Structural drivers support Kalmars long term profitable growth - PowerPoint PPT Presentation

Structural drivers support Kalmar’s long term profitable growth Site visit 21.11.2016 Dr. Antti Kaunonen

Structural drivers support Kalmar’s long term profitable growth focusing on automated container ports Introduction Kalmar in brief Market drivers Kalmar strategy with the focus on automated container ports Summary 15 Sep 2015

We are Introduction shaping the industry  Great long-term possibilities in automation and in software solutions, only a question of timing  Kalmar has established PMO to support services growth  Profitability to improve also by growth in services Our industry is over ten years behind other industries using automation (and IT) as a competitive advantage

Structural drivers support Kalmar’s long term profitable growth focusing on automated container ports Introduction Kalmar in brief Market drivers Kalmar strategy with the focus on automated container ports Summary 15 Sep 2015

Kalmar in brief  Kalmar is the market leader in container handling equipment, port automation and services.  Our customers include port and terminal operators, distribution centres and industry.  Kalmar is part of Cargotec Oyj

One in four container movements around the globe is handled by a Kalmar solution.

Provides integrated port automation solutions including software, services and a wide range TOS coordinates and optimises the planning of cargo handling equipment and management of container and equipment moves in complex business environments. Navis provides also maritime shipping solutions: • Stowage planning • Stowman • Vessel monitoring • MACS3 • Loading computer Transfer area • Blue Tracker • Route planning Yard Horizontal The collaboration platform Transportation serving the needs of ocean carriers, terminals and their Quay shipping partners Industry leading spreader manufacturer Our operating environment

Kalmar business area solutions Automation and Projects (APD) Mobile Equipment Services STS cranes ASCs RTGs Empty container Crane upgrades Maintenance handlers Reachstackers Shuttle Straddle carriers carriers AGVs Automation Process Forklift trucks Terminal tractors Used equipment (TLS) OneTerminal Spare parts automation

Kalmar business area solutions Terminal Operating Systems Spreaders Collaboration Cloud Vessel Optimisation Automatic Twistlock Handling

Example of an automated terminal project Quay • Automated Lashing Horizontal Platform (ALP) transport • AutoShuttles Container yard • Automated Stacking Cranes (ASCs) Process Services Operations automation Spare parts, maintenance • TOS SmartFleet, contracts • TLS SmartTrucks, 24/7 on-call and remote • M&S diagnostics SmartLanes

Kalmar has a true one-stop shop capability Konecranes-Terex merger slightly to change the picture Suppliers Kone- Solutions Kalmar ZPMC cranes Terex Liebherr Künz Mitsui Sany ABB TMEIC Taylor Hyster Terberg Capacity Other (  )       STS   MHC (  )        RMG      ASC Competitors with         RTG automation background     SCS  (  )   SHC    AGV       Autom.  (  ) TOS   Consulting       RS      ECH       FLT       TT

MEUR % Kalmar Q3 – satisfactory 500 10 463 development 436 Large orders during Q3/15 409 389 400  Order intake declined 16% y-o-y to EUR 389 (463) million as customers postponed their 8 bigger investment decisions 300  Order book strengthened 5% from 2015 year- end level to EUR 922 million  Sales grew 6% y-o-y to EUR 436 (409) million 200 6  Profitability excluding restructuring costs was 8.3% (8.8%) 100  Increased investments in automation and software development decreased profitability  Sales mix had a negative impact on 0 4 profitability Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Orders Sales Operating profit%* *excluding restructuring costs November 2016 12

Kalmar’s profit improvement potential 2016-2018 Total 60-100 2015 2016 2017 2018 EUR million improvement Project delivery capability development Automation potential +20-30 Expand Rainbow Cargotec Industries (China) joint venture offering EUR million Further development of integrated port automation solutions +10-20 Expand software business Software EUR million Mobile Continuous improvements in design-to-cost and sourcing +20-30 equipment EUR million Strengthen distribution network Services Excel in spare parts +10-20 EUR million Colour on the bubbles indicates the progress November 2016 13

Kalmar has strong position in attractive segments Market size Market position Automation & Projects #1-2 Mobile equipment #1 EUR 7.5 billion Bromma #1 Navis #1 Services #1 EUR 7.6 billion November 2016 14

Cargotec’s portfolio Net sales, EUR million * Trend in orders, Profitability: EBIT margin, last 12 months last 12 months 3,600 Kalmar software (Navis) and Low due to long term ~500 Automation and Projects division investments ~800 MacGregor -34% 1.2% ~1,000 Hiab +4% 13.4% ~1,200 Kalmar equipment and service Low double digit (excluding Automation and Projects Division & Navis) * Figures rounded to closes 100 million 28.9.2015 15

Perception of our current situation Strenghts Improvement opportunities  Our strategy is good  Service growth  The market is there for long  Seamless integration of term automation and IT offering  Asset-light  Safety consciousness  Kalmar brand  Profitability improvements  Dedicated employees

Structural drivers support Kalmar’s long term profitable growth focusing on automated container ports Introduction Kalmar in brief Market drivers Kalmar strategy with the focus on automated container ports Summary 15 Sep 2015

Major trends affecting Container Shipping Capacity Shipping Continued demand Increasingly larger Broadening of Capacity oversupply Shipping line growth vessels consolidation alliances 3 5 1 2 4 Increase in short term spot Increases operational Container shipping expected Increasing operational Creates opportunities for IT market buying and last minute to grow more slowly at 2% per complexity in stowage, berth complexity at network, investment through the review of booking (14-21 days vs. year until 2020 compared with and yard capacity management vessel and terminal level existing processes and approx. 5 days) leads to poor historical growth of 6% consolidation of operational IT capacity management systems Terminals Automation Other Terminal Increasing hub-and Terminal automation Bunker prices Shift to forwarders consolidation -spoke networks 9 10 8 6 7 Fuel costs represent significant Information flow is Terminal operators look for Top-10 terminal operators Increases the number of percentage of operating costs. increasingly important for automation opportunities to seeking to simplify and container moves in the This requires efficiency shipping partners to improve efficiency and standardize their IT supply chain and the improvements by optimizing trim, manage their supply chain throughput, while reducing landscape complexity of planning ballast, speed and route labor costs 21 November 2016 18

Container throughput still forecasted to grow year on year TEU ’000 1 000 1,000 +3.0% 775 +3.2% 752 +3.0% +2 .4% 800 729 +1.3% 708 +1.0% 691 682 +5.1% 675 112 +3.3% 642 109 622 106 103 101 101 98 600 96 94 205 199 193 187 183 181 182 173 169 400 458 444 430 417 200 400 407 395 373 359 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 APAC EMEA AMER Source: Drewry: Container forecaster Q3 2016 November 2016 19

Global container throughput development Growth stabilising in the short-mid term Global container throughput and GDP, change % y/y GDP change Container throughput 18,0 16,0 14,0 12,0 10,0 8,0 6,0 4,0 2,0 0,0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 f2016 f2017 f2018 f2019 f2020 -2,0 -4,0 -6,0 -8,0 -10,0 Source: IMF July 2016, Drewry August 2016 21 November 2016 20

Global Container terminal volume and Capacity Development MTEU 1400 100% 90% 1200 80% 1000 70% 60% 800 Throughput 50% Capacity 600 40% Utilisation rate 30% 400 20% 200 10% 0 0% 21 Source: Drewry Container terminal operator annual review, 2002-2016

Macro indicators and industry trends support growth in automation  Ships are becoming bigger and the time in port needs to be shorter  Optimum efficiency, space utilization and reduction of costs are increasingly important  Safety in the terminal yard has become even more of a focus for operators  Importance of sustainable operations is growing  Shortage and cost of trained and skilled labor pushes terminals to automation

Ship sizes increasing dramatically  The largest containership in the fleet has nearly tripled since 2000.  The average size of new builds doubles between 2009 and 2014 Largest container ship in world fleet Average newbuilding delivered in year Source: Drewry November 2015