Credit Suisse European Capital Goods Conference 12 September

Credit Suisse
Capital Goods Conference
12 September, 2007
European
Pekka Lundmark, President and CEO
1
Konecranes in Short
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2006 Sales: 1,483 MEUR
Market Cap: approx. 1,700 MEUR
Daily Trade Approx: 12 MEUR
Over 7,800 Employees in 41
Countries
• The Largest Industrial Electric
Overhead Travelling (EOT) Crane
Company in the World
• Strong Challenger in the FastGrowing Container Crane Market
• Unique Service Concept with over
270,000 units in contract base
2
Three Synergistic Business Areas
With Leading Market Positions
Service (Industrial & Port)
• Preventive maintenance
• Inspections
• Repairs
• Modernizations
• Spares
Standard Lifting
Market Size
Market share
Position
Open: ~ 3 BEUR
~ 18 %
#1
Total: > 8 BEUR
~ 7%
> 4 BEUR
~ 15 %
#1
~ 12 %
< 5%
#1
#5-6
• Chain Hoists
• Wire rope hoists
• Crane Components
• Industrial Cranes
Heavy Lifting
- Industrial process cranes
- Container handling & other port equip.
• STS
• RTG & RMG
• Lift trucks
• Reachstackers
• Straddle Carriers
~ 7 BEUR
~ 2 BEUR
~ 5 BEUR
3
Worldwide Network
Most Extensive Service Footprint
with More Than 370 Service Locations
Sales and Service
Manufacturing
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4
Broad Geographical Presence and
Balanced Business Area Sales
Sales by Region, %
Sales by Business Area, %
13
11
35
40
37
R12M
1.65 BEUR
34
34
R12M
1.65 BEUR
49
50
31
EMEA
AME
Standard Lifting
Service
Heavy Lifting
APAC
5
Broad Customer Base
Rolling 12-month Sales, % of total sales
Steel & other
warehousing 2 %
Petrochemical 4 %
Pulp and paper 5 %
Power plants 4 %
General
Manufacturing 22 %
Automotive 3 %
Transport,
Shipping 5 %
Resellers 14 %
Sales
R12MTH
1.65
BEUR
OEM crane builders 6 %
Construction 2 %
Primary metals 10 %
Aviation,
Aerospace<1 %
Shipyards 3 %
Harbors 14 %
Others 5 %
1%
Refuse
Handling
6
Market Growth Drivers
• Global re-allocation of work:
Industries moving South and East
• Increasing world trade & container
traffic
• Supply chain re-design requires
more advanced material handling
• High raw material prices
• Power generation; environmental
concerns
• Increasing interest to outsource
maintenance
• Market consolidation
7
Standard Lifting
8
Light Lifting and Chain Hoists
• Workstation Cranes
up to 2000kg
• Jib Cranes up to 5000kg
• XN Chain Hoists 60 – 7500kg
• Monorail Systems 125 – 2000kg
Jib Crane
Chain Hoist
Monorail systems
9
Industrial Cranes
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Single Girder Cranes up to 12.5 tons
Double Girder Cranes up to 80 tons
Underslung Cranes up to 12.5 tons
Explosion Proof Cranes up to 80 tons
Electric Overhead Traveling Crane
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Industry Leading Technology
11
Global Supply Chain
12
Heavy Lifting
13
Heavy Liting Trolleys
SM Standard Winch 5 - 500 ton
LV Tailored Winch 5 - 1000 ton
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Steel Industry
• Solutions in EOT Cranes and Lift
Trucks for All Process Phases
• From the Scrapyard through the
melt-shop to the storage area
• Slabs, blooms, billets, format
plates, coils, tubes and wires
15
Paper Industry
• Applications in the pulp and paper
production
• Process duty and service cranes for
all phases
• Clamp & Bale trucks for Loading
and Unloading of trucks, rail cars or
ships and handling of rolls in
storage
• Automatic paper roll storage
systems
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Power Plants
• Solutions for both the construction
and the maintenance of a power
plant
• Supports the power industry with
new crane installations
• Crane modernizations and
replacement investments
• Positioning of extremely heavy and
valuable loads
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Container Handling
Ports, Railroad, River and
Inland Terminals
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Rubber Tired Gantry Crane
Rail Mounted Gantry Crane
Ship-to-Shore Gantry Crane
Reachstacker
Masted Lift Truck
Empty Container Lift Truck
Laden Container Lift Truck
Straddle Carrier
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Bulk Handling & Shipyards
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Bulk Handling Cranes
Shipyard Cranes
Shipboard Cranes
Fork Lift Trucks
Goliath Gantry
Crane
Fork Lift Truck
Munckloader
Heavy Cargo
Gantry Crane
Off Shore Crane
Slewing Shipyard Crane
Multipurpose
Crane
Grab Unloader
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SERVICE
20
Crane Service
Maintenance services for all types
and brands of overhead cranes
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24 Hour Response
Expert Crane Inspections
Modernisation Services
Preventive Repairs and On-calls
Spare Part Services
Predictive Maintenance
Agreements
• Spare Part Services
21
Service Contract Base
273 Thousand Units
Value 100 MEUR
Number of Cranes
Units
Value
300 000
MEUR
120
250 000
100
80
200 000
60
150 000
40
100 000
20
50 000
0
1999
2000
2001
2002
2003
2004
2005
2006
Q2/2007
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Service is 2/3 of Life-Time Cost
• Process Cranes: Service accounts for 75 % of total life-time crane cost
• Standard Cranes: Approx 50/50 %
Initial Purchase
Modernisation
25 %
30 %
10 %
Maintenance
35 %
Spare Parts
Real Case of Paper Process Crane over it’s 30-Year Life
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Unlimited Potential in
Service Market
• Outsourcing of maintenance
services is propelled by:
Outsourced
Market
• Significant cost savings
27 %
• Regulatory / Liability concerns
7%
66 %
• Higher technology content
• Few sizeable participants
Konecranes
“In-house”
Maintenance
Case Study of North American Market (> 3.5 BUSD)
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Growth Strategy
• Cranes and services in one
package
• Higher added value in services to
meet market demand
• Port crane maintenance
• Geographical market entries
• Technology investment
Organic growth
• Market consolidation
Selected acquisitions
25
Acquisition Track Record
Since 1985
CMS Company
Orley
Meyer
Landel
Overhead Crane Service
Kelly Sales
Browning
Munck-Canada Ltd.
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Strong Sales Growth Track Record
CAGR 15 %, of which Approx. 2/3 Organic
Sales,
MEUR
EBIT
Margin
SALES AND EBIT MARGIN
1600
9%
1400
8%
1200
7%
6%
1000
5%
800
4%
600
3%
400
2%
200
1%
0
0%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
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1/
02
Q
2/
02
Q
3/
02
Q
4/
02
Q
1/
03
Q
2/
03
Q
3/
03
Q
4/
03
Q
1/
04
Q
2/
04
Q
3/
04
Q
4/
04
Q
1/
05
Q
2/
05
Q
3/
05
Q
4/
05
Q
1/
06
Q
2/
06
Q
3/
06
Q
4/
06
Q
1/
07
Q
2/
07
Q
Rolling 12-Month Orders Received
1,665 (2006:1,473) MEUR, + 13 %
MEUR
1 800
1 600
1 400
1 200
1 000
800
600
400
200
0
28
End-June Order Book by Business Area
Total 700 (End-06: 572) MEUR or +22%, YoY +9%
SERVICE
MEUR
STANDARD LIFTING
HEAVY LIFTING
Q1/06
Q3/06
800
700
600
500
400
300
200
100
0
Q1/05
Q2/05
Q3/05
Q4/05
Q2/06
Q4/06
Q1/07
Q2/07
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Rolling 12-Month Sales and Margin
Sales 1,648 (2006:1,482) MEUR, +11 %,
Margin 8.5 (2006:7.1)%
9%
1 600
8%
1 400
7%
1 200
6%
1 000
5%
800
4%
600
3%
400
2%
200
1%
0
0%
Q
1/
0
Q 2
2/
0
Q 2
3/
0
Q 2
4/
0
Q 2
1/
0
Q 3
2/
0
Q 3
3/
0
Q 3
4/
0
Q 3
1/
0
Q 4
2/
0
Q 4
3/
0
Q 4
4/
0
Q 4
1/
0
Q 5
2/
0
Q 5
3/
0
Q 5
4/
0
Q 5
1/
0
Q 6
2/
0
Q 6
3/
0
Q 6
4/
0
Q 6
1/
0
Q 7
2/
07
MEUR
1 800
30
Gearing
120 %
102,1 %
100 %
80 %
75,8 %
79,3 %
65,0 %
60 %
57,3 %
40 %
39,3 %
20 %
0%
Q1/06
Q2/06
Q3/06
Q4/06
Q1/07
Q2/07
31
Return on Capital Employed
ROCE %
40
36
32
28
24
20
16
12
8
4
0
39,6
29,5
17,8
17,2
13,7
10,8
2002
2003
2004
2005
2006
R12M
32
Return on Equity
ROE %
50
45
40
35
30
25
20
15
10
5
0
48,5
36,5
16,6
14,2
12,5
7,5
2002
2003
2004
2005
2006
R12M
33
New EBIT Margin Targets Set in 2007
Due to Recent Improvement and New Reporting Method for
Spare Parts
2005
EBIT, %
2006
EBIT, %
2006
Restated
H1/07 (H1/06)
EBIT, %
Long-term EBIT
Target, %
Previous
Target, %
Service
7.2
8.5
10.0
(+1.5 %-pts)
11.1 (9.2)
12
8
Standard Lifting
9.1
10.6
9.1
(-1.5 %-pts)
13.2 (8.1)
12
12
Heavy Lifting
4.6
6.8
5.7 (5.5)
10
10
Unallocated Group
Costs (% of Sales)
2.5
2.1
2.3 (2.5)
2
Group Margin
5.1
7.1
8.6 (5.5)
10
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2007 Outlook
• The level of orders received in the first half of the year and the stronger
order book, combined with a continued stable demand outlook for the
third quarter, form a strong base for the second half of year 2007.
• Based on these factors, 2007 sales are targeted to increase by
approximately 20 % compared with 2006 sales of MEUR 1,483.
• The Group target is to continue its EBIT margin improvement in line
with the development in recent years.
• The Group EBIT margin improvement is based on higher sales volumes,
productivity gains, and improved profitability in field services.
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2007 Outlook
• Heavy Lifting’s contribution to the Group’s 2007 profitability
improvement is, however, anticipated to be modest.
• High capacity utilization in the first half of the year contributed to the
margin improvement in the first half of 2007 in Service and Standard
Lifting. As a consequence, year-end weighted sales and profit
seasonality will not be as pronounced as before.
• The main general uncertainty factors regarding 2007 profitability
continue to be (1) the weaker USD/EUR rate, and (2) uncertain
availability and prices of certain components and raw materials.
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Contact information
• Pekka Lundmark, President and CEO
tel. +358-20 427 2000
pekka.lundmark@konecranes.com
• Teo Ottola, Chief Financial Officer
tel.+358-20-427 2040
teo.ottola@konecranes.com
• Paul Lönnfors, Investor Relations Manager
tel.+358-20-427 2050
paul.lonnfors@konecranes.com
www.konecranes.com
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