KALMAR CORPORATION, INTERIM REPORT JANUARY-SEPTEMBER 2024, 1 NOVEMBER 2024 AT 9:00 AM (EET)
Kalmar's interim report January-September 2024: Record-high profitability in the third quarter
- Trading in Kalmar's class B shares commenced on 1 July and the last demerger milestones including system separations were finalised in early September
- The comparable operating profit margin amounted to 13.5 (13.2) percent in the third quarter, presenting a record-high profitability on lower sales volumes
- Services segment's comparable operating profit margin reached 18.3 (16.1) in the third quarter
- Orders received totalled EUR 416 (392) million in the third quarter, demand remaining sequentially on a stable level
- Eco portfolio1 sales represented 40 (35) percent of consolidated sales
- Equipment's orders received totalled EUR 284 (266) million and Services' totalled EUR 132 (126) million in the third quarter
- Outlook specified for 2024.
- Orders received increased by 6 percent and totalled EUR 416 (392) million
- Order book amounted to EUR 905 (31 Dec 2023: 1,024) million at the end of the period
- Sales decreased by 16 percent and totalled EUR 425 (503) million
- Eco portfolio sales represented 40 (35) percent of consolidated sales
- Eco portfolio sales decreased by 2 percent and totalled EUR 172 (175) million
- Operating profit was EUR 54 (59) million, representing 12.7 (11.8) percent of sales. The operating profit includes items affecting comparability worth EUR -4 (-7) million
- Comparable operating profit decreased by 14 percent and amounted to EUR 57 (67) million representing 13.5 (13.2) percent of sales
- Cash flow from operations before finance items and taxes totalled EUR 72 (131) million
- Profit for the period amounted to EUR 36 (50) million
- Basic earnings per share was EUR 0.56 (0.77).2
January-September 2024 in brief:
- Orders received decreased by 8 percent and totalled EUR 1,193 (1,300) million
- Order book amounted to EUR 905 (31 Dec 2023: 1,024) million at the end of the period
- Sales decreased by 17 percent and totalled EUR 1,280 (1,540) million
- Eco portfolio sales represented 40 (34) percent of consolidated sales
- Eco portfolio sales decreased by 0.2 percent and totalled EUR 516 (517) million
- Operating profit was EUR 136 (187) million, representing 10.6 (12.1) percent of sales. The operating profit includes items affecting comparability worth EUR -28 (-7) million
- Comparable operating profit decreased by 16 percent and amounted to EUR 164 (194) million representing 12.8 (12.6) percent of sales
- Cash flow from operations before finance items and taxes totalled EUR 185 (128) million
- Profit for the period amounted to EUR 101 (150) million
- Basic earnings per share was EUR 1.57 (2.34).2
Outlook for 2024 specified
Kalmar expects its comparable operating profit margin to be above 12 percent in 2024.
Previous outlook (published 1 July 2024): Kalmar expected its comparable operating profit margin as a standalone company to be above 11 percent in 2024.
Vision and strategy
Kalmar is a market leader in heavy material handling equipment with deep-rooted foundations in customer proximity, attractive market, experienced and talented people and strong financial profile. Kalmar's industry and customers are facing pressure from different megatrends, which drive renewal across the whole industry. Kalmar is working to solve the challenges customers face, the most significant of which are:
- Safety
- Productivity
- Decarbonisation and electrification
- Changing logistics landscape
- Labour shortage
- Intelligent operations.
- Investing in sustainable innovation in the area of decarbonised and electric equipment, and equipment with driver assistance and autonomous functions to create added customer value
- Growing services by driving growth and profitability by increasing the capture rate of spare part orders for Kalmar's installed base, increasing the share of recurring business through service contracts and creating customer lifecycle value through an intelligent service offering
- Driving excellence by improving profitability and cash flow generation to fund further investments into R&D and organic growth, inorganic growth and distributing profits to shareholders.
Kalmar's Board of Directors has set the following performance targets for 2028:
Financial targets
- Sales growth of 5 percent p.a. over the cycle;
- Comparable operating profit margin of 15 percent;
- ROCE above 25 percent;
- Aligned with SBTi targets with 1.5 °C commitment;3
- Leverage (Net debt to EBITDA) under 2x;
- Dividend payout ratio of 30-50 percent per annum.
Corporate information and basis for preparation
Kalmar Corporation was formed as a result of the partial demerger from Cargotec Corporation ("demerger”), which was completed on 30 June 2024. The trading in Kalmar Corporation shares on the main market of Nasdaq Helsinki commenced on 1 July 2024.
In this interim report, financial information is presented on an actual basis for the consolidated balance sheet as at 30 September and at 30 June 2024, and on a carve-out basis for the earlier periods. Statement of income is presented on an actual basis for the third quarter of 2024 and on a carve-out basis for all previous periods. The differences in carve-out and actual basis of preparation impacts the presentation of certain key figures. Key figures calculated based on equity, interest bearing debt and net debt are presented only for 30 June 2024 and 30 September 2024 information as the previous periods with carve-out information do not reflect the capital structure and financing of Kalmar Group. Key figures based on number of shares are calculated based on the number of shares upon listing of Kalmar Corporation on 1 July 2024 for all the periods before listing. Key figures that are based on market value or trading volume are not presented for periods prior to 1 July 2024.
The carve-out financial statements do not necessarily reflect what the financials would have been had Kalmar operated as an independent consolidated group and had it therefore presented stand-alone consolidated financial information during the periods presented. Further, the carve-out financial information may not be indicative of Kalmar's future performance. The carve-out reporting principles are described in note 2. Basis of preparation.
Kalmar's key figures
| MEUR | Q3/24 | Q3/23 | Change | Q1-Q3/24 | Q1-Q3/23 | Change | 2023 |
| Carve-out | Carve-out | Carve-out | |||||
| Orders received | 416 | 392 | 6% | 1,193 | 1,300 | -8% | 1,705 |
| Order book, end of period | 905 | 1,172 | -23% | 905 | 1,172 | -23% | 1,024 |
| Sales | 425 | 503 | -16% | 1,280 | 1,540 | -17% | 2,050 |
| Eco portfolio sales | 172 | 175 | -2% | 516 | 517 | -0.2% | 718 |
| Eco portfolio sales, % of sales | 40% | 35% | 40% | 34% | 35% | ||
| Operating profit | 53.9 | 59.4 | -9% | 135.6 | 187.0 | -27% | 240.2 |
| Operating profit, % | 12.7% | 11.8% | 10.6% | 12.1% | 11.7% | ||
| Comparable operating profit | 57.5 | 66.5 | -14% | 163.7 | 194.5 | -16% | 254.7 |
| Comparable operating profit, % | 13.5% | 13.2% | 12.8% | 12.6% | 12.4% | ||
| Profit before taxes | 49.0 | 61.1 | -20% | 136.5 | 188.1 | -27% | 241.5 |
| Cash flow from operations before finance items and taxes | 71.8 | 131.3 | -45% | 184.8 | 127.9 | 45% | 256.8 |
| Profit for the period | 36.2 | 49.7 | -27% | 100.9 | 150.4 | -33% | 193.8 |
| Basic earnings per share, EUR* | 0.56 | 0.77 | -27% | 1.57 | 2.34 | -33% | 3.01 |
| Interest-bearing net debt, end of period | 98 | -200 | > 100% | 98 | -200 | > 100% | -123 |
| Gearing, % | 16.0% | n/a | 16.0% | n/a | n/a | ||
| Interest-bearing net debt / EBITDA** | 0.4 | n/a | 0.4 | n/a | n/a | ||
| Return on capital employed (ROCE), last 12 months, % | 19.3% | 23.2% | 19.3% | 23.2% | 24.4% | ||
| Personnel, end of period | 5,151 | 5,186 | -1% | 5,151 | 5,186 | -1% | 4,991 |
| * Periods before the listing of Kalmar Corporation on 1 July 2024 are calculated based on the number of shares at the listing moment. | |||||||
| ** Last 12 months' EBITDA | |||||||
President & CEO Sami Niiranen: Strong profitability driven by successful business performance
I am pleased to share with you Kalmar's third quarter 2024 results, which demonstrate continued progress in our journey as an independent, publicly listed company. This quarter was robust, we delivered strong profitability and advanced our strategic initiatives, further solidifying our position as a global leader in heavy material handling solutions. In September we reached one last major milestone in the demerger and listing process when the separation of all the IT systems was successfully completed. I am incredibly excited about the opportunities that lie ahead as a standalone company.
Our continued focus on commercial and operational excellence enabled us to deliver a record-strong profitability in the third quarter. Overall demand has remained stable despite some prolonged softness in the North American market, particularly in the distribution customer segment, where volumes have come down this year. Our orders received amounted to EUR 416 million with an increase of 6 percent year-on-year, presenting a sequentially stable demand. Sales declined by 16 percent from the previous year and amounted to EUR 425 million, impacted by slower market activity and lower order book compared to last year. Our sales pipeline remains healthy, and while quarterly order intake can fluctuate depending on the timing of customer decision making, we are confident in our ability to meet our long-term goals, as the underlying demand drivers remain good. The services sales remained more stable than the equipment sales, providing resilience and margin improvement.
We continued to generate good profits on the lower sales volumes. The comparable operating profit margin amounted to 13.5 percent, presenting a record-high profitability driven by successful commercial performance, cost savings executed during 2023 and 2024, as well as active product cost management. The comparable operating profit amounted to EUR 57.5 million and cash flow from operations before finance items and taxes January-September was EUR 185 million. Our healthy leverage ratio of 0.4x positions us well for continued success.
In July following the completion of the partial demerger we updated our profitability guidance for this year as a standalone company. As a result of continued solid business performance in Q3 we now specify our guidance and estimate our comparable operating profit margin to be above 12 percent in 2024. However, we are not expecting our profitability to improve sequentially in Q4 versus Q3.
Our strategic priorities remain focused on driving sustainable growth by leading the industry towards electrification, accelerating service growth, and driving business excellence. In the third quarter, 40 percent of our total sales were attributed to our eco portfolio, highlighting our commitment to sustainable solutions. As part of our R&D focus we have decided to expand our Ljungby Innovation Center by building a world class test center, which will enable us to conduct more comprehensive testing and development of our equipment and technologies. Additionally, we launched heavy forklift production in Shanghai to better serve our customers globally. In this quarter we were also pleased to announce a new partnership with CES Srl, an Italian manufacturer of super-sized heavy-duty material handling equipment, which will enable us to offer our customers an even more comprehensive range of solutions. Our extensive installed base of 65,000 machines globally continues to provide a strong foundation for service growth, which we are further accelerating through innovative offerings and digital solutions.
We continued to make significant progress with our Driving Excellence initiative, which is crucial to achieving our long-term performance targets. As part of this and to further enhance our operational excellence and competitiveness, we are reviewing our operating model and merging certain functions to streamline decision-making and improve efficiency. As communicated in August, we plan to achieve approximately EUR 50 million in gross efficiency improvements by the end of 2026, supporting our goal of a 15 percent comparable operating profit margin by 2028.
We remain focused on executing our strategic priorities, driving innovation, and further strengthening our position, with a commitment to profitable growth. I am grateful to our dedicated employees worldwide for their hard work and to our customers and shareholders for their trust in our company.
Reporting segments' key figures
Orders received
| MEUR | Q3/24 | Q3/23 | Change | Q1-Q3/24 | Q1-Q3/23 | Change | 2023 |
| Carve-out | Carve-out | Carve-out | |||||
| Equipment | 284 | 266 | 7% | 769 | 897 | -14% | 1,167 |
| Services | 132 | 126 | 5% | 424 | 403 | 5% | 538 |
| Other | 0 | 0 | 0 | 0 | 0 | ||
| Total | 416 | 392 | 6% | 1,193 | 1,300 | -8% | 1,705 |
| MEUR | 30 Sep 2024 | 31 Dec 2023 | Change |
| Carve-out | |||
| Equipment | 797 | 928 | -14% |
| Services | 103 | 90 | 14% |