The changing global financial conditions took their toll on Cargotec in the last quarter, with falls in orders, sales and operating profit.
CEO Mika Vehviläinen says the second quarter began with "a very exceptional situation with the rapid spread of the coronavirus in our main market areas".
"The virus, and in particular the resulting regulatory restrictions, had a strong impact on our business in the beginning of the second quarter. However, the operating environment improved as the quarter progressed. The operating hours we collect from our connected equipment also show that customers' activity levels have been clearly rising since the drop in the beginning of the quarter.
"Increased uncertainty and restrictions caused by the pandemic affected orders received, which decreased by 27% from the comparison period. Especially larger automation orders have been postponed. However, the orders received improved month-by-month after a weak April, which provides reason to believe that the bottom was reached in the second quarter for orders received," he says.
Vehviläinen notes that Cargotec's ability to deliver products to customers was impacted by closures of assembly units and lower utilisation rates of the assembly lines caused by the safety regulations as well as production downtime at suppliers. "However, the situation in our supply chain is normalising and all our assembly sites were back in operation by June. Our service and software sales were resilient despite the market circumstances. The COVID-19 crisis has also further increased customer interest in remote maintenance services.
"Our determined investments in asset-light operating model and developing the service and software business enabled us to keep comparable operating profit margins in Kalmar and Hiab at a reasonable level despite lower volumes. MacGregor's comparable operating profit improved from the comparison period, but is still negative. I am confident that ongoing actions in MacGregor will improve the business area's result also going forward."
Despite the crisis, Cargotec systematically continued to execute its strategy, the CEO adds. "We increased our investments in digitalisation and projects to improve the cost and eco-efficiency of our products. During the quarter, we also continued to develop our supply chain and organisation with the divestment of our share in the RCI joint venture in China, and closing down our assembly unit in India."
He believes the company is starting the second half of the year in a stable position, but concedes that visibility towards the end of the year is still weak. "In the current exceptional situation, Cargotec estimates that it is not able to give guidance for the year 2020," he concludes.