A year of sales and operating growth for Konecranes

Operating profit before restructuring costs rose by 18% to EUR 138m and earnings per share 32% to EUR 1.46. Cash flow was strong, reducing our gearing to below 40%. “All in all, 2012 was a good year, but we aim higher,” he said.

Lundmark said that year ago the company decided that its service business should prioritize profitability over growth in the short term. The reason was clear: heavy investments in growth, combined with execution issues, had resulted in an EBIT margin of only 7% in 2011. The results of this prioritization are encouraging, as the 2012 EBIT margin improved to 8.4%. Things are moving in the right direction, but obviously we cannot be satisfied with this level yet. There is still profitability improvement potential in numerous areas of our network, which currently includes over 600 service locations in 47 countries.

The profitability of the equipment business developed satisfactorily in a challenging market environment during the first three quarters of 2012, but the last quarter was weaker. There were both market structure issues, such as low industrial cranes demand in some Western markets, and various operational issues. “We are now prioritising profitability over growth in the equipment business in the same way that we did in the service business a year ago. We announced restructuring measures at the beginning of the year, with the main objective of reallocating resources from Western markets to emerging ones,” he added.