According to Pekka Lundmark, Konecranes’ president & CEO, this gives a solid base for continued growth in 2008. Demand continues to be geographically well balanced. Although the Asia-Pacific region had the strongest relative growth in orders, the Americas, Europe, Middle East and Africa also posted good growth figures.
The 10.7% operating margin in the third quarter boosted the rolling 12-month margin to 9.1%, already close to the published 10% target. Both Service and Standard Lifting business areas now have a structure where costs grow more slowly than sales. Standard Lifting’s 23% sales growth in the first three quarters of the year was achieved with a personnel increase of only 2%.
In Service, Konecranes increased capacity by adding 522 technicians to a new total of 3,082. Thuis is a real competitive advantage, as is the fact that fixed costs in Service are growing more slowly than sales.
Overall, the strong demand for Konecranes’ products and services continued. A record-high order intake was posted for the third consecutive quarter with growth of 25.6% to Euro506.4m. Orders increased in all business areas, and growth was well balanced between the geographical regions. Although Service and Standard Lifting posted double-digit sales growth, Heavy Lifting’s third quarter sales were lower because of the timing of certain large project deliveries and the availability of components from some key suppliers.
Capacity constraints and component bottlenecks also dampened growth in Standard Lifting and the key constraint in Service growth continues to be the availability of service technicians. The third quarter EBIT margin was 10.7% compared to 8.1% in the third quarter of 2006. Volume growth and higher efficiency were the main contributors to the profitability improvement, while price increases offset higher costs of labour, raw material and components.
Scheduled equipment and service deliveries are expected to boost Q4/2007 sales well over sales in Q3/2007 and Q4/2006. Total year 2007 sales growth is expected to be below 20%, but with improved profitability. Konecranes’ main risks regarding 2007 sales and profitability are the availability and prices of certain subcontracted components.