Cargotec’s half year figures show a solid performance

Cargotec’s CEO Mika Vehviläinen says that the company’s half year financial report – from January to June 2020 – show that Cargotec has given a solid performance in an exceptional environment.

He says, “The second quarter began in a very exceptional situation with the rapid spread of the coronavirus in our main market areas. The virus, and in particular the resulting regulatory restrictions, had a strong impact on our business in the beginning of the second quarter. However, the operating environment improved as the quarter progressed. The operating hours we collect from our connected equipment also show that customers’ activity levels have been clearly rising since the drop in the beginning of the quarter.

“Increased uncertainty and restrictions caused by the pandemic affected orders received, which decreased by 27% from the comparison period. Larger automation orders especially have been postponed. However, the orders received improved month-by-month after a weak April, which provides reason to believe that the bottom was reached in the second quarter for orders received.

“Our ability to deliver products to customers was impacted by closures of our assembly units and lower utilisation rates of the assembly lines caused by the safety regulations as well as production downtime at our suppliers. However, the situation in our supply chain is normalising and all our assembly sites were back in operation by June. Our service and software sales were resilient despite the market circumstances. The COVID-19 crisis has also further increased customer interest in remote maintenance services.

“Our determined investments in an asset-light operating model and developing the service and software business enabled us to keep comparable operating profit margins in Kalmar and Hiab at a reasonable level despite lower volumes. MacGregor’s comparable operating profit improved from the comparison period, but is still negative. I am confident that ongoing actions in MacGregor will improve the business area’s result also going forward. In these exceptional circumstances, our prompt response to the crisis, combined with our temporary savings measures, helped to keep our comparable operating profit reasonable at €43 million.

“Despite the crisis, we systematically continued to execute our strategy. We increased our investments in digitalisation and projects to improve the cost and eco-efficiency of our products. During the quarter, we also continued to develop our supply chain and organisation with the divestment of our share in the RCI joint venture in China, and closing down our assembly unit in India.

“In May, we introduced our climate ambition to be a 1.5 degree company. According to the commitment, we aim to reduce the CO2 emissions of raw material sourcing and product use phase by at least 50% from the 2019 levels by 2030. In addition, we aim to be carbon neutral in our own operations by 2030. In terms of electrically powered equipment, we are the forerunners, which gives us great business opportunities. Sales of our eco-efficiency portfolio increased slightly in the first half of the year compared to the previous year and accounted for 23% of our total sales.

“Our strategic direction is correct, which is also reflected in our results. Our investments in the services and software business paid off also in the second quarter. Our software sales increased from the comparison period. The service and software sales share of our consolidated sales increased to 37%.

He concludes, “We start the second half of the year in a stable position. Our financial position is strong and at the end of the quarter, Cargotec’s total liquidity was €970 million. In addition, our order book is still at a good level.”