The special cranes business is booming – the company received Euro 79m worth of orders in the quarter, and Euro 61m of sales. But according to Lundmark, it is not very profitable. “In special cranes, we are still very, very heavily dependent on the high-cost level in Western Europe in manufacturing, which is something that we are – throughout this year and the next – working on.”
When asked about the chances that production of special cranes would be moved to China, he said that special cranes may export as readily as hoist production has done.
“If we take standard lifting as comparison, because that’s where we started about two years ago, in a similar type of project. At the end of this year in standard lifting we are in a situation where actually we’re very close to a third of the production of the key components will be in the Far East. This is not a non-achievable target for special cranes either, for the next two to three years or so.”
But that is not all the company is planning, he continued. “Things are actually moving – building additional capacity – both of our own, and outsourcing, in other places that are not China and are not Finland, either. We are building up in Estonia, for example. We are outsourcing steel structures in Ukraine, to name one example.”
The statements came in a conference call announcing Konecranes’ first quarter 2005 results. Lundmark announced that Konecranes expects to have an overall 2005 sales growth of 20%, and an improved eBIT operating income compared to last year, according to Lundmark. But half of that growth comes from the acquisition of Morris Material Handling and a fork truck company, SMV Lifttrucks. Organic sales growth was about 15%.
Pekka Lundmark said that orders in maintenance services is growing at 11%, field service orders at 19%, standard lifting at an organic rate of about 12% and special cranes orders at 25%. In addition, the acquisition of Morris Material Handling gave a growth rate of 12% in standard cranes orders (which works out at about Euro 9m) and 25% (about Euro 20m) in special cranes orders.
Orders growth is slanted East, where Asian orders grew by 40%, in North America 19% and in western Europe Lundmark said the figures were “definitely lower.” Profit margins were also uneven across the areas, he said.
He said that the chance of increased profits has improved since February, when it forecast that any gains would be eaten up by currency conversions caused by the weak dollar.
Sales were up 27% compared with the previous quarter last year, to Euro 193m. The company also announced one-off expenses of Euro 4.7m because of changes in accounting terms.
