18.07.2014

Flat quarter for Hiab

Loader crane manufacturer Hiab has reported flat revenues in the second quarter but with a strong order intake in the period.

Total revenues for the half year were €429 million an increase of four percent on last year, while operating income more than doubled from €7.9 to €18.7 million even after allowing for a €10 million charge taken in the second quarter to cover the closure of assembly operations in Hudiksvall, Sweden. Order intake year to date is up 13 percent to €479 million.

Moving on to the second quarter revenues were the same as last year at €221 million, although new crane sales improved slightly, while service revenues fell. Order intake was substantially up at €261 million – 26 percent higher than in the same quarter last year. The business posted an operating profit of €5.3 million -slightly down on last year’s €5.9 million, but this after the restructuring charge of €10.4 million.

Sister company Kalmar – that builds port handling equipment including reach-stackers – had a tougher time with year to date revenues falling 11 percent to €649 million, while the second quarter was down 20 percent to €323 million. Order intake remained very strong increasing 29 percent to €725 million, but the business posted losses of nine million year to date and 19.7 million for the quarter, mostly due to serious cost overruns on completing a large project.

Cargotec's other company - MacGregor cranes - saw year to date revenues rise 27 percent to €478 million, while profits slipped from €30.5 million last year to €22.6 million this year. Order intake jumped 32 percent to €653 million.

Cargotec as a whole reported half year revenues of €1.55 billion – a three percent improvement on the same period in 2013. Pre-tax profits for the period plunged from €40.4 million last year to just €5.4 million this year. Net debt jumped from €567 million last year to €847 million at the end of June due to acquisition costs and debt restructuring.

Chief executive Mika Vehviläinen said: : “Market activity remained brisk, with our orders for the second quarter growing in all business areas. Both Kalmar and Hiab had strong order intake compared to the previous quarters. In MacGregor, recent acquisitions supported the growth in orders compared to the comparison period.”

“Due to a previously announced cost overrun in Kalmar projects, operating profit for the second quarter was unsatisfactory. As expected, MacGregor and Hiab saw positive profit development. The €40 million profit improvement programme currently being implemented in both Kalmar
and Hiab is proceeding as planned, and is actually ahead of schedule in Hiab. Unfortunately, due to project cost overruns, the effects of the programme are yet to make a visible impact on Kalmar's operating profit. We are continuing our determined efforts to see this programme through.
We have decided to reverse earlier plans to separately list MacGregor business. We focus on delivering profitable growth within the new MacGregor as part of the overall Cargotec portfolio.”

Vertikal Comment

While this is not a great interim report from Cargotec, it does include quite a bit of positive news under all the current issues and decision changes. The problem with the company is that it seems to be constantly changing its mind and spending time and money on restructuring. It centralises then it de-centralises –it decides to sell a business then to keep it…One has to wonder if we will ever see the day when the annual accounts will have no restructuring charges in the current or preceding year?

Under all this though the company still has three fantastically strong brands, and more importantly some excellent world beating products. Possibly more importantly - and perhaps surprising given the seemingly constant state of flux – the operating companies have some truly excellent managers and employees.

Hopefully when the latest round of changes have been completed the three operating companies will be left to simply get on with total focus on their businesses and do what they do best.