Pekka Lundmark, President and CEO Annual report 2009 LiftingLifting Businesses™Businesses™ Konecranes is an industry shaping, global group of dynamic Lifting Businesses™. We have a strong commitment to provide our customers with products and services of unrivalled quality, safety and reliability, which results in improved efficiency and performance of our customers’ businesses. Through applying both our unique knowledge and technology, and responsive service attitude of never letting the customer down, we are able to develop innovative and integrated lifting solutions that our customers can trust. These solutions help increase customers’ productivity and profitability, thus showing that we are not just lifting things, but entire businesses. Contents Konecranes in a snapshot _____________________________2 2009 highlights ______________________________________4 CEO’s review ________________________________________7 Chairman’s letter _____________________________________9 Company cornerstones ______________________________10 Strategy ___________________________________________11 Business environment _______________________________12 Business areas Service _________________________________________15 Standard lifting ___________________________________16 Heavy lifting _____________________________________19 Regional overview ___________________________________20 Organizational fine-tuning_____________________________ 24 Product research and development ____________________26 Product overview ____________________________________28 Corporate responsibility ______________________________30 GRI _______________________________________________36 Corporate governance _______________________________38 Risk management, internal control, and internal auditing _46 Group executive board _______________________________52 Extended management team _________________________54 Board of Directors ___________________________________56 Financial statements ________________________________59 Investor information _______________________________120 Share information ______________________________120 Summary of significant releases __________________123 Investor relations _______________________________124 Information to shareholders ______________________125 Contact details ___________________________________126 Konecranes in a snapshot Konecranes is a world-leading manufacturer Business Areas of lifting equipment, serving manufacturing Service Business Area Service offers service and maintenance solu- and process industries (including nuclear), tions for all brands of industrial cranes, port equipment, and shipyards, and ports with productivity- machine tools. Konecranes has 545 service locations in 43 enhancing lifting solutions and services. countries and a total of 4,891 employees. Our extensive resources, technologies, and Products proactive mindset ensure that we always Konecranes offers five different service levels covering the deliver on our customer promise: Lifting following products: inspections, preventive maintenance pro- grams, repairs and improvements, on-call service, spare parts, Businesses™. modernizations, and special services such as operational ser- vice and consultation. • Market leader in industrial cranes and crane service • Industry-leading technology and global modular product Market position platforms Clear market leader in crane service, with the world’s most ex- • Sales of EUR 1,671 million in 2009 tensive crane service network. One of the biggest international • 9,782 employees providers of machine tool service. • Production facilities in 12 countries • Sales and service locations in 43 countries 3% • Head office in Finland and listed on the NASDAQ OMX Exchange in Helsinki, Finland 16% 50% 31% 21% 42% PERSONNEL IN 2009 37% 27% Service 4,891 Standard Lifting 3,012 37% Heavy Lifting 1,603 EBIT BY Group Staff 276 BUSINESS AREA 2009* 36% Service MEUR 73.5 Standard Lifting MEUR 65.3 SALES Heavy Lifting MEUR 36.7 BY BUSINESS AREA 2009 *Excluding restructuring costs Service MEUR 667.2 Standard Lifting MEUR 652.2 Heavy Lifting MEUR 479.1 2 Konecranes 2009 Konecranes in a snapshot Service contract base Heavy Lifting More than 360,000 units are covered by Konecranes’ mainte- Business Area Heavy Lifting offers material handling solutions nance contracts, of which approximately 25 percent are manu- for virtually every type of process industry, other industries han- factured by Konecranes. dling heavy loads, nuclear plants, ports, intermodal terminals, shipyards, and bulk material terminals. Products are marketed Standard Lifting under the Konecranes brand. The US-based activities of Morris Business Area Standard Lifting offers pre-designed modular- Materials Handling selling P&H-branded products were merged ized components and cranes for a range of industries. Prod- in 2009 with Konecranes’ US business operations. P&H-brand- ucts are marketed through a multi-brand portfolio that includes ed products will continue to be offered, supported, and ser- the Konecranes corporate brand and the Stahl CraneSystems, viced. Heavy Lifting has sales representation in 43 countries SWF, Verlinde, and R&M power brands. Products previously and a total of 1,603 employees. sold under the P&H and Morris brands are since 2009 sold under the Konecranes brand. Konecranes-branded products are Products sold directly to end users, while the power brands are sold to Electric overhead traveling (EOT) cranes for process industries, distributors and independent crane builders. Standard Lifting nuclear cranes, shipyard cranes, shipboard gantry cranes, grab has sales representation in 43 countries and a total of 3,012 unloaders, STS cranes, RTG and RMG cranes, straddle car- employees. riers, reach stackers, top lifters, empty container handlers, forklift trucks, YardIT® crane automation, container positioning Products systems, crane control systems, and heavy-duty crane com- Industrial cranes, wire rope hoists, chain hoists, light crane ponents. Lifting capacities typically range from 50 to 2,000 systems, load manipulators, and components. Lifting capacities metric tons. range from 100 kg to 100 metric tons. Market position Market position Global leader in EOT cranes for process industries, including The world’s largest supplier of industrial cranes and wire rope nuclear power plants, and in shipyard gantry cranes. Global sup- hoists, and one of the largest manufacturers of light crane sys- plier of cranes and lift trucks for container handling and heavy tems and chain hoists. Worldwide leader in explosion-protected unitized cargo, automation, and bulk material unloading. crane technology. Annual production Annual production Several hundred heavy-duty cranes, hoisting trolleys, and heavy- Tens of thousands of cranes, wire rope hoists, and electric duty lift trucks. chain hoists. As of January 1, 2010 Konecranes will reduce the number of Business Areas from three to two: Equipment and Service. Read more on Page 24 Konecranes in a snapshot Konecranes 2009 3 2009 Highlights • Demand for lifting equipment and maintenance services Cost reduction program and streamlining the dropped significantly. Order intake fell by 34.7 percent management structure compared to 2008 to EUR 1,348.9 million. • The Group’s cost structure was adjusted to correspond to • More than 30 percent of new orders came from emerging the quickly and considerably weakened demand. The cost markets. reduction program included a procurement development • Konecranes’ order book as of the end of the year stood at program, restructuring the Group’s operational structure, EUR 607.0 million. the decision to close down manufacturing facilities in • Net sales decreased 20.5 percent compared to 2008 and Germany, the U.S., and UK, and personnel reductions. totaled EUR 1,671.3 million. • The number of personnel was 9,782 at the end of 2009, • Operating profit was EUR 118.8 million excluding restruc- taking into account the increase of almost 1,100 persons turing costs, 52.2 percent below the 2008 figure. via acquisitions and the decrease of almost 1,500 via • Operating margin excluding restructuring costs was 7.1 personnel reduction. The number is 122 lower than at the percent of sales. end of 2008. • Konecranes acquired ten companies in 2009: four MTS Lower net sales and profitability companies, three in the Nordic region, and one in the U.S. • Net sales in the Service business area were 11.5 percent Konecranes entered a new business segment by acquiring lower, at EUR 667.2 million. Operating profit was EUR two manipulator manufacturers in Europe. Konecranes 73.5 million excluding restructuring costs, or 11.0 percent acquired two crane service companies in Europe, a crane of net sales. manufacturer in South Africa, and a hoist manufacturer in • Net sales in the Standard Lifting business area were 21.9 China. percent lower, at EUR 652.2 million. Operating profit was • Associated company, ZAO Zaparozhje Kran based in EUR 65.3 million excluding restructuring costs or 10.0 Ukraine, was consolidated into Konecranes in the middle percent of net sales. of the year. • Net sales in the Heavy Lifting business area were down • A new Market Operations function was established to 27.3 percent, at EUR 479.1 million. Operating profit was strengthen the Group’s sales management. This function EUR 36.7 million excluding restructuring costs, or 7.7 is responsible for sales management and sales support, percent of net sales. global account management, and developing solution marketing. • Konecranes announced in mid-2009 that