Vehviläinen

Cargotec's latest financial statement reveals a strong year in orders received but a slip in profits.

For the full year, orders rose by 18%, reaching EUR3.756 billion (USD4.273 billion). Sales rose 2% to EUR 3.304 billion (USD3.76 billion), while operating profit dropped to EUR190.0 million (USD216 million) from EUR222.1 million (USD252.7 million) the previous year.

Commenting on the performance, CEO Mika Vehviläinen notes the positives: "We made good progress with service revenue, proceeded well with our automation orders at Kalmar, and Hiab's order intake was at a record high level. MacGregor fought against tough market conditions and, excluding restructuring costs, kept its business at a break-even level."

He also notes some important acquisitions made during the year. The Effer loader cranes business complements Hiab's portfolio and expands its heavy cranes segment. The acquisition of TTS Group's major businesses supports MacGregor's growth strategy and provides customer-focused solutions for the merchant shipping and offshore segments. They also completed the Rapp Marine business acquisition that will strengthen MacGregor's position within the fishery and research markets, and divested certain non-core assets from their portfolio.

"To secure our future effectiveness and performance, we invested in systems and processes. The main activities included enhancements to customer relations management, field service tools, and SAP. We also allocated substantial resources to develop our digital capabilities and internal processes."

Vehviläinen concedes that in terms of profitability, 2018 did not go as planned and the company was forced to lower its 2018 guidance in mid-December. "This was mainly due to exceptional challenges in our supply chain and delivery. Our cost management also needs specific attention. We are already addressing these issues and will continue this work during 2019," he explains.

The CEO is hopeful about the company's new strategy, refined at the end of 2018. "During the next strategy period, 2019-2021, Cargotec aims to make a transition from a good to a great company. We will do this by focusing on four must-win battles: customer centricity, services, digitalisation and productivity.

"Customer centricity will play a key role in driving our future offering. We will hold on to our strong products, quality and innovation offering, but they will not be enough. In the face of the ever-intensifying competition and changing customer needs, we need to focus more on the total customer lifecycle. To drive a successful solutions business, we need to understand our customers and their businesses much better than today," he says.