Cargotec strategy to focus on sustainability and higher financial performance2 May 2022
Cargotec has released it’s interim report January–March 2022: noting improved profitability despite supply chain challenges.
The company says it saw orders increase by 2% and totalled €1,135m during this period and sales increase by 17% and totalling €85m. It expects its comparable operating profit for 2022 to improve from 2021 (€232m).
“The year 2022 has started eventfully. We refocused our strategy at the end of March. Sustainability and profitable growth remain our breakthrough objectives but, going forward, we focus on developing Hiab, Kalmar mobile equipment and straddle and shuttle carriers, as well as related services (Core businesses),” said Mika Vehviläinen, CEO, Cargotec.
“The decision to refocus the strategy follows the decision of the Boards of Directors of Cargotec and Konecranes to cancel the planned merger after the negative resolution of the UK Competition & Markets Authority. Along with the strategy refocus, we announced our plans to exit Kalmar's heavy port cranes business, and started an evaluation of strategic options of MacGregor.”
He added, Hiab and refocused Kalmar offer their customers lifecycle services, market leading equipment and technologies. During the last eight years, their comparable operating profit margins have been above 10%. A large installed base with related services forms the basis of these businesses with both of them holding leading market positions in structurally attractive markets.
“Our refocused strategy enables additional investments in research, development and M&A in our core businesses, providing us a good position to further enhance our business through electrification, robotics and digitalisation,” said Vehviläinen.
“The market environment has also evolved strongly during the first quarter. The persisting coronavirus pandemic and the related restriction measures have caused global delivery and logistics challenges, as a result of which also the level of inflation has risen. China’s strong blockage measures pose a risk that these challenges will continue.
“Russia’s attack on Ukraine is cruel and unjustified. We comply with the international sanctions imposed on Russia and have stopped our sales in Russia and Belarus. The direct impacts of the attack on Cargotec's business have so far been limited. However, in the form of component availability challenges and accelerating inflation, for example, the indirect effects of the crisis on the global economy and our business are significant.
“We have responded to these challenges by continuing the price increases we started last year, engaging in an active supplier cooperation, and building alternative supply chains.
“Despite the uncertain market situation, demand for our core businesses continued strong. Hiab reached its all-time second highest orders received while Kalmar’s demand remained on a strong level. Our sales increased by 17% during the first quarter, even when component challenges still had a negative effect on our sales development. We estimate the supply chain challenges to continue also during the rest of the year.
“The positive development of our service business continued with orders received increasing by 2% to €307m, which is close to an all-time record. Service sales increased by 12% to €284m.
“Also the customer interest towards our eco portfolio is strong. As examples, Hiab received a record order for electric truck mounted forklifts and Kalmar was awarded its first orders for the world’s first fully electric reachstackers. Kalmar’s order to provide the world's first electric reachstacker with a combined charging system to Norway as well as Hiab’s record order also include five-year service agreements. The eco portfolio sales also progressed well, increasing as much as by 38% from the comparison period and reaching a 24% share of Cargotec total sales. In the future, as 28 new products were added to the eco portfolio and Hiab presented its third all-electric truck mounted forklift model, we will be able to respond even better to the demand for sustainable equipment.
“Our comparable operating profit increased by 26% to €65m. This illustrates well the excellent resilience and agility of our business when, despite supply chain challenges, we were able to improve our profitability.”