28.07.2021

Strong first half for Konecranes

Finnish port crane and material handling manufacturer Konecranes has reports a strong first half performance.

Total revenues for the six months were €1.46 billion, 0.7 percent down on last year, although order intake jumped 19 percent to €1.57 billion. Pre-tax profits increased 16 percent to €67.8 million. The order book at the end of the June was €1.97 billion, almost four percent up on June 2020. Net debt at the end of the period was €1.6 billion, down from €2.3 billion a year earlier.

Looking at the second quarter, sales improved 7.7 percent to €759.3 million with order intake rising almost 39 percent to €806.7 million. Pre-tax profit however slipped three percent to €41.1 million, mostly due to the absence of a €10.1 million financial gain last year, which was partly offset by lower interest costs.

Chief executive Rob Smith said: “Konecranes reported its fourth consecutive quarter of record profitability, powered by solid sales growth and high performance across the whole organisation. Strong first half orders, especially in our short cycle products, together with continuing traction from strategic initiatives give us good momentum for the latter half of the year.”

“Overall market sentiment continued to improve in the second quarter compared to the previous quarters, though Covid-19 related market volatility is not over. Activity remained high in the port sector and continued to improve with our industrial customers, and at the end of June our order book was at a record high. Second quarter order intake grew 41.1 percent in comparable currencies, as last year marked the peak of the pandemic and lockdowns from a global perspective. We saw once again good order growth in our short-cycle products.”

"Component availability and other supply chain constrains continued to affect sales, with a quarterly impact of approximately €35 million. However, sales still grew by 10 percent year on year in comparable currencies and increased in Port Solutions and Service but remained at the previous year’s level in Industrial Equipment. As a result, and in line with our expectations for the full year, first half sales exceeded last year’s in comparable currencies and were 0.7 percent behind last year’s level in reported currencies.”

“Our announced merger with Cargotec is progressing well – merger control filings and integration planning teams are making good headway. In the beginning of July, the European Commission opened a Phase II merger control review, which is a common step for sizeable global transactions. Shortly after that, the UK Competition and Markets Authority (CMA) referred the planned merger for a Phase II investigation under its fast track procedure. Phase II will enable the European Commission and the CMA to consider the merger in further detail, and Konecranes and Cargotec continue to closely cooperate with all relevant authorities to demonstrate the rationale of the planned merger. Both companies continue to operate fully separately and independently until all merger closing conditions are met and the deal is completed.”

Vertikal Comment

An interesting set of numbers from Konecranes. As the company points out, while order intake has rebounded dramatically, supply chain challenges and component shortages has created challenges in production. How long this will last is still uncertain. A key question is how Konecranes compares to others, such as Liebherr, in terms of vertical integration and the percentage of own content in the final products. Although the shortage of one component can have the same impact as a shortage of a dozen. However, increasingly long lead times could well divert buyers to other suppliers.

It will be interesting to see how this issue develops over the second half. The company believes that it will have overcome the supply chain issues during the third quarter and is holding its forecast to improve sales and profits over 2020.