Konecranes publishes 2012 annual report; CEO comments

Konecranes president and CEO Pekka Lundmark has said in the 2012 annual report that “the lion’s share of our future growth potential lies in Asia and other emerging markets”. Konecranes Plc’s year 2012 annual report was released earlier today (February 25, 2013).

“I am pleased with many aspects of our performance in 2012,” Lundmark added. “In a marketplace where uncertainty and customers’ hesitation in making decisions has become the new norm, a 14 percent growth in sales to a new record level of €2,170 million was a good achievement.”

Operating profit before restructuring costs rose by 18 percent to €138 million and earnings per share 32 percent to €1.46. Cash flow was strong, reducing Konecranes‘ gearing to below 40 percent. “All in all, 2012 was a good year, but we are aiming higher,” Lundmark surmised.

“A year ago, we decided that our service business should prioritise profitability over growth in the short term. The reason was clear: heavy investments in growth, combined with execution issues, had resulted in an EBIT margin of only 7 percent in 2011. The results of this prioritisation are encouraging, as the 2012 EBIT margin improved to 8.4 percent.”

Lundmark also pointed to profitability improvement potential in numerous areas of the network, which currently includes over 600 service locations in 48 countries.

Geographically, the best performer was the Americas region, which accounted for approximately one third of global sales. Lower demand in China and India affected Asia Pacific, despite good progress in South East Asia. Demand in most large European markets was low, but Eastern Europe, the Middle East, and Africa made good progress.

“In today’s world, it is no longer acceptable to use resources irresponsibly or inefficiently, be they people, natural resources, equipment, energy, or capital,” said Lundmark. “This is becoming the name of the game everywhere in the world, emerging markets included. This is the major underlying fact defining our future as a company.”

Lundmark temporarily relocated his office to Asia to be able to better understand the needs of customers in the region. “As we have seen in the U.S. in the last couple of years,” he said, “many manufacturing companies are rethinking their global supply chains, which has led to new industrial investments in established markets. So achieving the right balance between established and emerging markets is important.”

He concluded a statement to shareholders by saying he is “more optimistic” about short-term demand than after Q3 last year.