KCI KONECRANES GROUP INTERIM REPORT JANUARY MARCH Strong Organic Orders Growth

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1 4 May, (9) KCI KONECRANES GROUP INTERIM REPORT JANUARY MARCH 2000 Strong Organic Orders Growth New orders increase substantially in all Business Areas, total growth 53.4 % Strong sales growth will follow, now the growth was 13.3 % Income low as typical for Q1, but growing First quarter 2000 Results Q1/00 Q1/99 Change % LTM 1-12/1999 MEUR Orders received Order book Sales Maintenance Services Standard Lifting Equipment Special Cranes Internal Sales Operating income before goodwill amortization Operating income Income before taxes and minority interest Net income Earnings per share (EUR) Orders Received Q1/00 Q1/99 Change % MEUR Maintenance Services Standard Lifting Equipment Special Cranes Internal Orders Received total Comment on quarterly result: Two acquisitions were completed during the quarter. A further two were agreed upon and will close in Q2. Figures presented in this report contain only negligible contributions from the acquired companies. The good momentum in new orders is expected to continue into the next quarters. Sales will grow strongly later in the year, earnings development will follow the same pattern as in previous years. Comment on year-end result: The first quarter is not a good indicator for year-end results. However, strong flow of new orders in all Business Areas, together with newly acquired companies, will produce significantly higher levels of activity, compared to Margins development is favourable in all Business Areas, but development project costs, partly the reason for lower income in 1999, will still have an effect on income, but less than before.

2 4 May, (9) General New orders started to grow during the second half of That development accelerated during Q1/00. With 49.0 MEUR, new orders for Special Cranes were strong in comparison to a very low Q1/99, but also on an absolute level new Special Cranes orders are a third above average of last three years. Standard Lifting Equipment benefited from organisational changes in 1999, that allowed a better focus on new business. The new hoist line which was launched during the quarter attracted considerable attention. Shipments of the new products will start in June. All geographical regions contributed to the strong growth in new business. Total orders for Standard Lifting Equipment grew with 34.8 %. In Maintenance Services orders growth compared to Q1/99 was 32.9 %. Growth was particularly strong in North America. Here key personnel were redeployed back into line work after having focused on development work (the Omniman - ERP project) during The number of cranes under Maintenance Contract now stands at , up 13.0 % y-o-y and up 6.9 % during the quarter. The company in UK containing non-core service activities was sold and the deal closed during the quarter, in France a letter-of-intent for the sale of certain non-core service units was signed. Closing in France is expected in Q2. Following the good orders growth sales started to grow with a certain time lag. Total sales growth was %. Work-in-progress increase during Q1/00 was 46 %. Within Maintenance Services the availability of skilled labour still constitutes a bottleneck for growth. Including acquisitions, Maintenance Services will, however, master a very good growth rate. In Standard Lifting Equipment investments into new plant during recent years have efficiently removed production bottlenecks. In Special Cranes production capacity is capable of handling the new level of activity. Further growth will require some additional investments and/or increased outsourcing. Operating Income for the first quarter was low, as it has always been. Charges to specific development projects R&D, systems work, acquisition projects continued. Still, compared to the very low figure in 1999, the operating income level improved. The seasonal pattern of previous years with most of the results in the second half of the year, is still valid. Margins will also improve as orders growth transform into sales growth, new products and systems go into production, synergies from acquired companies materialise and the effect of aborted dilutive units fade. Charges to special projects ( incl. R&D, systems work, acquisitions) will continue to affect earnings during the year 2000, but to a lesser extent compared to With increased European integration, the Group decided to merge Region Nordic and Central Europe with Region Western Europe, into a new Region Europe. Q1 Sales split between Regions: Q1/00 % Q1/99 % Change % Europe Americas Asia Pacific Total Sales Following the low order intake in Asia Pacific during recent years, sales in that area continued to decrease. Asia Pacific new orders, however, posted a growth, and with approx. 14 % of total new orders, indicate a return to business growth for that Region. Currency exchange rate fluctuations somewhat inflated growth figures. In comparison to Q1/99 this effect on sales growth was approximately 7 % and on order intake 9 % accordingly. All foreign currency flows are subject to approximately one year hedging. Therefore recent favourable development in currency exchange rates have not yet benefited result of the group.

3 4 May, (9) Important orders Here are some examples on new orders during the period. The list very well illustrates our good reach, both in terms of customer base and geographical coverage. Service and standard crane orders have been largely omitted, because they are so numerous that even a sample would be too large for this report. Bechtel Corporation ordered two cranes; one power plant crane to the Bajio Project, Mexico and one coker crane to Marathon Oil, Louisiana, USA. Jaguar Cars Ltd ordered three standard cranes for their press shop in West Midlands, UK. Over 100 hoists were ordered by a major manufacturer in the US aircraft industry. The majority of the hoists were part of modular crane packages. PSA Citroen in Saint Ouen, France, ordered one stacker crane for storage of press tools. Husky, a global supplier of injection moulding systems to the plastics industry, ordered several standard and heavy EOT cranes to their plant in Luxembourg. Modo Paper AB in Husum, Sweden, contracted KCI Konecranes for the delivery of six overhead travelling cranes and four slewing loading devices. One automated paper roll storage system to Klingele Papierwerke GmbH Weener in Germany. Oji Paper Co Ltd., Japan s biggest paper manufacturer, ordered three paper machine cranes and one automatic paper roll storage system. Agra Simons Ltd, Ontario, Canada, ordered five standard cranes for mining industry to the North American Palladium in Thunder Bay. PT. Terminal Petikemas Surabaya, Indonesia, a joint venture between Indonesia Port Corporation III and P&O Australia Ports Pty Ltd., ordered twelve Rubber Tyred Gantry Cranes (RTG's) to be delivered between January- August One medium-sized shipyard crane to Samsung Heavy Industries Shipyard, Korea. The City of New York contracted KCI Konecranes for a major Inspections and Repair job. One EOT Magnet-crane for handling steel plates and the modernisation of two Double Boom Shipyard cranes for Gdynia Shipyard S.A., Poland. Acquisitions During the quarter, the Group acquired the businesses of four companies, of which three in Germany and one in Mexico. The two first acquisitions, Special Crane and Service company Kulicke in Berlin and Cranes and Service operations of Donges Stahlbau in Darmstadt closed in the quarter. The other two will close in Q2/00. Full details about the acquisitions are available on Group home page The German acquisitions mark a continuation of the Group s strategy of entering the German market for industrial cranes and related services. The German market is the biggest industrial market in Europe. Until 1997 the Group had only a very limited presence in that market. After the recent bolt-on acquisitions Group annual sales in Germany is expected to reach over 75 MEUR. All Group Business Areas are now represented in Germany. Maintenance Services have established a total of 15 service outlets across the nation. The Mexican deal marks the Group s re-entry into Mexico. Following the NAFTA agreement, industrial activity is growing strongly, and so is the need for cranes and services. Important events The Annual General Meeting (AGM) on March 9, 2000 confirmed a dividend of 0.71 EUR/share (same as for 1998) for The AGM renewed the Board s authorisation to repurchase and transfer company s own shares up to a maximum of 5 % of outstanding shares. The AGM re-elected Board members Timo Poranen and Stig Gustavson. Board member

4 4 May, (9) Michael Rosenlew resigned from his Board membership. The entire Board consists of Björn Savén (chairman), Timo Poranen, Juha Rantanen, Stig Stendahl, Christoffer Taxell and Stig Gustavson. The AGM made some changes to the Articles of Association. The position of a vice-chairman of the Board was deleted, and other minor technical corrections were made. The UK based company with certain non-core assets relating to testing, fabrication and trade of under-hook appliances was sold. In France, a letter-of-intent was signed related to the sale of certain non-core service assets. Both activities have had a dilutive effect on Group earnings. The transactions will trigger only negligible income and balance sheet effects. In March, after years of R&D work, the Group launched its new product line in the Hanover trade fair in Germany. The new line will form the core range for the Standard Lifting Equipment Business Area for years to come. As the product is loaded with unique patented features creating material customer benefit the reception among customers and dealers was enthusiastic. Designed for modern mass production the product also offers significant production cost benefits. Shipments will commence in June. Further models will be launched during the year, and the range will be complete in the year In early April the Group subscribed for new shares in Vaasa Control Oy. After the subscription, the Group s shareholding now amounts to 22.8 %. Shares and Shareholders On March 31, 2000 KCI Konecranes share closed at EUR/share, down with 15.7 % from year-end EUR/share price. The portfolio HEX index rose during the first three months with 1.96 %. The sector index (Metal industry) decreased with 1.80 %. Trading in the share during the first three months amounted to EUR 90.0 million. On February 28, Fidelity International Limited said its shareholding in the Group had reached 6.25 %. On February 28, Schroeder Investment Management Limited said its shareholding in the Group had reached %. Fidelity s and Schroeder s statements are available in full on the Group s homepage On April 13, 2000, after the end of Q1 but before the publication of this report, the Group released a preview on its Q1 performance. As a result, the share price has stabilised around 37 EUR/share. Non Finland based shareholding was % at the end of March, Stig Gustavson, President and CEO: The year 1999 saw generally lower growth rates compared to previous years. The Group concentrated on developing its services and products offering while also trimming the organisation. Today, our endeavours mature into rapidly increasing new business. Although still far from complete, our development initiatives have created a momentum sending orders to new levels. The Group also continued its acquisition strategy. Bolt-on acquisitions strengthened our positions in Germany, and took us back into Mexico. The Group maintains a capacity, both managerially and financially, of continuing its strategy, also concerning larger acquisition targets. However positive the developments are, we still have massive work ahead of us. Development projects must be finished, acquisitions integrated and synergies brought forward. Margins development in all Business Areas is positive, in Maintenance Services from efficient systems, in Standard Lifting Equipment from new product and in Special Cranes from a combination of new product and full load. The Group is back on its sales and earnings growth track. Comment on quarterly result Two acquisitions were completed during the quarter. A further two were agreed upon and will close in Q2. Figures presented in this report

5 4 May, (9) contain only negligible contributions from the acquired companies. The good momentum in new orders is expected to continue into the next quarters. Sales will grow strongly later in the year, earnings development will follow the same pattern as in previous years. Comment on year-end result: The first quarter is not a good indicator for yearend results. However, strong flow of new orders in all Business Areas, together with newly acquired companies, will produce significantly higher levels of activity, compared to Margins development is favourable in all Business Areas, but development project costs, partly the reason for lower income in 1999, will still have an effect on income, but less than before. Hyvinkää 4 May, 2000 The Board of Directors Formal statement Certain statements in this report are forward looking and are based on management s expectation at the time they are made. Therefore they involve risks and uncertainties and are subject to change due to changes in general economic conditions or industry conditions.

6 4 May, (9) DEVELOPMENT BY BUSINESS AND MARKET AREA Order Intake by Business Area (Excl. Service Contract Base)(MEUR) 1-3/ /1999 LTM * 1-12/1999 Maintenance Services Standard Lifting Equipment Special Cranes /. Internal Total Sales by Business Area (MEUR) 1-3/ /1999 LTM * 1-12/1999 Maintenance Services Standard Lifting Equipment Special Cranes /. Internal Total Sales by Market (MEUR) 1-3/ /1999 LTM * 1-12/1999 Nordic and Central Europe Western Europe Americas Asia-Pacific Total Order Book 3/2000 3/ /1999 Total (MEUR) Personnel by Business Area (at the End of the Period) 3/2000 3/ /1999 Maintenance Services 2,125 2,249 2,261 Standard Lifting Equipment 1,116 1,119 1,134 Special Cranes Group staff Total 3,989 4,025 4,044 Average number of personnel during period 4,017 4,039 4,050 Investments 1-3/ / /1999 Total (excl. acquisitions) (MEUR) * LTM = last 12 months (full year 1999./. three months three months 2000)

7 4 May, (9) Statement of Income (MEUR) 1-3/ / /1999 Sales Share of result of participating interest undertakings Depreciation Other operating expenses Operating income Interests, net Other financial income and expenses Income before taxes Taxes Minority Interest Net Income for the period Profit /share (EUR) Operating Income (= OI) by Business Area (MEUR) 1-3/ / /1999 LTM* Sales OI Sales OI Sales OI OI Maintenance Services Standard Lifting Equipment Special Cranes Group costs Consolidation items Total * According to estimated tax rate LTM = last 12 months (full year 1999./. three months three months 2000)

8 4 May, (9) Consolidated Balance Sheet (MEUR) 3/2000 3/ /1999 Fixed Assets Inventories Receivables and other current assets Cash in hand and at banks Total assets Equity Minority Share Provisions Long-term debt Current liabilities Total shareholders equity and liabilities Gearing (net of interest bearing debts and cash divided by equity) 60.0% 15.3% 35.8% Solidity 37.6% 44.5% 42.2% Return on capital employed 1 3.2% 2.1% 21.7% Equity/share(EUR) Contingent Liabilities and Pledged Assets (MEUR) The comparison figures are from April They approximate March 1999 figures. 3/2000 4/ /1999 Mortgages and pledged assets For own debts For commercial guarantees Own commercial guarantees Guarantees For others Leasing liabilities Other liabilities Total Notional Amounts of Derivative Financial Instruments (MEUR) 3/2000 3/ /1999 Foreign exchange forward contracts Options and other derivative instruments Total Derivatives are used for currency and interest rate hedging only. The notional amounts do not represent amounts exchanged by the parties and are thus not a measure of the exposure. A clear majority of the transactions relate to closed positions, and these contracts set off each other. The hedged orderbook and equity represent approximately one third of the total notional amounts. 1 Calculated on annual basis

9 4 May, (9) Teleconference An international teleconference will be arranged today on 4 May, 2000 at 4.00 p.m. Finnish time (2.00 p.m. London time). The dial-in number is (Please call in at 3.50 p.m.) The graphics of the presentation are attached to this report. A replay of the teleconference will be available for the next 48 hours at , code Internet This report is also on the Internet at An audio recording of Mr Gustavson s presentation on the teleconference will be available on the Internet (under Interim Report ) later on 4 May. To listen to the recording you will need a Java-enabled browser, Netscape Navigator 3.0+ or Microsoft Internet Explorer 3.0+ recommended. Optimal sound quality can be achieved by using version 4 of either Netscape or IE. Next report Interim Report, 2 nd quarter, will be published on 10 August, 2000 at Finnish time (8.00 a.m. London time). Further information Mr Stig Gustavson, President & CEO, tel Mr Teuvo Rintamäki, Chief Financial Officer, tel Ms Franciska Janzon, IR Manager tel KCI KONECRANES INTERNATIONAL PLC P.O. Box 661 FIN Hyvinkää Tel Fax Domicile Hyvinkää, Finland Trade Reg. No