Bloomberg News

Cargotec Rises After Announcing Profitability Plan (Update1)

January 31, 2008

Cargotec Oyj (CGCBV), the world's biggest maker of container-lifting gear, gained in Helsinki trading after announcing a program to boost profitability.

Cargotec rose as much as 1.36 euros, or 4.9 percent, to 29.25 euros and closed at 28.25 euros in the Finnish capital. Before today, stock had dropped 12 percent this year. Helsinki-based Cargotec has a market value of 1.87 billion euros ($2.77 billion).

Chief Executive Officer Mikael Maekinen today initiated a program to lift annual earnings by as much as 100 million euros after profit as a percentage of sales slipped in the fourth quarter. Cargotec predicted profit margin would improve this year and sales growth would equal last year, when revenue advanced 16 percent.

``We are not satisfied with the profitability of our operations, although it is partly explained by investments into Cargotec's strategic development,'' Maekinen said in a statement. The Helsinki-based company made 14 acquisitions from India to Sweden last year.

Fourth-quarter net income fell to 27.8 million euros, or 44 cents a share, from 38.5 million euros, or 60 cents, a year earlier, Cargotec said today. Sales climbed 24 percent to 867.5 million euros.

Orders Jump

Operating profit, excluding cost of repairs, rose 11 percent to 64.3 million euros, while the margin slipped to 7.4 percent from 8.3 percent. Orders jumped 70 percent to 1.21 billion euros, as new container ports opened and existing harbors expanded. Demand for Hiab load lifters was buoyant in Europe and Asia Pacific, while that for Kalmar container handling equipment was ``healthy,'' Cargotec said. Demand for ship cranes was at record level.

Analysts surveyed by Bloomberg predicted a profit of 26.4 million euros on sales of 826 million euros. Welding problems in a container grabbing product cost the company 18 million euros for corrective work in the fourth quarter.

The profitability program should lift profit by 80 million euros to 100 million euros. The measures include merging support operations such as finance, human resources and information technology services. Cargotec didn't specify any possible charges related to the program or potential job cuts.

The company appointed Eeva Maekelae as chief financial officer, while deputy CEO and current finance chief Kari Heinistoe will oversee the cost-cutting program.

Cargotec plans to pay an annual dividend of 1.05 euros per B class share, up from 1 euro a year earlier.

To contact the reporters on this story: Juho Erkheikki in Helsinki at jerkheikki@bloomberg.net; Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

To contact the editors responsible for this story: Lars Klemming at lklemming@bloomberg.net; Andrew Noel at anoel@bloomberg.net


We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus