29.10.2021

Strong quarter for Hiab

Hiab and Kalmar parent Cargotec has reported a strong third quarter, driven by a strong performance at Hiab.
Cargotec itself saw total revenues of €2.4 billion, just one percent up on the same period in 2020. Pre tax profits came in at €328.4 million compared to €29.9 million last year. However a portion of this came from a one off gain on the sale of Kalmar's Navis software business earlier this year, which also affected revenues.

Hiab
Total revenues for the nine months to the end of September was €912 million an increase of 14 percent on last year. Order intake in the period jumped 68 percent to €1.33 billion, taking the order book to €922 million, up 83 percent on this time last year. Operating profit for the period improved 53 percent to €110.8 million.
In the third quarter revenues increased 21 percent to €309 million, while order intake was 45 percent higher at €396 million, with operating profits jumping 45 percent to €37.6 million.

Kalmar
Kalmar saw total sales for the nine months fall three percent to €1.08 billion, due to material shortages and production bottlenecks as well as the completion of the Navis sale in July. Order intake increased 62 percent to €955 million, leaving the order book at €1.23 billion, up 46 percent on last year. Operating profits came in at €311.9 million a 7.5 fold increase, But most of this was due to the strong one off gain on the sale of the Navis business and other factors. Comparable operating profit was €83.6 million down 12 percent on last year, due to the reasons already mentioned.

In the third quarter sales improved three percent to €377 million, while order intake remained high at €421 million, up 28 percent on the same quarter last year. Operating profit was €265.8 million, compared to €31.4 million, however if the Navis profit is stripped out the comparable operating profit was €30 million down 14 percent on the same quarter last year.

Chief executive Mika Vehviläinen said: “Strong demand continued but component shortages slowed down deliveries. The market recovery from the pandemic as well as the increase in economic activity that started at the end of 2020 supported the demand for our solutions in the third quarter. Our main demand drivers - number of containers handled at ports globally, construction activity, new vessel contracting - continued to grow strongly.”

“Our orders received increased by 33 percent with all business areas improving their orders received from the comparison period. Our order book continued to grow and is now on a 48 percent higher level than at the end of 2020. In addition to continued strong order intake, longer delivery times expanded our order book.”

“Our sales increased by six percent from the comparison period. Component shortages and global logistics challenges still limited our ability to meet the increasing demand. We estimate these to have affected sales by approximately €50 million during the third quarter. We work in close cooperation with our suppliers to ensure the best possible component availability. We estimate the component and logistics challenges to remain largely at the same level also during the last quarter of the year.”

“During the quarter, also the raw material and product components as well as freight prices were at a high level. However, we are confident that we will be able to largely offset the increased costs with the price increases we made during the first half of the year. During the third quarter, Hiab strengthened its position in the US by acquiring the demountables manufacturer Galfab. To meet the increasing demand for truck mounted forklifts, Hiab will also expand manufacturing to the US and increase the production capacity in Dundalk, Ireland."

Vertikal Comment

This is great result from Hiab, in terms of sales, order intake and profitability, while Kalmar has clearly been struggling, but has a positive outlook given the likely investment in shipping and port handling equipment and maintenance.

One danger, also faced by other manufacturers, is that rapidly expanding order books often have an underlying weakness from orders placed by dealers in order to hold production slots, to overcome long lead times, rather than to cover real end user business. With cancellations flooding in when lead times begin to shrink.
Cargotec says that given recent price increases on new orders, there is an incentive to hold on to earlier orders, while cancellation charges have also been introduced.

Next year the business will merge with Konecranes which could cause some disruption to the Kalmar business. But Hiab should not be affected too much by the merger and looks to have real momentum at the momentum.