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Challenging times ahead for Konecranes

Challenging times ahead for Konecranes

Highlights of the third quarter reveal that the order book was EUR 1,040.1m at the end of September, 53% higher than a year ago and 6% higher than at the end of June 2011 and order intake of EUR 458.5m was up 22.8%. Operating profit, however, fell to EUR 26m from EURO 34.3m and represented 5.8% of sales compared with 8.7% last year.

According to the company, forecasting future demand continues to be challenging due to the macroeconomic uncertainties caused by the budget deficits and the level of public debt in Europe and the US. Although there are signs of weakening demand, the level of new inquiries is still reasonably good.

Operating profit for 2011, excluding possible restructuring costs, is likely to be at approximately the same level as in 2010 although sales are expected to be higher. The Business Area Service operating profit in 2011 is expected to fall short of 2010 level, although Business Area Equipment is forecast to increase from 2010.

President and CEO Pekka Lundmark said “I am obviously not satisfied with our third quarter as a whole, and the main concern is lower than planned operating profit in Service. We have invested a lot in growth, system and technology development, service network expansion and training in order to be able to deliver higher value services and higher volumes. These are all good investments, but now when the realised growth is lagging behind expectations, we are reconsidering certain parts of our plan. We will initiate actions in the fourth quarter to lower fixed costs in the Service business, especially in Europe.

“On balance, there is a lot of positive news in the quarter as well. Our total order intake of EUR 459m is 23% higher than a year ago and I am satisfied with the margin level in these orders. In general, our Equipment business is progressing according to plan and the strong order book in that business gives us visibility and some time to adjust, should the recent negative trend in the world economy continue.”