Konecranes reported on demand across its target industries including manufacturing, shipyards, ports and terminals. It noted that industrial capacity utilisation was increasing in the US and Europe, and demand, while low overall, increased towards the end of the year. Container port related demand picked up with an expansion of shipping volumes, and it received increased interest from the power generation sector, including waste-to-energy, and paper sector.
Konecranes said that sales for lifting equipment services rocketed due to increased use of older cranes and equipment. Service sales increased 24% in the quarter and new equipment sales increased 1.6%, bucking the yearly trend of flagging equipment sales. It said that manufacture of new cranes had stagnated this year due to a dearth of major industrial investments. It described price competition as ‘intense’.
Group sales reached €469.4m, up 9.5%, with the order book growing 24.6%. By the end of 2010, sales to developing markets had increased from 30% to 40% of total orders and acquisitions.
Regional sales were consistent with last year with relatively small increases: European sales increased minimally to 53%, North and South American sales increased to 30% and Asian-Pacific sales remained the same at 16%, while the remainder went to additional locations. The group operates globally from 578 locations in 46 countries.
However, demand for new equipment is expected to grow in the Asia-Pacific, in addition to other emerging markets. European and North American new equipment sales will continue to grow as markets recover to a greater extent, Konecranes says.
During this quarter, Konecranes made an unsuccessful bid to combine with Demag. It also made nine acquisitions, six of which were small machine tool service businesses in Denmark, the United Kingdom and the United States. Acquisitions only made up 3% of orders in this quarter.
The company sold off its hoist distribution business, Japanese subsidiary MHS Konecranes Co. Ltd, to the Japanese crane, hoist and material handling equipment company Kito Corporation, while purchasing shares in Kito. It ultimately obtained 24% of the voting rights in Kito.
Konecranes calculates that currency rates had a positive effect on orders and insignificant effect on operating margins. Compared to the previous year and at comparable rates of currency, orders increased for services and equipment.
Despite low full year sales, Konecranes says that it had a ‘good result’ with increased net working capital. It observed an increased operating margin, before restructuring costs, which moved from 7.1%–7.4%. It forecasts that sales and operating profits will be even larger in 2011.
Following the increase in margins, Konecranes has announced it will begin a ‘multi-year programme’ of development spending to make use of this income. It has plans to implement technological developments along with new products and services currently in the pipeline. New products and services revolve around safety, eco-efficiency, automation, safety, maintenance, and control systems. It has earmarked additional development spending for internal efficiency.