Order growth keeps Cargotec on its toes

29 April 2010

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Cargotec’s orders received grew 31% during the first quarter of 2010 (Q1 2010) year-on-year, although sales declined 18%.

Cargotec reported its Q1 2010 results inline with its new business structure, including the industrial and terminal area and the marine segment. An explanation of the new structure can be found here.

Orders received totalled €598m, compared to €456m in the first quarter of 2009 (Q1 2009). Cargotec’s industrial and terminal segment saw orders received climb from €361m in Q1 2009 to €415m, while the marine segment saw orders received increase from €96m to €183m, equivalent to 91% growth.

However, Cargotec’s order book saw a decline of €533m from €2,772m in Q1 2009, to €2,239m in Q1 2010. The Q1 2010 figure includes €26m of previously received, but now cancelled, orders for the marine segment, which have been removed from the order book. In addition, its management estimates that the current order book includes €300m of marine orders, ‘which bear a risk of cancellation’.

Sales totalled €555m in Q1 2010, against €675m in Q1 2009, with the industrial and terminal segment’s sales down from €457m to €314m. Sales in the marine segment increased by €23m to €241m, as the market for marine cargo handling equipment ‘showed signs of picking up’, Cargotec said.

However, Cargotec is still expecting shipowners to postpone or cancel previously made ship and equipment orders, although ‘cancellations for marine cargo handling equipment were low in the first quarter’.

Other operating environment improvements included a ‘tentative recovery’ in both Europe and the US in areas other than construction-related customer segments, which led to increased demand for loader cranes. In addition, there is a glimmer of hope for its container handling equipment as the number of containers handled showed signs of an upturn in Asian ports, it said. This is backed up by a modest improvement in container traffic forecasts for 2010, Cargotec added, and is also supported by a slight rise in tenders at the end of Q1 2010.

Geographically, the percentage of Cargotec’s sales in the Asia-Pacific region increased from 29% to 40.3%, while EMEA sales dropped from a 54.2% stake in Q1 2009, to 42.1% in Q1 2010.

Overall, Cargotec is maintaining its guidance of achieving operating profit of more than €100m in 2010, with sales expected to be on par with 2009.

"While the market situation improved in the first quarter, it will take time to return to the pre-recession level,” said President and CEO Mikael Mäkinen. “Industrial and marine businesses saw more orders than in the previous quarter.

“Supported by this gradual recovery in the markets, our guidance for the entire year remains unchanged. Our major restructuring measures have now been concluded. Investment in our new assembly factory in Poland has proceeded according to plan and production in rented facilities has got off to a good start.”

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