28.07.2021

Power surge for Hiab

Cargotec, owner of Hiab, Kalmar and MacGregor, has reported a strong first half.

Hiab was the star performer for the period, with a first half revenue boost of 11 percent to €603 million. Its order intake however, leapt 80 percent to €933 million, leaving an order book at the end of June of €831 million, up 65 percent on the year. Operating profit for the six months was 73.2 million, an increase of 58 percent on the same period last year. Looking at the second quarter sales jumped 30 percent to €316 million, but order intake more than doubled to €508 million. Operating profits for the quarter more than doubled to €40 million.

Kalmar saw revenues for the first half slip seven percent to €705 million, although order intake jumped 80 percent to €1.13 billion, leaving an order book at the end of June of €1.26 billion, up 49 percent on this time last year. Operating profit more than quadrupled to €46.1 million. In the second quarter sales improved nine percent to €382 million, while operating profit came in an at €28.2 million, compared to a €13.1 million loss in the same quarter last year.

Cargotec as a whole saw first half sales decline two percent to €1.58 billion, however it managed to lift pre-tax profits to €55.8 million, compared to a loss in the same period last year of €8.4 million.

Cargotec chief executive Mika Vehviläinen said: “The second quarter was significantly different from the comparison period. The demand for our solutions was further increased by the market recovery after last year's difficult pandemic situation and the increase in economic activity that started at the end of 2020. Our main demand drivers - number of containers handled at ports globally, construction activity, and the level of new vessel contracting - were all growing strongly in early 2021.”

“Our orders received more than doubled, reaching an all-time record of almost €1.3 billion. A strong mobile equipment demand pushed Kalmar's orders received to a record-high level of €600 million. Orders for Kalmar's automation solutions remained moderate as customers continue to consider their larger investments carefully. Hiab’s demand remained exceptionally strong, with orders received reaching a record number for a third consecutive quarter. MacGregor’s orders received increased by 41 percent from the comparison period as shipbuilding recovered in both merchant ship and offshore sectors.”

“Our order book increased by 43 percent from the end of 2020, driven by high orders in Kalmar mobile equipment and Hiab. We estimate that, in addition to the strong market, high demand is due to the pent-up demand from last year as well as customers preparing for longer delivery times and price increases.”

“Our sales increased by 13 percent from the comparison period, although global logistics challenges and component shortages in the supply chain have extended our delivery times and limited our ability to meet the increasing demand.”

“The economic recovery from the pandemic is also reflected in the prices of raw materials, components and freight transportation. We are prepared to respond to the situation with price increases and active cooperation with our suppliers. Challenges in the supply chain and the related price increases mainly affected Kalmar’s results. Cargotec’s comparable operating profit increased by 41 percent, driven by higher comparable operating profit in Hiab. The impact of extended delivery times and increased costs will also be seen in the next quarter, but we expect the situation to improve towards the end of the year.”

“Our service business developed strongly in the second quarter with service orders received increasing by 27 percent compared to the comparison period. Service sales grew by 12 percent and, together with the software business, constituted 36 percent of our total sales.”

“During this spring, we have refined our strategy and during the second half of the year we will continue our determined investments in sustainable and profitable growth. Our key business driver is to reduce the carbon footprint of the logistics industry. We have continued our product development investments, and, during the end of this year, Kalmar’s entire portfolio becomes available as electrically powered versions.”

Vertikal Comment

An excellent result from Hiab, which has been going from strength to strength in recent years, the future is most definitely bright. While Kalmar’s results are not quite as stellar, they are still pretty good and with a strong order book in its back pocket, it looks as though it will be a good year. As long as the supply chain does not become worse.

The two operations will also be involved in Cargotec’s merger with Konecranes towards the end of the year. That is likely to have a more significant impact on Kalmar than Hiab. While it should not have any impact this year, 2022 could be affected. Hopefully the new combined management team will take its time and not rush into any stupid rationalisation moves. Thankfully both companies are performing almost equally well (see: Strong first half for Konecranes) and also facing the same issues. The slow process towards regulatory approval should help the two teams prepare and compare notes on strategy. Overcoming supply chain issues must be the overriding priority for the two companies now.

Interesting times.

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