The company announced in its Financial Review 2021, that its order book grew by 56% and, as an example, Hiab’s order book nearly doubled when compared to the previous year. Strong demand and extended short-cycle product delivery times affected the growth of its order book.
Despite strong demand, sales increased by only 2% due to lower project deliveries in Kalmar and MacGregor as well as the sale of the Navis business. In addition, component shortages and global logistics challenges limited growth in Hiab and in Kalmar mobile equipment. It estimates these factors to have affected sales by approximately €80m during the fourth quarter.
“2021 was twofold. The improving market situation and increasing economic activity boosted our orders received to a record level, and our main demand drivers – number of containers handled at ports globally, construction activity, new vessel contracting – grew significantly. However, as the year progressed, component shortages and global logistics challenges proved to be more difficult than what we had estimated, causing delays to our deliveries. Due to the coronavirus pandemic, market predictability was exceptionally challenging,” said Mika Vehviläinen, CEO, Cargotec.
“Cargotec’s comparable operating profit increased by 2% to €232m, driven by higher comparable operating profit in Hiab. Challenges in the delivery chain and added costs thereof impacted Kalmar’s result in particular, causing its comparable operating profit to decrease by 5%. Despite MacGregor’s positive market development, due to one-time cost overruns related to new product developments in offshore wind energy vessel projects during the last quarter, MacGregor’s result for the whole year turned negative.
“Our service business reached a new record when services sales increased by 7% and services orders received by 18% compared to the previous year. Examples of good progress in services include Kalmar’s multi-year service agreements with Outokumpu’s Tornio stainless steel plant in Finland, and with Holmen Iggesund’s mill in Sweden. Service and software business sales constituted 35% of our total sales in 2021.”
He added, the eco portfolio sales represented 19% of Cargotec’s total sales. The customer interest towards eco-efficient equipment is increasing. As an example, more than a quarter of the forklift truck orders in 2021 were fully electric. Going forward, it plans to meet the growing demand for electrical equipment, as Kalmar introduced three all-electric solutions in December.
“Cargotec refined its vision and strategy in April. Our vision is to become the global leader in sustainable cargo flow and our strategic breakthrough objectives are sustainability and profitable growth. Practical examples of executing the strategy in 2021 include the development of the fully electric offering as well as our agreement with SSAB to work on the introduction of fossil-free steel to the cargo handling industry. In concrete terms, Cargotec aims to reduce the CO2 emissions of its value chain by 1 million tons by 2024,” said Vehviläinen.
“During the year we completed the sale of the Navis business, which had an approximately €230m positive impact on our operating profit. The proceeds enable R&D investments in the fields of electrification, digitalisation, robotisation and automation, and further investments in acquisitions. As an example, Hiab acquired the demountables manufacturer Galfab in the US and, to speed up the development and launch of robotic solutions across the mobile equipment offering, Kalmar signed a joint development agreement with Coast Autonomous Inc. in the US.
“In October 2020, Cargotec Corporation and Konecranes announced their combination agreement and a merger plan to combine the two companies through a merger. Extraordinary general meetings of Cargotec and Konecranes held on 18 December 2020 approved the merger. Competition authorities in the EU, UK, and US, among others, are reviewing the proposed transaction. In August, Cargotec and Konecranes received an unconditional approval from the State Administration for Market Regulation, the competition authority in China, for their planned merger.
“Cargotec and Konecranes have continued their dialogue and cooperation with relevant competition authorities to find satisfactory ways to mitigate concerns raised by the competition authorities to secure approvals to complete the merger of Cargotec and Konecranes. Based on ongoing dialogue with the authorities, the remedy requirements are more complex than expected.
“Cargotec and Konecranes have discussed remedies with relevant competition authorities based on a commitment offered to the European Commission to divest Konecranes' Lift Truck business and Cargotec's Kalmar Automation Solutions. Both companies consider the offered remedy package as sufficient and feasible. Further investigations regarding the proposed remedies and negotiations with relevant competition authorities regarding antitrust concerns continue.”
Cargotec and Konecranes are awaiting the authorities’ decisions and continue to work towards the merger being completed by the end of H1 2022. Until all merger closing conditions are met and the deal is completed, both companies continue to operate fully separately and independently.
The next Annual General Meeting of Cargotec Corporation will be held at Sanomatalo, Töölönlahdenkatu 2, Helsinki, Finland on Thursday, March 17, 2022 at 1pm (EET).
