29.10.2018

Profits continue to slide at Hiab

Hiab has posted a stronger quarter in terms of revenues, and order intake, but further declines in profitability.

Looking at the nine months to the end of September, Hiab revenues were three percent higher at €831 million, while order intake was nine percent higher at €902 million, taking the order book to €371 million, 24 percent up on the start of the year. Operating profits however were 15 percent lower at €99.4 million.
Sister company Kalmar reported nine month revenues of €1.17 billion, up four percent on the same period last year, with order intake 24 percent higher at €1.47 billion, taking its order book to just over €1 billion, up 28 percent on the end of last year. Operating profits were five percent higher at €91 million.

Cargotec as a whole, which also includes MacGregor, posted a one percent increase in revenues at €2.39 billion, with a pre-tax profit of €108.9 million, down 23 percent on the same period last year.

Moving on to the third quarter sales at Hiab increased three percent to €260 million while order intake was 13 percent higher at €294 million. Operating profits for the quarter plunged 29 percent to €23.9 million. Due - according to the company - to a mix of lower margin products, a weak dollar compared to the euro during the period and extra costs. During the quarter the company made three acquisitions – including two UK dealers and Effer.

Kalmar sales for the quarter were €415 million, up 12 percent on the same period last year, while order intake jumped 38 percent to €486 million. Operating profit was 36 percent higher at €38.6 million.

Cargotec chief executive Mika Vehviläinen said: “Our development continued to be strong in terms of orders received during the third quarter. Orders received grew in all of our business areas. The development was especially favourable in Kalmar, where the orders received were 38 percent higher. Also our sales grew in all business areas, supported by the good order intake. Cargotec's third quarter operating profit excluding restructuring costs remained at the comparison period's level despite Hiab's operating profit declining by almost one third. The decline in Hiab's operating profit was mainly caused by the weakening of the US dollar compared to the euro, product mix, additional costs related to supply chain, as well as investments in sales and service capabilities and digitalisation.”

“During the third quarter, Hiab entered into an agreement to acquire the Effer loader cranes business. Founded in 1965, Effer has over 50 years' experience in developing and manufacturing knuckle boom cranes. With the acquisition of Effer, Hiab will complement its loader cranes portfolio and expand its range of heavy cranes, in particular in the over 100 metric tonne segment, in which Effer is recognised as a global leader.”

“During the third quarter, Scott Phillips was appointed president of Hiab and a member of the Cargotec executive board. He has extensive experience in various global leadership positions in the construction and mining industries. Roland Sundén, who had been managing Hiab successfully since 2014, took up a corporate development role in Cargotec as of 1 October, continuing as a member of the Cargotec executive board until the end of 2018. I would like to thank Roland warmly for the excellent work in lifting Hiab's sales and profitability to a new level.”

“In September, we announced our refined strategy for 2019-2021. Together with our business areas, we will continue to work towards our vision "Becoming the global leader in intelligent cargo handling". As customer needs change, we will focus even more on the total lifecycle and comprehensive solutions. Our strategy will ensure profitable growth by focusing on customer centricity, services, digitalisation and productivity. Kalmar, Hiab and MacGregor share Cargotec's must win battles, while also having their own specific focus areas. Leadership - a must win battle during the strategy period 2015-2018 - is still fundamentally important to the company, and it is a cornerstone for all our operations also in the future. We are committed to achieving our financial targets announced in 2017.”

Vertikal Comment

Hiab is actually doing quite well at the moment, although you would not think so looking at the falling bottom line. However it should be pointed out that Hiab is still generating higher profits than Kalmar, which posted a very positive quarter when compared to last year.

The company will have a good deal of work incorporating its new acquisitions, and may well post a similar fourth quarter result, in terms of revenue growth/profit declines. However, expect this to improve in 2019 as positive momentum kicks in, and following any write offs by the new president etc…

All in all a reasonably upbeat set of numbers.