | -25.8 | -21.3 | | -97.8 | -93.3 | -------------------------------------------------------------------------------- | Sales total | 380.5 | 296.7 | 28.3 | 1 566.3 | 1 482.5 | -------------------------------------------------------------------------------- | Operating profit | 30.8 | 14.0 | 120.1 | 122.3 | 105.5 | | (EBIT) | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Share of result of | -0.2 | -0.1 | | 0.6 | 0.7 | | associates | | | | | | | and joint ventures | | | | | | -------------------------------------------------------------------------------- | Interests, net | -2.6 | -2.3 | | -9.7 | -9.5 | -------------------------------------------------------------------------------- | Other financial | -0.6 | 0.3 | | -2.6 | -1.6 | | income and expenses | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit before taxes | 27.4 | 11.9 | 130.4 | 110.6 | 95.1 | -------------------------------------------------------------------------------- | Taxes | -8.0 | -3.6 | | -30.9 | -26.5 | -------------------------------------------------------------------------------- | Net profit for the | 19.5 | 8.3 | 133.7 | 79.7 | 68.6 | | period | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share, | 0.33 | 0.15 | | 1.37 | 1.17 | | basic (EUR) | | | | | | -------------------------------------------------------------------------------- | Earnings per share, | 0.32 | 0.14 | | 1.34 | 1.15 | | diluted (EUR) | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ORDERS RECEIVED | | | | | | -------------------------------------------------------------------------------- | Service | 143.8 | 99.8 | 44.1 | 492.6 | 448.5 | -------------------------------------------------------------------------------- | Standard Lifting | 196.0 | 142.6 | 37.5 | 646.2 | 592.7 | -------------------------------------------------------------------------------- | Heavy Lifting | 118.3 | 115.1 | 2.7 | 522.3 | 519.2 | -------------------------------------------------------------------------------- | Internal Orders | -28.7 | -24.9 | | -91.5 | -87.7 | -------------------------------------------------------------------------------- | Orders received | 429.4 | 332.7 | 29.1 | 1 569.5 | 1 472.8 | | Total | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Order Book at end of | 636.8 | 510.8 | 24.7 | | 571.6 | | period | | | | | | -------------------------------------------------------------------------------- Summary of Konecranes' financial performance in the first quarter of 2007: Overall strong demand for Konecranes' products and services continued, and first quarter order intake increased 29.1 % to record-high EUR 429.4 million for one quarter. The order increase was strongest in Service and Standard Lifting, and all geographical regions contributed to the improvement. Group sales rose by 28.3 %. Approximately half orders and sales growth was the result of the acquisition of MMH Holding, which was consolidated as of 1 June, 2006. Improved efficiency, in combination with higher volumes and prices continued to have a positive impact on profitability. Higher raw material and component costs were offset by improved cost-efficiency and higher sales prices. The first quarter EBIT margin was 8.1 % compared with 4.7 % in the first quarter of 2006. The EBIT margin improved in all three Business Areas with Standard Lifting posting the largest increase mainly as a result of strong volume growth. Return on capital employed increased to 33.3 % and return on equity to 42.8 % on a rolling twelve-month basis. Outlook The level of orders received in the first quarter and the stronger order book, combined with a solid demand outlook for the second quarter, form a strong base for the rest of year 2007. Based on these factors, 2007 sales are targeted to increase by approximately 20 % compared with 2006 sales of MEUR 1,483. The target is to continue the EBIT margin improvement achieved during recent years. The expected EBIT margin improvement is based on forecasted higher sales volumes and productivity gains, a higher pre-calculated margin in the order book and improved profitability in field services. Unlike in the past, capacity utilization during the first quarter was high, boosting the margin. This improvement cannot be directly extrapolated for the rest of the year. General uncertainty regarding 2007 profitability has increased as a result of (1) the weaker USD/EUR rate, and (2) uncertain availability and prices of certain components and raw materials. Interim Report January-March 2007 Change in Reporting Method Due to changes in the Business Area reporting method described below, the sales, orders and operating profit comparison figures in this report deviate from the figures reported in 2006 for the Business Areas Service and Standard Lifting. The aggregate and Heavy Lifting figures are not affected. As of January 1, 2007, Konecranes-branded spare parts are reported in the Service Business Area, while they were earlier partly included in Service and partly in Standard Lifting. The 2006 quarterly comparison figures for Service and Standard Lifting according to the new reporting structure are presented in the table below. -------------------------------------------------------------------------------- | | Q1 2006 | Q2 2006 | Q3 2006 | Q4 2006 | -------------------------------------------------------------------------------- | Service | | | | | -------------------------------------------------------------------------------- | Orders received, MEUR | 99.8 | 108.3 | 117.9 | 122.5 | -------------------------------------------------------------------------------- | Net sales, MEUR | 105.6 | 122.9 | 136.6 | 161.4 | -------------------------------------------------------------------------------- | Operating income, MEUR | 8.7 | 12.3 | 14.4 | 17.6 | -------------------------------------------------------------------------------- | Operating margin, % | 8.2 | 10.0 | 10.5 | 10.9 | -------------------------------------------------------------------------------- | Standard Lifting | | | | | -------------------------------------------------------------------------------- | Orders received, MEUR | 142.6 | 155.3 | 157.2 | 137.7 | -------------------------------------------------------------------------------- | Net sales, MEUR | 114.0 | 131.7 | 153.2 | 159.5 | -------------------------------------------------------------------------------- | Operating income, MEUR | 8.0 | 12.0 | 15.3 | 16.2 | -------------------------------------------------------------------------------- | Operating margin, % | 7.0 | 9.1 | 10.0 | 10.2 | -------------------------------------------------------------------------------- Also the geographical segment reporting structure has been changed from the beginning of 2007. The new geographical segments are Europe, Middle East, Africa (EMEA), Americas (AME) and Asia-Pacific (APAC). The earlier structure was Nordic and Eastern Europe, EU (excl. Nordic), Americas, and Asia-Pacific. The 2006 quarterly sales comparison figures according to the new geographical segmentation are presented in the table below. -------------------------------------------------------------------------------- | | Q1 2006 | Q2 2006 | Q3 2006 | Q4 2006 | -------------------------------------------------------------------------------- | EMEA | 170.1 | 195.3 | 187.9 | 227.8 | -------------------------------------------------------------------------------- | AME | 90.1 | 105.8 | 148.0 | 168.5 | -------------------------------------------------------------------------------- | APAC | 36.6 | 38.8 | 50.0 | 63.8 | -------------------------------------------------------------------------------- | TOTAL | 296.7 | 339.9 | 385.8 | 460.1 | -------------------------------------------------------------------------------- The restated 2006 APAC sales figures differ from the figures reported in 2006 as sales in Africa and the Middle East have been shifted from APAC to EMEA. Group Structure MMH Holdings, Inc was consolidated into the Konecranes Group figures as of 1 June, 2006. Therefore the Q1 2006 comparison figures do not include MMH. MMH accounted for roughly half of the reported 28.3 percent sales growth and the 29.1 percent order intake growth. Somewhat over half of MMH's sales and orders are included in the Service Business Area, and the remainder is fairly evenly divided between Standard Lifting and Heavy Lifting. Market Review Overall market demand for Konecranes' products and services continued to develop favorably during the first quarter of 2007. Demand improved in all geographical regions and in almost all customer industries, with general manufacturing, shipyards, primary metals and metal warehousing, power and petrochemicals showing particularly strong growth. The pulp and paper and the automotive industries continued to show weak investment demand. Demand for container-handling equipment varied by product segment and geographical region. Due to the continued rise in input costs, especially steel and other metals, as well as labor costs, the market prices for cranes and crane maintenance rose somewhat during the first quarter. Orders Received, Order Book and Contract Base Order intake amounted to EUR 429.4 (Q1 2006: 332.7) million, representing order growth of 29.1 percent. Both the strong market and internal factors contributed to the high order growth. Order intake increased in all geographical regions. Order intake in Service and Standard Lifting grew substantially, while Heavy Lifting, which shows considerable quarterly variations, posted moderate growth. Order intake in Service returned to double-digit organic growth after posting weaker growth in the fourth quarter 2006. Standard Lifting benefited from growth in the general manufacturing customer segment both in emerging and developed markets, and continued strengthening its clear market-leading position. Strong demand in process cranes continued supporting order intake in Heavy Lifting. The value of the order backlog at the end of March was EUR 636.8 (end of March 2006: 510.8) million, up by 24.7 percent year-on-year and 11.4 percent from the end of 2006. The Standard Lifting order book grew clearly as a result of the high order intake. It represents approximately four months of sales. Also the Service order book increased substantially, while Heavy Lifting's order book was more or less unchanged. The contract base development was positive both in terms of units and value. At the end of March 2007, there were 269,045 (245,814) cranes and hoists included in the annual maintenance contract base, up by over 6,000 from the end of 2006. Orders Received by Business Areas, MEUR -------------------------------------------------------------------------------- | | Q1 2007 | Q1 2006 | Change percent | -------------------------------------------------------------------------------- | Service | 143.8 | 99.8 | +44.1 | -------------------------------------------------------------------------------- | Standard Lifting | 196.0 | 142.6 | +37.5 | -------------------------------------------------------------------------------- | Heavy Lifting | 118.3 | 115.1 | +2.7 | -------------------------------------------------------------------------------- | Internal | -28.7 | -24.9 | | -------------------------------------------------------------------------------- | Total | 429.4 | 332.7 | +29.1 | -------------------------------------------------------------------------------- Sales Net sales rose 28.3 percent to EUR 380.5 (296.7) million. Sales growth was predominantly the result of higher volumes, but also higher prices contributed to growth. All Business Areas achieved strong growth in all geographical regions. Service sales were supported by the good development in the maintenance contract base, in addition to strong order growth, increased spare parts sales and MMH's service revenue. Organic growth was strongest in Standard Lifting as a result of the strong demand in general manufacturing, a competitive product offering, new key customers and expanding geographical presence. The ongoing supply chain restructuring in Heavy Lifting continued to set restraints on sales growth potential. Difficulties in procuring subcontracted components showed no signs of easing. Net Sales by Business Areas, MEUR -------------------------------------------------------------------------------- | | Q1 2007 | Q1 2006 | Change percent | -------------------------------------------------------------------------------- | Service | 147.8 | 105.6 | +39.9 | -------------------------------------------------------------------------------- | Standard Lifting | 144.7 | 114.0 | +26.9 | -------------------------------------------------------------------------------- | Heavy Lifting | 113.9 | 98.4 | +15.8 | -------------------------------------------------------------------------------- | Internal | -25.8 | -21.3 | | -------------------------------------------------------------------------------- | Total | 380.5 | 296.7 | +28.3 | -------------------------------------------------------------------------------- Profitability The Group's operating income more than doubled to EUR 30.8 (14.0) million and the operating margin rose to 8.1 (4.7) percent. Higher volumes were the main driver of the improved margin. Also Increased productivity continued to have a positive impact on profitability. Changes in currency exchange rates had only a marginal negative translational effect on operating income. Currency hedging absorbed the major part of the impact of the weaker USD/EUR rate (and USD-linked currencies). The decrease in Group overheads from 2.5 to 2.2 percent of sales supported the Group's margin expansion. The operating margin in Service rose from 8.2 to 10.2 percent. The main contributing factors for the profitability increase were higher volumes and productivity, a maintained high maintenance contract retention rate, and a higher proportion of spare parts sales. The MMH service business also contributed to the margin expansion. The EBIT margin in Standard Lifting rose 4.8 percentage points to 11.8 percent. Standard Lifting's first quarter product mix was very favorable in terms of profitability. Other main reasons for Standard Lifting's improved margin were higher volumes through broader geographical presence, improved productivity, synergies from the acquired businesses and improved cost-competitiveness. The restructuring program implemented in 2002-2005 continues to have a positive effect on productivity and competitiveness. Price increases made after the first quarter 2006 also helped boost profitability. In Heavy Lifting, the operating margin rose from 5.7 to 6.9 percent. The Business Area started a similar restructuring program in 2004 as Standard Lifting started in 2002. These measures helped improve profitability despite the fact that the program is ongoing. In combination with the tighter market for subcontracted components, this continued to create a very challenging environment in terms of production and deliveries while improving profitability. Operating income and margin by Business Area -------------------------------------------------------------------------------- | | Q1 2007 | Percent of | Q1 2006 | Percent of | | | MEUR | sales | MEUR | sales | -------------------------------------------------------------------------------- | Service | 15.1 | 10.2 | 8.7 | 8.2 | -------------------------------------------------------------------------------- | Standard Lifting | 17.0 | 11.8 | 8.0 | 7.0 | -------------------------------------------------------------------------------- | Heavy Lifting | 7.9 | 6.9 | 5.6 | 5.7 | -------------------------------------------------------------------------------- | ./. Group overheads | -8.5 | -2.2 | -7.4 | -2.5 | -------------------------------------------------------------------------------- | ./. Elimination of | -0.7 | -0.0 | -0.8 | -0.0 | | internal profit | | | | | -------------------------------------------------------------------------------- | Total | 30.8 | 8.1 | 14.0 | 4.7 | -------------------------------------------------------------------------------- Group EBITDA was EUR 37.0 (18.8) million or 9.7 (6.3) percent on sales. Depreciations grew by EUR 1.5 million, from EUR 4.7 million to EUR 6.2 million. The increase in depreciations is mainly attributable to acquisitions. The share of associated companies' result amounted to EUR -0.2 (-0.1) million. Group interest costs (the net of interest income and expenses) were EUR 2.6 (2.3) million. Group income after financing items was EUR 27.4 (11.9) million. Income taxes were EUR 8.0 (3.6) million corresponding to an effective tax rate of 29 (30) percent for the year. The change in tax rate is mainly related to structural changes. Group net income was EUR 19.5 (8.3) million. Basic earnings per share totaled EUR 0.33 (0.15) and diluted earnings per share were EUR 0.32 (0.14). The Group's return on capital employed was 29.9 (18.3) percent and return on equity was 35.3 (21.7) percent. On a rolling twelve-month basis, return on capital employed was 33.3 and return on equity 42.8. Group costs Unallocated Group overhead costs were EUR 8.5 (7.4) million, representing 2.2 (2.5) percent of net sales. These costs consist mainly of common development costs (personnel, R&D, systems), treasury and legal functions, development of the company structure (M&A), and Group management and administration. Seasonality of sales and profit The sales and profit accumulation in the Group has historically not been equal between quarters. Typically, sales and profit generation has been slow in the beginning of the year and accelerated towards the yearend. This seasonality has, however, decreased in the past two years as the business has become more geographically distributed. The decrease in seasonality is expected to continue in 2007, as the strong growth will lead to high capacity utilization throughout the year. Cash flow and balance sheet Cash flow from operations before financing items and taxes, but after the change in working capital, was EUR 34.5 (31.2) million, representing EUR 0.58 (0.54) per share. Net working capital increased marginally despite significantly higher volumes. Cash flow from financing items and taxes was EUR -12.2 (-4.6) million. Net cash flow from operating activities was EUR 22.3 (26.6) million, representing EUR 0.38 (0.46) per share. In total, EUR 12.0 (3.1) million of cash was used to cover capital expenditures including acquisitions. The cash-based capital expenditures in fixed assets were EUR 6.8 (3.6) million. The parent company paid EUR 26.8 (15.8) million in dividends. Group interest-bearing debt was EUR 204.5 (162.7) million, and interest-bearing net debt was EUR 141.8 (122.6) million. Gearing was 65.0 (79.3) percent. The Solidity (equity) ratio was 27.1 (24.5) percent and the current ratio was 1.3 (1.2). The Group has a EUR 200 million committed back-up financing facility to secure running liquidity. At the end of the first quarter, EUR 60.0 (end-2006: 100.9) million was in use. Currencies Changes in currency exchange rates had only a marginal negative translational effect on reported orders, sales and operating income. Currency hedging absorbed the major part of the impact of the weaker USD/EUR rate (and USD-linked currencies). The impact of the weakened USD/EUR rate will, however weight on the reported orders, sales and profits in the second half of 2007. Continued unfavorable currency rate development would have a further negative impact on profitability going forward. The consolidation exchange rates of some important currencies for the Group developed as follows: The period end rates: -------------------------------------------------------------------------------- | | Q1 2007 | Q1 2006 | Change % | -------------------------------------------------------------------------------- | USD | 1.332 | 1.210 | -9.12% | -------------------------------------------------------------------------------- | CAD | 1.537 | 1.408 | -8.34% | -------------------------------------------------------------------------------- | GBP | 0.680 | 0.696 | 2.44% | -------------------------------------------------------------------------------- | CNY | 10.295 | 9.704 | -5.74% | -------------------------------------------------------------------------------- | SGD | 2.020 | 1.958 | -3.08% | -------------------------------------------------------------------------------- | SEK | 9.346 | 9.432 | 0.91% | -------------------------------------------------------------------------------- | NOK | 8.119 | 7.968 | -1.87% | -------------------------------------------------------------------------------- | AUD | 1.648 | 1.700 | 3.11% | -------------------------------------------------------------------------------- The period average rates: -------------------------------------------------------------------------------- | | Q1 2007 | Q1 2006 | Change % | -------------------------------------------------------------------------------- | USD | 1.311 | 1.202 | -8.27% | -------------------------------------------------------------------------------- | CAD | 1.536 | 1.389 | -9.55% | -------------------------------------------------------------------------------- | GBP | 0.671 | 0.686 | 2.32% | -------------------------------------------------------------------------------- | CNY | 10.169 | 9.678 | -4.83% | -------------------------------------------------------------------------------- | SGD | 2.007 | 1.956 | -2.55% | -------------------------------------------------------------------------------- | SEK | 9.189 | 9.353 | 1.78% | -------------------------------------------------------------------------------- | NOK | 8.169 | 8.024 | -1.77% | -------------------------------------------------------------------------------- | AUD | 1.667 | 1.628 | -2.37% | -------------------------------------------------------------------------------- The Group continued its currency hedging policy in order to minimize currency risk relating to non-euro nominated export and import from or to the euro zone. Hedging was mainly carried out through currency forward exchange transactions. Capital expenditure The Group's capital expenditures excluding acquisitions were EUR 5.4 (3.1) million. These capital expenditures consisted mainly of replacement or capacity expansion investments on machines, equipment and information technology. Capital expenditure in acquisitions was EUR 5.4 (0.0) million, of which the acquisition of the existing Straddle Carrier product rights from Consens Transport Systeme GmbH form the majority. Personnel and personnel development At the end of March, the Group employed 7,805 (6,125) persons. The average number of personnel was 7,677 (6,024) in the first quarter 2007. The increase in employment relates mainly to the acquisition on MMH Holding. Since the end of 2006, the number of employees increased by 256, of which 205 in Service. Personnel by Business Area, end of period -------------------------------------------------------------------------------- | | Q1 2007 | Q1 2006 | Change percent | -------------------------------------------------------------------------------- | Service | 4,128 | 3,042 | +36 | -------------------------------------------------------------------------------- | Standard Lifting | 2,321 | 2,047 | +13 | -------------------------------------------------------------------------------- | Heavy Lifting | 1,173 | 898 | +8 | -------------------------------------------------------------------------------- | Group Staff | 183 | 138 | +32 | -------------------------------------------------------------------------------- | Total | 7,805 | 6,125 | +27 | -------------------------------------------------------------------------------- Resolutions of Konecranes' Annual General Meeting Konecranes Annual General Meeting held on 8 March, 2007 approved the company's Financial Statements for the fiscal year 2006 and discharged the Board and Managing Director from liability. The AGM adopted the Board's proposal that dividend of EUR 0.45 be paid on 59,402,720 shares, totaling EUR 26,731,224.00. Konecranes has 742,600 own shares in its possession, which are not entitled to dividend. The rest of the non-restricted equity of EUR 45,110,117.03 was retained and carried forward. The dividend was paid on 21 March, 2007. The AGM approved the proposal of the Nomination and Compensation Committee that eight (8) members of the Board of Directors be elected. The Board of Directors elected in the AGM in 2006 was re-elected, added with one new member. Mr. Svante Adde, Mr. Stig Gustavson, Mr. Matti Kavetvuo, Ms. Malin Persson, Mr. Timo Poranen, Mr. Björn Savén and Mr. Stig Stendahl were re-elected, and the managing director of Nokian Tyres Plc. Mr. Kim Gran was elected as a new member. The term of the Board ends at the next AGM. The AGM confirmed an annual fee of EUR 78,000 for the Chairman of the Board, EUR 48,000 for the Vice Chairman of the Board, and EUR 30,000 for other Board members and that 40 % of the annual fee will be used to acquire Konecranes Plc shares from the market to each Board member. Should the acquisition of shares not be possible due to reasons consequent upon the Company or Board member, the compensation will be paid in its entirety in cash. In addition, compensation of EUR 1,200 was approved for attendance at Board Committee meetings. Travel expenses are compensated against invoice. The AGM confirmed that Ernst & Young Oy continue as the Company's external auditors. The AGM approved the Board's proposal to amend the Articles of Association, which are mainly due to the new Companies Act effective as from 1 September, 2006. The Articles of Association were amended as follows: -The Company name is Konecranes Abp, in Finnish Konecranes Oyj and in English Konecranes Plc (1 §) -The definition of the object of the Company's business is complemented (2 §) -The provisions concerning the Company's minimum share capital and maximum authorized capital and the number of shares are abolished (3 § and 4 §) -The provisions concerning the record date are abolished (5 §) -The provisions concerning the representing of the Company are amended to correspond with the terminology of the new Companies Act (the new 6 §) -The time of delivery of the Notice of a Shareholders' Meeting is amended. The notice is to be delivered not earlier than three (3) months before the General Meeting (the new 9 §) -The agenda of the Annual General Meeting is amended to correspond contentually to the new Companies Act (the new 10 §) -The provision concerning the shareholder's liability to redeem shares is abolished (13 §) -A provision on the resolution of corporate disputes is added (the new 11 §) Board Authorizations The AGM authorized the Board to repurchase the Company's own shares. No more than 6,500,000 shares may be repurchased. The Company cannot at any moment own more shares than the amount of shares, which together with shares held by its subsidiaries corresponds to 10 per cent of all the registered shares of the Company. The Board resolves upon the methods of the repurchase and other provisions. Among others, derivatives can be used in the purchase. The shares can be purchased in deviation from the proportioned holdings of the shareholders (directed purchase). The AGM authorized the Board to transfer shares repurchased by the Company. The authorization is limited to a maximum of 6,500,000 shares. The shares may be transferred in one or several tranches. The Board is authorized to resolve upon the terms and conditions of the transfer of the own shares. The Board is authorized to resolve to transfer the shares deviating from the shareholders' pre-emptive rights to acquire the Company's shares, provided that weighty financial grounds exist. The Board can use this authorization to grant stock option rights and other special rights concerning the Company's own shares, referred to in Chapter 10 of the Companies Act but not, however, to resolve upon a personnel stock option plan. The AGM approved the Board's proposal that the key employees of the Konecranes group are granted the maximum of 3 million option rights. The option rights entitle to an aggregate of 3 million Company shares. Option rights are divided into three series, whose subscription periods are staggered, so that the share subscription period for the option rights of the first series begins on 2 May 2009 and ends for the option rights of the last series on 30 April 2013. The share subscription prices when exercising an option right are based on the Company share's market price, as defined in the terms of the option rights. The AGM approved the Board's proposal that the subscription price paid for new shares that are subscribed on the basis of the Company's option rights 1997 (based on the General Meeting resolution on 4 March 1997), 1999 (based on the General Meeting resolution on 11 March 1999), 2001 (based on the General Meeting resolution on 8 March 2001) and 2003 (based on the General Meeting resolution on 6 March 2003), and are issued after the General Meeting, will be booked in its entirety to the paid in capital. Change in Management The Konecranes Group's CFO Teuvo Rintamäki informed that he will leave his position. Mr. Rintamäki has been a member of the Group management team since it was formed in 1994. The search for a new CFO is underway and both internal and external candidates will be considered. Mr. Rintamäki has confirmed that he will continue as CFO until his successor has been appointed and introduced to the position. Acquisitions Konecranes acquired all the existing Straddle Carrier product rights from Consens Transport Systeme GmbH in January, 2007. Konecranes has started to manufacture Straddle Carriers based on the concept developed by Consens. Konecranes' entry into the Straddle Carrier business is an important step in developing Konecranes' product offering within Ports and further increases the company's global competitiveness. Konecranes will use its well-established global service platform to support the new product line and utilize its existing distribution and service network for cranes and lifttrucks to market the new product line. By entering the straddle carrier business, Konecranes not only widens the product offering, but also gains access to new customers, who have been using this yard-operating concept. Sale of Real Estate Konecranes signed a letter of intent regarding the sale of six properties located in Hyvinkää and Hämeenlinna, Finland, to the Swedish-based real estate company AB Sagax (publ.) on March 26, 2007. The real estate comprises buildings of approximately 74,000 square meters and a land area of roughly 240,000 square meters, which are currently mainly in production, warehousing and office use. The Konecranes companies currently operating in the facilities will continue their normal operations in these facilities under long-term rental agreements. The aggregate sales price for the facilities is approximately EUR 30 million. As a result of the transaction, which is expected to be signed and closed shortly, Konecranes will book a capital gain in the second quarter of 2007. Risks Konecranes main short-term risks regarding the 2007 financial performance are the availability, quality, costs, and delivery times and accuracy of subcontracted components. The ability and cost to increase own production capacity is also subject to some uncertainty. Due to the current tight labor market, labor costs and difficulty to recruit skilled personnel is a cause of some uncertainty in regards to growth and profitability in Service. Litigations Konecranes is a party to various litigations and disputes relating to its normal business in different countries. At the moment, Konecranes does not expect any of these ongoing litigations or disputes to have a material effect on the profits or future outlook of the Group. Incentive Programs and Share Capital Konecranes has four ongoing stock option plans (1997, 1999, 2001 and 2003). The option plans include approximately 300 key employees. The terms and conditions of the stock option programs are available on our website at www.konecranes.com. Pursuant to Konecranes' stock option plans 194,500 new shares were subscribed for and registered in the Finnish Trade Register during year the first quarter of 2007. As a result of the subscriptions, Konecranes' share capital increased to EUR 30,072,660, comprising 60,272,220 shares. The remaining 1997, 1999B, 2001 and 2003 stock options at the end of the accounting period entitle to subscription of a total of 1,797,100 shares. On 15 December, 2006, the Konecranes Board approved a long-term incentive program directed to Pekka Lundmark, the Managing Director of the Company. The program was implemented by disposing of the Company's own shares held by the Company on the basis of the authorization granted to the Board of Directors by the AGM on 8 March, 2006. Pursuant to the incentive program a total of 50,000 shares were sold to the Managing Director on 22 December 2006, and 50,000 shares were sold in January 2007 on terms and conditions defined in the terms of subscription. The shares sold are subject to a five-year transfer restriction. As part of the scheme the Company paid a separate bonus to the Managing Director to cover the taxes levied as a result of the arrangement. The purpose of the incentive scheme is to motivate the Managing Director to contribute in the best possible manner to long-term success of the Company and increased shareholder value for all shareholders of the Company. Own Shares in the Company's Possession At the end of March, 2007, Konecranes held 742,600 of the company's own shares. This corresponds to 1.2 percent of the company's total outstanding shares and votes. The shares were bought back between February 20 and March 5, 2003. Shares and trading volume Konecranes' share price increased by 13 percent during the first quarter of 2007 and closed at EUR 25.10. The period high was EUR 26.85 and period low EUR 20.68. The volume-weighted average share price during the period was EUR 24.31. In the same period, the OMX Helsinki Index rose by roughly seven percent and the OMX Helsinki Industrials Index by nearly 12 percent. At the end of March 2007, Konecranes' total market capitalization was EUR 1,512 million including own shares in the company's possession, making it the 29th largest company on the Helsinki Stock Exchange. The trading volume totaled 32.1 million shares, representing a turnover velocity of 207 percent. Total trading amounted to EUR 781 million, which was the 21st highest on the Helsinki Exchange. The daily average trading volume was 502,307 shares, representing a daily average turnover of EUR 12.2 million. Flagging notifications -------------------------------------------------------------------------------- | Date | Shareholder | Number of | % of | Prior | | | | Shares | shares and | flagging, % | | | | owned | votes* | of shares | | | | | | and votes | -------------------------------------------------------------------------------- | 19 | Fidelity | 4 137 578 | 6.89 | 10.02 | | January,2007 | International | | | | | | Limited and its | | | | | | direct and | | | | | | indirect | | | | | | subsidiaries | | | | -------------------------------------------------------------------------------- | 12 March, 2007 | JPMorgan Chase & | 3 008 405 | 5.00 | | | | Co and its | | | | | | subsidiaries | | | | -------------------------------------------------------------------------------- | 14 March, 2007 | JPMorgan Chase & | 2 936 245 | 4.88 | | | | Co and its | | | | | | subsidiaries | | | | -------------------------------------------------------------------------------- | 20 March, 2007 | Morgan Stanley & | 3 014 940 | 5.00 | | | | Co International | | | | | | Ltd | | | | -------------------------------------------------------------------------------- | 21 March, 2007 | Morgan Stanley & | 2 010 229 | 3.33 | | | | Co International | | | | | | Ltd | | | | -------------------------------------------------------------------------------- | 29 March, 2007 | JPMorgan Chase & | 3 313 163 | 5.50 | | | | Co and its | | | | | | subsidiaries | | | | | | direct and | | | | | | indirect | | | | | | subsidiaries | | | | -------------------------------------------------------------------------------- *Percentage of shares at time of notification Outlook The level of orders received in the first quarter and the stronger order book, combined with a solid demand outlook for the second quarter, form a strong base for the rest of year 2007. Based on these factors, 2007 sales are targeted to increase by approximately 20 % compared with 2006 sales of MEUR 1,483. The target is to continue the EBIT margin improvement achieved during recent years. The expected EBIT margin improvement is based on forecasted higher sales volumes and productivity gains, a higher pre-calculated margin in the order book and improved profitability in field services. Unlike in the past, capacity utilization during the first quarter was high, boosting the margin. This improvement cannot be directly extrapolated for the rest of the year. General uncertainty regarding 2007 profitability has increased as a result of (1) the weaker USD/EUR rate, and (2) uncertain availability and prices of certain components and raw materials. Konecranes Plc Board of Directors Disclaimer Certain statements in this report, which are not historical fact, including, without limitation those regarding expectations for market growth and developments, expectations for growth and profitability and statements preceded by "believes", "expects", "anticipates", "foresees" or similar expressions, are forward-looking statements. Therefore they involve risks and uncertainties, which may cause actual results to materially differ from the results expressed in such forward-looking statements. Such factors include but are not limited to the company's own operating factors, industry conditions and general economic conditions. Important Orders RTG orders in Europe: Grupo Boluda Corporacion Maritima, a new customer to Konecranes, ordered eight RTG (Rubber Tired Gantry) cranes, and Dragados S.P.L. placed a repeat order of six RTGs to Maritima Valenciana in the Port of Valencia. The orders were made in March, 2007 and the cranes will be delivered by January, 2008. The total value of the orders is approximately 15 MEUR. Shipyards: Taekwang Heavy Industry, an important player in the South Korean shipbuilding market ordered one Gantry Crane. Taekwang is a new customer to Konecranes and the latest order reflects an increased demand for high capacity shipyard cranes among Korean shipbuilders. The crane will be delivered to the Taekwang shipyard in Youngkwang in October 2007. HPC Ukraina, in Odessa, Ukraine, a subsidiary of HPC Hamburg Port Consulting GmbH, which is a new customer to Konecranes, ordered four RTG cranes and Compania Auxiliar del Puerto SA (CAPSA) in Santa Cruz de Tenerife, Canary Islands has ordered two RTGs. The total value of the orders is over 7 MEUR. The cranes will be delivered by January 2008. Energy: RWEnPower ordered a 12T grabbing crane for Aberthaw power plant in Wales.Konecranes will deliver 3 EOT-powerhouse cranesto the power plant Limberg II in Austria. China Everbright / Changzhou Environmental Energy (Changzhou) Ltd orderd two sets of 9.5t semiautomatic cranes for refuse handling to be delivered to China. Shandong Luneng Mount Tai Electric Equipment Co., Ltd ordered one set of 260/32t EOT Crane. They also ordered 6 sets of CXT Cranes. All cranes will be delivered to China. RTG orders in Europe: Grupo Boluda Corporacion Maritima, a new customer to Konecranes, ordered eight RTG (Rubber Tired Gantry) cranes, and Dragados S.P.L. placed a repeat order of six RTGs to Maritima Valenciana in the Port of Valencia. The orders were made in March, 2007 and the cranes will be delivered by January, 2008. The total value of the orders is approximately 15 MEUR. HPC Ukraina, in Odessa, Ukraine, a subsidiary of HPC Hamburg Port Consulting GmbH, which is a new customer to Konecranes, ordered four RTG cranes and Compania Auxiliar del Puerto SA (CAPSA) in Santa Cruz de Tenerife, Canary Islands has ordered two RTGs. The total value of the orders is over 7 MEUR. The cranes will be delivered by January 2008. Shipyards: Taekwang Heavy Industry, an important player in the South Korean shipbuilding market ordered one Gantry Crane. Taekwang is a new customer to Konecranes and the latest order reflects an increased demand for high capacity shipyard cranes among Korean shipbuilders. The crane will be delivered to the Taekwang shipyard in Youngkwang in October 2007. Steel: Thyssen 13t Crane to be delivered to France. Duferco ordered one 52t+15t Gantry Crane to be delivered to Belgium. Energy: RWEnPower ordered a 12T grabbing crane for Aberthaw power plant in Wales.Konecranes will deliver 3 EOT-powerhouse cranesto the power plant Limberg II in Austria. China Everbright / Changzhou Environmental Energy (Changzhou) Ltd orderd two sets of 9.5t semiautomatic cranes for refuse handling to be delivered to China. Shandong Luneng Mount Tai Electric Equipment Co., Ltd ordered one set of 260/32t EOT Crane. They also ordered 6 sets of CXT Cranes. All cranes will be delivered to China. Others: Fluor Enterprises, Inc from Texas, USA ordered one 30 ton coke handling bucket crane with a span of 139 feet for the Marathon Oil Corporation refinery in Garyville, Lousiana, USA. This is the second Konecranes coker crane for this refinery. OJI Tomioka made a large order comprising five process cranes for its paper mill in Japan. PSA Peugeot Citroën ordered one 50t Crane and one 30t SM Crane to be delivered to France. -------------------------------------------------------------------------------- | CONSOLIDATED STATEMENT OF INCOME - IFRS | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | 1-12/2006 | -------------------------------------------------------------------------------- | Sales | 380.5 | | 296.7 | | 1 482.5 | -------------------------------------------------------------------------------- | Other operating income | 0.7 | | 0.8 | | 2.0 | -------------------------------------------------------------------------------- | Depreciation and impairments | -6.2 | | -4.7 | | -22.5 | -------------------------------------------------------------------------------- | Other operating expenses | -344.3 | | -278.8 | | -1 356.5 | -------------------------------------------------------------------------------- | Operating profit | 30.8 | | 14.0 | | 105.5 | -------------------------------------------------------------------------------- | Share of result of associates and | -0.2 | | -0.1 | | 0.7 | | joint ventures | | | | | | -------------------------------------------------------------------------------- | Financial income and expenses | -3.2 | | -2.0 | | -11.1 | -------------------------------------------------------------------------------- | Profit before taxes | 27.4 | | 11.9 | | 95.1 | -------------------------------------------------------------------------------- | Taxes | -8.0 | | -3.6 | | -26.5 | -------------------------------------------------------------------------------- | Net profit for the period | 19.5 | | 8.3 | | 68.6 | -------------------------------------------------------------------------------- | Net profit for the period attributable to | | | | | -------------------------------------------------------------------------------- | Shareholders of the parent company | 19.5 | | 8.3 | | 68.6 | -------------------------------------------------------------------------------- | Minority interest | 0.0 | | 0.0 | | 0.0 | -------------------------------------------------------------------------------- | Earnings per share, basic (EUR) | 0.33 | | 0.15 | | 1.17 | -------------------------------------------------------------------------------- | Earnings per share, diluted (EUR) | 0.32 | | 0.14 | | 1.15 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED BALANCE SHEET - IFRS | | | | | -------------------------------------------------------------------------------- | EUR million | | | | | | -------------------------------------------------------------------------------- | ASSETS | 31.03.2007 | 31.03.2006 | 31.12.2006 | -------------------------------------------------------------------------------- | Non-current assets | | | | | | -------------------------------------------------------------------------------- | Goodwill | 54.0 | | 55.6 | | 54.0 | -------------------------------------------------------------------------------- | Other intangible assets | 54.7 | | 41.7 | | 55.0 | -------------------------------------------------------------------------------- | Property, plant and equipment | 68.2 | | 59.6 | | 67.5 | -------------------------------------------------------------------------------- | Advance payments and | 11.0 | | 6.0 | | 9.6 | | construction in progress | | | | | | -------------------------------------------------------------------------------- | Investments accounted for using | 6.1 | | 5.8 | | 6.3 | | the equity method | | | | | | -------------------------------------------------------------------------------- | Available-for-sale investments | 2.1 | | 1.6 | | 2.1 | -------------------------------------------------------------------------------- | Long-term loans receivable | 0.5 | | 0.4 | | 0.5 | -------------------------------------------------------------------------------- | Deferred tax assets | 25.4 | | 21.1 | | 24.6 | -------------------------------------------------------------------------------- | Total non-current assets | 221.9 | | 191.7 | | 219.6 | -------------------------------------------------------------------------------- | Current assets | | | | | | -------------------------------------------------------------------------------- | Inventories | | | | | | -------------------------------------------------------------------------------- | Raw material and | 96.7 | | 70.1 | | 92.7 | | semi-manufactured goods | | | | | | -------------------------------------------------------------------------------- | Work in progress | 119.5 | | 94.1 | | 103.5 | -------------------------------------------------------------------------------- | Advance payments | 35.4 | | 13.1 | | 30.4 | -------------------------------------------------------------------------------- | Total inventories | 251.6 | | 177.3 | | 226.6 | -------------------------------------------------------------------------------- | Account receivables | 283.9 | | 212.6 | | 324.2 | -------------------------------------------------------------------------------- | Loans receivable | 0.1 | | 0.3 | | 0.2 | -------------------------------------------------------------------------------- | Other receivables | 23.6 | | 22.4 | | 27.0 | -------------------------------------------------------------------------------- | Deferred assets | 71.0 | | 78.1 | | 76.9 | -------------------------------------------------------------------------------- | Cash and cash equivalents | 62.0 | | 39.4 | | 44.4 | -------------------------------------------------------------------------------- | Total current assets | 692.3 | | 530.1 | | 699.4 | -------------------------------------------------------------------------------- | TOTAL ASSETS | 914.2 | | 721.9 | | 919.0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EQUITY AND LIABILITIES | 31.03.2007 | 31.03.2006 | 31.12.2006 | -------------------------------------------------------------------------------- | Capital and reserves attributable to the shareholders of the | | | parent | | -------------------------------------------------------------------------------- | Share capital | 30.1 | | 29.5 | | 30.0 | -------------------------------------------------------------------------------- | Share premium account | 39.3 | | 33.3 | | 39.0 | -------------------------------------------------------------------------------- | Share issues | 0.2 | | 0.0 | | 0.0 | -------------------------------------------------------------------------------- | Fair value reserves | 3.6 | | -2.0 | | 3.7 | -------------------------------------------------------------------------------- | Translation difference | -6.1 | | -1.7 | | -5.8 | -------------------------------------------------------------------------------- | Paid in capital | 1.9 | | 0.0 | | 0.5 | -------------------------------------------------------------------------------- | Retained earnings | 129.6 | | 87.2 | | 87.7 | -------------------------------------------------------------------------------- | Net profit for the period | 19.5 | | 8.3 | | 68.6 | -------------------------------------------------------------------------------- | Total Shareholders' equity | 218.0 | | 154.6 | | 223.7 | -------------------------------------------------------------------------------- | Minority interest | 0.1 | | 0.1 | | 0.1 | -------------------------------------------------------------------------------- | Total equity | 218.0 | | 154.7 | | 223.7 | -------------------------------------------------------------------------------- | Liabilities | | | | | | -------------------------------------------------------------------------------- | Non-current liabilities | | | | | | -------------------------------------------------------------------------------- | Interest-bearing | 79.4 | | 27.1 | | 120.9 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Other long-term liabilities | 58.8 | | 58.0 | | 58.7 | -------------------------------------------------------------------------------- | Deferred tax liabilities | 19.0 | | 17.1 | | 20.0 | -------------------------------------------------------------------------------- | Total non-current | 157.2 | | 102.2 | | 199.6 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Provisions | 27.3 | | 20.4 | | 28.2 | -------------------------------------------------------------------------------- | Current liabilities | | | | | | -------------------------------------------------------------------------------- | Interest-bearing | 125.1 | | 135.6 | | 52.4 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Advance payments received | 109.8 | | 89.7 | | 128.9 | -------------------------------------------------------------------------------- | Progress billings | 8.5 | | 0.0 | | 7.0 | -------------------------------------------------------------------------------- | Accounts payable | 102.2 | | 78.4 | | 113.6 | -------------------------------------------------------------------------------- | Other short-term | 23.9 | | 19.1 | | 23.0 | | liabilities (non-interest | | | | | | | bearing) | | | | | | -------------------------------------------------------------------------------- | Accruals | 142.2 | | 121.6 | | 142.5 | -------------------------------------------------------------------------------- | Total current liabilities | 511.7 | | 444.5 | | 467.4 | -------------------------------------------------------------------------------- | Total liabilities | 696.2 | | 567.1 | | 695.2 | -------------------------------------------------------------------------------- | TOTAL EQUITY AND | 914.2 | | 721.9 | | 919.0 | | LIABILITIES | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | KEY FIGURES | 31.03.2007 | 31.03.2006 | 31.12.2006 | -------------------------------------------------------------------------------- | Gearing % | 65.0 | | 79.3 | | 57.3 | -------------------------------------------------------------------------------- | Solidity % | 27.1 | | 24.5 | | 28.3 | -------------------------------------------------------------------------------- | Return on capital employed | 33.3 | | 20.6 | | 29.5 | | %, Rolling 12 Months | | | | | | | (R12M) | | | | | | -------------------------------------------------------------------------------- | Return on equity %, | 42.8 | | 24.3 | | 36.5 | | Rolling 12 Months (R12M) | | | | | | -------------------------------------------------------------------------------- | Equity/share, EUR | 3.66 | | 2.66 | | 3.77 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED STATEMENT OF CHANGES | | IN EQUITY - IFRS | -------------------------------------------------------------------------------- | MEUR | Share | Share premium | Share | Fair value | | | capital | account | issues | Reserves | -------------------------------------------------------------------------------- | Balance at 31 Dec, | 29.0 | 26.5 | 0.0 | -4.9 | | 2005 | | | | | -------------------------------------------------------------------------------- | Option excercised | 0.6 | 6.7 | | | -------------------------------------------------------------------------------- | Dividend distribution | | | | | -------------------------------------------------------------------------------- | Cash flow hedge | | | | 2.9 | -------------------------------------------------------------------------------- | Translation difference | | | | | -------------------------------------------------------------------------------- | Share based payments | | | | recognized against equity | | | -------------------------------------------------------------------------------- | Other change | | | | | -------------------------------------------------------------------------------- | Minority interest | | | | | -------------------------------------------------------------------------------- | Net profit for the | | | | | | period | | | | | -------------------------------------------------------------------------------- | Balance at 31 March, | 29.5 | 33.3 | 0.0 | -2.0 | | 2006 | | | | | -------------------------------------------------------------------------------- | Balance at 31 Dec, | 30.0 | 39.0 | 0.0 | 3.7 | | 2006 | | | | | -------------------------------------------------------------------------------- | Option excercised | 0.0 | 0.3 | | | -------------------------------------------------------------------------------- | Share issue | | | 0.2 | | -------------------------------------------------------------------------------- | Dividend distribution | | | | | -------------------------------------------------------------------------------- | Cash flow hedge | | | | -0.1 | -------------------------------------------------------------------------------- | Translation difference | | | | | -------------------------------------------------------------------------------- | Share based payments | | | | recognized against equity | | | -------------------------------------------------------------------------------- | Minority interest | | | | | -------------------------------------------------------------------------------- | Net profit for the | | | | | | period | | | | | -------------------------------------------------------------------------------- | Balance at 31 March, | 30.1 | 39.3 | 0.2 | 3.6 | | 2007 | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED STATEMENT OF CHANGES | | IN EQUITY - IFRS | -------------------------------------------------------------------------------- | MEUR | Translati | Paid in | Retained | Minority | Total | | | on | Capital | Earnings | interest | Equity | | | Differenc | | | | | | | e | | | | | -------------------------------------------------------------------------------- | Balance at 31 Dec, | -1.2 | 0.0 | 102.7 | 0.1 | 152.1 | | 2005 | | | | | | -------------------------------------------------------------------------------- | Option excercised | | | | | 7.3 | -------------------------------------------------------------------------------- | Dividend | | | -15.8 | | -15.8 | | distribution | | | | | | -------------------------------------------------------------------------------- | Cash flow hedge | | | | | 2.9 | -------------------------------------------------------------------------------- | Translation | -0.5 | | | | -0.5 | | difference | | | | | | -------------------------------------------------------------------------------- | Share based payments | 0.2 | | 0.2 | | recognized against equity | | | | -------------------------------------------------------------------------------- | Other change | | | 0.1 | | 0.1 | -------------------------------------------------------------------------------- | Minority interest | | | | | 0.0 | -------------------------------------------------------------------------------- | Net profit for the | | | 8.3 | | 8.3 | | period | | | | | | -------------------------------------------------------------------------------- | Balance at 31 March, | -1.7 | 0.0 | 95.6 | 0.1 | 154.7 | | 2006 | | | | | | -------------------------------------------------------------------------------- | Balance at 31 Dec, | -5.8 | 0.5 | 156.3 | 0.1 | 223.7 | | 2006 | | | | | | -------------------------------------------------------------------------------- | Option excercised | | 1.4 | | | 1.7 | -------------------------------------------------------------------------------- | Share issue | | | | | 0.2 | -------------------------------------------------------------------------------- | Dividend | | | -26.8 | | -26.8 | | distribution | | | | | | -------------------------------------------------------------------------------- | Cash flow hedge | | | | | -0.1 | -------------------------------------------------------------------------------- | Translation | -0.3 | | | | -0.3 | | difference | | | | | | -------------------------------------------------------------------------------- | Share based payments | | | 0.1 | | 0.1 | | recognized against | | | | | | | equity | | | | | | -------------------------------------------------------------------------------- | Minority interest | | | | | 0.0 | -------------------------------------------------------------------------------- | Net profit for the | | | 19.5 | | 19.5 | | period | | | | | | -------------------------------------------------------------------------------- | Balance at 31 March, | -6.1 | 1.9 | 149.1 | 0.1 | 218.0 | | 2007 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED CASH FLOW STATEMENT - IFRS | | | | -------------------------------------------------------------------------------- | EUR million | 1-3/2007 | 1-3/2006 | 1-12/2006 | -------------------------------------------------------------------------------- | Cash flow from operating | | | | | | | activities | | | | | | -------------------------------------------------------------------------------- | Operating income | 30.8 | | 14.0 | | 105.5 | -------------------------------------------------------------------------------- | Adjustments to operating profit | | | | | | -------------------------------------------------------------------------------- | Depreciation and impairments | 6.2 | | 4.7 | | 22.5 | -------------------------------------------------------------------------------- | Profits and losses on sale of | -0.1 | | 0.0 | | -0.3 | | fixed assets | | | | | | -------------------------------------------------------------------------------- | Other non-cash items | -0.2 | | 0.1 | | 2.0 | -------------------------------------------------------------------------------- | Operating income before chg in net | 36.7 | | 18.9 | | 129.7 | | working capital | | | | | | -------------------------------------------------------------------------------- | Change in interest-free short-term | 45.9 | | 14.6 | | -69.1 | | receivables | | | | | | -------------------------------------------------------------------------------- | Change in inventories | -22.4 | | -21.9 | | -48.2 | -------------------------------------------------------------------------------- | Change in interest-free short-term | -25.7 | | 19.5 | | 101.9 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Change in net working capital | -2.2 | | 12.3 | | -15.4 | -------------------------------------------------------------------------------- | Cash flow from operations before | 34.5 | | 31.2 | | 114.2 | | financing items and taxes | | | | | | -------------------------------------------------------------------------------- | Interest received | 0.4 | | 0.4 | | 2.1 | -------------------------------------------------------------------------------- | Interest paid | -3.0 | | -2.0 | | -11.5 | -------------------------------------------------------------------------------- | Other financial income and | -0.6 | | 0.3 | | -1.4 | | expenses | | | | | | -------------------------------------------------------------------------------- | Income taxes paid | -9.1 | | -3.4 | | -22.1 | -------------------------------------------------------------------------------- | Financing items and taxes | -12.2 | | -4.6 | | -32.8 | -------------------------------------------------------------------------------- | Net cash from operating activities | 22.3 | | 26.6 | | 81.4 | -------------------------------------------------------------------------------- | Cash flow from investing | | | | | | | activities | | | | | | -------------------------------------------------------------------------------- | Acquisition of Group companies, | -5.1 | | 0.0 | | -48.3 | | net of cash | | | | | | -------------------------------------------------------------------------------- | Acquisition of shares in | 0.0 | | 0.0 | | -0.2 | | associated company | | | | | | -------------------------------------------------------------------------------- | Investments in other shares | -0.2 | | 0.0 | | -0.6 | -------------------------------------------------------------------------------- | Capital expenditures | -6.8 | | -3.6 | | -17.1 | -------------------------------------------------------------------------------- | Proceeds from sale of fixed assets | 0.1 | | 0.5 | | 1.2 | -------------------------------------------------------------------------------- | Dividends received | 0.0 | | 0.0 | | 0.1 | -------------------------------------------------------------------------------- | Net cash used in investing | -12.0 | | -3.1 | | -64.8 | | activities | | | | | | -------------------------------------------------------------------------------- | Cash flow before financing | 10.3 | | 23.5 | | 16.6 | | activities | | | | | | -------------------------------------------------------------------------------- | Cash flow from financing | | | | | | | activities | | | | | | -------------------------------------------------------------------------------- | Proceeds from options exercised | 2.0 | | 7.3 | | 14.1 | | and share issues | | | | | | -------------------------------------------------------------------------------- | Proceeds from (+), payments of (-) | -40.8 | | -3.9 | | 88.5 | | long-term borrowings | | | | | | -------------------------------------------------------------------------------- | Proceeds from (+), payments of (-) | 73.1 | | -15.3 | | -101.8 | | short-term borrowings | | | | | | -------------------------------------------------------------------------------- | Proceeds from (-), payments of (+) | 0.0 | | -0.3 | | -0.2 | | short-term receivables | | | | | | -------------------------------------------------------------------------------- | Dividends paid | -26.8 | | -15.8 | | -15.8 | -------------------------------------------------------------------------------- | Net cash used in financing | 7.5 | | -28.0 | | -15.2 | | activities | | | | | | -------------------------------------------------------------------------------- | Translation differences in cash | -0.1 | | -0.2 | | -1.0 | -------------------------------------------------------------------------------- | Change of cash and cash | 17.7 | | -4.6 | | 0.3 | | equivalents | | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents at | 44.4 | | 44.0 | | 44.0 | | beginning of period | | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents at end | 62.0 | | 39.4 | | 44.4 | | of period | | | | | | -------------------------------------------------------------------------------- | Change of cash and cash | 17.7 | | -4.6 | | 0.3 | | equivalents | | | | | | -------------------------------------------------------------------------------- The effect of changes in exchange rates has been eliminated by converting the beginning balance at the rates current on the last day of the year. -------------------------------------------------------------------------------- | SEGMENT | | | | | | | | | | INFORMATION | | | | | | | | | -------------------------------------------------------------------------------- | 1. BUSINESS | | | | | | | | | | SEGMENTS | | | | | | | | | -------------------------------------------------------------------------------- | EUR million | | | | | | | | | -------------------------------------------------------------------------------- | Order Intakes | 1-3/ | % of | 1-3/ | % of | R12M* | % of | 1-12/ | % of | | by Business | 2007 | tota | 2006 | total | | total | 2006 | total | | Area | | l | | | | | | | -------------------------------------------------------------------------------- | Services 1) | 143. | 31 | 99.8 | 28 | 492.6 | 30 | 448.5 | 29 | | | 8 | | | | | | | | -------------------------------------------------------------------------------- | Standard | 196. | 43 | 142. | 40 | 646.2 | 39 | 592.7 | 38 | | Lifting | 0 | | 6 | | | | | | -------------------------------------------------------------------------------- | Heavy Lifting | 118. | 26 | 115. | 32 | 522.3 | 31 | 519.2 | 33 | | | 3 | | 1 | | | | | | -------------------------------------------------------------------------------- | ./. Internal | -28. | | -24. | | -91.5 | | -87.7 | | | | 7 | | 9 | | | | | | -------------------------------------------------------------------------------- | Total | 429. | 100 | 332. | 100 | 1 | 100 | 1 | 100 | | | 4 | | 7 | | 569.6 | | 472.8 | | -------------------------------------------------------------------------------- | 1) Excl. | | | | | | | | | | Service | | | | | | | | | | Contract Base | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Order Book | 1-3/2007 | 1-3/2006 | | | 1-12/2006 | | total 2) | | | | | | -------------------------------------------------------------------------------- | Total | 636. | | 510. | | | | 571.6 | | | | 8 | | 8 | | | | | | -------------------------------------------------------------------------------- | 2) Percentage of | | | | | | | | | completion | | | | | | | | | deducted | | | | | | | | -------------------------------------------------------------------------------- | Sales by | 1-3/ | % of | 1-3/ | % of | R12M* | % of | 1-12/ | % of | | Business Area | 2007 | tota | 2006 | total | | total | 2006 | total | | | | l | | | | | | | -------------------------------------------------------------------------------- | Services | 147. | 36 | 105. | 33 | 568.7 | 34 | 526.6 | 33 | | | 8 | | 6 | | | | | | -------------------------------------------------------------------------------- | Standard | 144. | 36 | 114. | 36 | 589.1 | 35 | 558.4 | 35 | | Lifting | 7 | | 0 | | | | | | -------------------------------------------------------------------------------- | Heavy Lifting | 113. | 28 | 98.4 | 31 | 506.4 | 30 | 490.8 | 31 | | | 9 | | | | | | | | -------------------------------------------------------------------------------- | ./. Internal | -25. | | -21. | | -97.8 | | -93.3 | | | | 8 | | 3 | | | | | | -------------------------------------------------------------------------------- | Total | 380. | 100 | 296. | 100 | 1 | 100 | 1 | 100 | | | 5 | | 7 | | 566.3 | | 482.5 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating | 1-3/2007 | 1-3/2006 | R12M* | | 1-12/2006 | | Profit (EBIT) | | | | | | | by Business | | | | | | | Area | | | | | | -------------------------------------------------------------------------------- | | MEUR | Ebit | MEUR | Ebit | MEUR | Ebit | MEUR | Ebit % | | | | % | | % | | % | | | -------------------------------------------------------------------------------- | Services | 15.1 | 10.2 | 8.7 | 8.2 | 59.5 | 10.5 | 53.0 | 10.1 | -------------------------------------------------------------------------------- | Standard | 17.0 | 11.8 | 8.0 | 7.0 | 60.5 | 10.3 | 51.5 | 9.2 | | Lifting | | | | | | | | | -------------------------------------------------------------------------------- | Heavy Lifting | 7.9 | 6.9 | 5.6 | 5.7 | 35.9 | 7.1 | 33.6 | 6.8 | -------------------------------------------------------------------------------- | Group costs | -8.5 | | -7.4 | | -32.7 | | -31.6 | | -------------------------------------------------------------------------------- | Consolidation | -0.7 | | -0.8 | | -0.8 | | -0.9 | | | items | | | | | | | | | -------------------------------------------------------------------------------- | Total | 30.8 | 8.1 | 14.0 | 4.7 | 122.3 | 7.8 | 105.5 | 7.1 | -------------------------------------------------------------------------------- | *R12M = | | | | | | | | | | Rolling 12 | | | | | | | | | | Months | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Personnel by Business | 1-3/2007 | 1-3/2006 | 1-12/2006 | | Area | | | | -------------------------------------------------------------------------------- | (at the End of the | | % of | | % of | | % of | | Period) | | total | | total | | total | -------------------------------------------------------------------------------- | Services | 4 128 | 53 | 3 042 | 50 | 3 923 | 52 | -------------------------------------------------------------------------------- | Standard Lifting | 2 321 | 30 | 2 047 | 33 | 2 333 | 31 | -------------------------------------------------------------------------------- | Heavy Lifting | 1 173 | 15 | 898 | 15 | 1 131 | 15 | -------------------------------------------------------------------------------- | Group staff | 183 | 2 | 138 | 2 | 162 | 2 | -------------------------------------------------------------------------------- | Total | 7 805 | 100 | 6 125 | 100 | 7 549 | 100 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Average number of | 7 677 | | 6 024 | | 6 859 | | | personnel during | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 2. GEOGRAPHICAL | | | | | | | | | SEGMENTS | | | | | | | | -------------------------------------------------------------------------------- | EUR | | | | | | | | | | million | | | | | | | | | -------------------------------------------------------------------------------- | Sales by | 1-3/ | % of | 1-3/ | % of | R12M* | % of | 1-12/ | % of | | Market | 2007 | tota | 2006 | total | | total | 2006 | total | | | | l | | | | | | | -------------------------------------------------------------------------------- | Europe-Mid | 188. | 49 | 170.1 | 57 | 799.1 | 51 | 781.0 | 53 | | dleEast-Af | 2 | | | | | | | | | rica | | | | | | | | | | (EMEA) | | | | | | | | | -------------------------------------------------------------------------------- | Americas | 151. | 40 | 90.1 | 30 | 573.9 | 37 | 512.3 | 35 | | (AME) | 7 | | | | | | | | -------------------------------------------------------------------------------- | Asia-Pacif | 40.7 | 11 | 36.6 | 12 | 193.3 | 12 | 189.1 | 13 | | ic (APAC) | | | | | | | | | -------------------------------------------------------------------------------- | Total | 380. | 100 | 296.7 | 100 | 1 566.3 | 100 | 1 482.5 | 100 | | | 5 | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NOTES: | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | INVESTMENTS | | | | | | -------------------------------------------------------------------------------- | EUR million | 31.03.2007 | 31.03.2006 | 31.12.2006 | -------------------------------------------------------------------------------- | Investments Total | 5.4 | | 3.1 | | 16.3 | | (excl.Acquisitions) | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NET INTEREST BEARING LIABILITIES | | | | | -------------------------------------------------------------------------------- | EUR million | 31.03.2007 | 31.03.2006 | 31.12.2006 | -------------------------------------------------------------------------------- | Long- and short-term | -204.5 | | -162.7 | | -173.3 | | interest bearing liabilities | | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 62.7 | | 40.1 | | 45.0 | | and other interest bearing | | | | | | | assets | | | | | | -------------------------------------------------------------------------------- | Total | -141.8 | | -122.6 | | -128.2 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONTINGENT LIABILITIES AND PLEDGED ASSETS | | | | -------------------------------------------------------------------------------- | EUR million | 31.03.2007 | 31.03.2006 | 31.12.2006 | -------------------------------------------------------------------------------- | Contingent liabilities | | | | | | -------------------------------------------------------------------------------- | For own debts | | | | | | -------------------------------------------------------------------------------- | Mortgages on land and | 0.0 | | 5.9 | | 0.7 | | buildings | | | | | | -------------------------------------------------------------------------------- | For own commercial | | | | | | | obligations | | | | | | -------------------------------------------------------------------------------- | Pledged assets | 1.1 | | 0.2 | | 1.1 | -------------------------------------------------------------------------------- | Guarantees | 154.0 | | 125.2 | | 136.3 | -------------------------------------------------------------------------------- | Other contingent liabilities and | | | | | financial liabilities | | | | -------------------------------------------------------------------------------- | Leasing liabilities | | | | | | -------------------------------------------------------------------------------- | Next year | 11.8 | | 44.2 | | 11.1 | -------------------------------------------------------------------------------- | Later on | 26.0 | | 0.7 | | 26.0 | -------------------------------------------------------------------------------- | Other | 1.5 | | | | 1.0 | -------------------------------------------------------------------------------- | Total | 194.4 | | 176.2 | | 176.2 | -------------------------------------------------------------------------------- | Leasing contracts follow the normal | | practices in corresponding countries. | -------------------------------------------------------------------------------- | Total by category | | | | | | -------------------------------------------------------------------------------- | Mortgages on land and | 0.0 | | 5.9 | | 0.7 | | buildings | | | | | | -------------------------------------------------------------------------------- | Pledged assets | 1.1 | | 0.2 | | 1.1 | -------------------------------------------------------------------------------- | Guarantees | 154.0 | | 125.2 | | 136.3 | -------------------------------------------------------------------------------- | Other liabilities | 39.3 | | 44.9 | | 38.1 | -------------------------------------------------------------------------------- | Total | 194.4 | | 176.2 | | 176.2 | -------------------------------------------------------------------------------- Contingent liabilities relating to litigations Konecranes is party to routine litigation incidental to the normal conduct of business. In the opinion of management the outcome of and liabilities in excess of what has been provided, in the aggregate, are not likely to be material to the financial condition or results of operations, taking also in the account the insurance arrangements the group has in place. -------------------------------------------------------------------------------- | NOTIONAL AND FAIR VALUES OF DERIVATIVE FINANCIAL INSTRUMENTS | | -------------------------------------------------------------------------------- | EUR million | 3/2007 | 3/2007 | 3/2006 | 3/2006 | 12/2006 | 12/2006 | -------------------------------------------------------------------------------- | | Nominal | Fair | Nomina | Fair | Nominal | Fair | | | value | value | l | value | value | value | | | | | value | | | | -------------------------------------------------------------------------------- | Foreign exchange | 176.8 | 2.7 | 260.6 | -1.8 | 279.7 | 3.0 | | forward contracts | | | | | | | -------------------------------------------------------------------------------- | Electricity | 1.2 | 0.0 | 0.7 | 0.5 | 1.1 | 0.1 | | derivatives | | | | | | | -------------------------------------------------------------------------------- | Total | 178.1 | 2.7 | 261.3 | -1.3 | 280.8 | 3.1 | -------------------------------------------------------------------------------- Derivatives are used for hedging currency and interest rate risks as well as risk of price fluctuation of electricity. Company applies hedge accounting on derivatives used to hedge cash flows in Heavy Lifting projects. ACQUISITIONS During the first quarter in 2007 Konecranes made few small business acquisitions. The most important of these was the acquisition of Straddle carrier manufacturer in Germany, Consens Transport Systeme. Additionally in January Konecranes signed an agreement to acquire a maintenance service business of a small Swedish-based company El&Travers. In March Konecranes made an asset purchase agreement with Spanish company Sistemas de Elevacion, operating in the field of port service. The preliminary fair values of the identifiable assets and liabilities of acquired businesses at the date of acquisitions are summarized below. -------------------------------------------------------------------------------- | EUR million | 3/2007 | 3/2007 | -------------------------------------------------------------------------------- | | Recognized on | Carrying | | | acquisition | value | -------------------------------------------------------------------------------- | Intangible assets | 1.0 | 0.2 | -------------------------------------------------------------------------------- | Tangible assets | 0.2 | 0.2 | -------------------------------------------------------------------------------- | Deferred tax assets | 0.0 | 0.0 | -------------------------------------------------------------------------------- | Inventories | 4.0 | 4.0 | -------------------------------------------------------------------------------- | Receivables and other assets | 0.0 | 0.0 | -------------------------------------------------------------------------------- | Cash and bank | 0.0 | 0.0 | -------------------------------------------------------------------------------- | Total assets | 5.2 | 4.5 | -------------------------------------------------------------------------------- | Liabilities | 0.1 | 0.0 | -------------------------------------------------------------------------------- | Net assets | 5.2 | 4.4 | -------------------------------------------------------------------------------- | Acquisition costs | 5.4 | | -------------------------------------------------------------------------------- | Goodwill | 0.3 | | -------------------------------------------------------------------------------- | Cash outflow on acquisition | | | -------------------------------------------------------------------------------- | Acquisition costs paid in cash | 5.1 | | -------------------------------------------------------------------------------- | Cash and cash equivalents of acquired | 0.0 | | | companies | | | -------------------------------------------------------------------------------- | Net cash flow arising on acquisition | 5.1 | | -------------------------------------------------------------------------------- | Cost of the business combination | | | -------------------------------------------------------------------------------- | Acquisition costs paid in cash | 5.1 | | -------------------------------------------------------------------------------- | Liabilities assumed | 0.3 | | -------------------------------------------------------------------------------- | Total cost of business combination | 5.4 | | -------------------------------------------------------------------------------- ACCOUNTING PRINCIPLES These presented interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. Konecranes applies the same accounting policies as are applied in 2006 annual financial statements, except the change in Segment reporting. At the beginning of year 2007 in Business Area segment Konecranes branded spare parts are reported in the Service Business Area, while they were earlier partly included in Standard Lifting. Also the geographical Segment reporting structure has been changed. The new geographical segments are Europe, Middle East, Africa (EMEA), Americas (AME) and Asia-Pacific (APAC). The earlier structure was Nordic and Eastern Europe, EU (excl.Nordic), Americas and Asia-Pacific. The key figures in this interim financial report are calculated with same accounting principles than in year 2006 annual financial statements. The calculation rules of key figures are presented in the financial statements of previous year. The figures presented in the tables below have been rounded to one decimal, which should be taken into account when reading the sum figures. The interim report has not been subject to audit. Events on 27 April, 2007 Analyst and press briefing A luncheon presentation for media and analysts will be held at Konecranes office in Helsinki at 1.00 p.m Finnish Time (address: Eteläesplanadi 22 B). Live webcast A live webcast of the presentation for analysts and media will begin at 1.00 p.m. Finnish Time and can be followed at www.konecranes.com. Internet This report and presentation material is available on the Internet at www.konecranes.com immediately after publication. A recording of the webcast will be available on the Internet later on the same day. Next report Konecranes Interim Report January - June 2007 will be published on 1 August, 2007 10.00 a.m. KONECRANES PLC Paul Lönnfors IR Manager FURTHER INFORMATION Mr Pekka Lundmark, President and CEO, tel. +358-20 427 2000 Mr Teuvo Rintamäki, Chief Financial Officer, tel. +358-20 427 2040, Mr Paul Lönnfors, IR Manager, tel. +358-20 427 2050 DISTRIBUTION OMX Helsinki Stock Exchange Media |
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