Cargotec as an investment

The third quarter was the seventh quarter in a row with good and stable results for Cargotec. Operational performance remained solid and there were no significant changes in the market environment which remained mixed. Expectations on lower interest rates and uncertainty in some of Hiab’s key geographies and industries continued to delay customer decision making. On the other hand, MacGregor continued to benefit from the strong ship building cycle.

Taking a look at our financial performance, Cargotec’s orders received in the third quarter increased, driven by both businesses and totalled EUR 597 million. Cargotec’s consolidated order book declined from the comparison period as Hiab's order book has gradually been returning to a more normal level. Sales amounted to EUR 590 million. The decrease in Hiab’s sales was offset by increased sales in MacGregor. Our comparable operating profit increased by 14 percent to EUR 70 million or 11.8 percent of sales. Once again, cash flow from operations before finance items and taxes was very strong, driven by good profitability and reduction in net working capital and totalled EUR 148 million. For the first time in Cargotec’s history, we have a net cash position.

In Hiab, the demand has remained on a stable level since the fourth quarter of 2022. Delayed decision making continued due to expectations on lower interest rates and market uncertainty. However, we were able to book some larger key account orders which were postponed from the second quarter, boosting Hiab’s orders received to increase by 16 percent from the comparison period to EUR 361 million. Hiab’s sales decreased by 8 percent to EUR 388 million. Share of service sales increased to 29 percent of Hiab’s sales and amounted to EUR 112 million. Despite lower sales, Hiab’s profitability remained on a good level and the comparable operating profit amounted to EUR 59 million, corresponding to 15.3 percent of sales. Hiab’s comparable operating profit was supported by successful management of inflationary pressures as well as sourcing and supply chain actions.

In MacGregor, the strong performance in merchant and service businesses continued. Orders received increased by 12 percent to EUR 236 million, driven by continued strong momentum in the ship building market. MacGregor’s order book continued to increase and amounted to EUR 1,055 million. The order book gives good visibility for the coming years as, due to the limited shipyard capacity, approximately 40 percent of the order book is scheduled to be delivered in 2026 or later. MacGregor’s sales increased by 13 percent to EUR 203 million, driven by merchant business. Due to higher sales and supported by lower losses from the offshore projects, MacGregor’s comparable operating profit improved yet again against the comparison period, reaching EUR 20 million or 9.6 percent of sales.

Following the strong third quarter performance in both divisions, we specified our outlook for 2024. Cargotec now estimates Hiab’s comparable operating profit margin in 2024 to be above 14.0 percent and MacGregor’s comparable operating profit in 2024 to be above EUR 65 million. In the outlook specified in August, we estimated Hiab’s comparable operating margin to be above 13.5 percent and MacGregor’s comparable operating profit to be above EUR 55 million.

We announced in May that we had started the sales process of MacGregor, aiming to find a solution in 2024. The process has progressed according to plan and after good developments in October we target signing the deal before the year end. We are currently carving out MacGregor from Cargotec and building standalone capabilities for the business. We have also continued to prepare Hiab for its standalone future. During the third quarter, we also successfully completed the final part of the Kalmar separation in just 16 months from the demerger announcement.