Q3 2010 interim report
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Q3 2010 interim report. October 21,2010 Pekka Lundmark, President and CEO Teo Ottola, CFO. Highlights of q3/10. Positives Key macroeconomic indicators continued to point to a recovery Improving new equipment demand

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Q3 2010 interim report

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Q3 2010interim report

October 21,2010

Pekka Lundmark, President and CEO

Teo Ottola, CFO


Highlights of q3/10

  • Positives

    • Key macroeconomic indicators continued to point to a recovery

    • Improving new equipment demand

    • Improved EBIT margin in Equipment thanks to higher volume, successful cost savings, favorable product mix, FX tailwind

  • Negatives

    • New equipment orders still relatively low in developed markets

    • Continued price competition especially in standard equipment


Capacity utilization: eu27 and usa

SOURCES: Eurostat, Federal Reserve Bank of St. Louis


Container traffic

Annual container handling volume

Monthly container handling volume

SOURCES: Drewry Container Annual 2009/2010, Drewry Freight Shipper Insight


Market outlook and financial guidance as of Oct 21, 2010

  • The demand for maintenance services is expected to continue to be above last year’s level due to higher capacity utilization within customer industries

  • The demand for new equipment is expected to remain robust in Asia-Pacific and in emerging markets in general while customers’ decision-making is still conditional on the sustainability of economic growth in western Europe and North America

  • Price competition to remain

  • Financial guidance unchanged

  • Growing demand will support our sales and profitability already during the second half of 2010

  • However, due to the low first half year sales we expect full year 2010 sales to be lower than in 2009

  • Operating profit in 2010 expected to be lower than in 2009 before restructuring costs


Combination of organic and acquisitive growth

Our main strategy is to grow organically

In M&A, our first priority are bolt-on acquisitions

We also keep an open mind towards larger M&A


Acquisitions in 2010

  • Five MTS companies: two in Denmark and in the UK, one in the US

  • Crane service and MTS company in France

  • Purchase of 22% of shares in Kito

  • Capex on acquisitions and investments in associated companies EUR 35.1 million in January-September

  • Acquisitive impact approximately 4% on orders and 3% on sales in January-September


ACQUISITION OF INDIAN WMI CRANES

  • One of the leading suppliers of heavy-duty cranes in India

  • Development of offering in India, adds in India to supply and sourcing network, enhances service business in India

  • Acquisition in two phases within a year, maximum price approx. EUR60m

  • Net sales of EUR30m, order book of more than EUR50m, good order prospects

  • Approximately 350 people and additionally contracted workforce of about 600 persons

*Closing subject to regulatory approvals


Q3/2010 GROUP ORDERS AND NET SALESOrders: 373.4 (308.5) MEUR, +21.0% | Net sales: 393.6 (368.7) MEUR, +6.8%


Q3/2010 GROUP EBIT & MARGINEBIT: 34.3 (24.0) MEUR, +42.5% | Margin: 8.7% (6.5%), excluding restructuring costs


1-9/2010 group orders received1 058.3 (987.7) MEUR, +7.1%


Group order book September 30, 2010679.7 (638.4) MEUR, +6.5%


1-9/2010 Group net sales1 076.9 (1 242.4) MEUR, -13.3%


1-9/2010 group EBIt & marginebit: 69.2 (91.6) MEUR | margin: 6.4% (7.4%), excluding restructuring costs


Sales split by business area and region (R12M)

17%

(16)

R12M

1,506 MEUR

(FY 2009 1,671)

R12M

1,506 MEUR

(FY 2009 1,671)

59%

41%

30%

54%

(63)

(37)

(29)

(56)


Return on capital employed

ROCE %

56.3

46.2*

29.5

24.3

19.3

17.8

17.2

18.8

13.7

10.8

*The 2007 ROCE including capital gain was 50.4%


service


Service: Q3/2010 orders and net salesOrders: 152.4 (124.5) MEUR, +22.4% | Net sales: 173.2 (157.6) MEUR, +9.9%

  • New orders grew in all regions and business units


Service: Q3/2010 ebit and marginebit: 14.6 (13.9) meur | margin: 8.4% (8.8%), excluding restructuring costs

  • Streamlining costs of EUR 1.5 million in Q3/10


service contract base September 30, 2010377 (371) thousand units, +1.6% |annual value 146.6 (122.6) MEUR, +19.6%


service order book September 30, 2010111.7 (88.1) MEUR, +26.8%


EQUIPMENT


Equipment: Q3/2010 orders and net salesOrders: 240.0 (205.9) MEUR, +16.5% | Net sales: 252.6 (233.5) MEUR, +8.2%

  • Order intake rose in EMEA and APAC, but fell in the Americas due to low port crane orders

  • New orders increased in all business units except Port Cranes


Equipment: Q3/2010 ebit and marginebit: 22.0 (14.0) meur | margin: 8.7% (6.0%), excluding restructuring costs

  • EBIT margin improved due to higher volume, cost savings, sales mix and currencies


equipment order book September 30, 2010585.6 (565.6) meur, +3.5%


Balance sheet and cash flow


Q3/2010 net working capital183.3 (211.1) MEUR | 12.2% (11.2%) of sales


Cash flow before financing activities

181.8

179.1

110.3

70.2

44.1

35.4

36.2 MEUR capex

on acquisitions and

investments in

associated companies

16.6

6.9

2.3

-30.4

-28.6


Q3/2010 gearingEquity: 415.7 (389.1) MEUR | Net debt: 0.7 (-14.9) MEUR | Gearing: 0.2% (-3.8%)


appendixes


Statement of income


Balance sheet


Cash flow statement


Key figures


The largest shareholders

Market cap > EUR 1 billion

46.1% *)

36.1%

*) According to the flagging notification on September 8, 2010 BlackRock Inc. holds 6,271,713 (10.2%) Konecranes shares.

13.2%

4.6%

  • Trading information

  • Listing: NASDAX OMX Helsinki

  • Date of listing: March 27, 1996

  • Segment: Large Cap

  • Sector: Industrials

  • Trading code: KCR1V

  • 1-9/10 average daily trading volume 379,831 shares, EUR 8.6 million


Contact information

Pekka Lundmark, President and CEOTel. +358 (0)20 427 2000

pekka.lundmark@konecranes.com

Teo Ottola, Chief Financial OfficerTel.+358 (0)20 427 2040 teo.ottola@konecranes.com

Miikka Kinnunen, Director, Investor Relations

Tel. +358 (0)20 427 2050

miikka.kinnunen@konecranes.com

Anna-Mari Kautto, Assistant,

Investor Relations

Tel. +358 (0)20 427 2960anna-mari.kautto@konecranes.com

www.konecranes.com


Thank you!


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