Cargotec as an investment

The year 2023 was a step change for Cargotec in many ways, with good results for four consecutive quarters. As a result we reached record-high sales, comparable operating profit and cash flow for the full year. In April we announced our plan to separate our core businesses Kalmar and Hiab into two world-leading standalone companies.

Business environment in 2023 was complex due to e.g. geopolitical tensions, high interest rates, and low consumer confidence. On one hand we harvested on our high order book, which was collected in 2021 and 2022. Hence, our sales in 2023 increased by 12 percent to EUR 4,569 million. Also service sales and eco portfolio sales reached all-time high levels. Driven by higher sales, successful management of inflationary pressures as well as MacGregor turnaround, our comparable operating profit improved by 62 percent to EUR 513 million, representing 11.2 percent of the consolidated sales.

On the other hand, orders received were on a lower level than in the exceptional years of 2021 and 2022. We addressed the lower order intake with cost saving actions announced in October, aiming for EUR 50 million annual fixed cost savings in 2024. The actions have progressed according to our expectations. We reduced approximately 300 roles globally in the fourth quarter related to the cost savings and we are confident reaching the target.

In the fourth quarter, demand for our solutions stabilised and improved by 11 percent from the seasonally somewhat lower third quarter. Our sales amounted to EUR 1,193 million and comparable operating profit to EUR 111 million in the quarter.

In Kalmar, the fourth quarter was a strong finish for a record year. Demand was stabilising and orders received improved from the third quarter. Successful delivery of the order book and management of inflationary pressures resulted in continued high profitability. Kalmar’s comparable operating profit in the fourth quarter was EUR 67 million, representing 13.1 percent of Kalmar’s sales. One-off costs related to cost saving actions announced in October had a EUR 5 million negative impact.

In Hiab, the quarter was the fifth quarter in a row with a stable level of orders received. Hiab’s sales decreased slightly. Hiab’s comparable operating profit declined to EUR 48 million, representing 10.6 percent of Hiab’s sales, impacted by EUR 16 million one-off costs related to cost saving actions announced in October as well as investments supporting growth. The full year comparable operating profit of EUR 252 million was record-high for Hiab.

Amid all the other actions, MacGregor is undergoing a successful turnaround according to the plan. Demand for its merchant and service solutions in the fourth quarter continued at a healthy level, resulting in a 7 percent increase in MacGregor’s order book compared to the end of 2022. Sales growth in merchant and services businesses, combined with reduced losses in the offshore business, resulted in the highest quarterly comparable operating profit, EUR 13 million, in nine years. However, there are still challenges related to a few offshore projects we have committed to in the past. Without the loss-making offshore business, MacGregor’s comparable operating profit margin would have been around 10 percent.

2024 will be another exciting year for Cargotec. We will continue to focus on executing the planned partial demerger and continue to look for a solution for MacGregor. In addition, we are well-prepared to respond to the prevailing market conditions as we progress on our journey towards two world-leading listed companies. To increase transparency, and in line with the intended separation of our three businesses, we publish our outlook for 2024 separately for our business areas. We estimate that Hiab’s comparable operating margin would be above 12 percent, Kalmar’s above 11 percent and that MacGregor’s comparable operating profit would improve from 2023 as part of Cargotec Group.

Our operative cash flow in 2023 was all-time high and our balance sheet is very strong. Our gearing is only 10.2 percent. Hence, the Board of Directors proposes to the Annual General Meeting that a record dividend of EUR 2.14 for each class A share and EUR 2.15 for each outstanding class B share be paid, corresponding to a 40 percent payout ratio. The balance sheet position gives an excellent foundation for our businesses in their planned standalone future.

I want to thank our employees for the hard work in a successful year 2023 as well as our customers and shareholders for their trust.