FINANCIAL REVIEW 2019 SMARTER CARGO FLOW FOR A BETTER EVERYDAY CONTENTS Financial review 2019 BOARD OF DIRECTORS’ REPORT Board of Directors’ report 5.4 Accounts payable and other non-interest- Notes to the parent company financial statements ... 94 and financial statements bearing liabilities .............................................. 52 Shares and shareholders ........................................ 104 5.5 Provisions .................................................. 52 Shares and share capital ......................................... 105 CONSOLIDATED FINANCIAL Board of Directors’ report ........................................... 3 6. Intangible and tangible assets .......................... 53 Share price development and trading ..................... 106 STATEMENTS (IFRS) Consolidated financial statements (IFRS)................ 15 6.1 Goodwill ..................................................... 53 Shareholders ........................................................... 107 Consolidated statement of income Consolidated statement of income ........................... 15 6.2 Other intangible assets .............................. 54 Board and management shareholding .................... 109 Consolidated statement of comprehensive income .. 15 6.3 Property, plant and equipment ................... 56 Signatures for Board of Directors’ report and Consolidated statement Consolidated balance sheet ...................................... 16 6.4 Depreciation, amortisation and impairment financial statements ................................................ 110 of comprehensive income Consolidated statement of changes in equity ........... 17 charges ............................................................ 57 Auditor’s report ........................................................ 111 Consolidated balance sheet Consolidated statement of cash flows ...................... 19 7. Group structure ................................................ 58 Notes to the consolidated financial statements ........ 20 7.1 Acquisitions and disposals ........................ 58 Governance Consolidated statement of changes 1. Basis of preparation ......................................... 21 7.2 Joint ventures and associated companies . 61 in equity 1.1 Accounting principles for the consolidated 7.3 Subsidiaries ............................................... 66 Corporate Governance Statement 2019 ................ 117 financial statements ......................................... 21 8. Capital structure and financial instruments ...... 68 Remuneration Statement 2019 ............................... 126 Consolidated statement of cash flows 1.2. Estimates and assumptions requiring 8.1 Financial risk management ........................ 68 Notes to the consolidated management judgement .................................. 30 8.2 Financial instruments by measurement Investor relations financial statements 2. Financial performance ...................................... 32 category ........................................................... 75 2.1 Segment information .................................. 32 8.3 Cash and cash equivalents ........................ 76 Investor relations at Cargotec ................................ 130 2.2 Revenue recognition .................................. 36 8.4 Interest-bearing liabilities ........................... 76 KEY FIGURES 2.3 Other operating income and expenses ...... 37 8.5 Derivatives ................................................. 78 2.4 Restructuring costs and other items 8.6 Equity ......................................................... 78 affecting comparability ..................................... 38 9. Other notes ....................................................... 79 FINANCIAL STATEMENTS OF 2.5 Financing income and expenses ................ 40 9.1 Leases........................................................ 79 THE PARENT COMPANY (FAS) 2.6 Earnings per share ..................................... 40 9.2 Commitments ............................................ 81 3. Employee benefits ............................................ 41 9.3 Related-party transactions ......................... 82 3.1 Personnel expenses ................................... 41 9.4 Adoption of the new and amended IFRS SHARES AND SHAREHOLDERS 3.2 Share-based payments .............................. 41 standards and interpretations, impact on the 3.3 Management remuneration ........................ 43 financial statements ......................................... 82 3.4 Post-employment benefits ......................... 44 Key figures ................................................................. 84 SIGNATURES FOR BOARD OF DIRECTORS’ 4. Income taxes .................................................... 47 Key financial figures .................................................. 84 REPORT AND FINANCIAL STATEMENTS 4.1 Income tax reconciliation ........................... 47 Share-related key figures .......................................... 86 4.2 Deferred tax assets and liabilities .............. 48 Calculation of key figures .......................................... 87 5. Net working capital ........................................... 50 Key exchange rates for the euro ............................... 90 AUDITOR’S REPORT 5.1 Net working capital .................................... 50 Financial statements of the parent company (FAS) 91 5.2 Inventories ................................................. 50 Parent company income statement ........................... 91 CORPORATE GOVERNANCE STATEMENT 5.3 Accounts receivable and other non-interest- Parent company balance sheet ................................. 92 Part of the Board of Directors’ report bearing receivables .......................................... 50 Parent company cash flow statement ....................... 93 Part of the financial statements REMUNERATION STATEMENT INVESTOR RELATIONS 2 BOARD OF DIRECTORS’ REPORT Financial review 2019 BOARD OF DIRECTORS’ REPORT Operating environment in 2019 2018: 1,995) million. Kalmar’s order book totalled EUR 1,049 Comparable operating profit for 2019 increased by 9 percent The market sentiment in 2019 was somewhat uncertain. (1,012) million, representing 50 (51) percent, Hiab’s EUR 406 and totalled EUR 264.4 (242.1) million, representing 7.2 (7.3) Things that caused concern within the industry include items (453) million or 20 (23) percent and MacGregor’s EUR 633 percent of sales. Comparable operating profit for Kalmar CONSOLIDATED FINANCIAL like the US-China trading dispute, Brexit, and the economic (530) million or 30 (26) percent of the consolidated order amounted to EUR 161.8 (143.6) million, for Hiab to EUR STATEMENTS (IFRS) and regulatory uncertainty. book. 170.2 (134.5) million, and for MacGregor to EUR -28.2 (-1.6) Consolidated statement of income million. Kalmar’s and Hiab’s comparable operating profit Kalmar’s demand driver, the number of containers handled Sales increased due to higher sales. MacGregor’s comparable Consolidated statement at ports globally, is estimated to have grown by 2.3 percent Sales in 2019 increased by 11 percent from the comparison operating profit declined due to cost overruns in certain of comprehensive income during 2019 compared to the previous year (Drewry). The period to EUR 3,683 (3,304) million. offshore projects, low capacity utilisation, and lower sales Consolidated balance sheet demand for mobile equipment decreased compared to 2018. margins. The customer interest towards port automation increased, In comparable foreign exchange rates, sales increased by 10 Consolidated statement of changes but they consider their decisions carefully, targeting their percent. Sales increased in all business areas. Service sales In 2019, net interest expenses for interest-bearing debt in equity investments mostly to phased renewals of existing ports. increased by 8 percent from the comparison period and and assets totalled EUR 21.9 (16.4) million. Net financing totalled EUR 1,062 (980) million, representing 29 (30) percent expenses totalled EUR 34.1 (28.9) million. Net interest Consolidated statement of cash flows The demand for Hiab’s load handling equipment in 2019 of consolidated sales. In comparable foreign exchange expenses increased due to the application of the IFRS 16 Notes to the consolidated was supported in the United States and Europe by the rates, service sales increased by 7 percent. Software sales accounting standard. Net income for 2019 totalled EUR financial statements construction activity, which increased particularly in Europe. increased by 15 percent and amounted to EUR 168 (147) 89.4 (108.0) million, and earnings per share EUR 1.39 (1.66). The demand for services improved compared to 2018. million. In comparable foreign exchange rates, software Earnings per share decreased due to significant restructuring sales increased by 11 percent. In total, service and software costs especially in MacGregor, as well as higher than KEY FIGURES Demand of MacGregor’s cargo handling products in 2019 sales amounted to EUR 1,230 (1,126) million, representing average tax expense due to MacGregor’s negative business was impacted by the low level of merchant ship contracting 33 (34) percent of consolidated sales. result as recognition criteria for deferred tax assets was not that decreased further from an already low level in 2018. fulfilled mainly in Germany and Norway. FINANCIAL STATEMENTS OF New vessel contracting in the offshore sector decreased as In geographical terms, sales in 2019 increased