EUR 87.07 For Business Accounts Only

Konecranes (Buy, TP: EUR40.00) - Hit by equipment delivery delays

Q1 was strong on orders but weak on earnings, which were hit by equipment delivery delays. We have cut our 2022–2024e clean EBITA by 4% on average, mainly due to equipment-related sales and profitability issues. However, we reiterate our BUY and EUR40 target price. Q1 – better orders, weaker earnings. Sales of EUR672m were down 5% YOY due to delivery delays, and component and supply chain challenges, and were 14% below our estimate and consensus, mainly in Port Solutions (PS) and Industrial Equipment (IE). The reversal of Russian sales reduced sales by cEUR30m. Prices rose by 7–8%. Clean EBITA was EUR44m, clearly below consensus and our estimate (adjusted for costs we included in IE but booked as non-recurring items). The clean EBITA miss was mainly due to PS (volumes) and IE (volumes, cost inflation), while Services’ clean EBITA was close to our estimate with stronger than expected profitability. Order intake rose by 35% YOY, to EUR1,030m, and was 28% above consensus and 30% above our estimate. Orders beat our forecast and consensus across the board, especially in PS (major last-minute order announcement) and IE. Short-cycle business orders returned to growth YOY. Konecranes had announced EUR47m in impairments prior to the Q1 report, but consensus had not been updated. The clean EBITA margin of 6.6% was below consensus of 8.3%. The agreement base in Services continued to grow YOY and QOQ in Q1. 2022 guidance and Q2 market outlook. Konecranes maintained its 2022 guidance, which indicates sales growth and a YOY improvement in the clean EBITA margin. We expect sales growth but pressure on the clean EBITA margin YOY. After the YOY sales decline in Q1, Konecranes will need to catch up in the coming quarters. As is typical, the year is H2 weighted. The Q2 demand outlook is healthy for Europe and North America among industrial clients. In APAC, the demand environment is not as positive. Container throughput remains high and long-term prospects appear good overall. Konecranes does not expect another record-high order quarter after booking its second-largest order in Q1. It expects operational challenges to continue. Konecranes proposed a DPS of EUR1.25 (our estimate: EUR1.10). BUY and EUR40 target price reiterated. We have cut our 2022–2024e clean EBITA by 4% on average.