20.10.2008

Hiab reports flat revenues on falling order intake

Loader crane and load handling company, Hiab, has reported flat revenues for the first nine months at €691 million, while order intake fell by almost 10 percent to €661 million. Hiab is a division of Cargotec which also owns port handling company Kalmar and ship crane company MacGregor.

Kalmar saw revenues improve by almost 13 percent to €1.1 billion, while order intake increased by a similar amount to €1.22 billion. At the same time revenues at MacGregor leapt by over 41 percent to €687 million, while order intake increased by a more modest 17 percent to €1.26 billion.

Total revenues for the Cargotec group were €2.5 billion, an increase of 15 percent over the same period in 2007. Group order intake was €3.136 an increase of just over eight percent.

Hiab continues to see an erosion in its order intake levels, with the third quarter coming in 13 percent lower than the third quarter 2007. This due, says the company, to a drop in demand in construction related customer segments in the USA and Western Europe.

Operating profits at Hiab, for the nine month period, fell by over 30 percent to €9.5 million, due to increased raw material and component prices and the slower and more expensive than expected ramp-up of its component factory in Narva, Estonia.

At Kalmar profits dropped seven percent due to a 4 million project cost provision, booked in the first quarter and a €5 million project cost provision booked in the third quarter. MacGregor'saw a 27 percent rise in profitability in line with the company’s expectations.

Pre tax profits for Cargotec as a whole were down just two percent to €141.8 million. This includes a €4.9 million cost impact from the purchase price allocation treatment of acquisitions and €5 million in costs from the ‘On the Move’ change programme.


Restructuring
The weakening market situation, particularly at Hiab, has resulted in the launch of a major restructuring programme that includes a reduction of around 700 employees, mainly in Finland, Sweden and the USA, in order to ‘adjust capacity’ at Hiab, bringing it “in line with the prevailing market situation and improving profitability.

The restructuring programme includes a plan to consolidate crane manufacturing capacity in Europe into three facilities, dropping production at the company’s Salo plant in Finland. In the USA Hiab's truck-mounted forklift manufacturing plant in Ohio will be closed, with manufacturing consolidated to a joint Cargotec production unit in Kansas.

Outlook
Cargotec says that while the market for construction related equipment such as loader cranes has continued to soften in the fourth quarter, the situation in the large project side of container handling is healthy, with quotations at a high level and the ship building market is “evening out”.