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Konecranes announces fall in sales and order intake

Finnish equipment manufacturer Konecranes has recorded an 18% fall in its order intake and 3% drop in sales in the first quarter of 2016.

The company’s sales went down to €459m (US$520m) in the first three months of 2016 from €475m (US$538m) in the same period last year, while its order intake dropped from €519m (US$587m) to €425m (US$481m) due to lower port crane orders.

The equipment business area’s order intake dropped by 29% year-on-year, a decline “entirely explained” by the port cranes business low order intake, while its service business area’s order intake decreased by only 1%.

The manufacturer’ order book amounted to €1bn (US$1.1bn) at the end of March 2016, a 7% year-on-year fall from €1.1bn (US$1.2bn).

The company said in a statement that customers are cautious about investing due to the slowing global economic growth, with the fall in the global container throughput leading to slower decision-making among terminal operators.

Despite the drop in sales, Konecranes’ adjusted operating profit (EBIT) increased by 4% from €14m (US$16m) last year to €15m (US$17m) in 2016 following restructuring and cost saving actions.

Excluding the €14.4m (US$16.3m) adjustments in 2016, which consist of transaction costs related to the Konecranes-Terex potential merger and restructuring costs, and the €2.3m (US$2.6m) adjustments in 2015, operating profit went down by 97% year-on-year.

Sales in the equipment business area fell by 6% year-on-year due to a lower order book for industrial cranes and timing of deliveries in the port cranes and lift trucks businesses, while the unit’s adjusted EBIT rose by €4m (US$4.5m).

Sales in the service business area decreased by 2%, with its adjusted EBIT falling by 12% due to “temporary business interruption related to the implementation of new IT systems and processes, timing of deliveries and market softness in commodity driven industries, and changes in spare parts distribution, which affected deliveries during the quarter”.

The business said in a statement that it expected an increase in sales and adjusted operating profit in 2016 compared to last year.  

According to the manufacturer, while demand is Europe is stable, business activity in the North American manufacturing industry “is showing signs of bottoming out”.

Konecranes’ president and CEO Panu Routila said in a statement: “Our first-quarter figures were a reflection of tough market conditions, but there are signs of improving earnings capacity thanks to restructuring actions.

“Our recently announced shipyard crane order and offer base point to stronger port crane orders in the second quarter.”

In a separate statement published on the same day, Konecranes announced that its and Terex’s boards of directors unanimously approved a definitive agreement to merge.

The proposed merger, which according to the Finnish manufacturer is now expected to occur approximately in the middle of the second half of 2016, remains subject to approval by the two companies’ shareholders, regulatory approvals and other closing conditions.

Earlier this year, Terex commenced negotiations with Zoomlion Heavy Industry Science and Technology Co. following the Chinese company’s non-binding conditional proposal to acquire all of its outstanding shares.

However, Konecranes reported that Terex’s board has not changed its recommendation in support of the proposed merger.