IR Blog: Frequently asked questions about Cargotec's Q2/2024 result

What is your outlook for 2024?
We specified our outlook in the Q2 2024 report. Cargotec estimates Hiab’s comparable operating profit margin in 2024 to be above 13.5 percent and MacGregor’s comparable operating profit in 2024 to be above EUR 55 million.

Outlook was initially published on 1 February 2024. At that time we estimated Hiab’s comparable operating profit margin in 2024 to be above 12 percent and MacGregor’s comparable operating profit in 2024 to improve from 2023 (EUR 33 million).

You have updated your reporting structure, what is that about?
The completion of the partial demerger of Cargotec Corporation and the incorporation of a new Kalmar Corporation was registered in the Finnish Trade Register on 30 June 2024. As a result of the partial demerger, we have updated our segment reporting.

From 30 June 2024 onwards Cargotec has two reporting segments, Hiab and MacGregor. The Kalmar segment has been removed. The new reporting structure is being used in the half-year financial report January–June 2024. To provide a basis for comparison, we published reclassified financial information on 3 July 2024.

Why did Hiab’s orders received decline by 7 percent to EUR 348 million?
Hiab’s orders received was affected by delayed decision making.

What was Hiab’s order book?
Hiab’s order book decreased by 15 percent from the end of 2023, totalling EUR 676 million at the end of the second quarter.

Why did Hiab’s sales decrease by 11 percent to EUR 433 million?
Hiab’s sales declined 11% as the order book is normalising.

Why did Hiab’s Q2 comparable operating profit decrease to EUR 69 million?
Hiab’s comparable operating profit decreased due to lower sales, which was partly offset by successful management of inflationary pressures and increase in service sales.

Why did MacGregor’s orders received increase by 26 percent to EUR 235 million?
MacGregor’s orders received increased as the strong market momentum continued in the merchant ship segment.

What was MacGregor’s order book?
MacGregor’s order book increased by 3 percent from the end of 2023, totalling EUR 1,014 million at the end of the second quarter.

Why did MacGregor’s comparable operating profit increase from EUR 10 million to EUR 21 million in Q2?
Comparable operating profit increased due to higher sales in the merchant business and smaller losses related to offshore business.

What are your next steps with MacGregor?
As announced on 14 November 2022, MacGregor will not be part of Cargotec’s portfolio in the future. As MacGregor’s performance and market conditions have improved, and as a dispute with a monopile installation vessel customer has been settled, Cargotec has decided to proceed with the sales process of MacGregor.

How much was the effect of currencies and structural changes in your orders received and sales?
In the second quarter of 2024, orders received increased organically in constant currencies by 5 percent. Changes in exchange rates did not have an effect on orders received. Structural changes had a -1 percentage point impact on orders received. In constant currencies, sales decreased organically by 3 percent. Changes in exchange rates did not have an effect on sales. Structural changes had a -1 percentage point effect on sales.

The impact of structural changes and changes in fx rates on orders and sales are reported in our interim reports.

What does the operation environment look like?
The business environment in which Cargotec operates is complex, stemming from high interest rates and inflation, growing geopolitical tensions, and sluggish growth estimates. However, the global economy has remained remarkably resilient and the shipping market is in a strong cycle.

Demand for Hiab's solutions is influenced by general economic growth, construction market development and truck sales, among others. Inflation, high interest rates and political instabilities continue to cause challenges. Decrease in interest rates, easing inflation and overall enhancing economic outlook may boost the customer investment activity, but timing remains uncertain.

What was your operative cash flow in Q2 2024?
Cash flow from operating activities before finance items and taxes totalled EUR 263 (68) million during January–June including both continuing and discontinued operations. The increase in cash flow was driven by continued good profitability and lower net working capital.

You have completed the partial demerger of Cargotec. What are your next steps?
The completion of the partial demerger of Cargotec Corporation and the incorporation of a new Kalmar Corporation was registered in the Finnish Trade Register on 30 June 2024. Trading in the Kalmar class B shares on Nasdaq Helsinki commenced on 1 July 2024.

If a solution to MacGregor is found so that MacGregor would not thereafter be part of the Cargotec group, Cargotec’s Board of Directors is planning to propose to Cargotec’s General Meeting of shareholders that the company’s name would be changed from Cargotec to Hiab.

Should such actions be carried out as planned in the leadership of the current President and CEO of Cargotec, Casimir Lindholm has announced his intention to step down as President and CEO at such point. The Board of Directors would then appoint the President of the Hiab business Scott Phillips as the President and CEO of the renamed company being the current Cargotec. Cargotec currently estimates that these changes to transform into standalone Hiab could take place during 2025. The current Cargotec CFO Mikko Puolakka would continue as CFO of standalone Hiab.

How much demerger costs have you booked so far? What is your estimate for 2024?
The cumulative total costs related to the partial demerger amount to EUR 69 million. Cargotec estimates to book an additional EUR 15 million cost related to the transaction. The estimate may be subject to change. Costs are reported as part of discontinued operations.