Questions and answers related to the coronavirus outbreak

COVID-19 is spreading fast in Europe and Americas, which are Cargotec’s main market areas. While in China and some Asian countries the situation and operations in our locations are normalising, the situation is getting very challenging in Europe and Americas. The spread of coronavirus and related government actions, such as State of Emergency declarations, have slowed down financial activity, the customer decision making as well as delayed the deliveries. Visibility for the rest of the year is weak. Risks on both demand and supply side have increased, and there is also a lack of transportation capacity which makes it more difficult for us to deliver our solutions. The risk of a broader economic slowdown is also increasing. For example, Goldman Sachs has predicted the US GDP to shrink by 5% in the second quarter of 2020 while also cutting full year estimates. 

Equals the situation on March 17. We are continuously monitoring development of the situation

Cargotec is constantly monitoring the situation and its development. Safety and health of our employees, customers and partners will remain our first priority. 

On 27 March 2020, Cargotec updated its outlook for 2020 due to the coronavirus pandemic and connecting political and administrative restrictions. In the current exceptional situation Cargotec estimates that it is not able to give a guidance for the year 2020.

Restrictions set by the authorities related to the coronavirus pandemic, as well as the increasing uncertainty, have slowed the decision making among customers and negatively affected Cargotec’s orders and delivery schedules. There are risks associated with the timing of the current order book deliveries, and the visibility is weak. 

Previous guidance (given on 6 February 2020): Cargotec expects its comparable operating profit for 2020 to improve from 2019 (EUR 264 million). 

Cargotec has initiated measures to adjust its cost structure. The measures include the objective of shifting the management and office workers to a four-day working week with a corresponding reduction in salaries, subject to local legislation; a reduction of external services, as well as minimising travel. Cost structure adjustments will continue as the situation requires.

Cargotec publishes a new guidance at a later date.

Below you can find answers to some typical questions we have received: 

What kind of financial effect is the coronavirus expected to have?

It is very difficult to estimate the full financial impact, but corona is a major risk for Cargotec’s financial performance in 2020, as the virus is now spreading fast in Europe and Americas, which are Cargotec’s main market areas. 

Customers avoid face to face meetings and travelling is heavily restricted. Also deliveries are delayed, partly due to our lower capacity utilization and partly due to challenges in the component supply. There is also a lack of transportation capacity, which makes it difficult to deliver the solutions and equipment to customers. 

Equals the situation on March 17. We are continuously monitoring the development of the situation

Are you expecting any impact on orders received? 

Customers are postponing the decisions and orders and this will impact orders received negatively.

Equals the situation on March 17. We are continuously monitoring the development of the situation. 

Have the production sites been working normally?

There are risks that our assembly units can not operate due to restrictions from local authorities.

The production sites in China have been ramping up and the situation is close to normal. 

Equals the situation on March 17. We are continuously monitoring the development of the situation.  

What kind of liquidity position does Cargotec have? 

Cargotec’s liquidity position is healthy. Cash and cash equivalents and the undrawn long-term credit limits amounted to EUR 720 (31 Dec 2018: 556) million at the end of 2019. In addition, Cargotec had access to a commercial paper programme as well as undrawn bank overdraft facilities totalling EUR 287 (31 Dec 2018: 249) million. 

Cargotec has one financial covenant in the loan agreements. Our financial covenant is  related to pre-IFRS 16 gearing (approximately 41% at the end of 2019) and we are under the threshold of 125%.

Why did Cargotec cancel the AGM scheduled for 17 March?

Based on the development of the coronavirus situation and the announcement made by the Finnish Government on 16 March Cargotec’s Board of Directors decided to cancel the Annual General Meeting. Cargotec will convene the Annual General Meeting at a later stage. The new date will be announced on a stock exchange release.

Will the dividend distribution be delayed?

The Board of Directors’ proposal on dividend distribution needs to be approved by the shareholders’ meeting. Based on the development of the coronavirus (COVID-19) situation and the announcement by the Finnish Government on 16 March 2020, Cargotec decided to cancel its 17 March 2020 Annual General Meeting and move it to a later stage. New invitation to AGM will be published later.