Annual Report 2010 Contents
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Annual report 2010 Contents 1 2010 highlights 2 Highlights of 2010 5 CEO’s message 7 Information for shareholders 9 On land and at sea 10 Cargotec in brief 11 Business review 2010 19 Customers 26 Solutions of the future 31 One company 32 Strategy at work 35 Cargotec and global trends 40 Sustainability 45 Personnel 58 UN Global Compact 59 Corporate governance 60 Corporate governance statement 71 CVs of Board members 75 CVs of Executive Board members 81 Remuneration statement 84 Risk management Cargotec’s annual report 2010 This page is generated from Cargotec’s online annual report. You can find the complete report at www.cargotec.com/annualreport 87 Financial statements 156 29. Employee benefits 158 30. Provisions 88 Board of Directors’ Report 159 31. Accounts payable and other non-interest-bearing liabilities 98 Consolidated financial statements 160 32. Commitments (IFRS) 161 33. Derivatives 99 Consolidated statement of income 162 34. Group as lessor and consolidated statement of 163 35. Related-party transactions comprehensive income 164 36. Subsidiaries 100 Consolidated statement of financial 168 37. Events after the balance sheet date position 169 Financial statements of the parent 102 Consolidated statement of changes in company (FAS) equity 170 Parent company income statement 103 Consolidated statement of cash flows 171 Parent company balance sheet 104 Notes to the consolidated financial 172 Parent company cash flow statement statements 173 Notes to the parent company 105 1. Accounting principles for the consolidated financial statements financial statements 113 2. Management estimates 174 1. Accounting principles for the parent company financial statements 115 3. Financial risk management 176 2. Personnel expenses 120 4. Segment information 176 3. Depreciation, amortisation and impairment 124 5. Acquisitions and disposals charges 125 6. Long term construction contracts 176 4. Audit fees 126 7. Other operating income and expenses 177 5. Financing income and expenses 127 8. Restructuring costs 177 6. Income taxes 128 9. Personnel expenses 178 7. Intangible assets 129 10. Depreciation, amortisation and 178 8. Tangible assets impairment charges 179 9. Investments 130 11. Financing income and expenses 180 10. Non-current receivables 131 12. Income taxes 180 11. Current receivables 132 13. Earnings per share 181 12. Equity 133 14. Goodwill 182 13. Non-current liabilites 135 15. Other intangible assets 182 14. Current liabilities 136 16. Property, plant and equipment 182 15. Commitments 139 17. Investments in associated companies 183 16. Derivatives 140 18. Investments in joint ventures 141 19. Non-current available-for-sale 184 Key figures investments 142 20. Deferred tax assets and liabilities 185 Key financial figures 144 21. Inventories 186 Share-related key figures 145 22. Financial instruments by category 187 Calculation of key figures 147 23. Accounts receivable and other non- Interest-bearing receivables 188 Shares and shareholders 148 24. Cash and cash equivalents 149 25. Non-current assets held for sale 197 Signatures for Board of Directors’ 150 26. Equity report and financial statements 151 27. Share-based payments 198 Auditor’s report 154 28. Interest-bearing liabilities Cargotec’s annual report 2010 This page is generated from Cargotec’s online annual report. You can find the complete report at www.cargotec.com/annualreport In 2010, the most extensive change initiatives geared towards reinventing the organisation were completed, and Cargotec was able to flex its muscles as the global economy began to revive. CEO's message President and CEO Mikael Mäkinen shares his views of 2010 and of Cargotec’s future. Cargotec's strategy was refined in 2010. Cargotec responds to industry consolidation with a global presence and comprehensive customer solutions. Financial result in brief Cargotec's sales in 2010 amounted to EUR 2,575 million. Operating profit rose to EUR 131,4 million. Cargotec's annual report 2010 This page is generated from Cargotec's online annual report. You can find the complete report at www.cargotec.com/annualreport 1 A stronger Cargotec – Highlights of 2010 In 2010, the global economic situation continued to have a major effect on the volume of cargo flows, although volumes began to pick up during the year. However, depending on the customer segment and region, there was considerable variation in the degree of market recovery. Key figures 2010 2009 2008 2007 2006 Orders received MEUR 2,729 1,828 3,769 4,106 2,910 Order book MEUR 2,356 2,149 3,054 2,865 1,621 Sales MEUR 2,575 2,581 3,399 3,018 2,597 Operating profit MEUR 131.4 0.3 173.7 203.1 240.4 Operating profit from operations* MEUR 141.9 61.3 192.8 221.1 222.6 Net income for the period MEUR 78.0 7.1 120.8 138.4 166.1 Return on equity % 8.0 0.8 13.7 15.6 20.2 Return on capital employed % 8.6 0.2 12.7 16.8 23.1 Gearing % 16.0 38.0 55.3 36.3 12.3 *Excludes non-recurring items Cargotec's annual report 2010 This page is generated from Cargotec's online annual report. You can find the complete report at www.cargotec.com/annualreport 2 Cargotec's annual report 2010 This page is generated from Cargotec's online annual report. You can find the complete report at www.cargotec.com/annualreport 3 Despite the unstable market conditions, Cargotec was able to grow its operating profit and show its strength in several markets. The Marine business in particular showed very positive development, both in operating profit and sales. The Asian markets now represent a proportion of sales equal to that of Europe, Middle East and Africa (EMEA). Cargotec signed several new contracts covering equipment maintenance, modernisation and repair. For the benefit of its customers, Cargotec continued to invest in technology development. Development work was focused on more productive, safer and environmentally sound solutions. The capacity adjustment measures launched in 2008 and other restructuring measures were completed in early 2010. After this, the focus shifted to the impending market recovery and growth. This involved measures to strengthen personnel skills and competences as well as Cargotec's regional organisations. Service network expanded Cargotec continued to upgrade its service network by cross-training Hiab and Kalmar product specialists. The service network expanded as personnel learnt to service both product ranges. A new parts distribution centre was set up in Sweden to serve Scandinavian customers, while plans for worldwide spare parts logistics were relaunched. New units in Poland and Singapore Cargotec celebrated the opening of a new multi-assembly unit in Stargard Szczeciński in Poland. Part of Cargotec's global supply network, the new unit is located close to customers and the growing European markets. This unit handles the assembly of several different Cargotec cargo and load handling solutions. Cargotec also set up a new business location in Singapore, housing the company's local operations. Cargotec's supply units are located in China, Estonia, Finland, India, Ireland, Malaysia, Norway, Poland, Singapore, South Korea, Spain, Sweden, the United Kingdom and the United States. Part of manufacturing has been outsourced to partner plants, which are mainly located in Asia. Competence and technology centre in Tampere moving ahead Cargotec pursued its plans to convert the Tampere unit into a competence and technology centre, in order to improve the worldwide competitiveness of the company's products. New, state-of-the-art facilities are scheduled to be up and running in 2013, in the vicinity of Tampere University of Technology in the Hervanta district. Measures to develop corporate governance continued Cargotec took measures to develop its corporate governance and strengthened the role of the service business, by rearranging the company's business into three business areas: Industrial & Terminal, Marine and Services. One shared Cargotec Services organisation facilitates service development, both in the Industrial & Terminal and in the Marine businesses. Cargotec's financial reporting is based on two reporting segments, Industrial & Terminal and Marine. New visual look Cargotec launched a new visual look for the company in 2009. Harmonisation of the visual look was carried out step by step, picking up pace in 2010 with the renewal of service cars, workwear, signs and marketing materials. This work will continue in 2011. Strategy fuels growth Cargotec refined its strategy, announcing that it would target measures and resources at carefully selected focus areas, in order to strengthen its market leadership over the next few years. Cargotec aims to grow faster than the industry on average. Cargotec's annual report 2010 This page is generated from Cargotec's online annual report. You can find the complete report at www.cargotec.com/annualreport 4 A world in transition Dear reader, For Cargotec, 2010 was a year of new beginnings. Measures aimed at building a strong and unified organisation were finalised. Although the process was long and painful at times, it allowed us to build a strong foundation for Cargotec. As market conditions began to perk up, the new and improved Cargotec proved its ability to perform: our operating profit turned strongly positive, at EUR 131.4 (0.3) million. During the year, we also refined Cargotec's strategy. The key priority now is to pay more attention to customer needs. Several factors contributed to our strong performance. While the global economy was still struggling in 2009, we focused on driving our organisational overhaul forward and on adapting to shared processes across Cargotec. The completion of the "On the Move" internal change programme was highly conducive to creating a unified corporate culture. Operational development continues as a natural part of our daily work. Another key performance driver was the upswing in the global economy, signs of which could be seen at the beginning of 2010.