Delayed Deliveries Hit Cargotec’s Marine Unit

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April 26, 2013

Cargotec lift-away hatch covers. Photo: Cargotec

reuters logoBy Terhi Kinnunen

HELSINKI, April 26 (Reuters) – Finland’s Cargotec , a maker of cargo handling equipment, gave disappointing figures for profits and for the sales outlook of its marine unit as slower global trade led customers to delay deliveries.

The company on Friday forecast full-year sales for MacGregor, its biggest unit which makes products such as hatch covers and cranes for ships, at around 850 million euros ($1.1 billion). That was 20 million euros lower than the average estimate in a Reuters poll.

Group operating profit fell to 15 million euros from 37.5 million, missing all analysts’ estimates in a Reuters poll.

Cargotec has been struggling to improve profitability for the past few years as global economic uncertainty and a glut of vessels, ordered before the financial crisis, have made shipping companies hesitant about adding new ships.

The weak results come as newly hired Chief Executive Mika Vehvilainen is considering spinning off MacGregor and listing it in Singapore. Investors hope Vehvilainen can replicate his success at turning around Finnair, Finland’s flag carrier.

“We expect the listing to happen at the earliest at the first half of 2014 … The final listing decision depends on the market conditions,” Vehvilainen told a conference call.

MacGregor’s first-quarter operating profit fell 67 percent from a year earlier to 12 million euros, missing the consensus forecast of 24.1 million euros.

The company said cost cuts launched last year would help boost Cargotec’s margins in the second half of the year and reiterated its forecast for 2013 operating profit, excluding restructuring costs, to be roughly unchanged from 2012. It forecast full-year sales would fall slightly.

The shares were down 3.3 percent at 23.08 euros by 1020 GMT, after falling to as low as 21.98 euros.

Pareto analyst Jari Harjunpaa said investors will need to mark down their expectations for the year.

“This was such a big miss (that) they cannot reach market expectations,” he said.

Prior to Friday’s results, the shares had appeared relatively undervalued after a drop of over 20 percent in the past year, with an enterprise value at 8.8 times EBITDA (earnings before interest, tax, depreciation and amortisation) compared with multiples of over 11 for rivals Konecranes and Palfinger. ($1 = 0.7689 euros) (Editing by Ritsuko Ando and Jane Baird)

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