Q3 Interim Review January-September 2007 President and CEO Mikael Mäkinen October 18, 2007 1
Key issues in January-September 2007 • Q3 order intake record strong at MEUR 1,028 (7–9/2006: 603). Jan-Sep orders received totalled MEUR 2,892 (1-9/2006: 2,194). • Q3 sales were MEUR 713 (7–9/2006: 625). Sales growth of 13%, with half organic. Jan-Sep sales were MEUR 2,151 (1,900). • Services development continued strong with 28% growth. • Q3 operating profit from operations was MEUR 52.5 (7–9/2006: 52.1) representing 7.4 (8.3)% of sales. Jan- Sep operating profit from operations was MEUR 156.6 (164.0) representing 7.3 (8.6)% of sales. 2 October 18, 2007
Market activity was lively • Development of world economy and trade lively • Container traffic volumes continue to grow • Ship building at ship yards continues at high level • Load handling equipment demand in Europe strong but U.S. demand weak due to significant drop in construction activity • Demand for services developed positively 3 October 18, 2007
Cargotec’s order intake at record level • Hiab – Load handling equipment demand strong in Europe, particularly in Central Eastern Europe, Russia and China – U.S. market and order intake weak • Kalmar – Demand for container handling equipment healthy – Demand for heavy industrial handling equipment continued to be lively in Europe • MacGREGOR – Demand for marine cargo handling and offshore solutions continued very high – Many orders from long ship series with deliveries extending for a period of several years 4 October 18, 2007
Orders received MEUR 3,500 2,910 2,892 3,000 +32% 2,385 2,337 2,500 2,194 1,848 2,000 1,500 1,028 +70% 1,000 603 500 0 2003 2004 2005 2006 1-9/06 1-9/07 7-9/06 7-9/07 Pro Pro Pro forma forma forma 5 October 18, 2007
Order book record high MEUR 3,000 2,552 2,500 2,244 2,000 1,594 1,544 1,500 1,281 1,173 1,000 500 0 * * * * * * 5 5 5 6 6 6 6 7 7 7 3 4 4 4 4 5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 . . . . . . . . . . 6 9 2 3 6 9 2 3 6 9 . . . . . . 2 3 6 9 2 3 1 1 . . . . . . . . 0 0 1 0 0 1 0 0 1 . . 1 . . . . 1 0 0 1 3 3 1 3 3 3 1 3 3 3 . . 1 1 3 3 3 3 3 3 3 3 *Pro forma 6 October 18, 2007
Sales growth continued – half of growth organic MEUR 2,800 2,597 2,358 +13% 2,400 2,151 1,900 1,900 2,000 1,658 1,600 1,200 +14% 713 800 625 400 0 2003 2004 2005 2006 1-9/06 1-9/07 7-9/06 7-9/07 Pro Pro Pro forma forma forma 7 October 18, 2007
Geographical development of sales – fastest growth in Asia EMEA Americas Asia Pacific MEUR 1,500 1,368 1,335 +20 % 1,187 1,200 1,072 900 991 720 620 -10 % +31% 600 509 498 476 466 552 403 352 300 356 1-9 1-9 1-9 0 2004* 2005* 2006 1-9/07 2004* 2005* 2006 1-9/07 2004* 2005* 2006 1-9/07 *Pro forma 8 October 18, 2007
Services grew by 28% y-on-y representing 25% of sales Hiab Kalmar MacGREGOR Cargotec MEUR 700 +28 % 600 572 537 492 500 428 400 418 +29 % 311 294 300 267 223 +45 % 200 228 +11 % 134 132 128 116 111 110 109 95 100 100 91 1-9 1-9 1-9 1-9 0 2004* 2005* 2006 1-9/07 2004* 2005* 2006 1-9/07 2004* 2005* 2006 1-9/07 2004* 2005* 2006 1-9/07 *Pro forma 9 October 18, 2007
Operating profit from operations by business area Pro forma Pro forma MEUR 7-9/2007 7-9/2006 2006 2005 2004 44.6 13.7 17.4 86.0 Hiab 66.6 6.8% 6.4% 8.4% 9.4% 7.9% % 66.4 27.8 111.7 27.5 97.6 Kalmar 7.7% 8.5% 9.5% 9.3% 8.5% % 15.0 35.9 9.9 27.5 20.9 MacGREGOR 8.0% 7.8% 7.5% 7.5% 6.2% % Group admin, others (4.0) (11.9) (2.7) (12.3) (8.0) Cargotec total 52.5 52.1 221.7 123.9 179.4 7.4% 8.5% 8.3% 7.6% 6.5% % 10 October 18, 2007
Jan-Sep analysis – operating profit from operations 1-9/2007 1-9/2006 • Cost reserve for Dutch factory 54.5 63.3 • U.S. demand clearly below last year, Hiab strong development in Europe and Asia 7.9% 9.4% not fully compensating • Sales impact of acquired service companies 78.6 83.5 Kalmar • Higher costs from expanding presence in big 8.0% 9.5% cranes and automation solutions • Cost impact from the purchase price 37.0 26.2 allocation treatment of acquisitions in MacGREGOR 1-9/07 MEUR 4.6 of which over half in 7.6% 7.6% MacGREGOR • Investments in strengthening Cargotec’s Group administration (13.5) (9.0) presence and market position are increasing corporate admin costs in 2007 156.6 164.0 Cargotec total 7.3% 8.6% 11 October 18, 2007
Operating profit MEUR 250 240 18 222 195 200 182 15 18 157 179 164 150 124 100 85 70 53 18 50 52 0 2003 2004 2005 2006 1-9/06 1-9/07 7-9/06 7-9/07 Pro Pro Pro forma forma forma Non-recurring capital gain 12 October 18, 2007
Earnings per share (basic) Euros 3.00 2.57 2.50 2.11 2.37 1.97 2.00 1.72 1.76 1.50 1.20 0.81 1.00 0.81 0.21 0.55 0.50 0.60 0.00 2003 2004 2005 2006 1-9/06 1-9/07 7-9/06 7-9/07 Pro Pro Pro forma forma forma Non-recurring capital gain 13 October 18, 2007
Cash flow from operating activities before financial items and taxes MEUR 300 250 250 194 200 179 158 147 150 139 100 66 56 50 0 2003 2004 2005 2006 1-9/06 1-9/07 7-9/06 7-9/07 Pro Pro Pro forma forma forma 14 October 18, 2007
Key figures Pro forma 30.9.2007 2006 2005 Basic earnings per share EUR 1.72 2.57 2.11 Equity per share EUR 13.96 13.72 11.93 Interest-bearing net debt MEUR 364.6 107.5 120.5 Total equity/total assets % 40.2 47.6 46.2 Gearing % 41.6 12.3 15.7 Return on equity % 16.7 20.2 19.2 Return on capital employed % 17.6 23.1 20.9 15 October 18, 2007
Acquisitions completed in January-September 2007 • Services company Tagros in Slovenia • Berger sales, service, installation network in Eastern Europe • Sales and services company Truck och Maskin i Örnsköldsvik in Northern Sweden • Increased stake in distribution and services company BG Crane in Australia • U.S. services company PES for ports and intermodal terminals • Manufacturing base in India through Indital • Offshore and sub-sea load handling systems company Hydramarine in Norway • Plimsoll in Singapore focused on offshore deck equipment • Kalmar Asia Pacific minority stake • Kalmar distributor Kalmar España in Spain • Offshore service company Vestnorsk Hydraulikkservice in Norway • Component and steel structure manufacturer Balti ES in Estonia • U.S. services company Bay Equipment Repairs • Port automation technology company Advanced Cargo Q3 Transhipment in the Netherlands 16 October 18, 2007
Services strengthened through Cargotec Services operating model • Aim is to speed up services growth by better focusing resources and service knowhow • Cooperation in service concept development, spare parts sales and training of service people will be strengthened by a matrix organisation, where Cargotec Services acts as an internal centre of expertise. • Special focus in the operating model will be put on total maintenance of container and bulk terminals as well as significant refurbishment and conversion projects. 17 October 18, 2007
Focus on R&D and expansion of presence During 2007 Cargotec has invested in research and development as well as expansion of presence in component manufacturing and assembly. R&D expenditure has risen to 1.5% of sales. • R&D focus areas: • Expansion of production presence: • Hiab: expansion of product • Indonesia (offshore solutions) families, biggest capacity • India (container and load loader crane latest addition handling equipment) • Kalmar: big cranes and • China (offshore solutions) automation solutions as well • Vietnam (joint-venture for as eco-efficiency hatch cover manufacturing) • MacGREGOR: new control • Estonia (component systems and electrical manufacturing) solutions 18 October 18, 2007
Outlook • General market activity is expected to continue healthy with the exception of the U.S. load handling market. In accordance with its plans, Cargotec continues growth and efficiency related investments, which burden the 2007 result. • Thanks to the record value of orders received so far in the year the estimate for full year 2007 order intake growth has been raised to close to 30 %. • The sales growth estimate for 2007 is unchanged at approximately 15 %, which implies strong sales growth for the final quarter. Due to the growth operating profit in euros will improve from the previous quarters. Operating profit margin for the final quarter is estimated to remain at the third quarter level. 19 October 18, 2007
Questions & Answers • Mr. Mikael Mäkinen, President and CEO • Mr. Kari Heinistö, Senior Executive Vice President and CFO • Ms. Eeva Mäkelä, SVP IR & Communications • Ms. Tiina Naumanen, Group Controller 20 October 18, 2007
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