Konecranes Annual Report 2014 CONTENTS After streamlining our ways of 2 Konecranes in a snapshot Unique products and working and modernizing our 4 2014 highlights services that differentiate information systems, we are now us from our competitors 6 Theme: Connected. Future. Everywhere. The Industrial Internet more connected as an organization takes connectivity to new 8 CEO's letter heights 10 Chairman's letter Next phase of 12 Company cornerstones digitalization 14 Business environment 16 Business Area Service 18 Business Area Equipment 20 Regional overview 22 Research & Development 25 Product overview 28 Corporate responsibility 36 GRI content index Enabling completely new CORPORATE GOVERNANCE service concepts for enhancing safety and 38 Corporate Governance productivity 46 Risk management, internal control, and internal auditing 54 Board of Directors 56 Group Executive Board 58 Senior Management Team FINANCIAL STATEMENTS 2014 61 Report of the Board of Directors 69 Consolidated statement of income – IFRS 70 Consolidated balance sheet – IFRS New competences This publication is for general informational 72 Consolidated statement of changes in equity – IFRS needed across the board purposes only. Konecranes reserves 73 Consolidated cash flow statement – IFRS the right at any time, without notice, to 74 Notes to the consolidated financial statements alter or discontinue the products and/ 109 Konecranes Group 2010–2014 or specifications referenced herein. This Extensive global 110 Calculation of key figures publication creates no warranty on the part of Konecranes, express or implied, including presence 111 Company list Segment-based but not limited to any implied warranty or Offering 114 Parent company statement of income – FAS merchantability or fitness for a particular Different customer needs 115 Parent company cash flow – FAS purpose. in every market area 116 Parent company balance sheet – FAS 118 Notes to the parent company’s financial statements © 2015 Konecranes. All rights reserved. 122 Board of Directors’ proposal to the Annual General Meeting ‘Konecranes’, ‘Lifting Businesses’, 123 Auditor’s report , ‘SMARTON’, ‘TRUCONNECT’, ‘Agilon’, 124 Shares and shareholders ‘BOXHUNTER’, ‘CXT’, ‘UNO’ and ‘UNITON’ are either registered trademarks or trademarks 128 Investor information of Konecranes Plc. 129 Contact details KONECRANES Konecranes is a global industry-leading group of Lifting Businesses™. IN A SNAPSHOT Everything we do is targeted at one goal: improving the safety and productivity of our customers’ operations. Business Areas container handling, intermodal terminals, shipyards, and bulk material terminals. Products are marketed Sales by Business EBIT by Business Personnel by Business Service through a multi-brand portfolio that includes Area, 2014 Area, 2014* Area, 2014 Konecranes offers specialized maintenance and Konecranes and the group’s power brands: STAHL modernization services for all types and brands of CraneSystems, SWF Krantechnik, Verlinde, R&M, 42% 66% 53% industrial cranes, lifting equipment, and machine Morris Crane Systems, and SANMA Hoists & Cranes. tools through a global service network. Konecranes has 600 locations in almost 50 countries. Products Our product range comprises industrial cranes, 34% Products including industrial crane products, industrial crane Konecranes’ extensive service offering covers solutions, and workstation lifting systems; compo- 47% inspections, preventive maintenance programs, nents, including wire rope hoists, crane kits, electric 58% repairs and improvements, on-call service, spare chain hoists, manual hoists and accessories; nuclear parts, modernizations, and an array of consultation cranes; container handling cranes; cranes for inter- services. modal terminals and bulk material unloaders; lift ■ Equipment 1,221.7 MEUR ■ Equipment 46.7 MEUR ■ Equipment 5,639 ■ Service 895.1 MEUR ■ Service 89.1 MEUR ■ Service 6,285 trucks; and shipyard cranes. Konecranes Agilon * Excluding restructuring costs TRUCONNECT Remote Services lie at the core of is a patented materials management solution for Konecranes’ offering and provide a range of infor- managing, storing, picking, and replenishing compo- mation-based services, including periodic data nents that offers improved efficiency in material reporting, real-time diagnostics, and remote tech- handling. The product offering features a number nical support and production monitoring. of advanced technologies, such as automation and Market leader One of the Industry- in industrial cranes and smart features, including sway control, load posi- components, as well as crane Market position tioning, and shock load prevention. largest leading service suppliers of port cranes and lift Konecranes is the clear market leader in crane trucks technology service, with the world’s most extensive crane Market position and global modular product service network. The group is also one of the largest Konecranes is the world’s largest supplier of indus- platforms providers of international machine tool services. trial cranes, and a world leader in explosion- protected crane technology. It is also a global leader Service contract base in electrical overhead traveling cranes for process Approximately 450,000 units are covered by industries and shipyard gantry cranes, and a strong EUR 2,011 12,000 13 Konecranes maintenance contracts. The majority of global supplier of cranes and lift trucks for container employees in 2014 countries with production this equipment has been manufactured by compa- handling and heavy unitized cargo and bulk material million facilities nies other than Konecranes. Expert maintenance is unloading. of net sales in 2014 provided for any brand of equipment from any manu- facturer. Annual production We produce thousands of industrial cranes annually, Equipment tens of thousands of wire rope hoists and trolleys Business Area Equipment offers components, and electric chain hoists, as well as hundreds of Sales and service locations in Head office in Listed on cranes, and material handling solutions for a wide heavy-duty cranes and heavy-duty lift trucks. range of customers, including process industries, 48 countries Finland Nasdaq the nuclear sector, industries handling heavy loads, Helsinki 2 Konecranes Annual Report 2014 KONECRANES IN A SNAPSHOT KONECRANES IN A SNAPSHOT Konecranes Annual Report 2014 3 2014 HIGHLIGHTS 10.0% 5.9% 9.6% USING CHALLENGING TIMES TO MAKE increase in Service contract base operating margin before restructuring increase in order book compared COMPANY-WIDE IMPROVEMENTS compared to 2013. costs in 2014. to 2013. Profitability improved Intense work continued within Sales/orders, MEUR EBIT, MEUR/EBIT Order book, MEUR despite lower net sales the strategic focus areas margin, % • Demand for maintenance services improved • The three strategic initiatives – Industrial Internet, 10 991.8 979.5 2,171.5 942.7 during 2014, the key driver being the sustained Segment-based Offering and oneKONECRANES – 2,099.6 893.5 2,011.4 1,970.1 138.3* 1,920.8 1,903.5 strength in the US manufacturing industry. Market were at the core of Konecranes’ development work 1,896.4 1,896.1 8 756.2 119.1* 117.2* 115.5* 115.1* environment remained difficult in the new equip- in 2014. 1,546.3 1,536.0 ment business, particularly within process indus- • Service developed its delivery concepts by intro- 6 tries and, geographically, in most of the emerging ducing new tools and processes and further markets. Order intake decreased by 0.9 percent productized our service offering. 4 in 2014. • The BOXHUNTER RTG crane, launched in April, 2 • Konecranes’ order book as of the end of the year was the first product to be launched under the stood 9.6 percent higher than in 2013. Segment-based Offering initiative. It incorporates 0 • Net sales decreased by 4.2 percent compared to innovative and smart features in terms of control 10 11 12 13 14 10 11 12 13 14 10 11 12 13 14 2013 due to Business Area Equipment. and mechanical solutions and is maintenance ■ Sales ■ Order intake * Excluding restructuring costs • Operating margin before restructuring costs was friendly. 5.9 percent of sales. Profitability improved from • Konecranes unveiled the generation C series of lift the previous year thanks to Business Area Service. trucks at the CeMAT fair in May. Earnings & dividend Return on equity, % Return on capital • In June, Konecranes completed the acquisition per share, EUR employed, % Solid performance in Service, of the remaining shares of Jiangsu Three Horses 18.8 18.1 24.2 1.47 Equipment hit by lower sales Crane Manufacture Co. Ltd. (“SANMA”) and now 16.7 1.35 1.28 • Net sales in Business Area Service grew by owns 100 percent of the company. 14.6 1.11 18.4 1.05* 1.05 1.05 17.1 1.00 17.0 0.7 percent in 2014. Net sales grew in the • The CXT UNO overhead crane was launched in 1.00 10.9 Americas as well as India, Middle East and Africa, September. Designed to serve basic lifting needs, 0.85 declining in Europe and Asia-Pacific. Contract base the crane is targeted at small and medium-sized 11.6 growth continued and was up 10.0 percent year-on- companies as well as larger enterprises that year at the end of 2014. Operating margin before require lifting equipment for more rudimentary restructuring costs was 10.0 percent of sales. Prof- applications. itability improved due to higher gross margin and • Also in September, we introduced an entirely new 10 11 12 13 14 the restructuring actions executed in 2013. family of wire rope hoists under Konecranes’ ■ Earnings per share,