Konecranes Plc (KCR) Earnings Call Transcript
August 6, 2021
Earnings Call Speaker Segments
Good morning, everyone, and welcome to the future company CEO Announcement Conference. My name is Kiira Froberg, and I'm the Head of Investor Relations at Konecranes. Before we start, I would kindly remind you that until the completion of the merger, Konecranes and Cargotec will operate fully separately and independently. Please also remember that in a number of jurisdictions, in particular, in Australia, Canada, South Africa, Singapore, Japan and the United States, the distribution of this presentation and any recording thereof may be subject to restrictions imposed by law. Neither the merger consideration shares nor any other securities referenced in this presentation and any recording thereof have been registered or will be registered under the United States Securities Act of 1933. As for our today's host, I have here with me the future company Chairman, Christoph Vitzthum; Cargotec Chairman, Ilkka Herlin; and the future company CEO, Mika Vehvilainen. The presentation is followed by Q&A. Without any further speech, Christoph, please the stage is yours.
Thank you, Kiira, and very good morning to you all. I'm very pleased to welcome you to what is a major milestone in the creation of a global leader in sustainable material flow. The appointment of Mika Vehvilainen as CEO of the future company is why we are all here today. And today represents a major and exciting step towards creating a company that we believe will unlock significant value for the company's stakeholders and with its innovative team of top talent helps solve the sustainability challenge that faces the world. This news marks the culmination of a very rigorous selection process involving the Boards of both Cargotec and Konecranes. And speaking on behalf of both boards, we are extremely pleased with the results. Mika's leadership and industry experience, his proven track record of creating value at Cargotec and at other companies previously and his vision for the future company make him the right person for the right position at the right time. Mika, many congratulations on the appointment. I would also like to take a moment to give my sincere thanks to Rob Smith, who today announced that he would leave Konecranes at the end of the year to take a role at another company. Rob has been a remarkable leader for Konecranes since joining the company, successfully steering Konecranes through the pandemic, through the merger announcement to deliver the best for our customers as well as strong financial results. I look very much forward to working Rob during -- with Rob during the remainder of this year before he leaves. And I would like to thank Rob for your contribution and hard work, and we wish you all the best for the future. Before we hand over to Mika Vehvilainen, the Chairman of Cargotec, Ilkka Herlin would like to say a few words.
Speaking on behalf of Cargotec's board, we are delighted that we will continue to benefit from the Mr. Vehvilainen's experience and strong leadership. We know that our customers are increasingly seeking green solutions, and that will be a major business driver for us or -- we know very well that Mika has been leading this transition in Cargotec and we -- I'm sure that he is the right guy to -- for this great transition, seamless transition, the next phase of sustainability in our companies and the future company as well. Thank you.
So from my behalf as well, good morning, and first of all, I'd like to thank the Board of Konecranes and Cargotec for the trust they have put on me on this. And I have to say that I'm really excited and energized about this great opportunity ahead of us. I'm looking forward to working together with the extraordinary talent we have from both companies. And together, we can truly deliver value and opportunities for our customers, for our shareholders, for our employees and the world at large, driving the innovation and driving sustainability in global material flows. It will be a humbling opportunity for me to take the leadership of the new company in the first day of operations when that comes. Also, I'd like to say a few words about future company and some of the key points on that one. It's a real opportunity for us to unlock further value to our shareholders, to our employees, to our customers by combining the 2 excellent companies and the great innovation and talent we have together to deliver growth, to deliver further profitability and so on. For our customers, the great services businesses we have already today can be further strengthened. We will have an extensive service network, great service platforms and advanced technology to deliver further value for our customers. We will be helping to solve the sustainability challenge through innovation by investing further into robotics, electrification, automation and digitalization. And we will be extremely well positioned to grow, first of all, organically, by further growing our services business by delivering competitive technology by investing further into R&D and innovation. And then with the financial horsepower that the new company has, we can also grow inorganically faster. Last but not least, this is obviously a wonderful opportunity for the great talent from both companies for further personal development and further carrier opportunities. Lastly, a reminder where we are in the process. So today, we are working actively with the various competitive authorities, and we expect the merger to close and the new company start operations at the end of the first half next year. With that one, I'd like to thank everybody, and I think we are ready for Q&A.
Thank you, gentlemen. Now it's time to take some questions. Please, operator, go ahead and open the line for questions, if there are any.
[Operator Instructions]
While we wait for any questions from line, I could perhaps ask some questions that have arrived already this morning. So why now? The merger was announced already on 1st of October last year. Why are we here now today?
As you said, the merger was announced in October last year. And both of the boards have been working diligently. We also announced that we would have a rigorous selection process for the future company CEO. And now we have come to a decision, and so now it's time to announce.
Thank you. Christoph, you mentioned quickly Rob Smith. Would you like to comment on his future plans?
I think Rob Smith will, in due course, comment on his own future plans. He has resigned from Konecranes. That resignation becomes effective 1st of January 2022. And until then, Rob is fully committed to deliver the results and business plan of Konecranes.
Thank you. Mika, how would you describe yourself as a leader to all the stakeholder groups, both external and internal?
First of all, I'm a great believer in the good leadership. This is a people business, and people make the difference. And I think today, it's extremely important that the people will have a clarity and they will have a purpose. They know where we are going and why are we doing that one. From leadership point of view, I'd like to empower people. I strongly believe that closer to the customers and closer to the operations you make the decisions, the better quality and faster they are. Obviously, with that empowerment comes also the accountability and responsibility.
Thank you. Would we have any questions from the line now, please?
We'll now move to our first question over the phone. Please go ahead, caller.
It's Aurelio from Morgan Stanley. I've got 2, if I may, please. So the first one is around your portfolio priorities and congratulations Mika, obviously, on your appointment. And you touch on your strong position for organic growth, but you also touched on the financial power you will have for inorganic growth. I wonder, obviously, it's -- the merger is not closed, that if you see any low-hanging fruit in terms of portfolio that you can clean up?
Thank you for the congratulations, first of all. I think it's too early to speculate yet on that one. I think I'm looking forward working with the future Board as well to sort of define the portfolio strategy. I think there are great opportunities for, as I said, with the financial horsepower and what we can do and shape the business and shape for the growth as well.
Okay. And my second question is on obviously the EU commission. It's in Phase II now. And I think the deadline has been suspended at your request and Konecranes' request as well. I wonder if you can share anything on your latest thoughts on antitrust? And if we should read anything on the announcement on, let's say, maybe that you're more confident on antitrust that you were maybe a couple of months ago? Is there anything to read into the announcement or not really?
No, I don't think these 2 things are actually linked to each other. As Christoph was saying, this was a question of the Board process that came to the end at this particular moment at the moment. We are continuing the active dialogue and work together with the competitive authorities. And as I said, that process is going on. We did have a small stop that was stand in cooperation with the competitive authorities to enable people to take summer holidays on both ends and prepare for some of the material required, that one. And the time line is, as we have already said, that we expect to be able to close this at the end of the first half.
Just to confirm, there are no further questions queued over the phone.
Thank you. We have a question through chat. It's about the broader leadership team. When will that be announced?
What we will be doing next is to actually start discussions together with Boards of the companies about the operational model, structure of the new company. And once that's been defined, so we actually know what positions we will be filling and we will then start a selection process for the next table that will follow the same rigorous process and will be open and transparent for all the potential candidates. And we will announce the next layer of management in due course.
Thank you.
And if I may add on that point, the Boards have also agreed that there will be a dynamic and transparent selection process in order to choose the next level of leadership. There is remarkable talent in both companies and I think topics around diversity, inclusion, competence are going to be very important when selecting the future management.
We also have another question through the chat and it's also on the top management. So this is from [indiscernible] Congrats to you, Mika. Is the CEO appointment the only one regarding the top management to be announced prior to the actual merger?
No, I think we will actually select at least one potential part of the next layer as well according to our current plan. So obviously, for the proper and good quality integration planning and process, it's good to have the ownership on the different streams. So we do expect to actually announce a number of executive positions before the closing of the deal.
Thank you. Do we have any further questions from the line, please?
No, ma'am. The queue is still clear.
Thank you. I think it's then now time to conclude our today's conference. Thank you for the participation. I wish you all a great rest of the summer and weekend, of course. Thank you.
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