Contents
2020 highlights
Report of the Board of Directors
Konecranes Group 2016 – 2020
Calculation of key gures
Financial Statements
Consolidated statement of income – IFRS
Consolidated balance sheet – IFRS
Consolidated statement of changes in equity – IFRS
Consolidated cash ow statement – IFRS
Notes to the consolidated nancial statements
Company list
Parent company statement of income – FAS
Parent company balance sheet – FAS
Parent company cash ow – FAS
Notes to the parent company’s Financial Statement
Board of Director’s proposal to the Annual General Meeting
Auditor’s report
Shares and shareholders
32
34
54
55
57
58
59
60
61
110
112
113
114
115
117
118
123
FINANCIAL REVIEW 2020
31 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
2020 highlights
Sales & order intake, MEUR
Adjusted EBITA by Business Area, 2020
Adjusted EBITA, MEUR & Adjusted EBITA margin, %
Personnel by Business Area, 2020
Earnings & dividend per share, EUR
Adjusted EBITA by Business Area
71%
Service
205.2 MEUR
21%
Port Solutions
59.7 MEUR
9%
Industrial Equpment
25.4 MEUR
48%
Service
8,062
18%
Port Solutions
2,970
34%
Industrial Equpment
5,720
Personnel by Business Area, 2020
Sales/orders, MEUR
2016 2017 2018 2019 2020
Sales Order intake
0
500
1,000
1,500
2,000
2,500
3,000
3,500
3,178.9
2,727.3
2,118.4
1,920.7
3,137.2
3,007.4
3,156.1
3,090.3
3,326.9
3,167.3
35%
Service
1,190.0 MEUR
32%
Port Solutions
1,066.0 MEUR
33%
Industrial Equpment
1,120.1 MEUR
Sales by Business Area, 2020
Adjusted EBITA, MEUR/ Adjusted EBITA margin, %
2016 2017 2018 2019 2020
Adj. EBITA pre-MHPS Comparable adj. EBITA
Comparable adj. EBITA margin
2
4
6
8
10
12
14
260.8
144.8
216.6
257.1
275.1
0
50
100
150
200
250
300
Earnings & dividend per share, EUR
2016 2017 2018 2019 2020
Earnings per share, basic Dividend per share
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0.64
1.05
2.89
1.20
1.29
1.20
1.03
1.20
1.54
0.88
*
*
The Board's proposal to the AGM
Sales by Business Area, 2020
Percentages have been rounded and may not total to 100%.
32 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Return on equity, %
Order book, MEUR
ROCE, % & Adjusted ROCE, %
Year-end net working capital, MEUR
Year-end market capitalization*, MEUR
Year-end net debt, MEUR & Gearing, %
Year-end net working capital, MEUR
2016 2017 2018 2019 2020
304.3
324.6
410.4
446.0
337.2
0
100
200
300
400
500
2016 2017 2018 2019 2020
Net debt
129.6
525.3
545.3
655.3
577.1
0
200
400
600
800
1000
100
80
60
40
20
Gearing
2016 2017 2018 2019 2020
Return on capital employed, %
Adjusted return on capital employed, %
10.3
19.2
23.7
15.4
7.9
12.5
6.3
8.3
12.7
11.1
0
5
10
15
20
25
Order book, MEUR
2016 2017 2018 2019 2020
1,038.0
1,535.8
1,715.4
1,824.3
1,715.5
0
500
1,000
1,500
2,000
Return on equity, %
2016 2017 2018 2019 2020
8.3
26.1
7.7
6.5
9.8
0
5
10
15
20
25
30
Year-end market capitalization*, MEUR
2016 2017 2018 2019 2020
1,984.6
3,006.9
2,080.0
2,160.2
2,277.5
0
500
1,000
1,500
2,000
2,500
3,000
3,500
* Excluding treasury shares
33 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Report of the Board of Directors
This report contains comparisons to Konecranes’ historical
gures which are Konecranes’ stand-alone nancial
information as reported for 2019. These do not include
gures for MHE-Demag as the acquisition of MHE-Demag
was completed in January 2020. The combined operations
of Konecranes and MHE-Demag started on January 2, 2020.
Figures in brackets, unless otherwise stated, refer
to the same period a year earlier.
Market review
The world’s manufacturing sector, according to the aggregated
J.P. Morgan Global Manufacturing Purchasing Managers’ Index
(PMI), witnessed a turbulent year with signicant deterioration
in operating conditions caused by the COVID-19 pandemic. At
the start of the year, the index swung into contraction below
the 50.0 mark in February and bottomed to its lowest level
since 2009 in April. Towards the end of the year, the operating
conditions were recovering as the index stayed in expansion
territory during the entire second half. The year ended at 53.8
which was equal to November’s 33-month high and signaled
continued improvement.
In the eurozone, manufacturing sector operating
conditions continued to deteriorate from the end of 2019
and, like seen elsewhere globally, plunged in the second
quarter of 2020. The PMI’s deterioration eased at the
end of the rst half of the year. Since then, the index
showed improvement at a steady pace and December’s
reading was clearly in expansion territory. Within the
region, Germany and the Netherlands contributed strongly
to the improvement. At the end of the year, most of the
country-specic PMIs were clearly above the 50-borderline.
The UK Manufacturing PMI developed broadly in line
with the eurozone’s equivalent index over the year. In
December though, the PMI rose further to a three-year
high of 57.5 before the end of the Brexit transition period.
The manufacturing industry capacity utilization rate in
the European Union declined in the rst half of 2020
and began to recover in the third quarter. The capacity
utilization rate ended the year on the rise, but it had not
yet reached pre-COVID levels.
In the US, the manufacturing sector’s PMI rebounded
to expansion territory at the start of the second half
of 2020 following a coronavirus-induced contraction.
The index ended the year at 57.1, indicating strongly
improving conditions. The US unemployment rate also
continued to come down steadily from its April peak.
The US manufacturing capacity utilization rate showed
improvements from the drop in the beginning of the year.
In December, despite solid monthly increases, the capacity
utilization rate was still behind its gures prior to the start
of the coronavirus pandemic.
As for the emerging markets, China’s manufacturing sector
operating conditions steadily improved after an initial
plummet in February, and the PMI ended 2020 well above
the 50.0 mark. In both Brazil and India, the Manufacturing
PMIs also indicated recovering conditions by posting gures
continuously in expansion territory towards the end of 2020.
In Russia, manufacturing sector operating conditions were
in contraction territory almost throughout the year, ending
2020 fractionally below the 50.0 mark.
Global container throughput, according to the RWI/
ISL Container Throughput Index, ended the year 2020
higher than where it began despite the strong coronavirus
headwinds especially during the rst half of the year.
The recovery pace stabilized in the last months of the year
and container throughput had picked up in Chinese ports
as well as in ports elsewhere outside China. At the end of
December, global container throughput was approximately
5 percent higher than the year before.
Regarding raw material prices, at the end of the year both
steel and copper prices were clearly above the previous
year’s levels. The average EUR/USD exchange rate was
approximately 2 percent higher compared to
the year-ago period.
34 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Orders received
In full year 2020, orders received totaled EUR 2,727.3 million
(3,167.3), representing a decrease of 13.9 percent.
On a comparable currency basis, order intake decreased
12.6 percent. Orders received decreased in the Americas
and EMEA but increased in APAC. The increase in APAC
was mainly due to the acquisition of MHE-Demag.
In Service, order intake decreased 8.6 percent on a reported
basis and 6.5 percent on a comparable currency basis.
In Industrial Equipment, orders received decreased
21.6 percent on a reported basis and 20.2 percent on a
comparable currency basis. External orders received in
Industrial Equipment decreased 20.5 percent on a reported
basis and 18.9 percent on a comparable currency basis.
In Port Solutions, order intake decreased 13.3 percent on
a reported basis and 13.0 percent on a comparable
currency basis.
Order book
At the end of December, the value of the order book totaled
EUR 1,715.5 million (1,824.3), which was 6.0 percent lower
compared to previous year. On a comparable currency basis,
the order book decreased 2.9 percent. The order book
decreased 1.0 percent in Service, 7.7 percent in Industrial
Equipment and 5.9 percent in Port Solutions.
Sales
In full year 2020, Group sales totaled EUR 3,178.9 million
(3,326.9), representing a decrease of 4.4 percent. On a
comparable currency basis, sales decreased 3.0 percent.
Sales decreased 5.5 percent in Service, 5.5 percent in
Industrial Equipment and 4.5 percent Port Solutions.
Industrial Equipment’s external sales decreased 4.6 percent.
At the end of December, the regional breakdown of sales,
calculated on a rolling 12-month basis, was as follows:
EMEA 54 (52), Americas 31 (34) and APAC 16 (14) percent.
Financial result
In full year 2020, the Group adjusted EBITA decreased
to EUR 260.8 million (275.1). The adjusted EBITA margin
declined to 8.2 percent (8.3). The adjusted EBITA margin
increased in Service to 17.2 percent (16.6) and in Industrial
Equipment to 2.3 percent (1.5) and decreased in Port
Solutions to 5.6 percent (7.8). The decline in the Group
adjusted EBITA margin was mainly attributable to lower
sales as well as the one-time cost overruns in the rst
quarter.
In full year 2020, the consolidated adjusted operating
prot declined to EUR 224.9 million (250.4). The adjusted
operating margin declined to 7.1 percent (7.5).
In full year 2020, the consolidated operating prot totaled
EUR 173.8 million (148.7). The operating prot includes
adjustments of EUR 51.1 million (101.7), which are mainly
comprised of restructuring costs and transaction costs. The
operating margin declined in Service to 15.2 percent (15.5)
and in Port Solutions to 2.6 percent (6.4) but improved in
Industrial Equipment to 0.4 percent (-5.2).
In full year 2020, depreciation and impairments totaled
EUR 130.0 million (123.6). The impact arising from the
purchase price allocations for acquisitions represented
EUR 35.9 million (24.7) of the depreciation and
impairments.
In full year 2020, the share of the result in associated
companies and joint ventures was EUR 21.2 million (4.5).
The increase in the share of the result in associated
companies and joint ventures was mainly due to Konecranes
remeasuring its previously held equity interest in MHE-Demag
at its acquisition date fair value. Please refer to Note 5 for
additional information.
In full year 2020, nancial income and expenses totaled
EUR -24.6 million (-34.7). Net interest expenses accounted
for EUR 18.0 million (20.2) of the sum and the remainder
was mainly attributable to other nancing expenses.
The full year 2020 prot before taxes was
EUR 170.4 million (118.5).
10-12/ 2020 10-12/ 2019 Change %
Change % at
comparable
currency rates 1-12/ 2020 1-12/ 2019
Change
%
Change % at
comparable
currency rates
Orders received, MEUR 843.3 781.3 7.9 11.4 2,727.3 3,167.3 -13.9 -12.6
Net sales, MEUR 936.8 933.3 0.4 3.2 3,178.9 3,326.9 -4.4 -3.0
Orders received and net sales
35 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Income taxes in full year 2020 were EUR 47.5 million (35.7).
The Group’s effective tax rate was 27.9 percent (30.1).
The full year 2020 net prot was EUR 122.9 million (82.8).
In full year 2020, the basic earnings per share were EUR 1.54
(1.03) and the diluted earnings per share were EUR 1.54 (1.03).
On a rolling 12-month basis, the return on capital employed
was 8.3 percent (6.3) and the return on equity 9.8 percent
(6.5). The adjusted return on capital employed was
11.1 percent (12.7).
Balance sheet
At the end of December, the consolidated balance sheet
amounted to EUR 4,016.5 million (3,854.2). The total equity
at the end of the reporting period was EUR 1,251.1 million
(1,246.7) or EUR 15.69 per share (15.70). The total equity
attributable to the equity holders of the parent company was
EUR 1,242.0 million (1,237.5).
Net working capital totaled EUR 337.2 million (446.0).
Sequentially, net working capital decreased by
EUR 88.2 million. The sequential decrease in net working
capital resulted mainly from a decrease in inventories.
Cash ow and nancing
Net cash from operating activities in full year 2020 was
EUR 407.1 million (172.8). The increase in net cash from
operating activities was mainly due to the change in net
working capital as well as to a lesser extent, lower nancing
items during 2020. Cash ow before nancing activities was
EUR 242.0 million (149.6), which included cash inows of
EUR 2.8 million (16.4) related to sale of property, plant and
equipment and EUR 0.0 million (4.2) related to divestment
of businesses, and cash outows of EUR 124.1 million (3.1)
related to acquisition of Group companies and
EUR 43.8 million (40.7) related to capital expenditure.
At the end of December, interest-bearing net debt was
EUR 577.1 million (655.3). Net debt decreased due to
improved cash ow during 2020. The equity to asset ratio
was 34.1 percent (35.4) and the gearing 46.1 percent (52.6).
At the end of December, cash and cash equivalents
amounted to EUR 591.9 million (378.2). None of the Group’s
committed EUR 400 million back-up nancing facility was in
use at the end of the period.
In June 2020, Konecranes paid dividends, amounting to
EUR 51.4 million or EUR 0.65 per share, to its shareholders.
In August 2020, Konecranes paid dividends, amounting to
EUR 43.5 million or EUR 0.55 per share, to its shareholders.
Capital expenditure
Capital expenditure in full year 2020, excluding acquisitions
and joint arrangements, amounted to EUR 42.8 million
(39.5). The amount consisted mainly of investments in
machinery and equipment, buildings, ofce equipment
and information technology.
Acquisitions and divestments
In full year 2020, the cash impact of capital expenditure
for acquisitions and joint arrangements was EUR -124.1
million (-3.1).
On December 5, 2019 Konecranes signed an agreement
to acquire from Jebsen & Jensen its 50 percent share in
MHE-Demag. The transaction was closed on January 2, 2020
and the purchase price consideration was EUR 148.3 million.
After the acquisition Konecranes holds 100 percent of the
shares in the company.
Personnel
In full year 2020, the Group had an average of 17,027
employees (16,104). On December 31, the number of
personnel was 16,862 (16,196). In full year 2020,
the Group’s personnel increased by 666 people net.
The acquisition of MHE-Demag was completed on January 2,
2020 and on December 31, 2019 MHE-Demag’s number of
personnel was approximately 1,800.
At the end of December, the number of personnel by
Business Area was as follows: Service 8,062 employees
(7,762), Industrial Equipment 5,720 employees (5,397), Port
Solutions 2,970 employees (2,938) and Group staff 110 (99).
The Group had 9,688 (10,126) employees working in EMEA,
2,964 (3,319) in the Americas and 4,210 (2,751) in APAC.
36 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
In full year 2020, orders received totaled EUR 927.8 million
(1,015.1), corresponding to a decrease of 8.6 percent. On
a comparable currency basis, orders received decreased 6.5
percent.
The order book decreased 1.0 percent to EUR 213.4 million
(215.7). On a comparable currency basis, the order book
increased 5.1 percent.
The annual value of the agreement base increased
3.0 percent year-on-year to EUR 275.7 million (267.7).
On a comparable currency basis, the annual value of
10-12/2020 10-12/2019 Change %
Change % at
comparable
currency rates 1-12/2020 1-12/2019 Change %
Change % at
comparable
currency rates
Orders received, MEUR 233.6 250.0 -6.5 -2.0 927.8 1,015.1 -8.6 -6.5
Order book, MEUR 213.4 215.7 -1.0 5.1 213.4 215.7 -1.0 5.1
Agreement base value, MEUR 275.7 267.7 3.0 8.0 275.7 267.7 3.0 8.0
Net sales, MEUR 315.3 341.6 -7.7 -3.3 1,190.0 1,259.7 -5.5 -3.4
Adjusted EBITA, MEUR
1
60.6 61.4 -1.3 205.2 208.5 -1.6
Adjusted EBITA, %
1
19.2% 18.0 % 17.2 % 16.6 %
Purchase price allocation amortization, MEUR -4.0 -2.6 52.7 -16.1 -10.5 52.8
Adjustments, MEUR -1.2 -1.5 -7.7 -3.4
Operating prot (EBIT), MEUR 55.4 57.2 -3.1 181.4 194.6 -6.8
Operating prot (EBIT), % 17.6% 16.7 % 15.2 % 15.5 %
Personnel at the end of period 8,062 7,762 3.9 8,062 7,762 3.9
1
Excluding adjustments and purchase price allocation amortization.
See also note 11 in the summary nancial statements.
Business areas
Service
the agreement base increased 8.0 percent. Sequentially,
the annual value of the agreement base decreased
1.1 percent on a reported basis and decreased 0.3 percent
on a comparable currency basis.
Sales decreased 5.5 percent to EUR 1,190.0 million
(1,259.7). On a comparable currency basis, sales decreased
3.4 percent. Both eld service sales and parts sales
decreased.
The adjusted EBITA was EUR 205.2 million (208.5)
and the adjusted EBITA margin was 17.2 percent (16.6).
The increase in the adjusted EBITA margin was mainly
attributable to executed savings in both variable and xed
costs. The operating prot was EUR 181.4 million (194.6)
and the operating margin 15.2 percent (15.5).
37 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
10-12/2020 10-12/2019 Change %
Change % at
comparable
currency rates 1-12/2020 1-12/2019 Change %
Change % at
comparable
currency rates
Orders received, MEUR 241.3 316.3 -23.7 -20.3 981.2 1,251.5 -21.6 -20.2
of which external, MEUR 216.9 283.2 -23.4 -19.9 849.1 1,068.4 -20.5 -18.9
Order book, MEUR 598.8 648.9 -7.7 -2.0 598.8 648.9 -7.7 -2.0
Net sales, MEUR 313.6 336.0 -6.7 -3.1 1,120.1 1,185.5 -5.5 -3.7
of which external, MEUR 279.1 289.2 -3.5 0.3 973.8 1,020.4 -4.6 -2.6
Adjusted EBITA, MEUR
1
18.1 0.6 3033.6 25.4 18.2 39.7
Adjusted EBITA, %
1
5.8% 0.2% 2.3% 1.5%
Purchase price allocation amortization, MEUR -3.1 -1.7 81.8 -12.5 -6.9 82.7
Adjustments, MEUR -4.8 -2.7 -8.6 -72.7
Operating prot (EBIT), MEUR 10.1 -3.8 -362.9 4.3 -61.4 -107.0
Operating prot (EBIT), % 3.2 % -1.1 % 0.4 % -5.2 %
Personnel at the end of period 5,720 5,397 6.0 5,720 5,397 6.0
In full year 2020, orders received totaled EUR 981.2 million
(1,251.5), corresponding to a decrease of 21.6 percent.
On a comparable currency basis, orders received decreased
20.2 percent. External orders received decreased 20.5 percent
on a reported basis and 18.9 percent on a comparable
currency basis. Order intake decreased in standard cranes,
process cranes and components.
The order book decreased 7.7 percent to EUR 598.8 million
(648.9). On a comparable currency basis, the order book
decreased 2.0 percent.
Sales decreased 5.5 percent to EUR 1,120.1 million (1,185.5).
On a comparable currency basis, sales decreased 3.7 percent.
External sales decreased 4.6 percent on a reported basis and
2.6 percent on a comparable currency basis. Sales decreased
in standard cranes and components but increased
in process cranes.
The adjusted EBITA was EUR 25.4 million (18.2) and the
adjusted EBITA margin 2.3 percent (1.5). The increase in the
adjusted EBITA margin was mainly attributable to continued
progress on strategic initiatives and cost management.
1
Excluding adjustments and purchase price allocation amortization.
See also note 11 in the summary nancial statements
The operating prot was EUR 4.3 million (-61.4) and the
operating margin 0.4 percent (-5.2).
Industrial Equipment
38 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
10-12/2020 10-12/2019 Change %
Change % at
comparable
currency rates 1-12/2020 1-12/2019 Change %
Change % at
comparable
currency rates
Orders received, MEUR 403.7 264.4 52.7 53.0 994.5 1,147.3 -13.3 -13.0
Order book, MEUR 903.2 959.7 -5.9 -5.2 903.2 959.7 -5.9 -5.2
Net sales, MEUR 355.3 320.3 10.9 10.9 1,066.0 1,115.7 -4.5 -4.3
of which service, MEUR 44.3 45.7 -3.0 -0.7 167.9 185.9 -9.7 -8.8
Adjusted EBITA, MEUR
1
28.7 31.7 -9.6 59.7 86.9 -31.2
Adjusted EBITA, %
1
8.1% 9.9% 5.6% 7.8%
Purchase price allocation amortization, MEUR -1.8 -1.8 0.2 -7.3 -7.3 0.0
Adjustments, MEUR 1.3 -5.7 -24.4 -8.3
Operating prot (EBIT), MEUR 28.2 24.2 16.3 28.0 71.3 -60.6
Operating prot (EBIT), % 7.9% 7.6% 2.6% 6.4%
Personnel at the end of period 2,970 2,938 1.1 2,970 2,938 1.1
1
Excluding adjustments and purchase price allocation amortization. See also note 11 in the summary nancial statements.
In full year 2020, orders received totaled EUR 994.5 million
(1,147.3), corresponding to a decrease of 13.3 percent.
On a comparable currency basis, orders received decreased
13.0 percent.
The order book decreased 5.9 percent to EUR 903.2 million
(959.7). On a comparable currency basis, the order book
decreased 5.2 percent.
Sales decreased 4.5 percent to EUR 1,066.0 million (1,115.7).
On a comparable currency basis, sales decreased 4.3 percent.
The adjusted EBITA was EUR 59.7 million (86.9) and the
adjusted EBITA margin 5.6 percent (7.8). The decrease in the
adjusted EBITA margin was mainly attributable to a one-time
cost overrun in a port crane project in the rst quarter as well
as lower sales and weaker sales mix. Gross margin decreased
Port Solutions
The acquisition of MHE-Demag in January 2020 does not have an impact on Business Area Port Solutions.
on a year-on-year basis. Operating prot was EUR 28.0 million
(71.3) and the operating margin 2.6 percent (6.4).
39 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Group overheads
In full year 2020, the adjusted unallocated Group overhead
costs and eliminations were EUR 29.5 million (38.5),
representing 0.9 percent of sales (1.2).
The unallocated Group overhead costs and eliminations were
EUR 40.0 million (55.9), representing 1.3 percent of sales
(1.7). These included merger related transaction costs and
restructuring costs of EUR 10.5 million (17.3).
COVID-19 impact on Konecranes
The coronavirus pandemic (COVID-19) affected Konecranes’
overall performance negatively in 2020. Overall, the
pandemic has weakened global demand conditions and
made the environment uncertain, which has negatively
impacted order intake. Additionally, physical restrictions
on the daily conduct of people and businesses have led to
lower revenue recognition.
Towards the end the year, demand conditions were recovering
but the COVID-19 pandemic continued to impact Konecranes
negatively. At the end of 2020, the capacity utilization rates in
Europe and in the United States were also below their levels
prior to the coronavirus pandemic. Due to the pandemic, order
intake and net sales declined in all three Business Areas in 2020.
In Service, COVID-19 has affected net sales as scheduled
maintenance activities were postponed due to access
restrictions and regional lockdowns. COVID-19 has not led
to major order cancellations within Service, but scheduled
work and projects have been postponed.
In Industrial Equipment, COVID-19 started to affect net
sales at the end of the rst quarter. Net sales have been
negatively impacted by delivery delays resulting from access
limitations to customer sites. Industrial Equipment has not
seen major order cancellations, but orders and deliveries
have been postponed.
In Port Solutions, the negative impact of COVID-19 became
visible in the second quarter. The order intake and net
sales of the shorter cycle products, such as lift trucks and
reach stackers, were rst to be negatively affected. Travel
and access restrictions had a negative impact on net
sales especially in the second and third quarter. No major
orders received have been cancelled. However, due to
the uncertain market conditions, customers have become
cautious, and decision-making regarding new orders has
been postponed.
During parts of the rst half of the year, some Konecranes
factories in EMEA and APAC were closed due to local
COVID-19 physical restrictions. Although material deliveries
and component availability have become more challenging,
none of our factories were closed as a result of material
shortages. All Konecranes factories have been in operation
throughout the second half of the year, except for some
sites in APAC which have been closed for short periods in
Q3 and Q4.
The impact of COVID-19 on the Group’s protability has
been mitigated through almost real-time demand-supply
balancing and cost-exing actions. For example, these have
included temporary layoffs, reduced working hours and
streamlined spending. Permanent cost adjustments have
also been made.
Some customer payment delays have occurred, but the
impact has not been signicant. Konecranes has further
enhanced payment collection and credit control. The delays
in deliveries have led to some increase in inventory levels
during the year. At the same time, accounts receivables
have decreased as a result of active cash collection. The
risk of excess inventories has been limited through efcient
demand-supply balancing. Konecranes has seen only minor
changes in its supplier network.
To secure its liquidity position, Konecranes agreed on a new
bilateral term loan of EUR 150 million for general corporate
purposes in the second quarter.
The worldwide demand picture remains subject to
signicant volatility due to the COVID-19 pandemic. There
are still uncertainties regarding the COVID-19 pandemic,
and it is too early to estimate how long and to which extent
it will impact Konecranes’ business and performance.
40 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Administration
Merger of Konecranes Plc
and Cargotec Corporation
On October 1, 2020 Konecranes Plc (“Konecranes”)
and Cargotec Corporation (“Cargotec”) announced that
their respective Boards of Directors signed a combination
agreement and a merger plan (“the Merger Plan”) to combine
the two companies through a merger (“the Merger”).
On December 3, 2020 Konecranes announced that the Finnish
Financial Supervisory Authority had approved the merger
prospectus concerning the combination of Konecranes Plc
and Cargotec Corporation.
On December 18, 2020 Konecranes held an Extraordinary
General Meeting ("EGM") that approved the Merger in
accordance with the Merger Plan. In order to prevent the
spread of the COVID-19 pandemic, the EGM was arranged
without the physical presence of shareholders or their proxy
representatives. Cargotec’s Extraordinary General Meeting
was held on the same day and resolved to approve the
Merger.
Pursuant to the Merger Plan, Konecranes shall be merged
into Cargotec through an absorption merger so that all assets
and liabilities of Konecranes shall be transferred without a
liquidation procedure to Cargotec and Konecranes will be
dissolved. The shareholders of Konecranes will receive new
shares in Cargotec as merger consideration in proportion to
their existing shareholdings as described in more detail in the
Merger Plan.
The completion of the Merger is subject to necessary merger
control approvals having been obtained and other conditions
to completion having been fullled. The planned Merger
completion date is 1 January 2022, however, the date is
subject to change and the actual completion date may be
earlier or later than 1 January 2022.
Until the completion, both companies will operate as
independent and separate entities.
Additional information on the Merger is available in
the stock exchange releases dated October 1, 2020,
December 3, 2020, and December 18, 2020 available on
the Konecranes website, as well as on the merger website
www.sustainablematerialow.com.
Decisions of the Annual General Meeting
The Annual General Meeting of Konecranes Plc was held on
Thursday 11 June 2020. In order to prevent the spread
of the COVID-19 pandemic, the Annual General Meeting
was arranged without the physical presence of shareholders
or their proxy representatives. The meeting approved
the Company’s annual accounts for the scal year 2019,
discharged the members of the Board of Directors and the
persons who had served as CEO from liability, and approved
all proposals made by the Board of Directors and its
committees to the AGM.
The AGM approved the Board’s proposal that a dividend
of EUR 0.65 per share be paid from the distributable
assets of the parent Company. The AGM also approved
the Board’s proposal to authorize the Board, to further
decide, at its discretion, on the distribution of dividend in
one or several instalments so that the total amount of the
dividend distribution based on this authorization shall not
exceed EUR 0.55 per share. The authorization is valid until
the opening of the next Annual General Meeting.
The AGM decided to support the Konecranes Remuneration
Policy, covering the principles for remuneration of the
members of the Board of Directors, President & CEO and
Deputy CEO. The resolution by the AGM on the policy is
advisory.
The AGM conrmed that the amount of annual remuneration
payable to the members of the Board other than the
employee representative be unchanged as follows:
the remuneration to the Chairman of the Board is
EUR 140,000, the remuneration to the Vice Chairman of the
Board is EUR 100,000 in the event that a Vice Chairman
is elected by the Board, and the remuneration to the other
Board members is EUR 70,000. In case the term of ofce
of a Board member ends before the closing of the Annual
General Meeting in 2021, he or she is entitled to the
prorated amount of the annual remuneration calculated on
the basis of his or her actual term in ofce. In addition, the
Chairmen of the Audit Committee and the Human Resources
Committee are entitled to a compensation of EUR 3,000 and
the other Board members are entitled to a compensation
of EUR 1,500 per each attended committee meeting. No
remuneration will be paid to Board members employed
by the Company. Travel expenses for all Board members,
including the employee Board member, will be compensated
against receipt.
The AGM approved the proposal of the Shareholders’
Nomination Board that the number of members
of the Board of Directors shall be seven (7). Ms. Janina
Kugel, Mr. Ulf Liljedahl, Mr. Per Vegard Nerseth, Ms. Päivi
Rekonen, Mr. Christoph Vitzthum, Mr. Niko Mokkila and
Mr. Janne Martin were elected for a term of ofce ending
at the closing of the Annual General Meeting in 2021.
Mr. Janne Martin was selected among the employees of
Konecranes.
The AGM decided to re-elect Ernst & Young Oy as the
Company’s auditor for the year ending on 31 December
2020.
41 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
The AGM approved that § 4 Board of directors and term
of ofce of the Articles of Association of the Company be
amended according to the proposal.
The AGM approved that § 3 Duties of the Nomination Board
and remuneration and § 6.1 Preparation of the proposal
of the Charter of the Shareholders' Nomination Board be
amended according to the proposal.
The AGM authorized the Board of Directors to decide
on the repurchase of the Company's own shares and/or
on the acceptance as pledge of the Company's own shares.
The AGM authorized the Board of Directors to decide
on the issuance of shares as well as the issuance of special
rights entitling to shares referred to in chapter 10 section 1
of the Finnish Companies Act.
The AGM authorized the Board of Directors to decide
on the transfer of the Company’s own shares.
The AGM authorized the Board of Directors to decide
on a directed share issue without payment needed for the
continuation of the Share Savings Plan that the Annual General
Meeting 2012 decided to launch.
The AGM authorized the Board of Directors to decide on
donations in the aggregate maximum amount of EUR 200,000
to be given to universities, institutions of higher education
or to other non-prot or similar purposes.
The resolutions of the Konecranes Annual General Meeting
have been published in the stock exchange release dated
June 11, 2020.
Board of Directors’ organizing meeting
In the rst meeting of the Board of Directors of
Konecranes Plc after the Annual General Meeting the Board
of Directors elected Mr. Christoph Vitzthum Chairman of
the Board.
The Board of Directors has an Audit Committee and a
Human Resources Committee.
Mr. Ulf Liljedahl was elected Chairman of the Audit
Committee, and Mr. Niko Mokkila and Ms. Päivi Rekonen
as Committee members. Ms. Janina Kugel was elected
Chairwoman of the Human Resources Committee, and
Mr. Per Vegard Nerseth and Mr. Christoph Vitzthum as
Committee members.
Ms. Janina Kugel, Mr. Ulf Liljedahl, Mr. Per Vegard Nerseth,
Ms. Päivi Rekonen and Mr. Christoph Vitzthum were deemed
to be independent of the Company and any signicant
shareholders. While Mr. Niko Mokkila was deemed to be
independent of the company, he was deemed to be
dependent of a signicant shareholder of the Company
based on his current position as Managing Director at
Hartwall Capital Oy Ab. While Mr. Janne Martin was deemed
to independent of any signicant shareholders, he was
deemed to be dependent of the Company due to his current
position as an employee of Konecranes.
Composition of the Shareholders'
Nomination Board
On September 11, 2020 Konecranes announced
the composition of the Shareholders' Nomination Board.
The Shareholders' Nomination Board is comprised of one
member appointed by each of the four largest shareholders
of Konecranes Plc. The shareholders entitled to appoint a
member are determined on the basis of the shareholders'
register of the Company maintained by Euroclear Finland Ltd.
on August 31 each year.
The following members were appointed to Konecranes'
Shareholders Nomination Board:
• Peter Therman, Deputy Chairman of the Board
of Directors of Hartwall Capital, appointed by
HC Holding Oy Ab with 7,931,238 shares,
• Pauli Anttila, Investment Director of Solidium Oy,
appointed by Solidium Oy with 6,744,506 shares,
• Stig Gustavson, appointed by Stig Gustavson and family
with 2,366,157 shares, and
• Mikko Mursula, Chief Investment Ofcer of Ilmarinen,
appointed by Ilmarinen Mutual Pension Insurance
Company with 2,255,000 shares.
In addition, Christoph Vitzthum, the Chairman of the Board
of Directors of Konecranes, serves as an expert in the
Nomination Board without being a member.
Konecranes Leadership Team
Rob Smith joined Konecranes as the President and CEO
on February 1, 2020. His appointment had been announced
on October 7, 2019. The company’s CFO, Teo Ottola, who
also serves as Deputy CEO, acted as the interim CEO from
October 7, 2019 until February 1, 2020.
Carolin Paulus was appointed Executive Vice President
for the Industrial Equipment Business Area and member of
the Konecranes Leadership Team effective March 1, 2020
on February 6, 2020. She succeeded Mikko Uhari, who
stepped down from the Konecranes Leadership Team in
line with Konecranes succession and retirement planning
process.
Minna Aila, Executive Vice President, Marketing and
Communications and a member of the Konecranes Leadership
Team left the company on March 15, 2020 as announced on
October 14, 2019.
42 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
On October 27, 2020, Konecranes announced that Topi Tiitola
had been appointed Senior Vice President, Integration and
Project Management Ofce, and member of the Konecranes
Leadership Team effective November 1, 2020.
Since November 1, 2020, the Konecranes Leadership Team
has consisted of the following members:
• Rob Smith, President and CEO
• Teo Ottola, CFO, Deputy CEO
• Fabio Fiorino, Executive Vice President,
Business Area Service
• Carolin Paulus, Executive Vice President,
Business Area Industrial Equipment
• Mika Mahlberg, Executive Vice President,
Business Area Port Solutions
• Juha Pankakoski, Executive Vice President, Technologies
• Timo Leskinen, Senior Vice President, Human Resources
• Sirpa Poitsalo, Senior Vice President, General Counsel
• Topi Tiitola, Senior Vice President,
Integration and Project Management Ofce.
Dividend distribution
On August 16, 2020 Konecranes announced that the Board
of Directors had decided on the distribution of dividend based
on the authorization granted to the Board by the Annual
General Meeting.
A dividend of EUR 0.55 per share was paid from the
distributable assets of the parent Company on August 26,
2020.
Konecranes had already earlier paid a dividend of EUR 0.65
per share for the nancial year ended December 31, 2019.
This dividend was paid on June 23, 2020. Based on the
resolution of the Annual General Meeting and the August
16 decision by the Board of Directors, the total aggregate
dividend for the nancial period 2019 was thus EUR 1.20
per share.
Performance share plan 2020
On July 23, 2020, Konecranes announced that the Board
of Directors had resolved to establish a new Performance
Share Plan 2020. The Plan has a performance period from
2020 to 2022 with three separate measurement periods and
separate targets for 2020, 2021 and 2022.
The criterion for the measurement period 2020 is adjusted
earnings per share (EPS). The EPS target for the rst
measurement period was also resolved by
the Board of Directors.
The target group of the Plan for the performance period
2020–2022 consists of a maximum of 170 key employees
of the Konecranes group.
Additional information, including essential terms and
conditions of the Plan, is available in the stock exchange
release dated July 23, 2020.
On December 16, 2020 Konecranes announced that the
Board of Directors had resolved adjusted earnings per share
(EPS) as the criterion for the second measurement period of
the Performance Share Plan 2020.
Restricted share unit plan 2020
On October 27, 2020, Konecranes announced that the Board
of Directors had decided to establish a share-based incentive
plan, Restricted Share Unit Plan 2020, for the Group key
employees. The Plan is intended for selected key employees
only, approximately 100 employees, including the Konecranes
Leadership Team members.
Additional information, including essential terms and
conditions of the Plan, is available in the stock exchange
release dated October 27, 2020.
Employee share savings plan
On February 6, 2020, Konecranes announced that the
Board of Directors had decided to launch a new Plan Period
relating to the Employee Share Savings Plan. The new Plan
Period was to begin on July 1, 2020 and end on June 30,
2021. The other terms and conditions of the Plan Period
2020–2021 approved by the Board on February 6, 2020
have been published in the stock exchange release on the
same day.
On May 28, 2020, Konecranes announced that the Board of
Directors had decided to change the new Employee Share
Savings Plan Period which was to begin on July 1, 2020 and
end on June 30, 2021. Due to the Annual General Meeting
being held later than initially estimated, the Board decided
to change the Plan Period 2020–2021 to begin on October
1, 2020 and end on June 30, 2021. The other terms and
conditions remained unchanged.
Share capital and shares
On December 31, 2020 the company’s registered share
capital totaled EUR 30.1 million. On December 31, 2020,
the number of shares including treasury shares totaled
79,221,906.
Treasury shares
On December 31, 2020, Konecranes Plc was in possession
of 87,447 treasury shares, which corresponds to 0.1 percent
of the total number of shares and which had on that date
a market value of EUR 2.5 million.
43 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
On January 2, 2020, 2,500 treasury shares were conveyed
without consideration to the key employees as a reward
payment for the Vesting Period 2018–2019 of Konecranes
Restricted Share Unit Plan 2017.
On February 7, 2020, 300,000 new shares were issued
in the company to the company itself without consideration.
The new shares issued were registered with the Trade
Register on February 25, 2020.
On February 27, 2020, 10,874 treasury shares were
conveyed without consideration to the employees as a
reward payment for the Savings Period 2016–2017 of
Konecranes Employee Share Savings Plan.
On March 11, 2020, 280,659 treasury shares were
conveyed without consideration to the key employees as a
reward payment for the Performance Period 2017–2019 of
Konecranes Performance Share Plan 2017.
On September 1, 2020, 1,000 treasury shares were
conveyed without consideration to the key employee as a
reward payment for the Konecranes Restricted Share Unit
Plan 2017.
Market capitalization
and trading volume
The closing price for the Konecranes shares on the Nasdaq
Helsinki on December 30, 2020 was EUR 28.78. The
volume-weighted average share price in full year 2020 was
EUR 23.03, the highest price being EUR 33.08 in February
and the lowest EUR 14.05 in March. In full year 2020, the
trading volume on the Nasdaq Helsinki totaled 82.4 million,
corresponding to a turnover of approximately EUR 1,897.5
million. The average daily trading volume was 326,912
shares representing an average daily turnover of EUR 7.5
million.
In addition, according to Fidessa, approximately 100.3
million shares were traded on other trading venues (e.g.
multilateral trading facilities and bilateral OTC trades) in full
year 2020.
On December 31, 2020, the total market capitalization
of Konecranes Plc was EUR 2,280.0 million including
treasury shares. The market capitalization was EUR 2,277.5
million excluding treasury shares.
Notications of major shareholdings
In full year 2020, Konecranes received the following
notications of major shareholdings.
Date
Shareholder Threshold
% of shares
and
voting rights
% of shares
and voting rights
through nancial
instruments Total, % Total, shares
February 25, 2020 HC Holding Oy Ab Below 10% 9.97 9.97 7,901,238
March 11, 2020 HC Holding Oy Ab Above 10% 10.01 10.01 7,931,238
44 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Research and development
In 2020, Konecranes’ research and product development
expenditure totaled EUR 48.5 (41.1) million, representing
1.5 (1.2) percent of sales. R&D expenditure includes product
development projects aimed at improving the quality and
cost efciency of both products and services. Konecranes
has provided customers with tens of thousands of pieces
of connected equipment to give them insights into daily
operations and ensure maximum production uptime. This
large, connected eet provides usage data, the importance of
which has been elevated in the COVID-19 pandemic.
In the midst of the pandemic, understanding how lockdowns
and movement restrictions affected production was of critical
importance for future business success. In spring 2020,
Konecranes acted quickly in building analytics of the data,
gaining insights into whether assets were running normally,
with lower utilization or if they were completely shut down.
This allowed Konecranes to balance its demand-supply and
optimize its operations in real-time.
Konecranes Data Science Lab is based in Lyon, France,
and focuses on creating tangible business benets, working
closely with Konecranes businesses. In 2020, the Data
Science Lab produced numerous analyzes and algorithms
for Konecranes to apply in its operations. These innovations
include a fuel consumption prediction method for Konecranes
Lift Trucks business, allowing customers to gain accurate fuel
usage estimations and giving us a competitive edge.
The Data Science Lab also created lifecycle analyzes for
different crane components, starting with Konecranes
Rubber Tired Gantry (RTG) cranes. Having visibility into
single components takes Konecranes predictive maintenance
services to the next level, allowing planning service and parts
replacements to maximize our customers’ productivity by
minimizing downtime.
Digitalization provides Konecranes with multiple growth
opportunities and ways to enhance the customer
experience. In 2020, Konecranes launched a business
model enabling digital features based on active
subscriptions for its Lift Truck products. Previously only
available as one-size-ts-all annual contracts, customers
have now been given the opportunity to mix and match
services – such as operations and usage data, condition
monitoring and alerts notications, or location-based
services. Customers can now tailor services based on the
specic business needs on a monthly basis.
In 2020, Konecranes received dozens of applications for
cooperation from startups through its open call REACH
program. Konecranes also formalized its Discovery
concept in 2020, which focuses on identifying leading
startup partners in their eld to solve specic business
needs. Konecranes also continued its internal Accelerator
innovation program, facilitated in cooperation with the Maria
01 startup hub in Helsinki. The program gathered dozens
of Konecranes employees across the organization. Coached
by startup partners and serial entrepreneurs, participants
develop new solutions in response to customer needs.
Konecranes is also active in multiple innovation ecosystems
beyond Maria 01, such as DIMECC’s Intelligent Industry
Ecosystem.
Multiple new innovations were developed as a result of
the startup cooperation in 2020. To enhance its internal
operations, Konecranes teamed up with an indoor
localization provider, producing detailed data on the
duration of different crane assembly phases. With this
insight into assembly schedules, Konecranes can optimize
its manufacturing and avoid standstills. Internal operations
have been further sharpened by the introduction of virtual
reality to strengthen the training of eld service operatives.
This will be further scaled up in 2021. Konecranes has also
created digital efciencies in-house, utilizing robotic process
automation (RPA) to automate a wide range of repetitive
tasks extending from processes handled by support
functions such as nance and HR to assisting business
units in, for example, customer order handling and master
data management. In 2020 alone, over 60 processes were
automated, freeing more than 60,000 hours of working
time previously spent on manual and non-creative tasks.
This initiative will continue in 2021 and beyond, allowing
employees to focus on more business-critical tasks
such as innovation and creating customer value. Since
implementation began in 2018, Konecranes has automated
over 250 processes with RPA.
Customers benet directly from Konecranes’ digital
innovations. As a response to the travel and mobility
restrictions imposed due to the COVID-19 pandemic,
Konecranes developed an augmented reality solution
together with a startup to support technical support from
a distance. Using the solution, customers can contact
Konecranes’ eld service from a distance – even thousands
of kilometers – getting detailed instructions on how to
perform maintenance tasks that require special expertise.
The solution has proved especially valuable in in remote
locations that are hard to reach.
Cybersecurity is an increasing customer priority and an
essential part of Konecranes’ technological leadership.
As more solutions and products are digitized, customers
expect the same level of safety from software and data
as from physical products. Konecranes’ cybersecurity
management is built around industry best practices,
with an Information Security Management System based
on the ISO 27001 standard. Konecranes expects to gain
the rst ISO 27001 certications during 2021, standardizing
its security management and providing further assurance
to its customers.
45 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Statement of non-nancial information
The most essential non-nancial topics for Konecranes
are: responsible business conduct, the safety of employees
and our products, respecting human rights, employee
engagement, diversity and inclusion, providing sustainable
solutions for our customers, the carbon footprint of our own
operations, taking climate action, advancing circular economy
and enforcing sustainability requirements in the supply chain.
Konecranes reports the disclosed information in accordance
with Accounting Act amendment 1376/2016, which is based
on the EU Directive 2014/95/EU on the disclosure of non-
nancial and diversity information. More information about
the topics can be found in the Sustainability Report 2020 that
is prepared according to the international framework Global
Reporting Initiative (GRI). Konecranes is a signatory of the
United Nations Global Compact striving for the same goals
as the UN regarding human and labor rights, protecting the
environment and ghting corruption.
Business model and value creation
Our business aims to deliver optimal productivity and improve
our customers’ safety and sustainability by making intelligent
and connected lifting devices, adopting new technologies and
optimizing material handling ows. Konecranes enables our
customers’ shift to a low-carbon future by being the key link
in their material ow. With our knowledge, products, services
and solutions we seek to maximize the positive contributions
to our different stakeholders and society around us.
With our products and solutions, we provide monetary
value with sustained protability and stability. We enable
reliable and optimized performance and can support the
transition to low carbon with our innovative technologies.
Safe ways of working are an integral part of our business
and prioritizing safety in all areas of our operations brings
us a competitive advantage. Due to this approach we can
improve safety throughout our value chain and advance
circularity by focusing on optimized service and longer
product lifetime.
Being a preferred partner creates nancial stability for
our whole value chain. Sustainable business practices and
practical risk management are crucial for creating longer-
term shareholder value. To remain a key player within local
communities as well as an attractive employer, we strive to
make a positive impact on the societies where we operate.
This is done by providing jobs and income for employees,
by boosting local economies as an employer, supporting
non-prot organizations, being a provider and buyer of local
services and goods, and also being a signicant taxpayer in
many countries where we operate.
In 2020, a total of EUR 403 million (476) in taxes and other
compulsory tax-like payments were paid and collected in
countries where the Group operates, implying an effective tax
rate of 27.9 percent (30.1). A total of EUR 174 million (198)
was paid (taxes borne) directly by the group itself, while
EUR 228 million (277) was collected (taxes collected) on
behalf of governments. Konecranes is a compliant taxpayer
in each country where it operates and does not practice
aggressive tax planning that would articially decrease
the Group’s taxable income.
Our innovation not only focuses on products, technologies
and service solutions, but also on new ways of working
and leveraging workforce diversity to amplify innovation.
Our employees, with their expertise and motivation, are
central to our success and bring our strategy to life. In our
view, varied skill sets are a key driver of creativity and value
creation. To ensure that we continue to deliver value we
focus on maintaining close ties with our key stakeholders to
understand their evolving needs and expectations;
engaging and developing the best talent; implementing
smart technologies in our product and service offering;
innovating new business models; and developing our
product design and reliability.
Responsible business conduct
The management culture in Konecranes is based on the
company’s values: trust in people, total service commitment
and sustained protability. The goal is not just to comply with
the laws, rules and regulations that apply to the business
– Konecranes also strives to abide by high standards of
business conduct.
Konecranes’ Code of Conduct and Corporate Governance
Framework guide the everyday activities of the company
by clearly describing internal standards and ethical values
as well as legal obligations. The Code of Conduct is
complemented by several Group-wide policies covering areas
including safety, the environment, supplier requirements,
anti-corruption, competition compliance, equal treatment
and diversity.
There is an executive-level Compliance & Ethics Committee
to oversee the implementation and development of the
compliance & ethics program, which is managed by a
specially dedicated Team. During 2020 the Compliance &
Ethics Team was reinforced with new Compliance & Ethics
Ofcers in three different geographical locations. With the
added resources the team can better support the business
and execute on Konecranes’ ambitious compliance and ethics
program.
Konecranes promotes a healthy speak-up culture where
people can feel safe reporting ethical concerns. Multiple
ways to raise concerns are offered, including an externally
managed Whistleblowing Channel which enables
anonymous reporting when allowed by local laws. There
46 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
is a clear policy of no retaliation and all reports made are
reviewed and replied to condentially. Konecranes also
encourages its suppliers and other business partners to
report on any compliance and ethics concerns relating to
Konecranes.
A group-wide compliance and ethics risk assessment
was conducted in 2019 by interviewing more than 200
employees from various countries and business units, and
the responsible business conduct KPIs were renewed. During
2020 the follow-up on these metrics continued as part of
the overall compliance and ethics program and road map.
Multiple awareness-raising activities took place in 2020, with
the main focus on the new Code of Conduct training, which
was made available in 35 different languages.
The training was mandatory for all employees globally,
including operatives, and despite the challenging pandemic
situation over 16,000 employees (96 percent) were trained.
Global trainings were also rolled for competition law and
trade compliance matters.
To help mitigate risks and drive ethical practices in supply
chains, the Konecranes Supplier Code of Conduct (SCoC)
states the sustainability standards expected from third
parties. The Code has requirements, for example, on anti-
corruption, human rights, environmental and compliance
topics. The SCoC forms a key part of any agreements made
with key suppliers and subcontractors. By the end of 2020,
58 percent of suppliers (as share of spend) had signed the
SCoC. Background checks on suppliers and subcontractors
are done before entering into business relationships and
dened suppliers are assessed based on self-assessments.
The requirements are constantly reviewed and developed to
ensure that environmental and social impacts are managed
properly through responsible sourcing. In 2020 we started
third-party supplier audits concentrating particularly on
compliance with our Supplier Code of Conduct.
Anti-corruption and bribery prevention
Konecranes’ Anti-Corruption policy and Code of Conduct
demonstrate our commitment to work against corruption
in all forms, including extortion and bribery. They dene
the level of ethical conduct sought to uphold and support
long-term competitiveness in the global markets. The Anti-
Corruption policy has compliance protocols and guidelines
in place to detect risks, with a zero-tolerance approach
embedded in the monitoring and follow-up processes. Several
actions and processes are set up to mitigate corruption and
fraud risks including a Gift and Hospitality Portal.
Anti-Corruption matters are an important element of
the Code of Conduct training, which is mandatory for
all employees globally. In addition, more advanced anti-
corruption trainings were organized during 2020 to targeted
audiences such as the procurement, sales and nance teams.
Konecranes’ zero-tolerance approach is also promoted to
business partners in the Konecranes Supplier Code
of Conduct and Supplier Manual. Konecranes uses a risk-
based Know-Your-Counterparty process whereby the level
of scrutiny is determined by considering, for example, the
risks associated with the business in question, country risks
and business partner risks. Suppliers are also audited for
their anti-corruption work.
Environmental responsibility
The day-to-day challenge of reducing our environmental
footprint – meaning using resources more efciently and
minimizing emissions and waste – is already business as
usual. We have moved beyond this and are developing
products, services and technologies that also reduce the
environmental impact of our customers.
Our commitments concerning environmental responsibility
can be found in our Code of Conduct and in our
Environmental Policy, which outlines our principles for
managing the environmental impact of Konecranes sites,
products and services as well as our supply chain.
To continuously improve our own performance, we set
a target for all of our manufacturing sites to be ISO
14001:2015 EMS certied by the end of 2020. This target has
been postponed by a year due to the COVID-19 pandemic.
Currently 83 percent of our factories have an ISO 14001
environmental management system in place requiring
continuous development and the establishment of local
annual targets. We assess environmental risks of our service
and manufacturing sites in greater detail as part of our
environmental management system, where each of our units
is responsible for evaluating, prioritizing and mitigating their
risks on a local level. Environmental incidents and near-miss
cases are reported through our global Health, Safety and
Environment (HSE) reporting tool, and the investigations of
root causes and corrective actions are conducted accordingly.
In addition, we pay special attention to the use of efcient
logistics and packaging, minimizing waste and reusing and
recycling as much as possible.
We focus on energy efciency of our own operations, for
both service and manufacturing. Our target is to reduce our
energy intensity (MWh/sales) by 25 percent during 2017–2025.
We have also signed national voluntary agreements on
energy efciency. These ambitious targets will be reached by
investing in energy efciency actions such as heat recovery
and lighting and harmonizing our eet to become eco-
efcient. In 2020 energy intensity was reduced signicantly
by 23 percent compared to the 2017 baseline.
Low-carbon product and solutions portfolio
supports circular economy
Our business models support circular economy as we aim
to maximize the lifecycle value of products. We design our
products with their complete life cycle in mind as the majority
47 Financial Review 2020
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of the environmental impact of products’ lifecycle is dened
at the product design stage. Our product design is based on
smart design principles focusing on repairability, durability,
material selections including recyclability and energy
efciency. Usability, eco-efciency, and safety are our guiding
principles in product design, along with lifecycle thinking.
For diesel-powered vehicles we provide innovative power
options ranging from hybrids to full electric and battery
technology, with additional energy-saving features such as
regenerative braking.
The use phase of our products can last for decades, so
investing in data-driven, eco- and resource-efcient products
means the customer can preserve the value of their
equipment for a longer period of time and thus also decrease
the environmental impact. To provide accurate data on the
environmental impact of our solutions for decision making,
we calculate our products' energy consumption and CO
2
emissions, and critically asses this data with the help of a third
party (as part of our Environmental Product Declarations).
Our service business advances circular economy by focusing
on extending product lifecycles with repair and maintenance,
remanufacturing, modernizations and retrots; this helps us
raise our resource and energy efciency while reducing
our customers’ environmental footprints. Modernizations
and retrots also enhance the energy efciency and
performance of equipment by saving a great deal of raw
materials, cutting emissions from logistics and reducing
the energy used in manufacturing processes. Additionally,
modernization increases safety, productivity, reliability
and usability while decreasing the need for repairs and
unscheduled maintenance.
Our systematic approach to maintenance is supported by
digital tools that allow real-time visibility and insight. We
reduce the need to move items and people when we use real-
time data to predict maintenance needs. Connected devices
and online platforms provide data on the state of components
in real time; knowing when to maintain, replace or repair
components leads to a smarter use of resources and extends
the lifetime of a product. Digitalization improves predictive
maintenance by harnessing the industrial internet to connect
data, machines and people to provide the right service at the
right time, making it a key enabler for circular economy.
Climate risks and opportunities
We have a unique position to help decarbonize other
industries by providing equipment solutions that help
industries restructure to a low-carbon future. Taking an
example from our customer segments, ports play an
essential role in the world’s decarbonization as the total
electricity generating capacity for industrial ports will
most likely increase in future given cargo throughput is
expected to grow. Only by investing in technology that
cuts the dependency on fossil fuels can the shipping and
transportation industry reach their ambitious goals of 40
percent reduction in CO
2
by 2030 (IMO GHG Strategy).
In 2019 we nalized a climate risk scenario analysis to
strengthen our understanding of climate change and its
possible physical and transitional risks for the company. In
2020 we continued discussions at the top management level
and conducted a set of workshops for all Business Areas and
procurement to dene climate-related risks and opportunities
on a detailed level. During this exercise we dened our best
estimates on risk likelihood and impact (tolerance). To be
able to estimate the impact to business and prioritize risks,
we need a level of risk detail that enables mitigating actions.
Based on this work, we will sharpen our Climate roadmap for
years to come.
The focus of our climate work is to reduce greenhouse
gas emission intensity (tCO
2
e/sales) by 50 percent during
2017–2025. One aspect of this target is reducing service
eet fuel consumption. In addition, we are committed to
powering our factories with 100 percent renewable electricity
by 2025. We collect scope 1 and 2 emission data quarterly to
monitor progress. Scope 3 data is also collected on an annual
basis. In 2020 we managed to decrease our scope 1 and 2
emissions by 29 percent compared to the 2017 baseline.
Climate targets and scenario analysis
We have included the “double materiality” aspect in
our climate roadmap work, meaning we have reviewed
Konecranes’ impact on climate and how climate change
potentially impacts Konecranes' business. Both risks and
opportunities were considered. When it comes to climate-
related opportunities, we focus on providing eco-efcient
solutions for our customers and extending lifecycles with our
service concept. For example, we offer hybrids and electric
alternatives for traditional diesel cranes, and energy-saving
features such as regenerative braking to help our customers
minimize emissions. There are immense positive impacts of
electrically powered equipment given it emits signicantly
less CO
2
. Preventive maintenance also supports customer
emission reductions by using data and remote monitoring
to optimize visits from a service technician.
Konecranes' product offering also includes modernizations,
one benet of which is the material savings in steel and
avoiding the emissions from steel production.
Regarding transition risks such as emerging regulation,
we actively participate in relevant industry organizations
and follow national, EU-level and international regulation/
agreements related to climate aspects. Regarding the
physical risks like rising sea levels, we have conducted
a few natural hazard assessments with our insurance
company to understand the probability, time scale
and actual risks involved.
48 Financial Review 2020
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Current
regulation
Fuel and energy taxes and regulations are always included in risk assessments as their nancial implications are relatively
high. Changes in energy prices (such as electricity, heat, natural gas or liqueed petroleum gas) also have an effect on
our factories' operational costs. Environmental legislation and regulation regarding climate action are followed on the
corporate level when these requirements have global business relevance or impact reporting on a global level.
On a local level, reviewing environmental legislation and local environmental risks is an important part of the
ISO 14001 Environmental management system. Other business functions and product development follow product
specic legislation requirements on e.g. motors.
Emerging
regulation
Konecranes follows emerging regulation by participating in relevant industry organizations, following national, EU-level
and international regulation/agreements. We especially follow the development of the NFR directive and its requirements
and recommendations on reporting on climate change and low-carbon products. Other relevant topics that also have a
climate aspect are evolving regulation on energy efciency, chemical management, packaging and circular economy.
Technology
Technology plays a crucial part in our business, and we closely follow technological developments in sectors material to
us and our customers. We need to understand in what ways different technologies are developing and ensure that our
low-carbon solutions and selected technologies are attractive to our clients. Technology risks are included in our risk
management processes. The signicant risk for us related to technology lies in the selection of technologies used in our
portfolio. Technological development pressure in carbon-intensive industries might also increase costs and the availability
of technology.
Market
Environmental awareness is growing in all markets, especially in emerging markets. To understand the changes
in attitudes and requirements in different regions, we closely monitor shifts in the global megatrends, "quiet signals"
and customer feedback via e.g. our Voice of Customer surveys. We use this feedback in our strategic planning
and discuss these demands internally with our R&D, sales, marketing, management and engineering teams.
Reputation
Climate-related issues are not seen as major reputational risks as we have clear and ambitious energy and emission
targets, worldwide environmental management systems in place, global guidelines about demands for suppliers,
rigorous internal HSE practices, and we systematically monitor and report our performance. In addition,
our product-related environmental claims are based on third-party-assessed facts.
Acute physical
Several local site analyses have been conducted during past years. Physical risks for our production sites are assessed
together with an insurance company and actions are taken accordingly. An increase in extreme weather conditions such
as cyclones, hurricanes, hailstorms and lightning could especially affect our crane installations and project sites. Heavy
rainfall and oods would put some of our production sites at risk. Extreme weather conditions can also have a potential
impact on the shipment of our products or spare parts. Heatwaves signicantly lower labor productivity and safety, and
we have mitigation practices in place.
Chronic physical
Rising sea levels could potentially affect future Port operations by hindering the service or installation of port cranes,
and rising sea levels might also endanger some of our production or subcontracted production sites.
Upstream
Climate improvement actions have a key impact on procurement and on direct operative costs via materials
(e.g. possible carbon taxes). Upstream climate-related risks, if materialized, can affect our operations in many ways,
for example by challenging the performance of the supply chain for manufacturing facilities and signicantly impacting
cost (price increases for goods, carbon tax, etc.). Having a continuance plan for production changes due to e.g. extreme
weather conditions lowers the interruption risk for production.
Downstream
We identify and respond to climate-related risks and opportunities by educating customers on the climate impact of their
choices. When looking at our Scope 3 data, the use of sold products is the largest source of emissions. We have a wide
offering of eco-efcient products and solutions for customers to choose from. Providing information about our products'
environmental impact and the technical specication for actual fuel reductions gives our customers the opportunity to
better understand and minimize their climate impact. We will continue to invest in research for new technologies, nding
the best partners in e.g. battery technology and developing software that also aims to decrease the use of energy
and emissions.
Climate change risks
49 Financial Review 2020
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Climate change opportunities
Products
and services
As we already have energy-efcient products available in all product segments and focus on continuous product
development and technological improvements, growing demand for low-emission products presents a great opportunity
for us – especially in traditional diesel engine-powered product segments. For diesel-powered vehicles we provide
innovative power options from hybrids to full electric and battery technology with additional energy-saving features such
as regenerative braking. Providing sufcient information on energy use, power options and emission data on operative
use to our customers is our way to take advantage of this opportunity. For example, choosing a full electric option for
terminal operation instead of a traditional diesel equipment eet can decrease emissions by to 60–80 percent during the
use phase of product.
Our service business advances circular economy by focusing on extending product lifecycles. Konecranes offers several
retrot solutions for customers to reduce emissions, increase fuel efciency and update technology to current standards.
Modernizations and retrots also enhance the energy efciency and performance of equipment as well as save a great
deal of raw materials, cutting emissions from logistics and reducing the energy used in manufacturing processes.
Also, modernizing an old crane instead of purchasing a new one saves hundreds of tons of steel, resulting in remarkable
emission savings. Circular economy business models also help us raise our resource and energy efciency while reducing
our customers’ environmental footprints.
Investment
in R&D
Increasing demand for low-carbon products affects the way we design our products. Substituting existing technology
with lower emission alternatives is a big opportunity for us and for our customers. Being at the forefront of technological
developments mitigates sustainability risks and gives Konecranes many opportunities arising from tightening environmental
regulations. Therefore, we continue to invest in the best available technologies. The annual R&D budget (48.5 million euros
in 2020) contains investments for environmental improvements, for example the development of more energy-efcient
products and ways to improve the whole manufacturing process. It is not possible to separate R&D costs related to climate
transition risks, as constant improvements in eco-efciency and reducing emissions are embedded in our work.
Operations
Konecranes actively follows its energy, fuel and emission performance, and has set targets for reducing energy
consumption and emissions in operations. These targets encourage the company to continuously seek new ways
to reduce our environmental footprint and reduce costs at the same time. We continued to invest in LED lights, improved
heating systems and insulation of buildings, and better compressors. In service operations, the focus is on fuel efcient
eet, eco-efcient driving and optimized logistics. We continue to seek synergies, utilize digitalization and improve
efciency in our own operations and internal supply chains as that is in the core of our strategy.
Respect for human rights
Konecranes respects human rights and promotes the
principles set in the UN Universal Declaration of Human
Rights, the UN Guiding Principles on Business and Human
Rights, the UN Sustainable Development Goals, and the
Declaration on Fundamental Principles and Rights at Work
of the International Labor Organization (ILO).
Konecranes’ commitment to human rights is evident in
multiple internal policies. Firstly, the company has included
the basic principles of human rights in its Code of Conduct.
Furthermore, Konecranes has a corporate policy, Respect in
the Workplace, which deals with equal opportunities and fair
employment practices, and creates a common framework
for employee practices. Additionally, the company has
separate policies for Health & Safety and Diversity &
Inclusion that also address human rights. To ensure that
human rights are also respected in our supply chain, we
have included our basic requirements in our Supplier Code
of Conduct. Human rights are part of our annual, mandatory
Code of Conduct training.
To ensure we are not neglecting typical human rights risks
existing in the sectors and countries where we operate, we
conducted a human rights risk screening in 2020 with the
help of an external service provider. The exercise covered our
own activities, our supply chain and the use of our products.
The focus of the risk screening was on people.
Health and safety-related risks stand out as a potential
high-risk area both for our own employees and for people
in our value chain. Typical human right risks for ofce
employees are discrimination and the privacy of personal
data. We take privacy very seriously, and you can read more
about Konecranes’ activities to reduce IT risks in the risk
management section of the Sustainability Report.
To proactively prevent discrimination, we have a strong
Diversity & Inclusion program that is led by a Diversity &
Inclusion ofcer. If discrimination still occurs, we have a clear
process how to investigate the case. In 2021 we will conduct
social assessments in our own operations located in high-risk
countries, paying special attention to issues identied in the
risk screening.
As we have a complex supply chain located also in countries
lacking the strong enforcement of labor laws, labor rights
can be at risk. To mitigate risks, our Supplier Code of
Conduct includes our expectations towards our supply
chain. For years, we have also included elements of social
responsibility in our supplier management processes, like
in the supplier selection, and in the audits run by supplier
quality teams. In 2020 we started third-party audits
concentrating particularly on compliance with our Supplier
Code of Conduct.
Safety
Safety is an integral part of our business and prioritizing
it in all areas of our operations brings us a competitive
advantage. Our target is for everyone to return home
safely, every day. We seek to achieve our objectives
through strategic, Group-led programs and business-specic
50 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
initiatives. Transparent and comprehensive safety reporting
and follow-up procedures help us build a coherent safety
culture, recognize our most signicant risks and validate the
effectiveness of our safety work. Our occupational health
and safety principles are dened in the Code of Conduct and
in our Quality, Environmental, Health and Safety policies,
and we have several safety management tools and global
practices in place.
There are considerable occupational health and safety risks
in the material handling industry. Our most signicant safety
risks are related to factory work, vehicle incidents, crane
and equipment installation, and the service business, where
our technicians’ working conditions vary from job to job. All
Konecranes employees are properly trained to perform their
tasks safely and correctly.
The company follows incidents and hazards through
management systems, the ARMOR reporting system and
the AIR product compliance management system, as well
as through customer feedback collected after each major
delivery. Konecranes has set a target to get all manufacturing
units certied against OHSAS/ISO 45001 by the end of 2021.
Currently we are 65.8 percent OHSAS/45001 certied. Safety
performance is discussed monthly in the Group and Business
Area leadership meetings, focusing especially on cases with
Serious Injury or Fatality Potential (what we call our SIF
Exposure).
The KPI for Konecranes safety is the total recordable incident
rate TRI, which refers to the number of injuries requiring
medical treatment per million working hours. The recordable
incident rate for 2020 was 7.5 (8.1 in 2019), an improvement
of 7.4 percent compared to the previous year. We also track
the number of Safety Observations made as a leading KPI. In
2020 we made a total of 28,486 safety observations, which
was 49.0 percent more than in 2019 (19,124).
People Strategy
Konecranes’ talented, innovative, and engaged employees
help its customers enhance safety and productivity every day.
The Konecranes people management strategy supports this:
it ensures that the needed resources and skillsets for the
future are in place, and that employees are motivated and
capable of meeting future business requirements.
Konecranes believes in continuous development and offers
its employees a variety of training courses and activities in
different areas – including technology, leadership, health
and safety, language courses, culture, project management
and the environment.
At Konecranes employee engagement in measured by
conducting pulse surveys across the organization. The main
risk related to low employee engagement is the loss of talent
and competencies. At Konecranes this is mitigated through
fair and competitive compensation, culture and leadership
development programs, succession planning, internal job
rotation and talent management, as well as through various
programs to support professional growth.
Diversity
Konecranes aims to create a diverse and inclusive working
environment where people feel trusted and a sense of
belonging. All backgrounds and the variety of talents are
an asset for the company’s growth. Fair and responsible
practices, equal career development opportunities and
embracing diversity are the key enablers in attracting
employees with the potential to be the best in the industry.
Inclusion means that the strengths of differences are
welcomed and leveraged and that Konecranes offers a
working environment where everyone can be themselves
and feel valued for their contribution. Fostering diversity
– in terms of gender, age and cultural and educational
backgrounds – has been repeatedly proven to encourage
innovation, deliver exceptional organizational performance
and to enable outstanding customer service. In Konecranes’
view, varied skill sets are a key driver of creativity and value
creation, and diversity and inclusivity result in teams that
deliver better results.
A Diversity and Inclusion (D&I) Policy was created in 2018.
In 2019 a strategy on inclusion and diversity was established,
based on a three-year roadmap. In 2020, with strong
awareness-building globally and locally, the company was
able to draw attention to diversity and inclusion, educating
the organization and individuals about unconscious biases
and the importance of having D&I as a cultural foundation.
D&I was used as a tool to boost the sense of togetherness,
especially during the COVID-19 pandemic – a key activity
was a new internal “Coffee and Culture” webinar series
focusing on company’s culture and belonging. Also, a fast
track program was launched to support the acceleration of
women in leadership positions; at the end of 2020 there
were 13.1 percent women in Senior Management (11.4
percent in 2019). The goal is to have at least 22 percent
gender diversity in senior management by the end of 2025.
The current gender balance for all Konecranes employees is
16.7 percent female and 83.2 percent male. With the 2021
D&I vision, purpose and goals, Konecranes is further raising
its ambition for taking a leadership position as a diverse and
inclusive company.
51 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Litigation
Various legal actions, claims, and other proceedings are
pending against the Group in different countries.
These actions, claims, and other proceedings are typical
for this industry and are consistent with the global business
offering that encompasses a wide range of products
and services. These matters involve contractual disputes,
warranty claims, product liability (including design defects,
manufacturing defects, failure to warn, and asbestos legacy),
employment, auto liability, and other matters involving
general liability claims.
Risks and uncertainties
Global pandemics, such as COVID-19, have and may have
a negative impact on Konecranes’ customers and its own
operations. Physical restrictions on the daily conduct
of people and businesses can lead to lower revenue
recognition and adversely impact cash ow. Physical
restrictions may also lead to component shortages and
inventory obsolescence. Furthermore, global pandemics can
increase the likelihood of weaker demand conditions and,
as a result, may lead to overcapacity, impairment of assets
and credit losses.
Konecranes operates in emerging countries that face political,
economic, and regulatory uncertainties. Adverse changes
in the operating environment of these countries may result
in currency losses, elevated delivery costs, or loss of assets.
Konecranes operates a crane factory in Zaporozhye, Ukraine.
The operations in emerging countries have had a negative
impact on the aging structure of accounts receivable and may
increase credit losses or the need for higher provisions for
doubtful accounts.
Political risks and uncertainties have also increased outside
the emerging countries due to the emergence of populism,
patriotism and protectionism in a number of Western
economies. This has led and can lead to further increases
in tariffs on imported goods, such as components that
Konecranes manufactures centrally before exporting them
to most of the countries in which it operates. The resulting
tariffs may result in a decrease in protability.
Konecranes has made several acquisitions and expanded
organically into new countries. A failure to integrate the
acquired businesses, MHPS and MHE-Demag in particular,
or grow newly established operations may result in a
decrease in protability and impairment of goodwill
and other assets.
One of the key strategic initiatives of Konecranes is
oneKONECRANES. This initiative involves a major capital
expenditure on information systems. A higher-than-
expected development or implementation costs, or a
failure to extract business benets from new processes and
systems may lead to an impairment of assets or decrease in
protability.
Konecranes delivers projects, which involve risks related,
for example, to engineering and project execution with
Konecranes’ suppliers. A failure to plan or manage these
projects may lead to higher-than-estimated costs or disputes
with customers.
Challenges in nancing, e.g. due to currency uctuations,
may force customers to postpone projects or even cancel the
existing orders. Konecranes intends to avoid incurring costs
for major projects under construction in excess of advance
payments. However, it is possible that the cost-related
commitments in some projects temporarily exceed the
amount of advance payments.
The Group’s other risks are presented in the Notes to the
Financial Statements and the Governance Supplement to the
Annual Report.
Events after the end
of the reporting period
Performance Share Plan 2021
On February 3, 2021, Konecranes announced that the Board
of Directors had resolved to establish a new Performance
Share Plan 2021. The Plan has a performance period from
2021 to 2023 with three separate measurement periods and
separate targets for 2021, 2022 and 2023.
The criterion for the measurement period 2021 is adjusted
earnings per Share (EPS). The EPS target for the rst
measurement period was also resolved by the Board of
Directors.
The target group of the Plan for the performance period
2021–2023 consists of a maximum of 170 key employees
of the Konecranes group.
Additional information, including essential terms and
conditions of the Plan, is available in the stock exchange
release dated February 3, 2021.
First quarter demand outlook
The worldwide demand picture remains subject to volatility
due to the COVID-19 pandemic.
In Europe and North America, the current demand
environment within the industrial customer segments
is showing signs of improvement but remains below
52 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
the year-end 2019 level. At the moment, the demand
environment in Europe is less volatile compared to North
America. In Asia-Pacic, demand environment has started to
show signs of improvement also outside China but remains
below the year-end 2019 level.
Global container throughput has reached the previous year’s
level, and long-term prospects related to global container
handling remain healthy.
Financial guidance
Konecranes expects net sales to increase in full-year 2021
compared to 2020. Konecranes expects the full-year 2021
adjusted EBITA margin to improve from 2020.
Board of directors’ proposal
for disposal of distributable funds
The parent company’s non-restricted equity is
EUR 985,739,389.75, of which the net income for the year
is EUR 107,111,563.90. The Group’s non-restricted equity
is EUR 1,166,562,000.
According to the Finnish Companies Act, the distributable
funds of the company are calculated based on the parent
company’s non-restricted equity. For the purpose
of determining the amount of the dividend, the Board
of Directors has assessed the liquidity of the parent company
and the economic circumstances subsequent to the end
of scal year.
Based on such assessments, the Board of Directors proposes
to the Annual General Meeting to be held on March 30,
2021 that a dividend of EUR 0.88 be paid on each share
and that the remaining nonrestricted equity is retained
in shareholders’ equity. The proposal is in line with the
combination agreement and will be included in the notice to
the Annual General Meeting, which will be published during
February 2021.
A PDF version of the Konecranes’ full audited nancial
statements, including the report of the Board of Directors,
and corporate governance statement will be available as pdf
documents on Konecrances website on Friday, March 5, 2021.
Espoo, February 4, 2021
Konecranes Plc
Board of Directors
53 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Konecranes Group 2016 − 2020
Business development
2020 2019 2018 2017 2016
Orders received MEUR 2,727.3 3,167.3 3,090.3 3,007.4 1,920.7
Order book MEUR 1,715.5 1,824.3 1,715.4 1,535.8 1,038.0
Net sales MEUR 3,178.9 3,326.9 3,156.1 3,137.2 2,118.4
of which outside Finland MEUR 3,096.3 3,244.2 3,056.3 3,031.5 1,939.8
Export from Finland MEUR 1,075.9 969.6 777.0 655.6 686.7
Personnel on average 17,027 16,104 16,247 15,519 11,398
Personnel on December 31 16,862 16,196 16,077 16,371 10,951
Capital expenditure MEUR 42.8 39.5 35.4 35.7 33.8
as % of Net sales % 1.3% 1.2% 1.1% 1.1% 1.6%
Research and development costs MEUR 48.5 41.1 42.1 36.0 22.3
as % of Net sales % 1.5% 1.2% 1.3% 1.1% 1.1%
Protability
Net sales MEUR 3,178.9 3,326.9 3,156.1 3,137.2 2,118.4
Adjusted EBITA MEUR 260.8 275.1 257.1 216.6 144.8
as % of net sales % 8.2% 8.3% 8.1% 6.9% 6.8%
Adjusted operating prot MEUR 224.9 250.4 219.6 178.0 140.8
as % of net sales % 7.1% 7.5% 7.0% 5.7% 6.6%
Operating prot MEUR 173.8 148.7 166.2 318.7 84.9
as % of net sales % 5.5% 4.5% 5.3% 10.2% 4.0%
Income before taxes MEUR 170.3 118.5 138.7 276.0 62.1
as % of net sales % 5.4% 3.6% 4.4% 8.8% 2.9%
Net income (incl.
non-controlling interest)
MEUR 122.9 82.8 98.3 225.4 37.6
as % of net sales % 3.9% 2.5% 3.1% 7.2% 1.8%
Key gures and balance sheet
2020 2019 2018 2017 2016
Equity (incl.
non-controlling interest)
MEUR 1,251.1 1,246.7 1,284.1 1,278.9 445.5
Balance sheet MEUR 4,016.5 3,854.2 3,567.0 3,562.9 1,529.9
Return on equity % 9.8 6.5 7.7 26.1 8.3
Return on capital employed % 8.3 6.3 7.9 23.7 10.3
Current ratio 1.4 1.4 1.3 1.3 1.1
Equity to asset ratio % 34.1 35.4 39.8 39.2 32.9
Net working capital MEUR 337.2 446.0 410.4 324.6 304.3
Interest-bearing net debt MEUR 577.1 655.3 545.3 525.3 129.6
Interest-bearing
net debt / Equity
% 46.1 52.6 42.5 41.1 29.1
Shares in gures
Earnings per share, basic EUR 1.54 1.03 1.29 2.89 0.64
Earnings per share, diluted EUR 1.54 1.03 1.29 2.89 0.64
Equity per share EUR 15.69 15.70 16.06 15.95 7.58
Cash ow per share EUR 5.15 2.19 1.39 3.19 1.87
Dividend per share EUR 0.88* 1.20 1.20 1.20 1.05
Dividend /earnings % 57.1 116.5 93.0 41.5 164.1
Effective dividend yield % 3.1 4.4 4.5 3.1 3.1
Price /earnings 18.7 26.6 20.5 13.2 52.8
Trading low / high** EUR 14.05/33.08 24.84/38.15 25.05/42.43 31.52/42.64 17.92/36.89
Average share price** EUR 23.03 29.98 33.56 36.72 25.38
Share price on December 31** EUR 28.78 27.40 26.39 38.18 33.78
Year-end market capitalization MEUR 2,277.5 2,160.2 2,080.0 3,006.9 1,984.6
Number traded*** (1,000) 182,650 144,580 174,340 161,890 138,110
Stock turnover % 231.0 183.4 221.2 206.8 235.1
Average number of shares
outstanding, basic
(1,000) 79,078 78,836 78,811 78,273 58,748
Average number of shares
outstanding, diluted
(1,000) 79,078 78,836 78,811 78,273 58,748
Number of shares
outstanding, at end of the period
(1,000) 79,134 78,839 78,817 78,756 58,751
* The Board’s proposal to the AGM
** Source: Nasdaq Helsinki
*** Source: Fidessa
54 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Calculation of key gures
Operating prot (EBIT)
Sales + Other operating income−Materials, supplies and subcontracting−
Personnel cost−Depreciation and impairment−Other operating expenses
Adjusted EBITA
Operating prot (EBIT) + purchase price allocation impacts and
impairment + restructuring costs + transaction costs
Adjusted Operating prot Operating proft (EBIT) + restructuring costs + transaction costs
Return on equity (%):
Net prot for the period
X 100
Total equity (average during the period)
Return on capital
employed (%):
Income before taxes + interest paid + other nancing cost
X 100
Total amount of equity and liabilities−non-interest bearing debts
(average during the period)
Current ratio:
Current assets
Current liabilities
Equity to asset ratio (%):
Shareholders' equity
X 100
Total amount of equity and liabilities−advance payment received
Interest-bearing
net debt / Equity (%):
Interest-bearing liabilities−liquid assets−loans receivable
X 100
Total equity
Earnings per share:
Net prot for the shareholders of the parent company
Average number of shares outstanding
Earnings per share,
diluted:
Net prot for the shareholders of the parent company
Average fully diluted number of shares outstanding
Equity per share:
Equity attributable to the shareholders of the parent company
Number of shares outstanding
Cash ow per share:
Net cash ow from operating activities
Average number of shares outstanding
Effective dividend yield
(%):
Dividend per share
X 100
Share price at the end of nancial year
Price per earnings:
Share price at the end of nancial year
Earnings per share
Net working capital:
Non interest-bearing current assets + deferred tax assets (excluding
Purchase Price Allocation)−Non interest-bearing current liabilities−deferred
tax liabilities (excluding Purchase Price Allocation)−provisions
Interest-bearing net debt:
Interest-bearing liabilities (non current and current)−cash and cash
equivalents−loans receivable (non current and current)
Year-end market
capitalization:
Number of shares outstanding multiplied by the share price
at the end of year
Average number
of personnel:
Calculated as average of number of personnel in quarters
Number of shares
outstanding:
Total number of shares−treasury shares
Operating prot % and EBITA % are used to measure business protability before
nancial items and taxes. Adjusted operating prot and Adjusted EBITA are used to
reect the underlying business performance and to enhance comparability between
nancial periods and is frequently used by management, analysts and investors. See
also note 3 for reconciliation.
Return on equity % represents the rate of return that shareholders receive on their
investments and Return on capital employed % represent relative protability or the
rate of return that has been received on capital employed requiring interest or other
return.
Current ratio, Equity to asset ratio, Interest-bearing net debt, Interest-bearing net debt
/ Equity are used to measure solvency and indebtedness of the Konecranes Group.
Some of Konecranes’ loan agreements include a covenant measured by Interest-
bearing net debt / Equity percentage. Capital expenditure and Net working capital
give additional information of the cash ows and funding needs of the Konecranes
Group. Share related alternative performance measures enhance the information of
equity, cash ow and dividend attributable to the shareholders and development of the
Konecranes share value in the stock exchange.
55 Financial Review 2020
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Reconciliation of certain alternative
performance measures
Reconciliation of adjusted operating prot and adjusted EBITA
2020 2019
Operating prot 173.8 148.7
Restructuring costs
Employment termination costs 27.5 71.3
Impairments of non-current assets 0.0 0.8
Impairments of inventories 7.0 6.7
Other restructuring costs and income 8.0 21.9
Restructuring costs, total 42.6 100.7
Transaction costs 8.5 0.9
Adjusted operating prot 224.9 250.4
Purchase price allocation impacts 35.9 24.7
Adjusted EBITA 260.8 275.1
Reconciliation of interest-bearing net debt
Interest-bearing liabilities 1,170.8 1,034.2
Loans receivable -1.8 -0.7
Cash and cash equivalents -591.9 -378.2
Interest-bearing net debt 577.1 655.3
Reconciliation of net working capital
Total current assets 1,975.8 1,867.7
- Interest bearing current assets -1.8 -0.7
- Cash and cash equivalents -591.9 -378.2
Non-interest-bearing current assets 1,382.1 1,488.8
Deferred tax assets (excluding purchase price allocation) 118.5 118.5
Total current liabilities -1,437.3 -1,369.1
- Current Interest-bearing liabilities 311.1 248.4
Non-interest-bearing current liabilities -1,126.2 -1,120.7
Deferred tax liabilities (excluding purchase price allocations) -18.9 -21.5
Non-current provisions -18.4 -19.1
Net working capital 337.2 446.0
56 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Consolidated statement of income − IFRS
(1,000,000 EUR)
Jan 1−Dec 31
2020
Jan 1−Dec 31
2019
Note:
3,5,6 Sales 3,178.9 3,326.9
Other operating income 10.7 19.6
7 Materials, supplies and subcontracting -1,473.0 -1,505.0
7,8 Personnel cost -993.5 -1,080.7
9 Depreciation and impairments -130.0 -123.6
7 Other operating expenses -419.3 -488.5
Operating prot 173.8 148.7
4,16 Share of associates' and joint ventures' result 21.2 4.5
10 Financial income 38.6 2.5
10 Financial expenses -63.2 -37.2
Prot before taxes 170.4 118.5
11 Taxes -47.5 -35.7
PROFIT FOR THE PERIOD 122.9 82.8
Prot for the period attributable to
Shareholders of the parent company 122.2 81.0
Non-controlling interest 0.7 1.8
12 Earnings per share, basic (EUR) 1.54 1.03
12 Earnings per share, diluted (EUR) 1.54 1.03
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
(1,000,000 EUR)
Jan 1−Dec 31
2020
Jan 1−Dec 31
2019
Note:
Prot for the period 122.9 82.8
Items that can be reclassied into
prot or loss
34 Cash ow hedges 8.1 -0.7
Exchange differences on translating
foreign operations
-15.8 6.8
11.3
Income tax relating to items that
can be reclassied into prot or loss
-1.6 0.2
Items that cannot be reclassied
into prot or loss
28
Re-measurement gains (losses) on
dened benet plans
-18.8 -27.6
11.3
Income tax relating to items that
cannot be reclassied into prot or loss
5.9 8.1
Other comprehensive income
for the period, net of tax
-22.2 -13.2
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD
100.7 69.6
Total comprehensive income
attributable to:
Shareholders of the parent company 100.4 67.4
Non-controlling interest 0.3 2.2
The accompanying notes form an integral part of the consolidated nancial statements.
57 Financial Review 2020
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Consolidated balance sheet − IFRS
EQUITY AND LIABILITIES
(1,000,000 EUR) Dec 31, 2020 Dec 31, 2019
Note:
Equity attributable to equity holders of the parent company
Share capital 30.1 30.1
Share premium 39.3 39.3
Paid in capital 752.7 752.7
34 Fair value reserves 6.0 -0.5
Translation difference -11.6 3.7
Other reserve 58.0 58.8
Retained earnings 245.3 272.4
Net prot for the period 122.2 81.0
23 Total equity attributable to equity holders of the parent company 1,242.0 1,237.5
16 Non-controlling interest 9.1 9.2
Total equity 1,251.1 1,246.7
Non-current liabilities
26,27,32 Interest-bearing liabilities 859.7 785.8
28 Other long-term liabilities 306.4 290.4
24 Provisions 18.4 19.1
17 Deferred tax liabilities 143.6 143.1
Total non-current liabilities 1,328.1 1,238.4
Current liabilities
26,27,32 Interest-bearing liabilities 311.1 248.4
6 Advance payments received 352.3 337.3
Accounts payable 201.6 236.2
24 Provisions 142.6 151.7
25 Other short-term liabilities (non-interest-bearing) 61.2 44.3
32 Other nancial liabilities 5.5 6.2
Income tax payables 18.5 14.6
Accrued costs related to delivered goods and services 165.3 156.0
25 Accruals 179.2 174.4
Total current liabilities 1,437.3 1,369.1
Total liabilities 2,765.4 2,607.5
TOTAL EQUITY AND LIABILITIES 4,016.5 3,854.2
The accompanying notes form an integral part of the consolidated nancial statements.
ASSETS
(1,000,000 EUR) Dec 31, 2020 Dec 31, 2019
Note:
Non-current assets
13 Goodwill 1,016.7 908.2
14 Intangible assets 536.0 531.6
15 Property, plant and equipment 341.8 332.8
Advance payments and construction in progress 20.0 15.7
16
Investments accounted for using
the equity method
6.5 73.9
Other non-current assets 0.8 0.9
17 Deferred tax assets 118.9 123.4
Total non-current assets 2,040.7 1,986.5
Current assets
18 Inventories 644.8 658.7
19 Accounts receivable 489.2 530.4
20 Other receivables 30.9 33.7
Income tax receivables 13.4 30.5
6
Receivable arising from percentage
of completion method
102.3 167.8
32 Other nancial assets 21.2 8.1
21 Deferred assets 82.1 60.3
22 Cash and cash equivalents 591.9 378.2
Total current assets 1,975.8 1,867.7
TOTAL ASSETS 4,016.5 3,854.2
58 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Consolidated statement of changes in equity − IFRS
Equity attributable to equity holders of the parent company
(1,000,000 EUR) Share capital
Share
premium
account Paid in capital
Cash ow
hedges
Translation
difference
Other
reserve
Retained
earnings Total
Non-
controlling
interest
Total
equity
Balance at January 1, 2020 30.1 39.3 752.7 -0.5 3.7 58.8 353.4 1,237.5 9.2 1,246.7
Dividends paid to equity holders -95.0 -95.0 -0.3 -95.3
Equity-settled share based
payments (note 29)
-0.8 0.0 -0.8 -0.8
Acquisitions -0.1 -0.1 -0.1 -0.2
Prot for the period 122.2 122.2 0.7 122.9
Other comprehensive income 6.5 -15.4 -12.9 -21.8 -0.4 -22.2
Total comprehensive income 6.5 -15.4 109.3 100.4 0.3 100.7
Balance at December 31, 2020 30.1 39.3 752.7 6.0 -11.7 58.0 367.6 1,242.0 9.1 1,251.1
Balance at January 1, 2019 30.1 39.3 752.7 0.1 -2.8 55.2 391.2 1,265.8 18.3 1,284.1
Change in accounting principles
(IFRS 16)
-4.5 -4.5 -4.5
Balance at January 1, 2019,
restated
30.1 39.3 752.7 0.1 -2.8 55.2 386.7 1,261.3 18.3 1,279.6
Dividends paid to equity holders -94.6 -94.6 -4.5 -99.1
Equity-settled share based
payments (note 29)
3.6 0.0 3.6 3.6
Acquisitions -0.2 -0.2 -0.1 -0.3
Disposals 0.0 0.0 -6.7 -6.7
Prot for the period 81.0 81.0 1.8 82.8
Other comprehensive income -0.6 6.5 -19.5 -13.6 0.4 -13.2
Total comprehensive income -0.6 6.5 61.5 67.4 2.2 69.6
Balance at December 31, 2019 30.1 39.3 752.7 -0.5 3.7 58.8 353.4 1,237.5 9.2 1,246.7
59 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Consolidated cash ow statement − IFRS
(1,000,000 EUR)
Jan 1−Dec 31
2020
Jan 1−Dec 31
2019
Note:
Cash ow from operating activities
Prot for the period 122.9 82.8
Adjustments to net prot for the period
Taxes 47.5 35.7
Financial income and expenses 24.6 34.7
Share of associates' and joint ventures' result -21.2 -4.5
Depreciation and impairments 130.0 123.6
Prots and losses on sale of xed assets -2.2 -0.5
Other adjustments 0.8 3.2
Operating income before change
in net working capital
302.4 275.0
Change in interest-free current receivables 115.7 -40.3
Change in inventories 42.4 -18.9
Change in interest-free current liabilities -33.1 46.7
Change in net working capital 125.0 -12.5
Cash ow from operations before
nancing items and taxes
427.4 262.5
10 Interest received 21.9 26.5
10 Interest paid -36.8 -46.1
10 Other nancial income and expenses 20.7 -24.2
11 Income taxes paid -26.1 -45.9
Financing items and taxes -20.3 -89.7
NET CASH FROM OPERATING ACTIVITIES 407.1 172.8
(1,000,000 EUR)
Jan 1−Dec 31
2020
Jan 1−Dec 31
2019
Note:
Cash ow from investing activities
4 Acquisition of Group companies, net of cash -124.1 -3.1
4 Divestment of businesses, net of cash 0.0 4.2
Capital expenditures -43.8 -40.7
Proceeds from sale of property, plant
and equipment and other
2.8 16.4
NET CASH USED IN INVESTING ACTIVITIES -165.1 -23.2
Cash ow before nancing activities 242.0 149.6
Cash ow from nancing activities
Proceeds from non-current borrowings 151.8 140.0
Repayments of non-current borrowings -5.4 -20.6
Repayments of lease liability -42.5 -44.3
Proceeds from (+), payments of (-) current borrowings -20.0 19.6
Change in loans receivable -1.0 -0.1
Dividends paid to equity holders
of the parent company
-95.0 -94.6
Dividends paid to non-controlling interests -0.3 -4.5
NET CASH USED IN FINANCING ACTIVITIES -12.4 -4.5
Translation differences in cash -15.9 2.6
CHANGE OF CASH AND CASH EQUIVALENTS 213.7 147.7
Cash and cash equivalents at beginning of period 378.2 230.5
22 Cash and cash equivalents at end of period 591.9 378.2
CHANGE OF CASH AND CASH EQUIVALENTS 213.7 147.7
The effect of changes in exchange rates has been eliminated by converting the beginning balance at the
rates current on the last day of the year.
The accompanying notes form an integral part of the consolidated nancial statements.
60 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Notes to the consolidated nancial statements
1. Corporate information
Konecranes Plc (“Konecranes Group” or “the Group”) is a
Finnish public limited company organized under the laws
of Finland and domiciled with its principal place of business
in Hyvinkää. The company is listed on the NASDAQ Helsinki.
Konecranes is a world-leading manufacturer and servicer of
cranes, lifting equipment and machine tools, serving a broad
range of customers, including manufacturing and process
industries, shipyards, ports and terminals. Konecranes
operates internationally, with its products being manufactured
in North and South America, Europe, Africa, the Middle
East, and Asia and sold worldwide. Konecranes has three
reportable segments, which it calls Business Areas: Business
Area Service, Business Area Industrial Equipment and
Business Area Port Solutions.
2. Accounting principles
2.1. Basis of preparation
The consolidated nancial statements of Konecranes Plc have
been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU.
The consolidated nancial statements have been prepared on
a historical cost basis, except for items that are required by
IFRS to be measured at fair value, principally certain nancial
instruments.
The consolidated nancial statements including notes thereto
are presented in millions of euros and all values are rounded
to the nearest million (€000,000) except when otherwise
indicated.
Due to the rounding, some totals might differ from the sum
of individual gures as calculations are done originally in
thousands of euros.
The nancial statements were approved for issuance
by the Board of Directors on February 3, 2021.
Principles of consolidation
The consolidated nancial statements comprise the
consolidated balance sheet of Konecranes Plc and its
subsidiaries as at December 31, 2020 and 2019 and the
consolidated statements of income and cash ows for the
periods ended December 31, 2020 and 2019. Control is
achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and
has the ability to affect those returns through its power over
the investee. Specically, the Group controls an investee if,
and only if, the Group has:
• Power over the investee (i.e., existing rights that give
it the current ability to direct the relevant activities
of the investee)
• Exposure, or rights, to variable returns from its
involvement with the investee
• The ability to use its power over the investee to
affect its returns
Generally, there is a presumption that majority of voting
rights result in control. To support this presumption and when
the Group has less than majority of the voting or similar
rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over
an investee, including:
• The contractual arrangement with the other vote
holders of the investee
• Rights arising from other contractual arrangements
• The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee
if facts and circumstances indicate that there are changes
to one or more of the three elements of control. Consoli da-
tion of a subsidiary begins when the Group obtains control
over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses
of a subsidiary acquired or disposed of during the year are
included in the consolidated nancial statements from the
date the Group gains control until the date the Group ceases
to control the subsidiary.
Prot or loss and each component of other comprehensive
income (OCI) are attributed to the equity holders of the
parent of the Group and to the non-controlling interests,
even if this results in the non-controlling interests having
a decit balance. When necessary, adjustments are made
to the nancial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting
policies. All intra-group assets and liabilities, equity, income,
expenses and cash ows relating to transactions between
members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without
a loss of control, is accounted for as an equity transaction.
61 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
If the Group loses control over a subsidiary, it derecognizes
the related assets (including goodwill), liabilities, non-
controlling interest and other components of equity while
any resultant gain or loss is recognized in prot or loss.
Any investment retained is recognized at fair value.
Investment in associates and joint ventures
An associate is an entity over which the Group has
signicant inuence. Signicant inuence is the power to
participate in the nancial and operating policy decisions of
the investee but is not control or joint control over those
policies.
A joint venture is a type of joint arrangement whereby
the parties that have joint control of the arrangement
have rights to the net assets of the joint venture. Joint
control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the
relevant activities require unanimous consent of the parties
sharing control.
The Group’s investments in its associates and joint ventures
are accounted for using the equity method. Under this
method, the consolidated nancial statements show the
Group’s investment in and share of net assets of the
associate or joint venture. Any premium over net assets
paid to acquire an interest in an associate or joint venture is
recognized as goodwill within the same line as the underlying
investment. The statement of prot or loss reects the
Group’s share of the results of operations of the associate
or joint venture. Any change in OCI of those investees is
presented as part of the Group’s OCI. In addition, when
there has been a change recognized directly in the equity
of the associate or joint venture, the Group recognizes its
share of any changes, when applicable, in the statement
of changes in equity. Unrealized gains and losses resulting
from transactions between the Group and the associate or
joint venture are eliminated to the extent of the interest in
the associate or joint venture.
After application of the equity method, the Group determines
whether it is necessary to recognize an impairment loss on
its investment in its associate or joint venture. At each
reporting date, the Group determines whether there is
objective evidence that the investment in the associate
or joint venture is impaired. If there is such evidence, the
Group calculates the amount of impairment as the difference
between the recoverable amount of the associate or joint
venture and its carrying value, and then recognizes the loss
as share of prot of an associate and a joint venture in the
statement of prot or loss.
2.2. Use of estimates and judgments
The preparation of the nancial statements in accordance
with IFRS requires management to make estimates and
judgments that affect the valuation of reported assets
and liabilities and other information, such as contingent
liabilities and recognition of income and expenses in
the statement of income. These assumptions, estimates
and judgments are based on management’s historical
experience, best knowledge about the events and other
factors, such as expectations on future events, which
the Company assess to be reasonable in the given
circumstances. Although these estimates and judgments
are based on the management’s best understanding of
current events and circumstances, actual results may differ
from the estimates. Changes in estimates and assumptions
are recognized in the nancial period the estimate or
assumption is changed.
The most important items in the consolidated nancial
statements, which require management’s estimates and
that involve complex and subjective judgments and the
use of assumptions, some of which may be for matters
that are inherently uncertain and susceptible to change
are impairment testing, recognition of deferred taxes,
measurement of the fair value of assets and actuarial
assumptions in dened benet plans, and percentage of
completion revenue recognition in long term projects.
Impairment testing
The recoverable amount for goodwill has been determined
based on value in use of the relevant cash generating unit
to which the goodwill is allocated. The recoverable amounts
of all material intangible assets and property, plant and
equipment have also been based on their value in use.
The impairment testing of goodwill is based on numerous
judgmental estimates of the present value of the cash ows
which effect the valuation of the cash generating units
(CGU) pertaining to the goodwill. Cash ow forecasts are
made based on CGU specic historical data, order book, the
current market situation and industry specic information
of the future growth possibilities. These assumptions are
reviewed annually as part of management’s budgeting and
strategic planning cycles and can be subject to signicant
adjustment as arising from the development of the global
economy, pressure from competitors’ products as well as
changes in raw material prices and operating expenses.
The value of the benets and savings from the efciency
improvement programs already announced and included in
certain cash ow estimates are also subjective and based on
management’s best estimate of the impact. The fair value of
the CGUs is determined using a derived weighted average
cost of capital as the rate to discount estimated future cash
ows. The discount rate used may not be indicative of actual
rates obtained in the markets in the future.
See note 13.
Business Combinations
Acquisitions of subsidiaries are accounted for using the
acquisition method according to which the acquired
company’s identiable assets, liabilities and contingent
liabilities are measured at fair value on the date of
acquisition. The excess of the consideration transferred
for the business combination over the acquirer’s interest
in the net fair value of the identiable assets, liabilities
62 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
and contingent liabilities is recorded as goodwill. The
measurement of fair value of the acquired net assets
is based on market value of similar assets (property,
plant and equipment), or an estimate of expected cash
ows (intangible assets). The valuation, which is based
on prevailing repurchase value, expected cash ows or
estimated sales price, requires management judgement,
estimates and assumptions. See note 4.
Recognition of deferred taxes
The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the
periods in which those temporary differences become
deductible or in which tax losses can be utilized. The tax
effect of unused tax losses is recognized as a deferred tax
asset when it becomes probable that the tax losses will
be utilized. In making assessments regarding deferred tax
assets, management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income and
tax planning strategies. The actual current tax exposure is
estimated together with assessing temporary differences
resulting from differing treatment of items, such as
depreciation, provisions and accruals, for tax and accounting
purposes. When recording the deferred tax assets judgment
have been based on the estimates of the taxable income in
each subsidiary and country in which Konecranes operates,
and the period over which the deferred tax assets will be
recoverable based on the estimated future taxable income
and planned tax strategies to utilize these assets. The
amount of deferred tax assets considered realizable could
however be reduced in subsequent years if estimates of
future taxable income during their carry forward periods are
reduced, or rulings by the tax authorities are unfavourable.
Estimates are therefore subject to change due to both
market related and tax authorities related uncertainties, as
well as Konecranes’ own future decision matters such as
restructuring. Konecranes is unable to accurately quantify the
future adjustments to deferred income tax expense that may
occur as a result of these uncertainties. See note 17.
Actuarial assumptions in dened benet plans
The net pension liability and expense for dened benet
plans is based on various actuarial assumptions such as the
assumed discount rate, expected development of salaries and
pensions and mortality rates. Signicant differences between
assumptions and actual experience, or signicant changes in
assumptions, may materially affect the pension obligations.
The effects of actual results differing from assumptions and
the changing of assumptions are included in Remeasurement
gains/loss on dened benet plans in other comprehensive
income. Discount rates are determined annually based on
changes in long-term, high quality corporate bond yields.
Decreases in the discount rates results in an increase in the
dened benet obligation and in pension costs. Conversely,
an increase in the discount rate results in a decrease in the
dened benet obligation and in pension costs. Increases
and decreases in mortality rates have an inverse impact on
the dened benet obligation and pension costs. Increases
and decreases in salary and pension growth rates have a
direct correlating impact on the dened benet obligation and
pension costs.
The assumed discount rate, which is based on rates observed
at the end of the preceding nancial year may not be
indicative of actual rates realized. The actual development for
salaries and pensions may not reect the estimated future
development due to the uncertainty of the global economy
and various other factors. Konecranes uses generational
mortality tables to estimate probable future mortality
improvements. These tables assume that the trend of
increasing life expectancy will continue, resulting in pension
benet payments to younger members being likely to be paid
for longer time periods than older members’ pensions, given
that assumed retirement ages are those dened in the rules
of each plan.
The funded status, which can increase or decrease based
on the performance of the nancial markets or changes in
our assumptions, does not represent a mandatory short-
term cash obligation. Instead, the funded status of a dened
benet pension plan is the difference between the dened
benet obligation and the fair value of the plan assets.
See note 28.
Revenue recognition over time in long term projects
Konecranes applies the percentage of completion method
for recognizing revenue over time from certain long-term
large crane projects and modernizations in accordance with
IFRS 15 Revenue Recognition. The percentage of completion
is based on the cost-to-cost method. Under this method,
progress of contracts is measured by actual costs incurred
in relation to management’s best estimate of total estimated
costs at completion, which are reviewed and updated
routinely for contracts in progress. The cumulative effect of
any change in estimate is recorded in the period in which the
change in estimate is determined.
The percentage-of-completion method of accounting involves
the use of assumptions and projections, principally relating
to future material, labour and project-related overhead costs.
As a consequence, there is a risk that total contract costs
will exceed those originally estimated and the margin will
decrease, or the contract may become unprotable. This risk
increases as the duration of a contract increases because
there is a higher probability that the circumstances upon
the estimates were originally based will change, resulting
in increased costs that may not be recoverable. Factors
that could cause costs to increase include: unanticipated
technical problems with equipment supplied or developed by
us which may require us to incur additional costs to remedy,
changes in the cost of components, materials or labour,
project modications creating unanticipated costs, suppliers’
or subcontractors’ failure to perform, and delays caused by
unexpected conditions or events. By recognizing changes in
estimates cumulatively, recorded revenue and costs to date
reect the current estimates at the stage of completion for
each project. Additionally, losses on long-term contracts are
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recognized in the period when they are identied and are
based upon the anticipated excess of contract costs over the
related contract revenues.
COVID-19
The COVID-19 (coronavirus) pandemic has caused
Konecranes to review the estimates and assumptions used
in the preparation of the nancial statements. The impact
of the COVID-19 pandemic on estimates in the nancial
reporting rely on management’s best judgement. The Group
has assessed the impact of COVID-19 to goodwill, other
intangible and tangible assets as part of the impairment
testing process, dened benet plans, valuation of inventory,
recoverability of deferred tax assets and collectability of
account receivables as part of the regular reporting process.
Signicant judgement has been used for the cash ows used
for calculation of recoverable amounts of cash generating
units in impairment testing. The nancial impact of the
COVID-19 outbreak cannot yet be quantied fully, as it will
depend on the duration and severity of the virus in different
geographical areas. Therefore, estimates and assumptions
for market development, growth, and other signicant factors
used in the impairment testing are based on management’s
best estimates under the current circumstances. See note 13.
Konecranes reviews and estimates its customer credit risks
related to accounts receivable and ongoing projects as part
of normal reporting process. Provision for doubtful accounts
has been prepared based on the historical credit loss pattern,
but it is also adjusted case by case with forward-looking
risk positions. There has not been any signicant change
in payment delays related to customer receivables, but
credit risks might increase in case the COVID-19 pandemic
continues still for longer period. To limit this risk, the Group
applies a conservative credit policy towards customers. It
is Konecranes practice to review customers carefully before
entering formal business relationships and to require credit
reports from new customers. Customer credit risks are
mitigated with advance payments, letters of credits, payment
guarantees and credit insurance where applicable.
See note 19.
Although COVID-19 has impacted sales volumes and the
delays in deliveries have led to some increase in inventory
levels, Konecranes does not see material increase of the risk
for obsolete inventory values. There have not been major
order cancellations, but rather the orders and deliveries have
been postponed. The risks related to work in progress and
contract assets are also mitigated with advance payments
collected from customers. The risk of excess inventories has
also been limited through efcient demand-supply balancing.
2.3. Summary of signicant accounting policies
Revenue recognition
Revenue is recognized at an amount of consideration to
which the Group expects to be entitled in exchange for
transferring promised goods or services to a customer and
to the extent that it is probable that the economic benets
will ow to the Company, that revenue can be reliably
measured, and that collectability is reasonably assured.
Revenue is measured at the fair value of the consideration
received or receivable. The creditworthiness of the buyer is
assessed before engaging into a sale. However, if a risk of
non-payment arises after revenue recognition, a provision for
non-collectability is established.
Company recognizes revenue when it satises an identied
performance obligation by transferring promised goods or
service to the customer. Goods and services are generally
considered to be transferred when the customer obtains
the control to it. Control means that the customer can direct
the use of and obtain benet from the good and service and
also prevent others from directing the use of and receiving
the benets from them. Thus, customer has sole possession
of the right to use the good or service for the remainder of its
economic life or to consume the good or service in its
own operations.
The transaction price is usually xed but may also include
variable considerations such as volume or cash discounts
or penalties. Variable consideration is included in the
revenue only to the extent that it is highly probable that
the amount will not be subject of signicant reversal when
the uncertainty is resolved. The variable considerations are
estimated using the most likely value method if not yet
realized in the end of the reporting period. If the contract
is separated in to more than one performance obligation,
Konecranes allocates the total transaction price to each
performance obligation based on the estimated relative
standalone selling prices of the promised goods or services
in each performance obligation or if the standalone selling
prices do not exist Konecranes typically uses the expected
cost plus a margin approach to estimate the standalone
selling price.
Nature of goods and services and timing of
satisfaction of performance obligations and
signicant payment terms
Service segment principally generates revenue from providing
maintenance and consultative services as well as spare
parts for all types and makes of industrial cranes and hoists.
Service also provides modernizations which are complete
transformations of existing cranes as an alternative to
replacing them. Revenue from services is recognized when
the outcome of the transaction can be estimated reliably
and by customer acknowledgement for the completion of
the service work or by reference to the stage of completion
based on services performed at the end of the reporting
period if it can be measured. The assessment of the stage
of completion is dependent on the nature of the contract
but will generally be based on costs incurred to the extent
these relate to services performed up to the reporting date.
In modernization projects, typically customer controls the
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assets that is enhanced thus the revenue is recognized
over time according to the percentage of completion
method. In spare parts business, the transfer of control and
revenue recognition usually takes place either when goods
are shipped or made available to the buyer for shipment,
depending on the terms of the contract or when the
customer has accepted the delivery. Usually customers pay
according to agreed payment terms after the services and
products have been delivered. Sometimes it is required that
the payment is done in advance. In these cases, for example
in annual maintenance contracts, the payment is periodized
to meet the revenue recognition in accordance with the
delivery of services and goods. In modernization project the
customers are typically required to make advance payments
according to the milestones dened in the modernization
project contract.
Industrial Equipment segment generates revenue from hoists,
cranes and material handling solutions for a wide range of
customers. For standard equipment and components, the
revenue is recognized when goods are shipped or made
available to the buyer for shipment, depending on the terms
of the contract or when the customer has accepted the
deli very, which is typically an installed crane. The revenue
from large engineered crane projects is recognized over
time according to the percentage of completion (POC)
met hod as those contracts are specically negotiated for
the construction of an asset or a combination of assets that
are closely interrelated or interdependent in terms of their
design, technology and function or their ultimate purpose
or use. Konecranes is then also entitled to an amount that
at least compensates the entity for performance completed
to date even if the customer can terminate the contract for
the reasons other than our failure to perform as promised.
In general, the warranty period for cranes is two years for
which Group records a warranty provision based on historical
data. The revenue for extended warranty is recognized
over the extended warranty period. In crane projects the
customers are typically required to make advance payments
in accordance with the milestones dened in the crane
project contract.
Port Solutions segment generate revenue from container
handling equipment, shipyard equipment, mobile harbor
cranes, heavy-duty lift-trucks and Port Solution related
software. All equipment deliveries are supported by a
complete range of services. Most of the container handling
and shipyard equipment as well as mobile harbor cranes
are tailored and engineered to the customer needs so
the revenue from these projects is recognized over time
according to the percentage of completion (POC) method
as those contracts are specically negotiated for the
construction of an asset or a combination of assets that
are closely interrelated or interdependent in terms of their
design, technology and function or their ultimate purpose
or use. Konecranes is then also entitled to an amount that
at least compensates the entity for performance completed
to date even if the customer can terminate the contract for
the reasons other than our failure to perform as promised.
The revenue of lift trucks and standard ports equipment is
recognized when goods are shipped or made available to the
buyer for shipment, depending on the terms of the contract
or when the customer has accepted the delivery. The
general warranty period for ports equipment differs to some
extent depending on the components used in the projects.
For general warranty Group records a warranty provision
based on historical data. The revenue for possible extended
warranty is recognized over the extended warranty period. In
Port Solutions projects the customers are typically required to
make advance payments according to the milestones dened
in the project contract.
Measurement of stage of completion for
performance obligations satised over time
The stage of completion of a contract is determined by the
proportion that the contract costs incurred for the work
performed to date bear to the estimated total contract costs
(cost-to-cost method) at completion. This depicts best the
transfer of control to the customer, which occurs as we incur
costs on our contracts. When the nal outcome of a project
cannot be reliably determined, the costs arising from the
project are expensed in the same reporting period in which
they occur, but the revenue from the project is recorded
only to the extent that the Group will receive an amount
corresponding to actual costs. An expected loss on a contract
is recognized immediately in statement of income. Revenue
in respect of variations to the contract scope and claims is
recognized when it is probable that it will be received and is
capable of being measured reliably.
Research and development costs
Research costs are expensed as incurred. Development
expenditures on an individual project are recognized as an
intangible asset when the Group can demonstrate:
• The technical feasibility of completing the intangible asset
so that it will be available for use or sale.
• Its intention to complete and its ability to use or
sell the asset.
• How the asset will generate future economic benets.
• The availability of resources to complete the asset.
• The ability to reliably measure the expenditure
during development.
Amortization of capitalized development costs begins when
development is complete and the asset is available for use.
Adjusted EBITA (alternative performance measure)
Group is using adjusted EBITA as alternative performance
measure, to reect the underlying business performance
and to enhance comparability between nancial periods. It
is frequently used by management, analysts and investors.
Adjusted operating prot before amortization and impairment
of purchase price allocations (a non-GAAP measure)
represents earnings from continuing operations before
income taxes (a GAAP measure), excluding restructuring,
transaction and restructuring related asset impairment costs
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as well as other adjusting items, amortization and impairment
of purchase price allocations and nancial income and
expense. Alternative Performance measures should not be
considered as a substitute for measures of performance in
accordance with the IFRS. See also note 3.
Earnings per share
Basic earnings per share are computed by dividing net
income from continuing operations and net income
from discontinued operations all attributable to ordinary
shareholders by the weighted average number of shares
outstanding during the year. Diluted earnings per share
are calculated by assuming conversion or exercise of all
potentially dilutive share-based payment plans.
Dividend distribution
The company recognizes a liability to make dividend
distributions to equity holders when the distribution is
approved by the shareholders. A corresponding amount is
recognized directly in equity.
Employee benets
Konecranes companies have various pension plans
in accordance with local conditions and practices. Pensions
are generally managed for the Group companies by outside
pension insurance companies or by similar arrangements.
These pension plans are classied either as dened con tri-
bution or dened benet plans. Under dened contribution
plans, expenses are recognized for the period the con tri-
bu tion relates to. The Group has no legal or constructive
obligation to pay further contributions if the fund does
not hold sufcient assets to pay employee benets. The
Konecranes Group accounts for the Finnish system under
the Employees’ Pensions Act (TyEL) within insurance system
as a dened contribution plan.
Under dened benet plans, a liability recognized in the
balance sheet equals to the net of the present value of the
dened benet obligation (calculated using the Projected Unit
Credit Method) less the fair value of the plan assets at the
balance sheet date. Actuarial gains and losses are recognized
in the consolidated statement of other comprehensive income
as remeasurement items when they occur. Remeasurement
recorded in other comprehensive income is not recycled. Past
service cost is recognized in the statement of prot or loss in
the period of plan amendment. Net-interest is calculated by
applying the discount rate to the net dened liability or asset.
Independent actuaries calculate the dened benet obligation
by applying the Projected Unit Credit Method. The Group
presents service cost, past-service cost, gains and losses on
curtailments and settlements and net interest expense or
income as Personnel cost – Pension costs: Dened benet
plans in the statement of income (see Note 8).
A liability for termination benet is recognized at the earlier
of when the entity can no longer withdraw the offer of the
termination benet and when the entity recognizes any
related restructuring costs.
Share-based payments
Employees (including senior executives) of the Group and
its subsidiaries receive remuneration in the form of share-
based payments, whereby employees render services
as consideration for equity instruments (equity-settled
transactions) or receive settlement in cash (cash-settled
transactions).
Equity-settled transactions
The cost of equity-settled transactions is determined by
the fair value at the date when the grant is made using an
appropriate valuation model.
That cost is recognized, together with a corresponding
increase in other reserves in equity, over the period in which
the performance and/or service conditions are fullled in
Personnel cost – Other personnel expense in the statement
of income. The cumulative expense recognized for equity-
settled transactions at each reporting date until the vesting
date reects the extent to which the vesting period has
expired and the Group’s best estimate of the number of
equity instruments that will ultimately vest. The expense
or credit recorded in the statement of income for a period
represents the movement in cumulative expense recognized
as at the beginning and end of that period.
No expense is recognized for awards that do not ultimately
vest, except for equity-settled transactions for which vesting
is conditional upon a market or non-vesting condition. These
are treated as vesting irrespective of whether or not the
market or non-vesting condition is satised, provided that all
other performance and/or service conditions are satised.
When the terms of an equity-settled award are modied, the
minimum expense recognized is the expense had the terms
not been modied, if the original terms of the award are met.
An additional expense is recognized for any modication that
increases the total fair value of the share-based payment
transaction or is otherwise benecial to the employee as
measured at the date of modication.
The tax laws or regulations usually obliges Konecranes
to withhold an amount for an employee’s tax obligation
associated with a share-based payment and transfer that
amount, normally in cash, to the tax authority on the
employee’s behalf. To full this obligation, the terms of the
share-based payment arrangement permits Konecranes to
withhold the number of equity instruments equal to the
monetary value of the employee’s tax obligation from the
total number of equity instruments that otherwise would
have been issued to the employee upon vesting of the share-
based payment. This share-based payment arrangement
with a net settlement feature is classied in its entirety as
an equity-settled share-based payment transaction and the
payment made shall be accounted for as a deduction from
equity for the shares withheld.
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Cash-settled transactions
The cost of cash-settled transactions, which is usually related
to the additional employee social cost or taxes of the share-
based payments, is measured initially at fair value at the
grant date using a binomial model. This fair value is expensed
over the period until the vesting date with recognition of a
corresponding liability. The liability is remeasured to fair value
at each reporting date up to, and including the settlement
date, with changes in fair value recognized in Personnel cost
– Other personnel expenses in the statement of income
(see Note 8).
Foreign currency translation
The Group’s consolidated nancial statements are reported in
euros, which is the Group’s presentation currency. Each entity
in the Group determines its own functional currency and
items included in the nancial statements of each entity are
measured using that functional currency.
Transactions and balances
Transactions in currencies other than the entity’s functional
currency (foreign currencies) are recognized by the Group
entities at their respective functional currency rates prevailing
at the date of the transaction. At the end of each reporting
period, foreign currency monetary items are retranslated
at the functional currency spot exchange rate in effect at
the reporting date. The resulting foreign currency exchange
differences are recorded in the statement of income with the
exception of differences that arise on monetary items that
provide an effective hedge for a net investment in a foreign
operation (such as intragroup loans where settlement is
neither planned nor likely to occur in the foreseeable future).
These are recognized in other comprehensive income until
the disposal of the net investment, at which time they are
recognized in the income statement. Tax charges and credits
attributable to exchange differences on those monetary items
are also recorded in other comprehensive income.
Non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange
rates as of the date of the initial transaction. Non-monetary
items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair
value is determined.
Foreign operations
The assets and liabilities of foreign operations are translated
into euros at the rate of exchange prevailing at the
reporting date and their income statements are translated
at average exchange rates for the period. The exchange
differences arising on the translation are recognized in other
comprehensive income. On disposal of a foreign operation,
the component of other comprehensive income relating to
that particular foreign operation is recognized in the income
statement.
Any goodwill arising on the acquisition of a foreign operation
and any fair value adjustments to the carrying amounts of
assets and liabilities arising on the acquisition are treated as
assets and liabilities of the foreign operation and translated at
the closing rate.
Income tax
Taxes shown in the consolidated statement of income include
income taxes to be paid on the basis of local tax legislations,
tax adjustments from previous years as well as the effect of
the annual change in the deferred tax balances. Taxes are
calculated using rates enacted or substantively enacted
at the balance sheet date.
Deferred tax liabilities and deferred tax assets are calculated
on all temporary differences arising between the tax basis
and the book value of assets and liabilities. Deferred tax
is not recognized for non-deductible goodwill on initial
recognition and temporary differences in investments in
subsidiaries to the extent that they probably will not reverse
in the foreseeable future. The main temporary differences
arise from unused tax losses, depreciation differences,
provisions, dened benet pension plans, inter-company
inventory margin and derivative nancial instruments. In
connection with an acquisition, the Group records provisions
for deferred taxes on the difference between the fair values
of the net assets acquired and their tax bases. A deferred tax
asset is recognized to the extent that it is probable that it can
be utilized.
Business combinations
Acquisitions of subsidiaries are accounted for using the
acquisition method according to which the acquired
company’s identiable assets, liabilities and contingent
liabilities are measured at fair value on the date of
acquisition. The excess of the consideration transferred
for the business combination over the acquirer’s interest
in the net fair value of the identiable assets, liabilities
and contingent liabilities is recorded as goodwill. For each
acquisition the non-controlling interest in the acquiree, if
any, can be recognized either at fair value or at the non-
controlling interest’s proportionate share of the acquiree’s
net assets. If the purchase consideration is less than the fair
value of the Group’s share of the net assets acquired, the
difference is recognized directly through the prot and loss.
Direct acquisition transaction costs are expensed as incurred.
Assets held for sale
The Group classies non-current assets and disposal groups
as held for sale if their carrying amounts will be recovered
principally through a disposal rather than through the
continuing use. Such non-current assets and disposal groups
classied as held for sale are measured at the lower of their
carrying amount and fair value less costs to sell.
The criteria for held for sale classication is regarded as
met only when the sale is highly probable, and the asset
or disposal group is available for immediate disposal in its
present condition. Actions required to complete the disposal
should indicate that it is unlikely that signicant changes
to the disposal will be made or that the decision to dispose
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will be withdrawn. Management must be committed to the
disposal expected within one year from the date of the
classication.
Property, plant and equipment and intangible assets are not
depreciated or amortized once classied as held for sale.
Intangible assets
Intangible assets include service contracts, patents and
trademarks as well as software licenses and implementation
costs. Intangible assets acquired separately are measured
on initial recognition at cost. The cost of intangible assets
acquired in a business combination is their fair value at the
date of acquisition. Intangible assets with denite useful
life are amortized on the straight-line basis over expected
useful lives, which may vary from 5 to 20 years with service
contracts and patents and trademarks and from 4 to 7 years
with software licenses. They are assessed for impairment
whenever there is an indication that the intangible asset may
be impaired.
Intangible assets with indenite useful life are not amortized,
but they are tested annually for impairment in a manner equi-
valent to that for testing goodwill. The assessment of indenite
life is reviewed annually to determine whether the indenite
life continues to be supportable. If not, the change in useful
life from indenite to nite is made on a prospective basis.
Impairment testing of goodwill
Goodwill acquired in a business combination is tested for
impairment annually or whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. For the purpose of impairment testing, goodwill
acquired in a business combination is, from the acquisition
date, allocated to each of the Group’s cash generating
units that are expected to benet from the combination,
irrespective of whether other assets or liabilities of the
acquiree are assigned to those units. If the carrying amount
for a CGU exceeds its recoverable amount, an impairment
loss equal to the difference is recognized. Konecranes uses
a discounted cash ow analyses to assess the fair value of
goodwill. In assessing value-in-use, the estimated future cash
ows are discounted to their present value using a pre-tax
discount rate that reects current market assessments of the
time value of money and the risks specic to the asset. The
Group bases its impairment calculation on detailed budgets
and forecast calculations, which are prepared separately for
each of the Group’s CGUs to which the individual assets are
allocated. These budgets and forecast calculations cover
a period of ve years. A previously recognized impairment
loss on goodwill is not reversed even if there is a signicant
improvement in circumstances having initially caused the
impairment.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any impairment losses.
Depreciation is recorded on a straight-line basis over the
estimated useful economic life of the assets as follows:
• Buildings 10–40 years
• Machinery and equipment 3–10 years
No depreciation is recorded for land.
Improvements made for existing property, plant and
equipment that will provide future economic benet are
capitalized and depreciated over the remaining useful life of
the asset.
For leased right-of-use assets please see the accounting
principles section for leases.
Impairment of assets subject to amortization
and depreciation
The carrying values of intangible assets subject to
amortization, property, plant and equipment and investments
in associates and joint ventures are reviewed for impairment
whenever events and changes in circumstances indicate that
the carrying amount of an asset may not be recoverable.
If such an indication exists, the recoverable amount of the
assets will be estimated.
The recoverable amount is the higher of the assets fair value
less selling costs and value in use which is the present value
of the cash ows expected from the asset’s use and eventual
disposal. An impairment loss is recognized in the statement
of income when the recoverable amount of an asset is less
than its carrying amount. Impairment losses on these assets
are reversed if their recoverable amounts subsequently
increase.
Valuation of inventories
Raw materials and supplies are valued at the acquisition cost
or, if lower, at the net realizable value. Net realizable value is
the estimated selling price in the ordinary course of business,
less estimated costs of completion and the estimated costs
necessary to make the sale. Semi-manufactured goods are
valued at variable production costs including a share of
production overheads based on normal capacity. Work in
progress of uncompleted orders includes direct labour and
material costs, as well as a proportion of overhead costs
related to production and installation. Raw materials and
supplies are valued using the rst-in, rst-out (FIFO) basis
or weighted average cost. The inventory stock obsolescence
provision is based on the best estimate of slow-moving and
obsolete inventory at the balance sheet date. The estimates
are based on frequent review and evaluation of inventory
ageing and composition.
Account and other receivables
Account and other receivables are initially recorded at
fair value after which they are subsequently measured at
amortised cost. Account receivables represent the Group’s
right to an amount of consideration that is unconditional (i.e.
only the passage of time is required before payment of the
consideration is due). The provision for doubtful accounts
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is estimated based on the Group’s historical credit loss
experience adjusted with current conditions and reasonable
and supportable forecasts about the future. The effect is
recognized in the statement of income.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with banks and other liquid investments with original
maturities of three months or less. Bank overdrafts are
included in current interest-bearing liabilities.
Fair value measurement
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants. The Group categorizes assets
and liabilities measured at fair value into one of three levels
depending on the ability to observe inputs employed in their
measurement. Level 1 inputs are quoted prices in active
markets for identical assets or liabilities. Level 2 inputs are
inputs that are observable, either directly or indirectly, other
than quoted prices included within level 1 for the asset or
liability. Level 3 inputs are unobservable inputs for the asset
or liability reecting signicant modications to observable
related market data or Konecranes’ assumptions about
pricing by market participants.
Derivative nancial instruments
and hedge accounting
The Group’s global operations expose it to currency risk
and to a lesser extent interest rate risk.
The Group uses derivative nancial instruments, primarily
forward contracts and interest rate swaps, to hedge its
risks associated with foreign currency uctuations relating
to certain commitments and forecasted transactions and
interest rate risks. Derivative nancial instruments are used
for hedging purposes in accordance with the Group’s hedging
policy and not for speculative purposes. These instruments
are initially recognized at fair value at the derivative contract
date and are re-measured to fair value at subsequent
reporting dates. Derivatives are presented as nancial assets
when the fair value is positive and as nancial liabilities when
the fair value is negative.
For certain large crane projects, the Group applies hedge
accounting. The Group designates hedges of the foreign
currency risk of rm commitments and highly probable
forecasted transactions to a cash ow hedge. Changes in
the fair value of derivative nancial instruments that are
designated as effective hedges of future cash ows are
recognized directly in other comprehensive income, while the
ineffective portion is recognized immediately in the income
statement. See note 34.
Amounts recognized as OCI are transferred to prot or loss
when the hedged transaction affects prot or loss, such as
when the hedged nancial income or nancial expense is
recognized or when a forecast sale occurs. When the hedged
item is the cost of a non-nancial asset or non-nancial
liability, the amounts recognized as OCI are transferred to the
initial carrying amount of the non-nancial asset or liability.
If the hedging instrument expires or is sold, terminated or
exercised without replacement or rollover (as part of the
hedging strategy), or if its designation as a hedge is revoked,
or when the hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss previously recognized in
OCI remains separately in equity until the forecast transaction
occurs or the foreign currency rm commitment is met. If a
hedged transaction is no longer expected to occur, the net
cumulative gain or loss recognized in the other comprehensive
income is transferred to prot or loss for the period.
Changes in the fair value of derivative nancial instruments
that do not qualify for hedge accounting are recognized in
the statement of income as they arise.
The Group does not apply fair value hedging.
Financial assets
Financial assets are classied as nancial assets at fair value
through prot or loss; nancial assets at fair value through
OCI; or nancial assets at amortized cost. Financial assets
are classied according to their cash ow characteristics and
the business model they are managed in and accounted
for at settlement date. They include account and other
receivables, interest bearing investments and derivative
nancial instruments. The measurement of nancial assets
depends on their classication, as follows:
Financial assets at amortized cost
Account receivables and other receivables are recognised at
their anticipated realisable value which is the original invoice
amount less an estimated provision for doubtful accounts for
impairment. The increase in the credit risk for nancial assets
measured at amortised cost is assessed at the end of the
reporting period. The credit loss allowance is estimated based
on the Group’s historical credit loss experience adjusted with
current conditions and reasonable and supportable forecasts
about the future. The Group applies the simplied approach
to record expected credit losses on its accounts receivable
by using a provision matrix where accounts receivable is
grouped based on different customer bases and different
historical loss patterns.
Financial assets at fair value through statement of
income
Interest-bearing investments, which are non-derivative
nancial assets and have xed or determinable payments and
are not quoted on active markets, are measured at fair value
through the statement of income. This category also includes
derivatives that are not qualifying for hedge accounting.
Financial assets at fair value through other
comprehensive income
Derivatives that are qualifying for hedge accounting are
classied as nancial assets at fair value through other
comprehensive income. The treatment of gains and losses
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arising from revaluation is described above in the accounting
policy for derivative nancial instruments and hedge
accounting.
Financial liabilities
Financial liabilities are classied as nancial liabilities at fair
value through prot or loss; nancial liabilities at fair value
through other comprehensive income; or as nancial liabilities
measured at amortized cost, as appropriate. Financial
liabilities include trade and other payables, nance debt and
derivative nancial instruments. The Group determines the
classication of its nancial liabilities at initial recognition.
The measurement of nancial liabilities depends on their
classication, as follows:
Financial liabilities at fair value through prot or loss
Financial liabilities at fair value through prot or loss are
carried on the balance sheet at fair value with gains or
losses recognized in the income statement. Derivatives,
other than those designated as effective hedging
instruments, are classied as held for trading and are
included in this category.
Financial liabilities at fair value through other
comprehensive income
These nancial liabilities are typically derivatives designated
for hedge accounting and are carried on the balance sheet
at fair value. The treatment of gains and losses arising from
revaluation is described above in the accounting policy for
derivative nancial instruments and hedge accounting.
Financial liabilities measured at amortized cost
All other nancial liabilities are initially recognized at fair
value. For interest-bearing loans and borrowings this is
the fair value of the proceeds received net of issue costs
associated with the borrowing. After initial recognition,
other nancial liabilities are subsequently measured
at amortized cost using the effective interest method.
Amortized cost is calculated by taking into account any
issue costs, and any discount or premium on settlement.
Gains and losses arising on the repurchase, settlement
or cancellation of liabilities are recognized respectively in
interest and other nance income and nance costs. This
category of nancial liabilities includes accounts payables
and interest-bearing liabilities.
Offsetting of nancial instruments
Financial assets and nancial liabilities are offset and the
net amount reported in the consolidated statement of
nancial position if, and only if, there is a currently existing,
legally enforceable, unconditional right of offset that
applies to all counterparties of the nancial instruments
in all situations, including both normal operations and
insolvency.
Provisions
Provisions are recognized in the balance sheet when the
Group has a present legal or constructive obligation as a
result of a past event and it is considered probable that an
outow of resources embodying economic benets will be
required to settle the obligation and a reliable estimate can
be made of the amount of the obligation. Provisions may
arise from restructuring plans, onerous contracts, guarantees
and warranties, among other events. Obligations arising
from restructuring plans are recognized when the detailed
and formal restructuring plans have been established, the
personnel concerned have been informed and when there is
a valid expectation that the plan will be implemented. The
warranty provision is based on the history of past warranty
costs and claims on delivered products under warranty.
Additionally, warranty provisions can be established on a
case by case basis to take into consideration the potentially
increased risks.
When the Group expects some or all of a provision to be
reimbursed, for example, under an insurance contract, the
reimbursement is recognized as a separate asset, but only
when the reimbursement is virtually certain.
Leases
The Group assesses at contract inception whether a contract
is, or contains, a lease. That is, if the contract conveys the
right to control the use of an identied asset for a period of
time in exchange for consideration.
The Group as a lessee
The Group applies a single recognition and measurement
approach for all leases, except for short-term leases and
leases of low-value assets. The Group recognizes lease
liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
Right-of-use assets
The Group recognizes right-of-use assets at the
commencement date of the lease (i.e. asset is available
for use). Right-of-use assets are measured at cost less
any accumulated depreciation and impairment losses and
adjusted for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities
recognized, possible initial cost incurred, lease payments
done before the commencement date and less any lease
incentives received. The recognized right-of-use assets are
mainly rentals of premises and vehicles which are typically
depreciated on a straight-line basis over the shorter of the
lease term and estimated useful life of the asset. Right-of-use
assets are subject to possible impairment.
Lease liabilities
At the commencement date of a lease the Group recognizes
lease liabilities measured at the present value of the lease
payments to be made over the lease term. The lease
payments include xed payments less any lease incentives,
variable lease payments that depend on an index or a rate
and amounts expected to be paid under residual value
guarantees. The variable lease payments that do not depend
on an index or a rate are recognized as expense in the
period on which the event or condition that triggers the
payment occurs. In calculating the present value of the lease
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payments, the group uses the incremental borrowing rate
at the lease commencement date if the interest rate implicit
in the lease is not determinable. After the commencement
date, the amount of lease liabilities is increased to reect
the accretion of interest and reduced for the lease payments
made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modication, a change in lease term,
a change in the xed lease payments or a change in the
assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition
exemption to its short-term leases of machinery and
equipment (i.e. those leases that have a lease term of 12
months or less from the commencement date and do not
contain a purchase option). It also applies the recognition
exemption to equipment that are considered of low value.
Lease payments on short term leases and lease of low value
assets are recognized as an expense over the lease term.
Judgment in determining the lease term
The Group has various lease agreements for ofce
equipment, vehicles and premises with varying terms
and renewal rights. The Group determines the lease
term as the non-cancellable term of the lease together
with any periods covered by an option to extend or early
terminate the lease if it is reasonably certain to be exercised.
The Group uses judgment especially for the use of extension
options as well as when dening the lease term for open
end lease agreements so that they are based on the business
requirements, factors that create an economic incentive
and real estimated useful life time of the underlying asset.
Cash ow statement
The cash ow statement has been prepared in accordance
with the indirect method. In the cash ow statement a
distinction is made between cash ows from operating,
investing and nancing activities. Currency differences on
cash and cash equivalents are recognized separately in the
cash ow statement. Revenue and expenses for income tax
are recognized under Cash ows from operating activities.
Interest costs and interest revenues are recognized under
Cash ows from operating activities. Cash ows as a result
of the acquisition or disposal of nancial interests
(subsidiaries and interests) are recognized under Cash ows
from investing activities, taking into account the cash, cash
equivalents and repaid third party debts present in these
interests. Dividends paid out, as well as obtained and repaid
loans, are recognized under Cash ows from nancing
activities.
2.4. Application of new and amended IFRS
standards and IFRIC interpretations
The relevant new or revised IFRSs that Konecranes has
adopted from January 1, 2020 were the following:
Denition of a Business−Amendments to IFRS 3. The
denition of a business was amended to help entities
determine whether an acquired set of activities and assets
is a business combination or an asset acquisition. They
clarify the minimum requirements for a business, remove
the assessment of whether market participants can replace
any missing elements, add guidance to help entities assess
whether an acquired process is substantive, narrow the
denitions of a business and of outputs, and introduce an
optional fair value concentration test. The amendments did
not have an impact on the consolidated nancial statements
of the Group.
Denition of Material−Amendments to IAS 1 and IAS 8.
The amendments were to align the denition of ‘material’
across the standards and to clarify certain aspects of the
denition. The new denition states that information is
material if omitting, misstating or obscuring it could rea-
sonably be expected to inuence decisions that the primary
users of nancial statements make on the basis of those
nancial statements, which provide nancial information
about a reporting entity. The amendments clarify that
materiality will depend on the nature or magnitude of
information, or both. An entity will need to assess whether
the information, either individually or in combination with
other information, is material in the context of the nancial
statements. The amendments did not have an impact on the
consolidated nancial statements of the Group.
Konecranes did not use the relief in the Amendments to
IFRS 16, Leases, COVID-19-Related Rent Concessions, which
permit lessees not to assess whether eligible COVID-19-
related rent concessions are lease modications, and account
for them as if they were not lease modications.
Amendments to IFRS 9, IAS 39 Financial Instruments:
Recognition and Measurement and IFRS 7 Financial
Instruments: Disclosures, which concludes phase one of its
work to respond to the effects of Interbank Offered Rates
(IBOR) reform on nancial reporting. The amendments
provide temporary reliefs which enable hedge accounting
to continue during the period of uncertainty before the
replacement of an existing interest rate benchmark with an
alternative nearly risk-free interest rate. The amendments did
not have an impact on the consolidated nancial statements
of the Group.
The relevant new or revised IFRSs that Konecranes has
adopted from January 1, 2019 were the following:
IFRS 16 Leases replaces IAS 17 Leases, IFRIC 4 Determining
whether an Arrangement contains a Lease, SIC-15 Operating
Leases – Incentives and SIC -27 Evaluating the Substance
of Transactions Involving the Legal form of a Lease. IFRS
16 sets out the principles for the recognition, measurement,
presentation and disclosure of leases and requires lessees to
account for all leases under a single on-balance sheet model
similar to the accounting for nance lease under IAS17. The
standard includes two recognition exemptions for lessees
– leases of low-value assets and short-term leases (with a
lease term of 12 months or less). At the commencement
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date of a lease, a lessee will recognise a liability to make
lease payments and an asset representing the right to use
the underlying asset during the lease terms. Lessees will
be required to separately recognise the interest expense
on the lease liability and the depreciation expense on the
right-of-use asset. Lessees will be also required to remeasure
the lease liability upon the occurrence of certain events (for
example, a change in lease term or a change in future lease
payments resulting from a change in an index or rate used
to determine those payments). The lessee will generally
recognize the amount of the remeasurement of the lease
liability as an adjustment to the right-of-use asset.
Lessor accounting under IFRS 16 is substantially unchanged
from the accounting under IAS 17. IFRS 16 also requires
lessees and lessors to make more extensive disclosures than
under IAS 17. The standard is effective for annual periods
beginning on or after January 1, 2019. A lessee can choose
to apply the standard using either a full retrospective or a
modied retrospective approach. The standard’s transition
provisions permit certain reliefs. Konecranes used the general
modied retrospective approach in which right of use assets
and lease liabilities were calculated per transition date
January 1, 2019 except for the lease contracts of the Finnish
premises in Hyvinkää and Hämeenlinna, in which Konecranes
used modied retrospective method to calculate the right
of use assets and liability from the commencement date but
using the prevailing discount interest at the transition date.
Konecranes elected also to use the exemptions proposed by
the standard on lease contracts for which the lease terms
end within 12 months as of the date of initial application
and lease contracts for which the underlying asset is of low
value. The Group has various lease agreements for ofce
equipment, vehicles and premises with varying terms and
renewal rights. The Group has used judgment especially
for the use of extension options as well as when dening
the lease term for open end lease agreements so that they
are based on the business requirements and real estimated
useful lifetime of the underlying asset. The right of use assets
Operating lease commitment Opening balance January 1, 2019 117.3
Short-term leases (-) -10.4
Leases of low-value assets (-) -1.1
Extension and termination options (+/-) 29.5
Variable lease payments based on an index or a rate (+) 0.2
Residual value guarantees (+) 0.0
Nominal value of IFRS 16 lease liability at transition 135.5
Discount effect on nominal value of IFRS 16 lease liability 1.1.2019 -11.3
Finance lease liabilities Opening balance January 1, 2019 20.1
Lease liabilities recognised at January 1, 2019 144.3
Transition bridge for IFRS 16
IFRIC 23
The IFRIC Interpretation 23 Uncertainty over Income Tax
treatment addresses the accounting for income taxes when
tax treatments involve uncertainty that affects the application
of IAS 12 Income Taxes. It does not apply to taxes or levies
outside the scope of IAS 12, nor does it specically include
requirements relating to interest and penalties associated
with uncertain tax treatments. The Group determines whet-
her to consider each uncertain tax treatment separately or
together with one or more other uncertain tax treatments
and uses the approach that better predicts the resolution of
the uncertainty. The interpretation did not have an impact on
the consolidated nancial statements of the Group.
increased by EUR 118.5 million and corresponding liabilities
by EUR 124.1 million at January 1, 2019. Equity decreased by
EUR 4.5 million and deferred tax asset increased by EUR 1.1
million. The Group had also EUR 20.1 million existing nance
leases according to IAS17 in December 31, 2018 balance
sheet. The weighted average interest rate on the application
date was 4.92%.
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3. Segment information
For management purposes, the Group is organized into
business units based on its products and services and had
three reportable segments in 2020 and 2019, which it
calls Business Areas: Business Area Service, Business Area
Industrial Equipment and Business Area Port Solutions.
Business Area Service provides maintenance and installation
services of industrial equipment, Business Area Industrial
Equipment produces industrial cranes and their components
to variety of industries and Business Area Port Solutions
produces lifting equipment for ports and provides services for
port equipment.
Some business units have been aggregated to form the
above reportable operating segments due to the similar
economic characteristics with respect to the nature of the
production process, product type and class of customers for
their products.
The above reportable segments are based on the Group’s
management reporting and organizational structure.
Konecranes Group’s chief operating decision maker is the
Board of Directors.
Segment performance is evaluated based on prot or loss
and is measured consistently with prot or loss in the
consolidated nancial statements. However, the performance
of the investees accounted for using the equity method is
evaluated using proportionate consolidation.
The assets and liabilities of the reportable segments include
only items directly connected with the business as well as
the goodwill related to them. Taxes and nancial income and
expenses are managed on Group level and are not allocated
to segments.
Konecranes reports also three geographical areas, which
are the main market areas: EMEA (Europe, Middle East and
Africa), AME (Americas) and APAC (Asia-Pacic). Sales are
reported by the customer location and assets and capital
expenditure by the location of the assets.
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3.1. Operating segments
Service Industrial Equipment Port Solutions
Corporate functions
and unallocated Eliminations Total
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Sales
Sales to external customers 1,148.4 1,211.5 973.8 1,020.4 1,056.0 1,094.7 0.8 0.2 3,178.9 3,326.9
Inter-segment sales 41.6 48.2 146.4 165.1 10.0 21.0 9.1 8.7 -207.1 -242.9 0.0 0.0
Total sales 1,190.0 1,259.7 1,120.1 1,185.5 1,066.0 1,115.7 9.9 8.8 -207.1 -242.9 3,178.9 3,326.9
Adjusted EBITA 205.2 208.5 25.4 18.2 59.7 86.9 -29.6 -38.9 0.0 0.4 260.8 275.1
% of net sales 17.2% 16.6% 2.3% 1.5% 5.6% 7.8% 8.2% 8.3%
Purchase price allocation
amortization
-16.1 -10.5 -12.5 -6.9 -7.3 -7.3 -35.9 -24.7
Adjusted operating prot 189.1 198.0 12.9 11.3 52.4 79.6 -29.6 -38.9 0.0 0.4 224.9 250.4
% of net sales 15.9% 15.7% 1.1% 1.0% 4.9% 7.1% 7.1% 7.5%
Adjustments to operating prot
Transaction costs -8.5 -0.9 -8.5 -0.9
Restructuring costs -7.7 -3.4 -8.6 -72.7 -24.4 -8.3 -2.0 -16.4 -42.6 -100.7
Total -7.7 -3.4 -8.6 -72.7 -24.4 -8.3 -10.5 -17.3 -51.1 -101.7
Operating prot 181.4 194.6 4.3 -61.4 28.0 71.3 -40.0 -56.3 0.0 0.4 173.8 148.7
% of net sales 15.2% 15.5% 0.4% -5.2% 2.6% 6.4% 5.5% 4.5%
Share of associates and joint
ventures result (note 16)
21.2 4.5 21.2 4.5
Financial income 38.6 2.5 38.6 2.5
Financial expenses -63.2 -37.2 -63.2 -37.2
Prot before tax 170.3 118.5
Segment assets 1,409.7 1,327.7 916.5 863.3 854.2 922.0 3,180.4 3,113.0
Investment accounted for using
the equity method (note 16)
6.5 73.9 6.5 73.9
Cash and cash equivalents 591.9 378.2 591.9 378.2
Deferred tax assets 118.9 123.4 118.9 123.4
Income tax receivables 13.4 30.5 13.4 30.5
Other unallocated and corporate
function level assets
105.4 135.1 105.4 135.1
Total assets 1,409.7 1,327.7 916.5 863.3 854.2 922.0 836.1 741.2 4,016.5 3,854.2
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3.1. Operating segments (continued)
Revenue expected to be recognized in the future periods related to performance obligations
that are unsatised or partially unsatised
Service Industrial Equipment Port Solutions
Corporate functions
and unallocated Eliminations Total
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Segment liabilities 192.5 194.1 356.4 345.3 415.0 417.7 963.9 957.2
Interest-bearing liabilities 1,170.8 1,034.2 1,170.8 1,034.2
Deferred tax liabilities 143.6 143.1 143.6 143.1
Income tax payables 18.3 14.6 18.3 14.6
Other unallocated and corporate
function level liabilities
469.3 458.4 469.3 458.4
Total liabilities 192.5 194.1 356.4 345.3 415.0 417.7 1,802.1 1,650.3 2,766.0 2,607.5
Other disclosures
Capital expenditure 9.6 10.7 24.9 20.3 8.2 8.5 0.0 0.0 42.8 39.5
Personnel 8,062 7,762 5,720 5,397 2,970 2,938 110 99 16,862 16,196
During 2021
During 2022
From 2023
onwards Total
Service 207.7 2.4 3.4 213.4
Industrial Equipment 530.5 42.9 25.4 598.8
Port Solutions 600.0 205.2 98.0 903.2
Total 1,338.2 250.5 126.8 1,715.5
The transaction price associated with unsatised or partially
unsatised performance obligations does not include variable
consideration that is constrained. The Group total revenue
will also include new orders, scope changes and contract
extensions which are not known at reporting date and thus
are excluded in this table.
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3.2. Geographical areas
2020 EMEA* AME APAC Total
External sales* 1,703.9 976.6 498.4 3,178.9
Assets* 2,910.5 529.5 576.6 4,016.5
Capital expenditure 35.7 1.5 5.6 42.8
Personnel 9,688 2,964 4,210 16,862
2019 EMEA* AME APAC Total
External sales* 1,714.1 1,145.8 467.0 3,326.9
Assets* 2,825.5 561.1 467.6 3,854.2
Capital expenditure 30.8 4.7 4.0 39.5
Personnel 10,126 3,319 2,751 16,196
* External sales to Finland EUR 82.6 million. Non-current assets (excluding deferred tax assets) in Finland: EUR 193.6 million and in other
countries: EUR 1,728.2 million.
* External sales to Finland EUR 82.7 million. Non-current assets (excluding deferred tax assets) in Finland: EUR 221.5 million and in other
countries: EUR 1,641.5 million.
There are no single customers which have over 10% of Group’s sales.
4. Acquisitions and divestments
Acquisitions in 2020
On December 5, 2019 Konecranes signed an agreement to
acquire from Jebsen & Jensen its 50% share in MHE-Demag.
The transaction was closed on January 2, 2020 and the
purhcase price consideration was EUR 148.3 million. After
the acquisition Konecranes holds 100% of the shares in the
company.
MHE-Demag is a leading supplier of industrial cranes and
services in Southeast Asia under the MHE and Demag
brands, engineering, manufacturing and maintaining a
comprehensive range of industrial cranes and hoists. Its
customized solutions serve a wide range of industries and
customers from general manufacturing to aerospace.
MHE-Demag also provides warehousing equipment such as
lift trucks and dock levelers, aerial work platforms, building
maintenance units and compact construction equipment,
as well as automated car parking systems. With the
acquisition, Konecranes increases its presence and market
coverage in strategically important and fast-growing
Southeast Asia. MHE-Demag has approximately 1,800
employees, including some 700 service engineers. MHE-
Demag operates 11 factories and more than 70 service
locations throughout Southeast Asia and is headquartered
in Singapore. MHE-Demag runs own operations in Australia,
Indonesia, Malaysia, Singapore, the Philippines, Taiwan,
Thailand and Vietnam. In addition, MHE-Demag has
distribution through resellers in several countries including
Brunei, Cambodia, Laos, Mongolia, Myanmar, Papua New
Guinea and Timor-Leste.
In 2019, MHE-Demag’s net sales were approximately SGD
296 million (EUR 196 million) and EBITA approximately SGD
21 million (EUR 14 million). Konecranes is the main supplier
to MHE-Demag, selling crane components under the Demag
brand name. Konecranes sales to MHE-Demag in 2019 was
approximately EUR 27 million.
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Fair value
Intangible assets
Clientele 36.1
Technology 0.0
Trademark 2.1
Other intangible assets 10.2
Property, plant and equipment 38.9
Deferred tax assets 4.2
Inventories 43.4
Accounts receivable 51.0
Provision for doubtful debts -0.7
Other assets 23.7
Cash and cash equivalents 17.6
Total assets 226.6
Fair value
Non-controlling interest 0.0
Deferred tax liabilities 12.5
Dened benet plans 1.0
Other long-term liabilities 11.1
Accounts payable and other current
liabilities
79.4
Total liabilities 104.1
Net assets 122.6
Acquisitions in 2019
in January 2019, Konecranes acquired a small service
business from MSAURförderteknik GmbH in Germany and
paid EUR 0.7 million as purchase price for the acquired
assets. In August 2019, Konecranes acquired a small service
business company Trevolution Service S.r.l. in Italy and paid
EUR 2.6 million for the shares of the company.
The fair values of acquired businesses are as follows:
Fair value
Intangible assets
Clientele 1.2
Property, plant and equipment 0.3
Deferred tax assets 0.1
Inventories 0.6
Accounts receivable 1.0
Other assets 0.3
Cash and cash equivalents 0.5
Total assets 3.9
Deferred tax liabilities 0.3
Dened benet plans 0.3
Other long-term liabilities 0.1
Accounts payable and other current
liabilities
1.2
Total liabilities 1.9
Net assets 2.1
Purchase consideration transferred 3.3
Goodwill 1.2
Cash ow on acquisition
Purchase consideration, paid in cash 3.3
Cash and cash equivalents in acquired
companies
-0.5
Net cash ow arising on acquisition 2.8
If the businesses had been acquired on January 1, 2019 the
full year sales of acquiree would have been EUR 3,329.4
million and EBIT EUR 148.7 million. The amount of goodwill
that is expected to be deductible for tax purposes was
EUR 0.3 million.
Konecranes remeasured its previously held equity interest in
MHE-Demag at its acquisition date fair value and recognised
the EUR 21.1 million gain in share of associates’ and joint
ventures’ result row of statement of income. Under the
acquisition method of accounting, the total purchase price
is allocated to the tangible and identied intangible assets
acquired and liabilities assumed based on their fair values
as of the date of acquisition. The intangible assets consist
of customer relationships, sales order backlog and trade
name. The accumulated transaction costs were EUR 0.9
million during 2019. The fair values of acquired businesses
are as follows:
Purchase consideration, paid in cash 141.7
Purchase consideration, deferred 6.6
Earlier non-controlling interest in
associated company
67.8
Fair value increase to non-controlling
interest
21.1
Acquisition cost 237.2
Goodwill 114.7
Cash ow on acquisition
Purchase consideration, paid in cash 141.7
Purchase consideration, deferred 6.6
Transaction costs 0.9
Cash and cash equivalents in acquired
companies
-17.6
Net cash ow arising on acquisition 131.6
Goodwill allocation to Cash
Generating Units:
Industrial Cranes 14.8
Industrial Service 99.9
Total 114.7
77 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Disposals in 2019
In December 2019 Konecranes completed the divestment
of its ownership in Noell Crane Systems (China) Ltd.
Konecranes received proceeds of EUR 18.4 million and
recorded EUR 2.3 million pre-tax loss from the transaction.
Part of the sales price is conditional and dependent on the
collection of the open receivables and possible third party
liabilities until October 31, 2021.
Carrying amounts of net assets over which
control was lost in 2019
Assets
Intangible assets 8.3
Property, plant and equipment 9.9
Accounts receivables 9.7
Other receivables 0.1
Cash and cash equivalents 5.2
Total 33.3
Liabilities
Interest-bearing liabilities 0.0
Provisions 0.8
Accounts payable 4.9
Accruals and other liabilities 0.1
Total 5.8
Non-controlling interest 6.8
Net assets derecgonized 20.7
Consideration received 9.4
Deferred conditional consideration 9.0
Total consideration recognized 18.4
Translation difference included in accumulated other
comprehensive income that was reclassied to prot
of the year was EUR -2.9 million.
5. Disaggregation of revenue in net sales
Customer contract revenue 2020 2019
Sale of goods 2,254.7 2,163.5
Rendering of services 917.8 1,159.7
Total customer contract revenue 3,172.5 3,323.2
Other revenue
Leasing of own products 6.1 3.3
Royalties 0.4 0.4
Total other revenue 6.5 3.7
Total net sales 3,178.9 3,326.9
2020 2020 2020 2019 2019 2019
Timing of satisfying performance
obligations by Segments
At a point
of time
Over
time Total
At a point
of time
Over
time Total
Service 139.3 1,009.1 1,148.4 171.9 1,039.7 1,211.5
Industrial Equipment 781.3 192.5 973.8 848.7 171.7 1,020.4
Port Solutions 778.0 278.0 1,056.0 841.0 253.7 1,094.7
Corporate functions 0.8 0,0 0.8 0.2 0,0 0.2
Total 1,699.3 1,479.7 3,178.9 1,861.8 1,465.0 3,326.9
78 Financial Review 2020
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6. Contract balances
6.1. Contract assets and liabilities
6.2. Advances received
7.1. Audit and non-audit fees to Group auditor
7. Operating Expenses 8. Personnel expenses
and number of personnel
8.1. Personnel expenses
8.2. Number of personnel
8.3. Personnel by Reportable Segment
at the end of period
Contract assets 2020 2019
The cumulative revenues of
non-delivered projects
554.6 570.7
Advances received netted 452.3 402.9
Total 102.3 167.8
Transfers to receivables from contract
assets recognized at the
beginning of period
263.8 162.2
Contract liabilities
Gross advance received from
percentage of completion method
510.0 433.3
Advances received netted 452.3 402.9
Total 57.7 30.4
Revenue recognised in the current
period that was included in the
contract liability opening balance
166.4 117.0
Increases due to cash received 347.2 325.3
2020 2019
Advance received from percentage
of completion method (netted)
57.7 30.4
Other advance received
from customers
294.6 306.9
Total 352.3 337.3
2020 2019
Audit 3.7 3.3
Non-audit services 0.9 0.4
Total 4.6 3.7
Contract assets relate to receivable arising from percentage
of completion method. Net asset balances are balances
where the sum of contract costs, recognized prots and
recognized losses exceed progress billings. Where progress
billings exceed the sum of contract costs, recognized prots
and recognized losses these liabilities are included in the line
item contract liabilities.
2020 2019
Change in work in progress 10.5 0.5
Production for own use -0.6 -1.1
Material and supplies 1,062.0 1,103.7
Subcontracting 401.1 401.9
Materials, supplies and subcontracting 1,473.0 1,505.0
Wages and salaries 826.3 891.5
Pension costs 58.9 61.3
Other personnel expenses 108.3 127.8
Personnel cost 993.5 1,080.7
Other operating expenses 419.3 488.5
Total operating expenses 2,885.8 3,074.1
2020 2019
Wages and salaries 826.3 891.5
Pension costs: Dened benet plans 9.2 6.9
Pension costs: Dened
contribution plans
49.7 54.5
Other personnel expenses 108.3 127.8
Total 993.5 1,080.7
2020 2019
Average number of personnel 17,027 16,104
Number of personnel as
at December 31
16,862 16,196
Number of personnel as
at December 31 in Finland
1,985 1,964
2020 2019
Service 8,062 7,762
Industrial Equipment 5,720 5,397
Port Solutions 2,970 2,938
Group Staff 110 99
Total 16,862 16,196
Research and development costs recognized as an expense in
other operating expenses amount to EUR 48.5 million in the
year 2020 (EUR 41.1 million in 2019).
79 Financial Review 2020
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9. Depreciation, amortization
and impairments
9.1. Depreciation and amortization
10. Financial income and expenses
10.1. Financial income
11. Income taxes
11.1. Taxes in statement of income
9.2. Impairments
10.2. Financial expenses 11.2. Reconciliation of income before taxes
with total income taxes
11.3. Tax effects of components in other
comprehensive income
2020 2019
Intangible assets 52.4 48.5
Buildings 30.8 29.3
Machinery and equipment 46.9 45.0
Total 130.0 122.8
2020 2019
Interest income on bank deposits
and loans
1.5 1.8
Exchange rate gains 36.5 0.0
Other nancial income 0.6 0.7
Total 38.6 2.5
2020 2019
Local income taxes of group
companies
51.7 32.3
Taxes from previous years -3.3 -1.8
Change in deferred taxes -1.0 5.2
Total 47.5 35.7
2020 2019
Cash ow hedges -1.6 0.2
Re-measurement gains (losses)
on dened benet plans
5.9 8.1
Total 4.3 8.3
2020 2019
Property, plant and equipment 0,0 0.8
Total 0,0 0.8
2020 2019
Interest expenses on liabilities 24.1 21.7
Net loss on nancial instruments
at fair value through prot or loss
0.0 8.3
Exchange rate loss 32.5 2.9
Other nancial expenses 6.6 4.3
Total 63.2 37.2
Financial income
and expenses net
-24.6 -34.7
2020 2019
Prot before taxes 170.3 118.5
Tax calculated at the domestic corpo-
ration tax rate of 20.0% (2019: 20.0%)
34.1 23.7
Effect of different tax rates of foreign
subsidiaries
4.1 -1.0
Taxes from previous years -3.3 -1.8
Tax effect of non-deductible expenses
and tax-exempt income
0.1 6.6
Tax effect of unrecognized tax losses
of the current year
10.2 5.5
Tax effect of utilization
of previously unrecognized tax losses
-3.1 -2.8
Tax effect of recognition
of previously unrecognized tax losses
0.0 -2.6
Tax effect of impairment of previously
recognized deferred tax assets
7.1 3.2
Tax effect of recognizing the controlled
temporary difference from investment
in subsidiaries
-0.4 4.2
Tax effect of tax rate change 0.2 0.0
Other items -1.7 0.6
Total 47.5 35.7
Effective tax rate % 27.9% 30.1%
The nature of the impairments is described in the disclosures
of goodwill, intangible assets and property, plant and
equipment (see notes 14 and 15).
The company applies hedge accounting on derivatives used
to hedge cash ows in certain large crane projects. The cash
ow hedges of the expected future cash ows are assessed
to be highly effective and a net unrealized effect of EUR 8.1
million (2019: EUR -0.7 million) with deferred taxes of
EUR -1.6 million (2019: EUR +0.2 million) relating to the
hedging instruments is included in equity. The hedged
operative cash ows are expected to occur during the next
3–18 months. The realized and recycled currency differences
from these hedges recorded in the statement of income were
EUR -0.4 million in 2020 (EUR -2.7 million in 2019).
The Company evaluates regularly the net realizable value of
its deferred tax assets.
80 Financial Review 2020
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12. Earnings per share
Basic earnings per share are calculated by dividing
the net income attributable to the shareholders of the
parent company by the weighted average number of shares
outstanding during the year. Diluted earnings per share are
calculated by adjusting the weighted average number
of shares outstanding during the year for the dilutive effect
of the shares issued under the stock option plans. Weighted
average number of shares is excluding the number of
treasury shares.
13.2. General principles
Management monitors the performance of the Group through
the monthly meetings and monthly reporting that take place
on a business unit level. Impairment testing is done at the
lowest level of the Group at which goodwill is monitored
internally.
13.3. Total goodwill in reportable segments
after impairments
13. Goodwill and goodwill
impairment testing
13.1. Goodwill
2020 2019
Net prot attributable to shareholders
of the parent company
122.2 81.0
Weighted average number of shares
outstanding (1,000 pcs)
79,078 78,836
Weighted average number of shares
outstanding, diluted (1,000 pcs)
79,078 78,836
Earnings per share, basic (EUR) 1.54 1.03
Earnings per share, diluted (EUR) 1.54 1.03
Compound
annual
growth rate
Discount
rate
Industrial Cranes 3% 10.3%
Agilon 40% 13.1%
Industrial Crane Service 7% 10.5%
Machine Tool Service 6% 8.5%
Lift trucks 7% 9.4%
Port Cranes 4% 8.9%
2020 2019
Industrial Cranes 152.3 139.7
Agilon 3.9 3.9
Goodwill in Industrial
Equipment total
156.3 143.6
Industrial Crane Service 656.1 560.5
Machine Tool Service 3.9 4.2
Goodwill in Service total 660.0 564.7
Port Cranes 163.4 163.4
Lift trucks 37.0 36.5
Goodwill in Port Solutions total 200.4 199.9
Total goodwill in reportable
segments as of December 31
1,016.7 908.2
2020 2019
Acquisition costs as of January 1 922.9 920.8
Additions 114.7 1.2
Translation difference -6.2 0.9
Acquisition costs as of December 31 1,031.4 922.9
Accumulated impairments
as of January 1
-14.7 -14.7
Total as of December 31 1,016.7 908.2
The recoverable amounts of the CGUs are determined based
on value in use calculations using the discounted cash ow
method. The forecasting period of cash ows is ve years
and it is based on nancial forecasts of the management
responsible for that CGU, and adjusted by Group
management if needed. The forecasts have been made
based on the CGU specic historical data, order book, the
current market situation and industry specic information
of the future growth possibilities. These assumptions are
reviewed annually as part of management’s budgeting and
strategic planning cycles. Calculations are prepared during
the fourth quarter of the year.
The discount rate applied to cash ow projections is the
weighted average (pre-tax) cost of capital and is based on
risk-free long-term government bond rates and market and
industry specic risk premiums. These risk premiums are
derived based on the business portfolio of companies which
operate in a similar industry.
The key assumptions, being the average compound annual
growth rate for the sales of the ve years forecasted and the
discount rate are as follows:
The average compound growth rate for the gross prot is
consistent with that of sales. Furthermore for all the CGUs a
1% terminal growth rate has been applied.
Impairment charges
The impairment testing performed in 2020 and 2019 did not
result in any impairments being recognized.
81 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Sensitivity analyses
In addition to impairment testing using the base case
assumptions, four separate sensitivity analyses were
performed for each CGU:
1) A discount rate analysis where the discount rate was
increased by 5% points
2) A Group management adjustment to the future
protability. The cash ow of each CGU was analyzed
by the Group management.
Based on the CGU specic historical data and future
growth prospects the cash ows were decreased by
10% in each year including terminal year.
3) A higher discount rate (+5% points) analysis combined
with lower (-10%) cash ows as mentioned above.
4) A decrease in the compound annual growth rate for
the sales for each of the ve forecasted years
(- 2% points) combined with the current discount rate.
2020
There was no indication of impairment of goodwill for any
CGU from the sensitivity tests.
2019
There was no indication of impairment of goodwill for any
CGU from the sensitivity tests.
14. Intangible assets
2020
Patents
and trademarks Software Other
Intangible
assets total
Acquisition costs as of January 1 245.1 172.3 456.1 873.5
Additions 0.1 8.8 0.3 9.2
Disposals 0.0 -0.8 -1.2 -2.1
Business combinations 2.1 0.0 46.4 48.5
Transfer within assets -3.6 -0.1 3.6 0.0
Translation difference 0.0 0.0 -0.3 -0.3
Acquisition costs as of December 31 243.7 180.2 504.8 928.8
Accumulated amortization
as of January 1
-15.8 -141.4 -184.6 -341.9
Translation difference 0.0 0.2 0.3 0.5
Accumulated amortization
relating to disposals
0.0 0.8 0.2 1.0
Amortization for nancial year -1.9 -17.6 -32.9 -52.4
Total as of December 31 226.0 22.2 287.8 536.0
2019
Patents
and trademarks Software Other
Intangible
assets total
Acquisition costs as of January 1 245.0 167.1 465.3 877.4
Additions 0.0 6.2 0.0 6.3
Disposals 0.0 -0.8 -10.5 -11.3
Business combinations 0.0 0.0 1.2 1.2
Translation difference 0.0 -0.3 0.1 -0.2
Acquisition costs as of December 31 245.1 172.3 456.1 873.5
Accumulated amortization
as of January 1
-15.3 -119.4 -160.8 -295.4
Translation difference 0.0 0.0 0.0 0.0
Accumulated amortization
relating to disposals
0.0 1.0 1.1 2.1
Amortization for nancial year -0.6 -23.0 -24.9 -48.5
Total as of December 31 229.2 30.9 271.5 531.6
The category Other consists mainly of customer lists and
technology acquired in business combinations. They are
stated at cost and amortized on a straight-line basis over
their expected useful lives. The normal amortization period
of intangible assets varies from 4 to 20 years. The amortization
of intangible assets is included in the depreciation and
impairments line in the consolidated statement of income.
On December 31, 2020 and December 31, 2019, the intangible
assets having indenite useful life consisted of the Demag
and Gottwald trademarks of EUR 167.0 million and EUR 51.0
million. As there is no foreseeable limit on the period over
which the asset is expected to generate net cash inows
for the entity, it is classied as intangible assets having an
indenite useful life. The carrying amounts of these assets
are tested on a yearly basis in connection with the goodwill
impairment testing.
The addition of EUR 9.2 million (EUR 6.3 million in 2019)
mainly consisted of capitalized development costs of the
Group’s ERP systems.
82 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
15. Property, plant and equipment
2020 Land Buildings
Machinery &
Equipment
Property,
plant and
equipment
total
Acquisition costs as of January 1 27.2 236.4 359.6 623.2
Additions 0.0 22.8 50.5 73.3
Disposals -1.0 -8.2 -25.3 -34.4
Business combinations 4.6 18.1 11.8 34.5
Translation difference -0.7 -5.9 -4.9 -11.6
Acquisition costs as of December 31 30.1 263.3 391.6 685.0
Accumulated depreciation as of
January 1
0.0 -61.2 -229.1 -290.4
Translation difference 0.0 0.3 0.5 0.8
Accumulated depreciation relating to
disposals
0.0 3.4 20.5 24.0
Depreciation for nancial year 0.0 -30.8 -46.9 -77.7
Total as of December 31 30.1 175.0 136.7 341.8
2019 Land Buildings
Machinery &
Equipment
Property,
plant and
equipment
total
Acquisition costs as of January 1 30.7 139.0 311.0 480.7
Additions 0.0 22.3 47.9 70.2
Disposals -3.6 -19.7 -25.1 -48.3
Change in accounting principles
(IFRS 16)
0.0 93.3 25.1 118.5
Business combinations 0.0 0.0 0.3 0.3
Impairment 0.0 0.0 -0.8 -0.8
Translation difference 0.1 1.4 1.1 2.7
Acquisition costs as of December 31 27.2 236.4 359.6 623.2
Accumulated depreciation
as of January 1
0.0 -37.3 -206.8 -244.1
Translation difference 0.0 0.0 0.0 -0.1
Accumulated depreciation
relating to disposals
0.0 5.4 22.7 28.0
Depreciation for nancial year 0.0 -29.3 -45.0 -74.3
Total as of December 31 27.2 175.1 130.4 332.8
Classication of Property, plant and equipment 2020 2019
Property, plant and equipment, owned 220.8 201.0
Right-of-use assets, leased 121.0 131.8
Total 341.8 332.8
2020
Right of use assets
Land and
Buildings
Machiery and
Equipment Total
Balance as of January 1 85.8 46.0 131.8
Translation difference -2.4 -1.8 -4.3
Business combinations 7.0 0.3 7.3
New contracts and changes in lease
contracts
10.6 19.5 30.0
Depreciation during the year -22.5 -21.5 -43.9
Total as of December 31 78.5 42.5 121.0
2019
Right of use assets
Land and
Buildings
Machiery and
Equipment Total
Balance as of January 1 93.3 45.6 138.9
Translation difference 0.9 0.2 1.1
New contracts and changes in lease contracts 13.2 21.8 34.9
Depreciation during the year -21.6 -21.6 -43.2
Total as of December 31 85.8 46.0 131.8
Mainly due to the restructuring actions of the Group land, buildings, machinery and equipment were
written off in 2020 by EUR 0.0 million (EUR 0.8 million in 2019).
83 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
16. Interests in other entities
and non-controlling interests
16.1. Investments accounted for using
the equity method
The following table illustrates the summarized nancial information of the Group’s investments and reconciliation
with the carrying amount of the investments in consolidated nancial statements.
16.3. Joint operations
Konecranes has classied the interest in AS Konesko
(domiciled in Estonia) as a joint operation based on the joint
arrangement agreement. AS Konesko is a strategic supplier
of components used in Konecranes products. Konecranes
has the exclusive right to purchase certain motors and end
carriages from AS Konesko at a price to be agreed upon
with AS Konesko. However Konecranes retains ownership
of the current motor designs and the trademark rights
to the end carriages.
Associated Companies 2020 2019
Acquisition costs as of January 1 1.7 1.7
Share of associated companies' result
after taxes
0.1 0.1
Dividends received -0.1 -0.1
Total as of December 31 1.7 1.7
Joint Ventures 2020 2019
Acquisition costs as of January 1 72.3 69.3
Share of joint ventures' result after
taxes*
0.0 4.4
Change to subsidiary -67.8 0.0
Dividends received -0.4 -1.4
Acquisitions 0.8 0.0
Translation difference -0.1 0.0
Total as of December 31 4.8 72.3
2020
Carrying
amount
of the
investment
Non−
current
assets*
Current
assets*
Non−
current
liabilities*
Current
liabilities* Revenue*
Prot/
loss after
tax from
continuing
operations*
Total com-
prehensive
income*
Dividends
received
Investments in
associated companies
and joint ventures
6.5 2.5 48.1 0.2 27.8 57.8 0.5 0.5 0.5
Total 6.5 2.5 48.1 0.2 27.8 57.8 0.5 0.5 0.5
2019
Carrying
amount
of the
investment
Non−
current
assets*
Current
assets*
Non−
current
liabilities*
Current
liabilities* Revenue*
Prot/
loss after
tax from
continuing
operations*
Total com-
prehensive
income*
Dividends
received
MHE-Demag (S)
Pte Ltd Group (joint
venture)
67.8 32.9 132.8 5.4 71.4 195.8 10.2 10.2 1.3
Other Investments in
associated companies
and joint ventures
6.1 2.9 43.6 0.1 24.9 59.4 1.4 1.4 0.2
Total 73.9 35.8 176.4 5.5 96.3 255.2 11.6 11.6 1.5
* Including adjustments from purchase price allocation. *Asset and liability values, revenue and prot/loss represent values according to the latest published nancial information.
Konecranes owns as of December 31, 2020 49.5%
of AS Konesko shares.
Konecranes has recognized and accounted for the assets,
liabilities, revenues and expenses relating to its interest
in AS Konesko in accordance with IFRS11.
16.2. Investments in Associated Companies and Joint Ventures
In addition Konecranes remeasured its previously held equity
interest in MHE-Demag at its acquisition date fair value
and recognised also EUR 21.1 million gain in share of joint
ventures’ result in statement of income.
84 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
16.4. Subsidiaries with material non-controlling interest
17. Deferred tax assets and liabilities
17.1. Deferred tax assets
17.2. Deferred tax liabilities
2020
Accumulated
non-controlling
Interest Goodwill
Non-current
assets Current assets
Non-current
liabilities
Current
liabilities Revenue
Prot/loss
after tax from
continuing
operations
Total
comprehensive
income
Non-controlling interests 9.2 0,0 59.4 43.9 5.6 62.6 42.6 3.8 3.8
Total 9.2 0,0 59.4 43.9 5.6 62.6 42.6 3.8 3.8
2019
Accumulated
non-controlling
Interest Goodwill
Non-current
assets Current assets
Non-current
liabilities
Current
liabilities Revenue
Prot/loss
after tax from
continuing
operations
Total
comprehensive
income
Noell Cranes Systems (China) Ltd
(NCI 30%)
0,0 0,0 0,0 0,0 0,0 0,0 10.2 3.7 3.7
Other non-controlling interests 9.2 0,0 55.0 38.6 5.1 56.4 40.4 2.9 2.9
Total 9.2 0,0 55.0 38.6 5.1 56.4 50.6 6.7 6.6
NCI = Non-Controlling Interest. Assets and liabilities as well as revenue and prot/loss values represent the total company values including purchase price allocations. See also the company list for the ownership and
principal place of business of the subsidiaries.
2020 2019
Employee benets 56.5 53.4
Provisions 17.1 15.8
Unused tax losses 11.4 10.9
Other temporary differences 33.8 43.4
Total 118.9 123.5
2020 2019
Intangible and tangible assets 129.7 126.1
Other temporary difference 13.9 17.0
Total 143.6 143.1
Other temporary differences include timing differences
arising for example from accrued costs, advances received
and unrealized currency differences that are not deductible
in taxation until they occur.
The deferred tax assets and deferred tax liabilities have been
netted on a juridical company level when there is a legally
enforceable right to offset income tax receivables against
income tax payables related to income taxes levied by the
same tax authority. The gross amount of deferred tax assets
in 2020 were EUR 148.4 million (EUR 156.2 million in 2019)
and deferred tax liabilities EUR 172.8 million (EUR 175.8
million in 2019).
Konecranes has not recognized the temporary differences in
investments in subsidiaries to the extent that they probably
will not reverse in the foreseeable future.
17.3. Tax losses carried forward
At the end of year 2020, Konecranes recorded a deferred tax
asset of EUR 11.4 million (EUR 10,9 million in 2019) related
to unused tax losses on the carry-forward losses of EUR
218.4 million (EUR 225.3 million in 2019) in total. The tax
losses, for which no deferred tax assets are recognized due
to the uncertainty of the utilization of the losses, amounted
to EUR 170.0 million in the year 2020 (EUR 177.1 million in
2019). EUR 151.3 million of these carry-forward tax losses
available have unlimited expiry, EUR 17.8 million expire later
than in ve years and EUR 49.4 million expire in ve years.
Part of carry-forward losses relates to Morris Material
Handling, Inc., USA, which was acquired in 2006. The
overall carry-forward losses of Morris Material Handling, Inc.
amounted to EUR 24.5 million (EUR 29.2 million in 2019).
To assess if the convincing evidence threshold per IAS12
was met Konecranes has prepared tax forecasts for future
periods considering the restructuring done and the tax
planning opportunities that were being implemented at
85 Financial Review 2020
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Tax losses carried forward and related deferred tax assets on December 31
by the most signicant countries as following:
2020
Tax losses
carried forward
Potential deferred
tax assets
Deferred tax assets
not recorded
Deferred
tax assets
France 75.9 20.8 20.8 0.0
India 34.4 10.7 10.7 0.0
USA 24.6 5.8 0.0 5.8
Austria 19.2 4.8 4.2 0.6
Great Britain 12.3 2.3 1.2 1.2
China 8.3 2.1 1.2 0.9
South Africa 7.7 2.2 2.2 0.0
Germany 5.8 1.8 1.8 0.0
Australia 5.0 1.5 0.0 1.5
The Netherlands 4.7 0.7 0.2 0.5
Other 20.5 4.9 3.9 1.1
Total 218.4 57.6 46.2 11.4
2019
Tax losses
carried forward
Potential deferred
tax assets
Deferred tax assets
not recorded
Deferred
tax assets
France 53.0 14.8 14.8 0.0
India 46.5 14.5 14.5 0.0
USA 29.3 6.9 0.0 6.9
Austria 20.5 5.1 4.2 0.9
Great Britain 4.7 0.9 0.9 0.0
China 19.8 4.9 3.8 1.2
South Africa 7.6 2.1 2.1 0.0
Germany 5.9 1.9 1.8 0.0
Australia 0.0 0.0 0.0 0.0
The Netherlands 6.1 1.4 0.4 1.0
Other 31.9 7.6 6.8 0.8
Total 225.3 60.2 49.3 10.9
that time. The taxable income in these forecasts has led
management to recognize the deferred tax assets for
The Netherlands and Austria.
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18. Inventories
19. Ageing analysis of accounts receivable
2020 2019
Raw materials and semi-manufactured goods 238.4 265.5
Work in progress 336.6 339.1
Finished goods 51.4 32.9
Advance payments 18.4 21.2
Total 644.8 658.7
2020 2020 2019 2019
Accounts
receivable
including
impairment of
Accounts
receivable
including
impairment of
Not overdue 327.0 2.9 334.2 1.1
1−30 days overdue 85.0 0.4 101.9 0.6
31−60 days overdue 30.1 0.3 36.2 0.3
61−90 days overdue 14.1 0.6 19.8 0.3
more than 91 days overdue 33.0 27.6 38.3 27.1
Total 489.2 31.8 530.4 29.3
2020
Balance at the
beginning
of the year
Translation
difference
Business
combinations
Utilized during
the period
Provision not
needed Additions
Balance
at the end
of the year
Provision
for obsolete
inventory
36.8 -1.5 3.9 8.9 2.0 14.3 42.7
2019
Balance at the
beginning
of the year
Translation
difference
Business
combinations
Utilized during
the period
Provision not
needed Additions
Balance
at the end
of the year
Provision
for obsolete
inventory
49.8 0.4 0.0 19.5 0.3 6.3 36.8
The carrying amount of accounts receivable approximates to their fair value. Accounts receivable are subject to only minor credit
risk concentrations due to the Group’s extensively diversied customer portfolio. Credit losses recognized from the customer
contracts for the nancial year totaled EUR 5.8 million (EUR 4.2 million in 2019).
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2020
Balance at
the beginning
of the year
Translation
difference
Business
combinations
Utilized
during
the period
Provision not
needed Additions
Balance
at the end
of the year
Provision for
doubtful accounts
(Impairment)
29.3 -1.2 0.6 5.7 6.6 15.5 31.8
2019
Balance at
the beginning
of the year
Translation
difference
Business
disposals
Utilized
during
the period
Provision not
needed Additions
Balance
at the end
of the year
Provision for
doubtful accounts
(Impairment)
26.8 0.2 -0.1 4.2 5.6 12.2 29.3
The release of the provision for doubtful accounts relates to the cash received from individual receivables which were historically
provided for due to management’s uncertainty of their collectability.
19. Ageing analysis of accounts receivable (continues)
20. Other receivables
21. Deferred assets
22. Cash and cash equivalents
2020 2019
Notes receivable 4.7 5.9
Value added tax 26.2 27.8
Total 30.9 33.7
2020 2019
Interest 0.8 2.1
Prepaid expenses 20.4 15.7
Unbilled revenue 24.6 5.6
Other 36.4 36.9
Total 82.1 60.3
2020 2019
Short-term deposits 15.9 5.0
Cash in hand and at bank 576.0 373.2
Total 591.9 378.2
23. Equity
23.1. Shareholders’ equity
Number of
shares
Number of
treasury
shares
As of January 1, 2019 78,816,503 105,403
Share subscriptions
with share awards
22,923 -22,923
As of December 31, 2019 78,839,426 82,480
Share issue 0 300,000
Share subscriptions
with share awards
295,033 -295,033
As of December 31, 2020 79,134,459 87,447
The total shareholders’ equity consists of share capital,
share premium, paid in capital, cash ow hedges, translation
difference, other reserves and retained earnings. Consistent
with local legislation Konecranes’ share has no nominal value.
All issued shares are fully paid and listed on Nasdaq Helsinki.
Share premium includes the value of shares, which exceeds
the accounting par value of the shares, for shares issued
before September 1, 2006. Cash ow hedges include
changes in the fair values of derivative nancial instruments
used to hedge operational cash ows. Translation differences
comprise the differences arising from translating non-euro
functional currency entities to euro, which is the Group’s
presentation currency. Other reserves include the credit
for equity settled share-based payment cost. The paid in
capital includes the portion of shares’ subscription price,
which is not recorded to share capital or to liabilities
according to IFRS. The paid in capital includes also other
capital contributions to the Group, which are not recorded
to some other reserve within the equity. The paid in capital
includes also the possible amount of share capital decrease,
which is not netted against accumulated losses or is not
distributed to shareholders.
Dividend proposal per share was for 2020 EUR 0.88 and
dividend for 2019 was EUR 1.20.
23.2. Distributable earnings
See page 117 / Board of Director’s Proposal to the Annual
General Meeting.
Short-term deposits have a maturity of three months or less.
Cash and cash equivalents are carried at nominal value,
which corresponds to their fair value.
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24. Provisions
2020 Warranty Restructuring
Pension
commitments Other Total
Total provisions as of January 1 55.7 80.7 6.2 28.2 170.8
Translation difference -0.5 -0.2 -0.5 -1.0 -2.3
Increase through business combination 2.3 0.0 0.0 0.0 2.3
Additional provision in the period 31.2 23.7 2.4 11.5 68.8
Utilization of provision 16.2 37.1 2.1 9.0 64.4
Unused amounts reversed 8.9 2.3 0.0 3.1 14.3
Total provisions as of December 31 63.7 64.8 6.0 26.5 161.0
2019 Warranty Restructuring
Pension
commitments Other Total
Total provisions as of January 1 61.3 35.5 6.8 30.1 133.8
Translation difference 0.1 0.2 0.1 0.2 0.7
Additional provision in the period 31.3 70.5 2.1 14.4 118.4
Utilization of provision 22.8 25.2 2.6 11.3 61.9
Unused amounts reversed 14.3 0.3 0.2 5.3 20.1
Total provisions as of December 31 55.7 80.7 6.2 28.2 170.8
The provision for warranties covers the expenses due to
the repair or replacement of products during their warranty
period. The warranty liability is based on historical realized
warranty costs for deliveries of standard products and
services. The usual warranty period is 12 months. For more
complex contracts, mainly including long-term projects, the
warranty reserve is calculated contract by contract and the
warranty period can be signicantly longer. The restructuring
provision is recognized when the Group has prepared a
detailed reorganization plan and begun implementation of the
plan or announced the matter. Pension commitments include
provisions for local pension schemes.
Other provisions include provisions for claims, litigations
and provisions for loss contracts in which the amount is not
provided for as part of work in progress or percentage of
completion receivable of the loss making project.
Restructuring costs
Konecranes has recorded EUR 42.6 million restructuring costs
during 1–12/2020 (EUR 100.7 million in 1–12/2019) of which
EUR 0.0 million was impairment of assets (EUR 0.8 million for
1–12/2019). The remaining EUR 42.6 million of restructuring
cost is reported 1–12/2020 in personnel costs (EUR 27.5
million) and in other operating expenses (EUR 16.4 million)
and prots on disposal of assets in other operating income
(EUR 1.3 million).
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25. Current liabilities
25.1. Accruals
2020 2019
Wages, salaries
and personnel expenses
115.8 119.6
Pension costs 9.5 9.3
Interest 6.1 11.4
Other items 47.8 40.4
Total 179.2 180.6
2020 2019
Value added tax 29.3 14.7
Payroll tax liability 19.2 16.4
Other short-term liabilities 12.7 13.2
Total 61.2 44.3
Maturity
of undiscounted cash ows 2020 2019
within 1 year 41.4 39.7
1−5 years 78.0 79.2
over 5 years 19.5 18.7
Total 138.9 137.6
Lease liabilities included
in the balance sheet 2020 2019
Non current interest-bearing liabilities 90.9 98.4
Current interest-bearing liabilities 37.9 39.8
Total as of December 31 128.8 138.2
25.2. Other current liabilities
(non-interest bearing)
26. Lease accounting
Amounts recognised
in statement of income 2020 2019
Depreciation for right of use asset 43.9 43.2
Income for subleasing right of
use asset
-1.3 -0.7
Expenses related to short-term leases 4.4 5.4
Expenses related to leases
of low-value assets
2.9 3.3
Interest on lease liabilities 4.4 4.1
Total expenses 54.4 55.3
Total cash ow of leases 54.2 57.1
2020 2019
Loans from nancial institutions 479.8 400.6
Bonds 249.5 249.1
Pension loans 30.0 35.0
Lease liabilities 90.9 98.4
Other long-term loans 9.6 2.7
Total 859.7 785.8
2020 2019
Loans from nancial institutions 82.8 3.9
Pension loans 5.0 5.0
Lease liabilities 37.9 39.8
Commercial papers 180.8 199.6
Other short-term loans 4.6 0.1
Overdraft 0.0 0.0
Total 311.1 248.4
The Group leases land and buildings for its production and
ofce space. The leases of production facilities typically
run for a period of two to seven years, and leases of ofce
space for one to ten years. Some leases include an option
to renew the lease for an additional period after the end
of the contract term. Konecranes Group has major lease
agreements of factory and ofce buildings in Hyvinkää
and Hämeenlinna, Finland. At the year end 2020 they are
still valid for 1–3 years unless the lessee extends the lease
period by ve years. The lessee is entitled to exercise the
5-year extention option three consecutive times. Group
has now included one 5-year option in the liability value.
The Group has various other leases for ofce equipment,
vehicles and premises with varying terms and renewal rights.
Vehicles have typically a lease term from three to seven
years. Leasing contracts comply with normal practices in
the countries concerned. The average interest rate in lease
contracts was 3.15% (3.24% in 2019).
27. Interest-bearing liabilities
27.1. Non-current
27.2. Current
In order to support and nance the completion of the merger
plan with Cargotec, Konecranes entered into EUR 935 million
re- and back-up nancing agreements in the beginning
of October 2020. The term loan facilities may be used to
renance the companies’ existing indebtedness in connection
with the merger, potential cash redemptions of Konecranes’
shares as well as Konecranes’ extra distribution proposed to
be distributed prior to the completion of the merger. During
the fourth quarter, Konecranes obtained waivers for merger
related covenants for EUR 200 million term loans in respect
of its existing indebtedness and the back-up nancing was
cancelled for EUR 100 million (50/50 split with Cargotec).
In the beginning of December, Konecranes announced a
consent solicitation for amending the terms and conditions
of its EUR 250 million notes in respect of the planned merger.
The noteholders resolved to approve the proposal and the
solicitation process was fullled after the extraordinary
general meetings of Konecranes and Cargotec approved
the merger plan. After the extraordinary general meeting
90 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
approval the respective facility for cash redemptions of
Konecranes shares of EUR 300 million was cancelled.
For the EUR 77 million Schuldschein loans maturing in
November 2024 Konecranes received similar waivers
in the amount of EUR 71 million. Committed merger related
term loan facilities amount outstanding at the end of year
2020 was EUR 535 million.
At the end of the fourth quarter 2020, the Group’s liquid
cash reserves were higher than in a normal circumstance,
EUR 591.9 million (December 31, 2019: EUR 387.2 million).
For safeguarding the Group’s cash position, the Group
has established EUR 400 million committed revolving
credit facility with an international loan syndication
(2017–2024), which remained undrawn at the end of
December 2020. In addition, the Group may draw short
term nancing from the domestic commercial paper markets
within the EUR 500 million limit, for which EUR 181 million
was utilized at the end of December 2020 (December 31,
2019: EUR 200 million).
At the end of December 2020, the outstanding long-term
loans were: EUR 400 million term loans, EUR 150 million
Schuldschein loan, EUR 250 million bond and EUR 35 million
employment pension loan. The Schuldschein loan and
term loans contains oating and xed rate tranches and
the bond yield is xed with annual coupon payment. The
weighted average interest rate for these loans and the bond
is currently 1.30% per annum. The Group is in compliance
with the quarterly monitored nancial covenant (interest-
bearing net debt/equity). No specic securities have been
given for the loans. The Group continues to have healthy
interest-bearing net debt / equity ratio of 46.1% (December
31, 2019: 52,6%) which is in compliance with the nancial
covenants the Group has to comply with.
In addition the Group has certain revolving facilities the
details of which can be found in Note 33.3. The average
interest rate of the non-current liabilities portfolio at
December 31, 2020 was 1.57% (2019: 1.45%) and that of
the current liabilities portfolio was 0.98% (2019: 0.84%).
The effective interest rate for EUR loans varied between
0.29%−3.8% (2019: 0.25%−9.00%).
27.3. Maturity tables of nancial liabilities
and liquidity risk
The following table reects the maturity of interest bearing
liabilities.
2020 Maturity
Currency
Avg.
duration
Avg.
rate %
Less than
1 year 1-5 years
Over
5 years
Amount
MEUR
EUR 1.8 years 1.21 279.6 787.2 23.6 1,090.4
INR 1.6 years 8.73 0.6 0.6 0.0 1.2
CNY 1.3 years 5.07 0.9 0.4 0.0 1.4
USD 1.7 years 3.68 7.8 17.3 1.1 26.1
GBP 1.8 years 2.94 1.7 4.5 0.9 7.0
Others 1.0-3.0 years 1.46-20.43 20.4 18.8 5.5 44.7
Total 1.41 311.1 828.7 31.0 1,170.8
2019 Maturity
Currency
Avg.
duration
Avg.
rate %
Less than
1 year 1-5 years
Over
5 years
Amount
MEUR
EUR 2.5 years 1.11 224.0 709.3 33.9 967.2
INR 1.7 years 8.68 0.6 1.2 0.1 1.8
CNY 1.5 years 5.13 1.3 1.0 0.0 2.3
USD 1.7 years 3.81 10.3 21.3 1.4 33.1
GBP 1.8 years 2.85 1.8 4.4 1.6 7.8
Others 1.1-2.0 years 1.42-16.03 10.4 10.9 0.7 22.0
Total 1.30 248.4 748.0 37.8 1,034.2
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The following table reects all contractually xed pay-offs
for settlement, repayments and interest resulting from
recognized nancial liabilities, excluding derivatives.
The amounts disclosed are undiscounted net cash outows
for the respective upcoming scal years, based on the earliest
2020 Maturity
Currency
Avg.
duration
Avg.
rate %
Less than
1 year
1-5
years
Over
5 years
Amount
MEUR
EUR 1.8 years 1.21 297.3 806.2 24.1 1,127.7
INR 1.6 years 8.73 0.6 0.7 0.0 1.4
CNY 1.3 years 5.07 1.0 0.5 0.0 1.5
USD 1.7 years 3.68 8.8 18.6 1.1 28.5
GBP 1.8 years 2.94 1.9 4.8 0.9 7.6
Others 1.0- 3.0 years 1.46-20.43 22.5 21.0 5.8 49.2
Total debt 1.41 332.1 851.9 31.9 1,215.9
Other nancial
liabilities
262.7 7.2 0.0 270.0
Total nancial
liabilities
594.9 859.1 31.9 1,485.8
2019 Maturity
Currency
Avg.
duration
Avg.
rate %
Less than
1 year
1-5
years
Over
5 years
Amount
MEUR
EUR 2.5 years 1.11 239.5 733.6 34.5 1,007.5
INR 1.7 years 8.69 0.7 1.5 0.1 2.4
CNY 1.5 years 5.13 1.4 1.1 0.0 2.5
USD 1.7 years 3.81 11.5 23.9 1.5 36.9
GBP 1.8 years 2.85 2.0 4.9 1.7 8.6
Others 1.0- 2.0 years 1.38-20.81 11.3 12.2 1.0 24.5
Total debt 1.30 266.5 777.1 38.7 1,082.3
Other nancial
liabilities
280.4 6.8 0.0 287.2
Total nancial
liabilities
546.9 783.9 38.7 1,369.5
27.3b Liquidity risk, containing undiscounted cash ows
of non-derivative nancial liabilities by currency
date on which Konecranes could be required to pay. Cash
outows for nancial liabilities (including interest) without
xed amount or timing are based on the conditions existing
at December 31.
92 Financial Review 2020
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27.4. Maturity prole of the Group’s nancial liabilities
The following table reects the maturity of all nancial liabilities.
27.5. Changes in Group’s liabilities arising from nancing activities
2020 Maturity of nancial liabilities
Liability type
Amount
drawn
Less than
1 year
1-5
years
Over
5 years
Loans from nancial institutions 562.6 82.8 479.8 0.0
Bonds 249.5 0.0 249.5 0.0
Lease liabilities 128.8 37.9 72.6 18.3
Commercial paper program 180.8 180.8 0.0 0.0
Pension loans 35.0 5.0 20.0 10.0
Other long-term debt and short-term loans 14.2 4.6 6.9 2.7
Overdraft 0.0 0.0 0.0 0.0
Derivative nancial instruments 5.5 5.5 0.0 0.0
Account and other payables 270.0 262.7 7.2 0.0
Total 1,446.3 579.4 836.0 31.0
2019 Maturity of nancial liabilities
Liability type
Amount
drawn
Less than
1 year
1-5
years
Over
5 years
Loans from nancial institutions 404.5 3.9 400.6 0.0
Bonds 249.1 0.0 249.1 0.0
Lease liabilities 138.2 39.8 78.3 20.1
Commercial paper program 199.6 199.6 0.0 0.0
Pension loans 40.0 5.0 20.0 15.0
Other long-term debt and short-term loans 2.8 0.1 0.5 2.3
Overdraft 0.0 0.0 0.0 0.0
Derivative nancial instruments 6.2 6.2 0.0 0.0
Account and other payables 287.2 280.4 6.8 0.0
Total 1,327.7 535.0 755.3 37.3
2020
Non-current
interest
bearing loans
Non-current
lease
liabilities
Current
interest
bearing
loans
Current
lease
liabilities
Financial
derivatives Total
Total liabilities as of
January 1
687.5 98.4 208.6 39.8 6.2 1,040.5
Cash ows 146.4 0.0 -20.1 -42.5 0.0 83.9
Acquisitions and disposals 7.9 6.5 12.3 1.3 0.0 28.0
Foreign exchange
movement
0.1 -2.9 -0.5 -1.5 0.0 -4.8
Changes in fair values 0.0 0.0 0.0 0.0 -0.6 -0.6
Changes in lease contracts 0.0 39.5 0.0 -9.9 0.0 29.6
Other -73.1 -50.6 72.9 50.6 0.0 -0.2
Total as of December 31 768.8 90.9 273.2 37.9 5.5 1,176.3
2019
Non-current
interest
bearing loans
Non-current
lease
liabilities
Current
interest
bearing
loans
Current
lease
liabilities
Financial
derivatives Total
Total liabilities
as of January 1
572.5 12.1 183.8 8.0 7.7 784.1
IFRS 16 adjustment 0.0 86.1 0.0 38.1 0.0 124.1
Cash ows 114.4 0.0 24.6 -44.3 0.0 94.7
Foreign exchange
movement
0.0 0.2 0.3 0.1 0.0 0.5
Changes in fair values 0.0 0.0 0.0 0.0 -1.5 -1.5
Changes in lease contracts 0.0 37.9 0.0 0.0 0.0 37.9
Other 0.5 -37.9 0.0 37.9 0.0 0.5
Total as of December 31 687.5 98.4 208.6 39.8 6.2 1,040.5
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28. Other long-term liabilities
28.1. Employee benets
The Company and most of its subsidiaries offer retirement
plans which cover the majority of employees in the Group.
Many of these plans are dened contribution, where
Konecranes’ contribution and resulting charge is xed at a
set level or is a set percentage of employees’ pay. However
the Group has signicant dened benet pension plans in
the United Kingdom, Germany and Switzerland as well as
individually insignicant plans in other countries. Companies
in many countries have also other long term employee
benets such as part time pension benets and jubilee
benets which are reported as dened benet plans.
The UK dened benet plan is administered by an
independent trustee company that is legally separated from
the Group. The investments are managed by a professional
and independent Fiduciary Manager who is appointed by
the trustees. The Fiduciary Manager appoints Investment
Managers as they see t in order to achieve the Trustees’
stated objectives for the scheme funding level and taking
into account the agreed risk appetite. The Fiduciary Manager
has trigger points set in conjunction with the Trustees
which when reached allows them to make changes to the
investments to repatriate the gains to achieve full funding
position. The UK plan is subject to the UK’s pensions
legislation, is regulated by the UK Pensions Regulator and is
exempt from most UK taxation through its registered status.
The UK plan was closed to new members in 2005.
Under the UK plan the employees are entitled to post-
retirement installments calculated as an average annual basic
salary from the best three years within the last ten years.
2020 2019
Employee benets 299.2 283.6
Other non-interest-bearing long-term
liabilities
7.2 6.8
Total 306.4 290.4
The net liability in the United Kingdom was EUR 0.0 million
(EUR 0.0 million in 2019).
In Germany the dened benet pension plans are direct
pension promises which are unfunded and administered by
a service provider. The payments to plan participants start
after retirement or in case of disability or death. Benets
are based on the number of years worked and the nal
salary. The commencement of pension payments depends
on the beginning of the state-pension, which is the earliest
at age 63 in case of early retirement and otherwise 65 for
old age pension. The biggest dened benet pension plan in
Germany is the Mannesmann Leistungsordnung (MLO),
which is closed to new employees. The monthly pension
benet provided by this plan is calculated as the ratio
Individual pay/Average pay, times the years of service, times
3.07, and has to be at least equal to 2.10 times the years
of service. The net liability in Germany was EUR 265.2 million
(EUR 251.6 million in 2019) of which the MLO plan was
EUR 170.5 million (EUR 159.3 million in 2019).
The Swiss pension plans are administered via pension funds,
which are legally separated from the Group. The board of
Trustees of the pension funds are equally composed
of representatives of both the employer and employees.
The Trustees are required by law to act in the interest of all
relevant beneciaries and are responsible for the investment
policy with regard to the assets and the administration and
nancing of the benets. The plans function in and comply
with a large regulatory framework and comply with the
local minimum funding requirements. The plans are open
to new members. Both the Company and employees pay
contributions to fund the plans. The pension plans qualify
as dened benet plan for IFRS purposes, because accruals
are by law subject to a minimum guaranteed rate of return
and the plan has to guarantee a certain legal minimum level
of benets. There is hence a risk that the Company may have
to pay additional contributions. Under the plans, participants
are also insured against the nancial consequences of old
age, disability and death. The net liability in Switzerland
was EUR 5.1 million (EUR 4.1 million in 2019) of which the
pension plan was EUR 4.8 million (EUR 3.9 million in 2019).
There was a settlement in the Swiss plan in 2019 in which
the current retirees were transferred to a new fully insured
pension plan. The settlement was EUR 10.2 million and
resulted in a positive settlement effect of EUR 3.1 million
to result.
The dened benet plans typically expose the Company
to actuarial risks such as: investment risk, interest rate
risk, longevity risk and salary risk. The investment risk is
being mitigated by investing the funds both to equity
and debt instruments.
The following tables summarize the components
of net benet expense recognized in the statement
of prot or loss and the funded status and amounts
recognized in the balance sheet for the respective plans:
28.2. Amounts recognized in the balance sheet
2020 2019
Present value of obligation
wholly unfunded
294.7 279.8
Present value of obligation
wholly or partly funded
86.1 84.3
Dened benet plan obligations 380.8 364.1
Fair value of plan assets -81.6 -80.5
Total net liability recognized 299.2 283.6
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2020 2019
Obligation as of January 1 364.1 347.5
Translation difference -3.8 3.9
Business combinations 1.9 0.3
Reclassication of pension liabilities 0.7 0.0
Settlements and curtailments -2.2 -14.1
Current service cost 8.4 7.5
Interest cost 4.4 6.4
Past service cost 0.3 -0.8
Actuarial gains (-) / losses (+)
arising from changes in demographic
assumptions
0.5 -1.2
Actuarial gains (-) / losses (+) arising
from changes in nancial assumptions
27.8 34.6
Actuarial gains (-) / losses (+) arising
from experience
-2.3 -2.4
Benets paid (-) -19.0 -17.6
Obligation as of December 31 380.8 364.1
Movements of the fair value
of plan assets 2020 2019
Fair value of plan assets as of January 1 80.5 84.4
Translation difference -3.4 3.7
Business combinations 0.6 0.0
Reclassication of plan assets 0.5 0.0
Interest income 1.5 2.1
Employee contributions 0.4 0.4
Employer contributions 0.3 2.1
Settlements 0.0 -10.2
The return on plan assets
(excluding amounts included
in the net interest expense)
7.2 3.4
Benets paid (-) -5.9 -5.4
Fair value of plan assets
as of December 31
81.6 80.5
2020 2019
Service cost:
Current service cost 8.1 7.4
Net interest cost 3.0 4.3
Past service cost 0.3 -0.8
Effect of settlement and
curtailments
-2.2 -4.0
Components of dened
benet plan costs recorded
in prot or loss
9.1 6.9
2020 2019
Remeasurement on
the net dened benet
liability:
The return on plan assets
(excluding amounts included
in the net interest expense)
gains (-) / losses (+)
-7.2 -3.4
Actuarial gains (-) / losses (+)
arising from changes
in demographic assumptions
0.5 -1.2
Actuarial gains (-) / losses (+)
arising from changes
in nancial assumptions
27.8 34.6
Actuarial gains (-) / losses (+)
arising from experience
-2.3 -2.4
Components of dened
benet plan costs recorded
in other comprehensive
income
18.8 27.6
Total (income (-) /
expense (+))
27.9 34.5
28.3. Components of dened benet plan
recorded in comprehensive income
The actuarial gains / losses in 2020 and 2019 were mainly
caused by the change of discount rates in the dened benet
plans of Germany, Switzerland and the United Kingdom.
28.4. Movements of the present value
of dened benet obligation
Of the benets paid, EUR 5.9 million (2019: EUR 5.4 million)
was paid from plan assets and EUR 13.1 million
(2019: EUR 12.2 million) by employer directly.
28.5. Major categories of plan assets
at the end of the reporting period
2020 2019
Equity instruments 14.4 14.5
Debt instruments 57.5 55.2
Insurances 1.1 1.3
Real estate 7.5 7.2
Others 1.1 2.4
Total plan assets 81.6 80.5
The plan assets do not contain any Konecranes shares or
assets.
Virtually all equity and debt instruments have quoted prices
in active markets. The plan assets originate from the United
Kingdom, Switzerland, Germany and India. It is the policy
of the UK fund to invest approximately 25–30% to growth
assets such as equity instruments as well as property and
growth funds and 70–75% to risk reducing assets such
as corporate bonds and xed or index-linked gilts. The
Swiss pension funds have a policy of investing their assets
approximately for 40–60% in Swiss bonds, about 15–35% in
equities, and 15–25% in Swiss property and mortgage loans.
There is almost no exposure to alternative investments.
The Company can only indirectly and partially determine
the asset allocation through the 50/50 employer/employee
representation in the board of Trustees. The actual return on
plan assets was EUR 8.7 million (2019: EUR 5.5 million).
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Sensitivity analysis Increase Decrease
0.5% points change in
the discount rate
-8.1% 7.9%
0.5% points change in the expected
development of salaries
0.5% -0.4%
0.5% points change in the expected
development of pensions
5.3% -5.7%
28.6. Dened benet plan:
the main actuarial assumptions
With the objective of presenting the assets and liabilities
of the dened benet plans at their fair value on the balance
sheet, assumptions under IAS 19 are set by reference
to market conditions at the valuation date. Qualied
independent actuaries have updated the actuarial valuations
under IAS 19 of the major dened benet schemes operated
by the Group to December 31, 2020. The assumptions
used by the actuaries are chosen from a range of possible
actuarial assumptions which, due to the long-term nature of
the schemes, may not necessarily be borne out in practice.
The actuarial assumptions used to calculate the benet
liabilities therefore vary according to the country in which the
plan is situated. The following table shows the assumptions,
weighted by liabilities, used to value the principal dened
benet plans.
Germany 2020 2019
Discount rate % 0.55 1.06
Expected development of salaries % 2.40 2.40
Expected development of pensions % 1.67 1.67
Mortality table: Richttafeln 2018 G von Klaus Heubeck
UK 2020 2019
Discount rate % 1.40 2.00
Expected development of pensions % 2.90 2.80
Mortality table: SAPS base table of S2PA, applied at year of birth
and weighted by male/female deferred members and pensioners,
and CMI 2017 (2019: CMI 2017) projections with a long term im-
provement parameter of 1.25% (2019: 1.25%) per annum.
Switzerland 2020 2019
Discount rate % 0.05 0.10
Expected development of salaries % 1.25 1.25
Mortality table: BVG 2015 Generational and improvement factors
CMI LTR 1.5%.
Other 2020 2019
Discount rate % 0.22−12.07 0.53−12.15
Expected development of salaries % 1.08−8.80 0.30−9.10
Expected development of pensions % 1.50−6.90 1.61−7.10
The below table shows the % effect of a change in the
signicant actuarial assumptions used to determine the
retirement benets obligations in our main dened benet
pension obligation countries. The effect shows the increase
or decrease in the liability. In the calculation of the sensitivity
of the discount rate any effect from the return of plan assets
has been ignored.
The sensitivity analyses above have been determined
based on reasonably possible changes of the respective
assumptions occurring at the end of the reporting period
and may not be representative of the actual change. It is
based on a change in the key assumption while holding all
other assumptions constant. A linear extrapolation of these
amounts based on alternative changes in the assumptions
as well as an addition of combined changes in the individual
assumptions is not possible.
There are no changes in the way the sensitivity analyses
were performed compared to the previous years.
The average duration of the dened benet obligation
weighted by the present value of the dened benet
obligation is 16 years (2019: 16 years).
The Group expects to contribute EUR 1.2 million to the
above dened benet pension plans in 2021 (Employer
contribution).
29. Share-based payments
Performance Share Plan
The Board of Directors of Konecranes Plc has resolved in
2017 to establish a long-term incentive plan for the Group
key employees and the President and CEO. The share-based
incentive plans are a Performance Share Plan 2017 for the
Group key employees, a Restricted Share Unit Plan 2017 for
selected Group key employees and a Performance Share Plan
2017–2021 for the President and CEO. The potential rewards
from the incentive plans will be paid partly in Konecranes Plc
shares and partly in cash to be used for taxes and tax-related
costs after the performance periods or vesting periods. As a
rule, no reward will be paid if a plan participant’s employment
or service ends before the reward payment. The Performance
Share Plan includes three performance periods, calendar
years 2017–2019, 2018–2020 and 2019–2021. The Board
of Directors will resolve on the performance criteria and on
the required performance levels for each criterion at the
beginning of each performance period.
During the performance period 2017–2019, the plan offers
the key employees a possibility to earn reward based on
achieving the required performance levels based on the
Konecranes Group’s cumulative adjusted Earnings per Share
(EPS) during the nancial years 2017–2019. Adjustments
to the EPS include dened restructuring costs, transaction
costs related to the MHPS acquisition, purchase price
allocation amortization and other unusual items reported as
adjustments by the company. The adjusted EPS includes the
gain on the disposal of STAHL CraneSystems. The rewards to
be paid on the basis of the performance period 2017–2019
correspond to an approximate maximum total of 880,000
Konecranes Plc shares including also the proportion to be
paid in cash. The plan is directed to approximately 260 key
employees, including the members of the Group Executive
Board and the Senior Management during the performance
period 2017–2019. The Board of Directors will be entitled to
reduce the rewards payable on the basis of the performance
period 2017–2019 if certain reward value cap is reached.
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Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
The Board of Directors resolved that the performance
criterion for the discretionary period 2018–2020 is the
cumulative adjusted Earnings per Share (EPS) of the nancial
years 2018—2020. Adjustments to the EPS include dened
restructuring costs, purchase price allocation amortization
and certain other unusual items. The target group of the
plan consisted of a maximum of 280 people during the
discretionary period 2018—2020. The rewards to be paid on
the basis of the discretionary period correspond to the value
of a maximum total of 710,000 Konecranes Plc shares.
If the target determined by the Board of Directors is attained,
the reward payout may be a half of the maximum reward.
The maximum reward payout requires that the target is
clearly exceeded.
The Board of Directors of Konecranes Plc resolved that the
performance criteria for the performance period 2019–2021
under the company’s Performance Share Plan (the “Plan”)
are the cumulative adjusted Earnings per Share (EPS) and
the cumulative annual growth rate (CAGR) for Sales of
the nancial years 2019—2021. Adjustments to the EPS
include dened restructuring costs, purchase price allocation
amortization and certain other unusual items. The target
group of the Plan for the performance period 2019—2021
consists of a maximum of 200 key employees of the
Konecranes Group. The rewards to be paid on the basis of
the performance period 2019—2021 correspond to the value
of a maximum total of 670,000 Konecranes Plc shares. If the
target determined by the Board of Directors is attained, the
reward payout may be half of the maximum reward. The
maximum reward payout requires that the target is clearly
exceeded.
The Board of Directors of Konecranes Plc resolved in 2020 to
establish a new Performance Share Plan 2020 for Konecranes
key employees. The Plan has a performance period from
2020 to 2022 with three separate measurement periods and
separate targets for 2020, 2021 and 2022.
The criterion for the measurement periods 2020 and 2021 is
adjusted Earnings per Share (EPS). Adjustments to the EPS
include dened restructuring costs, mergers and acquisitions
related deal costs and other unusual items. The EPS target
for the rst and second measurement periods have also been
resolved by the Board of Directors. The target group of the
Plan for the performance period 2020—2022 consists of a
maximum of 170 key employees of the Konecranes group.
The rewards to be paid on the basis of the performance
period 2020—2022 correspond to the value of a maximum
total of 600,000 Konecranes Plc shares. The payment of the
total reward takes place in 2023 if the plan term conditions
are met. The potential rewards from the Plan will be paid
partly in company shares and partly in cash after the
performance periods. The cash proportion is intended to
cover taxes and tax-related costs arising from the rewards to
the plan participants. As a rule, no reward will be paid if plan
participant’s employment or service ends before the reward
payment.
Restricted Share Unit Plan
The Restricted Share Unit Plan 2017 is directed to selected
key employees in Konecranes. The vesting periods will last
for 12 to 36 months. The prerequisite for reward payment
is that a key employee’s employment or service continues
until the end of the vesting period. The rewards to be
allocated on the basis of the entire plan will amount to a
maximum total of 200,000 Konecranes Plc shares including
also the proportion to be paid in cash. 45,000 shares (4,000
shares in 2019) of the restricted share unit plan was allocated
during 2020.
Restricted Share Unit Plan 2020
Konecranes Plc and Cargotec Corporation have on October
1, 2020 signed a combination agreement and a merger
plan to combine the two companies through a merger
(“Transaction”). The Board of Directors of Konecranes Plc
decided to establish a new share-based incentive plan for
the Group key employees. The new Restricted Share Unit
Plan 2020 (“Plan”) is intended to function as a bridge plan for
the transition period before the closing of the Transaction and
forming the combined company in the merger (“Transition
Period”). The aim of the Plan is to align the objectives of
the shareholders and the key employees, to secure business
continuity during the Transition Period, and to retain key
employees at the Company.
The reward from the Plan is conditional to the closing of
the Transaction. In addition, the reward is based on a valid
employment or service and the continuity of the employment
or service during the waiting period. The reward is paid partly
in shares and partly in cash, after the end of the waiting
period, ending on the closing date of the Transaction. Shares
received as a reward in the Plan may not be sold, transferred,
pledged or otherwise assigned during the 12-month lock-up
period. The lock-up period begins on the date following
the closing date of the Transaction. The Plan is intended for
selected key employees only, approximately 100 employees,
including the Konecranes Leadership Team members.
The rewards to be allocated in Konecranes Plc shares on the
basis of the Plan will amount up to an approximate maximum
total of 120,000 Konecranes Plc shares. In addition, a cash
proportion is included in the reward to cover taxes and tax-
related costs arising from the reward.
Performance Share Plan 2017—2021 for the CEO
The CEO long-term incentive plan consists of one ve-year
performance period, calendar years 2017–2021.
The potential reward from the CEO Plan will be based on
the Konecranes Group’s cumulative adjusted Earnings per
Share (EPS) during the nancial years 2017–2019 and
cumulative Earnings per Share (EPS) during the nancial
years 2020–2021. The rewards to be paid on the basis of
the CEO Plan correspond to a maximum total of 200,000
Konecranes Plc shares including also the proportion to be
paid in cash. However, the shares paid and to be paid as
97 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
reward, on the basis of the performance periods of the
Performance Share Plan 2017 and 2018, will be deducted
from the payable reward. The CEO will have a possibility to
earn a total of 48,000 Konecranes Plc shares including also
the proportion to be paid in cash, on the basis of the rst
performance period 2017–2019 of the Performance Share
Plan 2017 and similarly 39,000 shares of the Performance
Share Plan 2018. The CEO will not be entitled to sell shares
paid as reward through the Performance Share Plan 2017–
2021 for the CEO or the Performance Share Plan 2017 until
he owns Konecranes shares worth EUR 750,000 in total.
The plan for Panu Routila was discontinued in 2019.
Ownership Obligations
A member of the Konecranes Leadership Team must hold
a minimum of 50% of any net shares given on the basis of
these plans, until the member’s shareholding in the company
in total corresponds to the value of the member’s annual
salary and the member’s membership in the Konecranes
Leadership Team continues.
The fair value of the equity-settled portion of the share
rights granted is estimated at the date of grant using a
Monte-Carlo simulation model, taking into account
the terms and conditions upon which the share rights were
granted. The model simulates the TSR and compares it
against the group of principal competitors. It takes into
account historical and expected dividends, and the share
price uctuation covariance of the Group and its competitors
to predict the distribution of relative share performance.
Fair value of the cash-settled portion is measured at each
reporting date using a binomial option pricing model taking
into account the terms and conditions upon which the
instruments were granted and the current likelihood of
achieving the specied target.
Employee Share Savings Plan
The Group has launched an Employee Share Savings Plan
(ESSP) in which each participant will receive one free
matching share for every two acquired savings shares.
Matching shares will be delivered to a participant if the
participant holds the acquired shares from the plan until
the end of the designated holding period. The matching
shares will be paid in Konecranes shares and partly in cash.
The expenses of the plan are recognized over the vesting
period based on the quarterly acquired savings
share amounts.
The fair value of the equity-settled portion of the share
options granted is estimated at the date of grant using a
binominal option pricing model, taking into account the
terms and conditions upon which the share options were
granted. Fair value of the cash-settled portion is measured
at each reporting date using a binomial option pricing model
taking into account the terms and conditions upon which
the instruments were granted and the current likelihood of
achieving the specied target.
29.1. Expenses for employee service
29.3. Changes in the number of net share
rewards in Restricted Share Unit Plan 2020
29.2. Changes in the number of gross share
rewards in Performance Share Plan
2020 2019
Expense arising from equity-settled
share-based payment transactions
5.0 5.9
Expense arising from cash-settled
share-based payment transactions
0.7 -0.4
Total expense arising from share-
based payment transactions
5.7 5.4
2020 2019
Number
of shares
Number
of shares
As of January 1 2,124,100 1,677,350
Share rewards granted 700,000 628,000
Share rewards awarded -552,820 0
Share rewards expired -280,135 0
Share rewards forfeited -43,545 -181,250
Total as of December 31 1,947,600 2,124,100
2020 2019
Number
of shares
Number
of shares
As of January 1 0 0
Share rewards granted 119,246 0
Total as of December 31 119,246 0
The carrying amount of the liability arising from cash settled
portion was EUR 0.7 million (2019: EUR 0.8 million).
29.4. Changes in the number of gross share
rewards in Employee Share Savings Plan
2020 2019
Number
of shares
Number
of shares
Outstanding as of January 1 146,344 134,193
Share rewards granted 66,329 64,998
Share rewards awarded -21,480 -45,078
Share rewards forfeited -9,033 -7,769
Outstanding as of December 31 182,160 146,344
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Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
29.5. Assumptions made in determining the fair
value of Performance Shares Plan
The fair value for the cash settled portion is remeasured at
each reporting date until the possible share delivery. The fair
value of the liability will thus change in accordance with the
Konecranes Plc share price.
For the 2017–2019 vesting periods granted in 2017 and for
the 2018–2020 vesting periods granted in 2018, the fair value
for the equity settled portion is based on non market vesting
2020
Restricted
share unit
plan
2020
plan
2019
plan
2018
plan
CEO LTI
2017
plan
2017
plan
Share price at grant, EUR 27.74 26.95 31.09 32.91 37.03 38.45
Share price at reporting period end
December 31, EUR
28.78 28.78 28.78 28.78 28.78 28.78
Expected volatility, % * 31.0% 32.0% 25.0% 27.0% 30.6% 33.7%
Risk-free interest rate, % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Expected dividend per share, pa , EUR 3.2 1.7 1.1 1.1 1.1 1.0
Expected contractual life in years 1.4 2.5 2.8 1.7 4.9 2.7
Weighted average fair value of the share
rewards at the grant date
24.54 22.59 27.66 29.55 32.70 35.64
Model used Black-Scholes Black-Scholes Black-Scholes Black-Scholes Black-Scholes Black-Scholes
* Expected volatility was determined by calculating the historical volatility of the Konecranes share using monthly observations over corresponding
maturity.
condition (adjusted EPS), for the 2019–2021 vesting periods
granted in 2019 the fair value for the equity settled portion is
based on two non market vesting conditions (adjusted EPS
and annual growth rate of sales). For the 2020–2022 vesting
periods granted in 2020 the fair value for the equity settled
portion is based on non market vesting condition (adjusted
EPS) for the years 2020 and 2021 when the condition for
2022 is still open. The fair value for the equity settled portion
based on non market vesting condition has been determined
at grant using the fair value of Konecranes share as of the
grant date and expected dividend yield.
30. Related party transactions
The related parties of Konecranes include subsidiaries (see
Company list), associated companies, joint ventures and
joint operations, pension fund in the United Kingdom and
the key management personnel of the Group and major
shareholders. The key management personnel of the Group
is comprised of the Board of Directors, the CEO and the
Konecranes Leadership Team.
30.1. Key Management compensation
Board of Directors
The remuneration packages for Board members are
resolved by the Annual General Meeting (AGM) on proposal
by the Nomination Committee. The AGM 2020 conrmed an
annual fee of EUR 140,000 for the Chairman of the Board
(2019: EUR 140,000), EUR 100,000 for the Vice Chairman
of the Board (2019: EUR 100,000), and EUR 70,000 for
other Board members (2019: EUR 70,000). In case the term
of ofce of a Board member ends before the closing of the
Annual General Meeting in 2021, he or she is entitled to
the prorated amount of the annual remuneration calculated
on the basis of his or her actual term in ofce. In addition,
compensation of EUR 1,500 was approved per meeting for
attendance at Board committee meetings (2019: EUR 1,500).
However, the chairman of audit committee is entitled to a
compensation of EUR 3,000 (2019: EUR 3,000) per meeting
for attendance at audit committee meetings.
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Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
2020
Total compensation to
the Board of directors
Number of shares
as part of
compensation
Value of
compensation
in shares, EUR
Compensation paid
in cash, EUR
Total
compensation, EUR
Chairman of the Board 2,193 59,448 94,052 153,500
Board members 6,180 169,738 344,262 514,000
Total 8,373 229,185 438,315 667,500
2019
Total compensation to
the Board of directors
Number of shares
as part of
compensation
Value of
compensation
in shares, EUR
Compensation paid
in cash, EUR
Total
compensation, EUR
Chairman of the Board 1,942 52,481 96,519 149,000
Board members 7,213 194,922 436,078 631,000
Total 9,155 247,403 532,597 780,000
According to the proposal, 50% of the annual remuneration
is to be used for acquiring shares in the company.
The remuneration may also be paid by transferring treasury
shares based on the authorization given to the Board
of Directors by the general meeting. In case such purchase
of shares cannot be carried out due to reasons related
either to the company or to a board member, the annual
remuneration shall be paid entirely in cash.
Travel expenses will be compensated against receipt.
President and CEO
The Human Resources Committee reviews the President and
CEO’s performance. Based on this review and relevant facts,
the Board sets the total compensation package
for the President and CEO.
October 7, 2019 The Board of Directors of Konecranes Plc
appointed Rob Smith as President and CEO of Konecranes
effective February 1, 2020 and the former CEO Panu Routila
left the Group October 6, 2019. The company’s CFO,
Teo Ottola, who also serves as Deputy CEO, acted as the
interim CEO until Rob Smith started in the position.
2020 2019
Salary and benets, EUR (Panu Routila Jan 1 – Oct 6, 2019, Teo Ottola Oct 7, 2019 – Jan 31, 2020,
Rob Smith Feb 1 – Dec 31, 2020)
750,830 590,238
Annual variable pay, EUR (Panu Routila 2019, Rob Smith 2020) 0,0 330,225
Total 750,830 920,463
Expense of statutory pension plans (Panu Routila Jan 1 – Oct 6, 2019, Teo Ottola Oct 7, 2019 – Jan 31, 2020,
Rob Smith Feb 1 – Dec 31, 2020)
113,782 194,272
Expense of voluntary pension plans (Panu Routila Jan 1 – Oct 6, 2019, Teo Ottola Oct 7, 2019 – Jan 31, 2020,
Rob Smith Feb 1 – Dec 31, 2020)
107,186 168,298
Total 220,968 362,570
Benets related to termination of employment (Panu Routila)
Paid during the period 758,302 364,690
Accrued at December 31. 0,0 815,843
Total 758,302 1,180,533
Shareholding in Konecranes Plc (number of shares)
1)
0,0 0,0
Performance share rights allocated (number of share rights)
2)
122,922 0,0
Share-based payment costs, EUR (Panu Routila 2019, Rob Smith 2020) 218,859 -319,656
Retirement age (Panu Routila 2019, Rob Smith 2020) 63 years 63 years
Period of notice (Panu Routila 2019, Rob Smith 2020) 6 months
Severance payment
(including 6 months' notice period)
18 months'
salary and
fringe benets
1)
Panu Routila was not acting as CEO at December 31, 2019 thus shares and share rights are reported as 0.
2)
Number of 2020 restricted share rights are net share amounts. In addition, a cash part is included in the reward.
Expense of statutory pension plans was EUR 0.0 million in 2020 (EUR 0.0 million in 2019).
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Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Konecranes Leadership Team
The Konecranes Leadership Team (KLT) convenes as
frequently as necessary, normally on a monthly basis.
Business Areas have their own management teams that
convene on a regular basis. Only the KLT is classied to key
management personnel due to the decision making power.
The Konecranes Leadership Team consists of the following
members:
• President and CEO
• Chief Financial Ofcer, Deputy CEO
• Executive Vice President, Business Area Service
• Executive Vice President, Industrial Equipment
• Executive Vice President, Port Solutions
• Executive Vice President, Technologies
• Senior Vice President, Human Resources
• Senior Vice President, General Counsel
• Senior Vice President, Integration and Project
Management Ofce
The Human Resources Committee of the Board will, based
upon a recommendation by the President and CEO, make a
proposal to the Board concerning the approval of the base
compensation review and incentive levels for KLT members.
The retirement age of the Finnish members of the KLT
(excluding the President and CEO) is set according to the
Employees Pensions Act (TyEL). The Finnish members of the
KLT also participate in the contribution-based group pension
insurance scheme offered to key personnel in Finland. The
dened contribution payment by the company is 1% of
annual salary excluding performance based compensation
(annual or long term incentives). The Finnish KLT members
also have life insurance and disability insurances. Non-Finnish
members have local insurances.
Konecranes Leadership Team excluding the President and CEO 2020 2019
Salary and benets, EUR 2,041,926 2,206,523
Annual variable pay, EUR 634,430 765,000
Total 2,676,357 2,971,523
Expense of statutory pension plans 280,349 369,232
Expense of voluntary pension plans 17,360 17,078
Total 297,709 386,310
Shareholding in Konecranes Plc (number of shares) 170,044 239,978
Performance share rights allocated (number of share rights)
1)
334,419 342,000
Share-based payment costs, EUR 720,725 872,177
There were no loans outstanding to the Konecranes Leadership Team at end of the period 2020 and 2019. There were no
guarantees on behalf of the Konecranes Leadership Team in 2020 and 2019.
The employee benets to the key management personnel of the Group were in total EUR 5.6 million in year 2020 (EUR 7.2
million in year 2019).
1)
Number of 2020 restricted share rights are net share amounts. In addition, a cash part is included in the reward.
2020 2019
Sales of goods and services with associated companies and joint arrangements 20.0 46.5
Receivables from associated companies and joint arrangements 4.3 8.9
Purchases of goods and services from associated companies and joint arrangements 48.7 53.2
Liabilities to associated companies and joint arrangements 0.8 0.9
30.2. Transactions with associated companies and joint arrangements
Sales to and purchases from related parties are concluded using terms equivalent to arm's length transaction.
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30.3. Transactions with Pension Fund
in the United Kingdom
30.4. Transactions with Board members
31. Guarantees, lease commitments
and contingent liabilities
2020 2019
Employer contributions 0,0 1.8
2020 2019
Board member holding the bond
of Konecranes Plc through a 100%
owned company.
Interest-bearing long-term liabilities 0.1 0,0
2020 2019
For own commercial obligations
Guarantees 580.2 629.5
Other 33.4 34.1
Total 613.6 663.6
From time to time Konecranes provides customers with
guarantees that guarantee Company’s obligations pursuant
to the applicable customer contract. In sales of investment
goods (machinery) the typical guarantees are the following:
• tender guarantees (bid bonds) given to the customer
to secure the bidding process
• advance payment guarantees given to the customer to
secure their down payment for project
• performance guarantees to secure customers over the
Company’s own performance in customer contracts, and
• warranty period guarantees to secure the correction of
defects during the warranty period.
Contingent liabilities relating to litigation
Various legal actions, claims and other proceedings pend
against the Group in various countries. These actions,
claims and other proceedings are typical of this industry and
consistent with a global business offering that encompasses
a wide range of products and services. These matters
involve contractual disputes, warranty claims, product liability
(including design defects, manufacturing defects, failure to
warn and asbestos legacy), employment, vehicles and other
matters involving claims of general liability.
While the nal outcome of these matters cannot be
predicted with certainty, Konecranes has the opinion, based
on the information available to date and considering the
grounds presented for such claims, the available insurance
coverage and the reserves made, that the outcome of such
actions, claims and other proceedings, if unfavorable, would
not have a material, adverse impact on the nancial condition
of the Group.
32. Financial assets and liabilities
32.1. Carrying amounts of nancial assets and liabilities
2020 2019
Financial assets
Fair value
through
OCI
Fair value
through income
statement
Amortized
cost
Carrying amounts
by balance
sheet item
Fair value
through
OCI
Fair value
through income
statement
Amortized
cost
Carrying amounts
by balance
sheet item
Current nancial assets
Account and other receivables 0.0 0.0 520.1 520.1 0.0 0.0 564.2 564.2
Derivative nancial instruments 7.7 13.4 0.0 21.2 3.0 5.1 0.0 8.1
Cash and cash equivalents 0.0 0.0 591.9 591.9 0.0 0.0 378.2 378.2
Total 7.7 13.4 1,112.0 1,133.2 3.0 5.1 942.4 950.5
Financial liabilities
Non-current nancial liabilities
Interest-bearing liabilities 0.0 0.0 859.7 859.7 0.0 0.0 785.8 785.8
Other payables 0.0 0.0 7.2 7.2 0.0 0.0 6.8 6.8
Current nancial liabilities
Interest-bearing liabilities 0.0 0.0 311.1 311.1 0.0 0.0 248.4 248.4
Derivative nancial instruments 1.9 3.7 0.0 5.5 4.4 1.8 0.0 6.2
Account and other payables 0.0 0.0 262.7 262.7 0.0 0.0 280.5 280.5
Total 1.9 3.7 1,440.8 1,446.3 4.4 1.8 1,321.6 1,327.7
Additional information on nancial instruments is presented in Note 34.
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32.2. Fair values
Set out below is a comparison, by class, of the carrying amounts
and fair value of the Group’s nancial assets and liabilities:
Carrying amount Fair value
Financial assets 2020 2019 2020 2019 Note
Current nancial assets
Account and other receivables 520.1 564.2 520.1 564.2 19,20
Derivative nancial instruments 21.2 8.1 21.2 8.1 34.1
Cash and cash equivalents 591.9 378.2 591.9 378.2 22
Total 1,133.2 950.5 1,133.2 950.5
Financial liabilities
Non-current nancial liabilities
Interest-bearing liabilities 859.7 785.8 864.6 795.7 27.1
Other payables 7.2 6.8 7.2 6.8
Current nancial liabilities
Interest-bearing liabilities 311.1 248.4 311.2 248.4 27.2
Derivative nancial instruments 5.5 6.2 5.5 6.2 34.1
Account and other payables 262.7 280.5 262.7 280.5 25.2
Total 1,446.3 1,327.7 1,451.3 1,337.7
The management assessed that cash and short-term
deposits, trade receivables, trade payables, bank overdrafts
and other current liabilities approximate their carrying
amounts largely due to the short-term maturities of these
instruments.
The fair value of the nancial assets and liabilities is included
at the amount at which the instrument could be exchanged in
a current transaction between willing parties, other than in a
forced or liquidation sale. Long-term xed-rate and variable-
rate borrowings are evaluated by the Group based on
parameters such as interest rates and the risk characteristics
of the loan.
IFRS 7 requires that the classication of nancial instruments
at fair value be determined by reference to the source of
inputs used to derive the fair value. This classication uses
the following three-level hierarchy:
• Level 1 − quoted prices in active markets for identical
nancial instruments
• Level 2 − inputs other than quoted prices included within
level 1 that are observable for the nancial instrument,
either directly (i.e. as prices) or indirectly (i.e. derived
from prices)
• Level 3 − inputs for the nancial instrument that are not
based on observable market data (unobservable inputs)
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32.3. Hierarchy of fair values
The following table allocates nancial assets and nancial
liabilities measured at fair value to the three levels of the fair
value hierarchy.
2020 2019
Financial assets Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Derivative nancial instruments
Foreign exchange forward contracts 0.0 21.2 0.0 0.0 8.1 0.0
Currency options 0.0 0.0 0.0 0.0 0.0 0.0
Total 0.0 21.2 0.0 0.0 8.1 0.0
Other nancial assets
Cash and cash equivalents 591.9 0.0 0.0 378.2 0.0 0.0
Total 591.9 0.0 0.0 378.2 0.0 0.0
Total nancial assets 591.9 21.2 0.0 378.2 8.1 0.0
Financial liabilities
Derivative nancial instruments
Foreign exchange forward contracts 0.0 5.5 0.0 0.0 6.2 0.0
Total 0.0 5.5 0.0 0.0 6.2 0.0
Other nancial liabilities
Interest bearing liabilities 0.0 1,170.8 0.0 0.0 1,034.2 0.0
Other payables 0.0 0.0 0.7 0.0 0.0 0.8
Total 0.0 1,170.8 0.7 0.0 1,034.2 0.8
Total nancial liabilities 0.0 1,176.3 0.7 0.0 1,040.4 0.8
There were no signicant changes in classication of fair
value of nancial assets and nancial liabilities in the period
2019–2020. There were also no signicant movements
between the fair value hierarchy classications.
33. Management of nancial risks
The nature of Konecranes’ business and its global presence
exposes it to a range of nancial risks. These risks include (i)
market risks, which include potential unfavorable changes in
foreign exchange rates, interest rates and commodities (ii)
liquidity risk and (iii) credit and counterparty risk.
33.1. Market risk
The responsibility of identifying, evaluating and controlling
the nancial risks arising from the Group’s global business
operations is divided between the business units and the
Group Treasury. However, the Group uses an approach
in which most of the management of nancial risks is
centralized to Konecranes’ Group Treasury. The Group
Treasury functions within the legal entity Konecranes Finance
Corporation. By centralization and netting of internal foreign
currency cash ows, the Group’s external hedging needs can
be minimized.
Konecranes Finance Corporation is not a prot center in
the sense that it would pursue to maximize its prots. The
Company aims to serve the operating companies of the
Group in reducing their nancial risks.
The Group’s global business operations involve market risks
in the form of currency, interest rate and commodity risk. The
Group’s objective is to increase the short-term stability of the
nancial environment for the business operations by reducing
the negative effects caused by price uctuations and other
uncertainties in the nancial markets.
Business units hedge their risks internally with the Group
Treasury. As a result of this, most of the nancial risks of
the Group are concentrated into one company, Konecranes
Finance Corporation, and can be evaluated and controlled in
an efcient way.
The level 3 valuations in other payables are contingent
consideration liabilities resulting from business combinations
or the acquisition of non-controlling interest and the cash
settled share based payment liability.
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Almost all funding, cash management and foreign exchange
with banks and other external counterparties are centralized
to and managed in Konecranes Finance Corporation in
accordance with the Group’s Treasury Policy. In a few special
cases, when the local central bank regulation prohibits using
group services in hedging and funding, this must be done
directly between an operating company and a bank under the
supervision of the Group Treasury.
Konecranes Finance Corporation uses a treasury system,
which enables practically a real-time processing of
transactions and in-depth records of activities and
performance. The standard reporting is done on a weekly
basis and it covers group-level commercial and nancial cash
ows, foreign currency transaction exposure, debt positions,
portfolio of derivatives and counterparty credit exposure
for nancial transactions. In addition, all Group companies
participate in the monthly managerial and statutory reporting.
Foreign exchange risk
The Group’s global business operations generate foreign
exchange risk. However, most of the business units only have
transactions in their own currency, i.e. these units have their
sales and costs as well as internal funding from Konecranes
Finance Corporation in their local home currency. Only 23 out
of some 150 Group companies operate regularly in a foreign
currency. These companies hedge their foreign exchange
risk with Group Treasury. Depending on the business area
and the probability of the cash ows, the hedging covers
operative cash ows for the next 1–24 months and is done
by using internal foreign exchange forward contracts. In
this way, Konecranes Finance Corporation can manage
the foreign exchange risk of the whole Group. The foreign
currency funding of the other Group companies and possibly
some external foreign currency funding can net some of
these foreign currency items. The residual net exposure can
be covered with commercial banks using foreign exchange
forward contracts or currency options. Currency derivatives
belonging to hedge accounting are managed in a separate
portfolio than derivatives hedging other commercial ows and
funding and cannot thus be netted out against other internal
items. These instruments are used when the hedging effect
cannot be obtained through internal netting and matching
of cash ows within the Group.
The business units’ commercial bids in a foreign currency
can be hedged by using currency options or exchange
forwards, but, in general, using currency clauses covers
the risk.
For certain large crane projects, the Group applies hedge
accounting under IAS 39. Hedges are done by using
foreign exchange forward contracts. Currently, only USD
denominated projects are included in the hedge accounting.
The hedge accounting portfolio comprises both USD sales
and purchases where gross ows are hedged separately.
At the end of 2020, the hedge accounting net cash ows
totaled USD 207 million (USD 274 million in 2019).
The following table shows the transaction exposure of
Konecranes Finance Corporation as of December 31, 2020,
and December 31, 2019 (in EUR millions):
2020 2019
AED 10 26
AUD 19 20
BRL 4 -3
CAD 16 19
CHF 1 2
CLP 1 1
CNY -24 -6
CZK 10 2
GBP 7 5
IDR 4 0
ILS -3 0
INR 2 0
JPY 3 0
MYR 1 0
NOK 1 5
PHP 1 0
PLN 0 2
SEK -58 -93
SGD -6 -8
THB 2 4
TWD 1 0
USD 250 294
ZAR 5 2
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2020 2019
AED 9 10
AUD 11 3
BDT 1 1
BRL 11 11
CAD 9 7
CHF 9 2
CLP 7 6
CNY 106 96
CZK 9 9
DKK 6 5
GBP -26 -22
HUF 3 3
INR 3 6
IDR 9 -6
JPY -8 -8
MAD 2 1
MXN 2 3
MYR 22 1
NOK 1 1
PEN 5 6
PHP 7 1
PLN 1 0
RON 2 1
RUB 6 4
SAR -2 1
SGD -45 18
SEK -15 -15
THB 16 -1
TWD 3 0
UAH -2 -7
USD 26 7
VND 0 -1
ZAR 0 2
The following table shows the translation exposure, which
represents the equity of the Group in a local currency as of
December 31, 2020, and December 31, 2019
(in EUR millions):
See Note 34 for the notional and fair values of derivative
nancial instruments.
Changes in currency rates can affect the protability and
equity of the Group. The US dollar has the biggest impact,
as many of the large crane projects outside the United States
are denominated in USD and because the Group has a lot of
local business operations in the United States. A depreciation
of the USD would have a negative impact.
The following table shows the theoretical effects that
changes in the EUR/USD exchange rate would have on the
Group’s annual EBIT and equity. An appreciation of US dollar
against euro for 10% increases EBIT by EUR 43.9 million
(37.2 million in 2019) and increases equity by EUR 3.2 million
(0.7 million in 2019). The below table provides a sensitivity
analysis over the past two years:
Change in
EUR/USD
rate
2020
EBIT
2020
Equity
2019
EBIT
2019
Equity
+10% - 35.9 - 2.6 - 30.4 - 0.6
- 10% +43.9 +3.2 +37.2 +0.7
The EBIT effect comprises transaction exposure for euro-
based companies having frequent sales in USD and the
translation exposure from EBIT generated in USD translated
into euros. The transaction position is estimated for 2020
as the USD positions changes from one year to another
and these changes are mainly due to timing of major
ports projects and currencies used in them. The estimate
of the effects is based on the assumption that the USD
denominated transactions are not hedged. In practice,
however, all large projects with long maturities generating a
substantial portion of the annual changes in the transaction
position are hedged and subject to project specic pricing.
The change in equity is the translation exposure on the
Group’s equity in USD.
Appreciating US dollar has a positive impact on Group’s
operating margin when it impacts the revenues and costs
reported in euros asymmetrically. This is due to the fact
that the exchange rate change impacts mostly both Group’s
revenues and costs and partly only either of these. If the
EBIT generated in USD based entities as well as cash ows
from long lasting projects, as they are subject to project
specic pricing which in practice may be adjusted to reect
the currency rate changes, are excluded from the sensitivity
analysis the effect on EBIT is estimated to be approximately
a EUR 10 million increase (EUR 10 million in 2019) when the
dollar appreciates 10%.
Interest rate risk
Changes in market interest rates have an impact on the
Group’s net interest expenses and the market value of
interest rate derivatives. The objective for interest rate risk
management is to reduce the volatility impact the market
interest rate changes cause by optimizing the allocation
between xed and oating interest rates according to
principles set in capital structure management.
Approximately 93% of the Group’s interest-bearing liabilities
are denominated in euro (94% in 2019). See note 27.3 for
the currency split of outstanding debt.
The portion of the Group’s long-term debt of total debt is
related to the Group’s gearing ratio. The higher the ratio is,
the bigger the share of long term debt should be of the total
loan portfolio in line with principles set in the capital structure
management. The interest rate risk related to long term loans
may be hedged with interest rate derivatives such as interest
rate swaps for which hedge accounting is applied. Other
instruments that can be used for which no hedge accounting
is applied are forward rate agreements, interest rate futures
and interest rate options.
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A change of one percentage point in interest rates in the
Group’s long-term debt portfolio would have the following
effect on the Group’s income statement and equity:
Change in
interest
rates
2020
Income
statement
2020
Equity
2019
Income
statement
2019
Equity
+1 - 5.2 +0.0 - 3.7 +0.0
- 1 +1.0 - 0.0 +0.4 - 0.0
The effect on income statement is comprised of the Group’s
oating long-term debt which is recognized through the
statement of income. The effect on equity is comprised of
the changes in fair value of interest rate swaps which are
hedging the debt portfolio. The effect of one percentage
point decline is calculated with a 0% interest rate oor.
The proportion of xed interest loans in the loan portfolio
can be increased by means of interest rate derivatives. As
a consequence of this treasury policy, the Group’s average
interest rate level, in general, can be higher than the market
level of short-term interest rates when low rates prevail and,
on the other hand, lower than the market level when high
rates prevail.
Commodity risk
By using electricity derivatives, the Group may reduce the
negative effect caused by electricity price uctuation. The
overall importance of the energy price risk is small compared
to other nancial risks and cannot be described as signicant.
See note 34 for the notional and fair values of derivative
nancial instruments.
Steel prices are xed as a normal part of the procurement
process. Price changes naturally affect the future
procurement, but these changes can be taken into
consideration in the price quotes to the end customers.
In large crane projects, the steel structures are sub-
contracted and as a normal part of the sub-contracting
process, the steel is included in the price of the sub-
contracting (i.e. the price is xed with the sub-contractor).
The Group can procure steel and steel components and thus
may have an inventory of those. Market price uctuation
of steel can impact the protability of customer projects or
cause inventory obsolescence.
33.2. Credit and counterparty risks
Credit risk arises from the potential failure of a commercial
counterparty to meet its commercial payment obligations.
To limit this risk, the Group applies a conservative credit
policy towards customers. It is Konecranes practice to
review customers carefully before entering into formal
business relationships and to require credit reports from new
customers. Customer credit risks are mitigated with advance
payments, letters of credits, payment guarantees and credit
insurance where applicable. With these actions and careful
monitoring of the customer payments credit risks can be
mitigated.
The business units manage credit risks related to their
commercial ows. There is currently no signicant
concentration of credit risk regarding the commercial
activities, as the number of customers is high and their
geographic distribution is wide. It is the Group’s policy not to
fund its customers beyond regular payment terms. See note
19 for a table of an aging analysis of accounts receivable.
The theoretical maximum credit risk equals the carrying
amount of all receivables.
Counterparty risk arises from the potential failure of a
nancial institution to meet its payment obligations regarding
nancial instruments. All credit risks related to other
nancial instruments than the regular accounts receivable
are managed by Konecranes Group Treasury. There is
no substantial concentration of credit risk regarding the
nancial instruments, since investments are rare and hedging
instruments are done with a number of banks. Additionally,
counterparties for nancial instruments are limited to the
core banks of the Group. These are all major banks with
good credit ratings. The majority of all nancial instruments
are of short-term nature, with maturity of less than one
year. There are no signicant deposits or loans granted with
external counterparties.
The Group has counterparty risk in form of cash holdings
in several banks around the world. Despite the active cash
management structures, the Group has in place, cash
holdings globally with several banks are needed to ensure
the liquidity of Group companies. The Group Treasury follows
closely the exposure in the Group according to principles set
out in the Treasury Policy and takes necessary actions for
reducing the risk.
A credit risk is run on the nancial assets of the Group,
which consist of cash and cash equivalents, receivables and
certain derivatives arising from default of the other party,
with a maximum risk equal to the carrying amount of these
instruments.
33.3. Liquidity risks
Liquidity risks concern the availability of liquid assets or
funding. Lack of funding might jeopardize normal business
operations and eventually might endanger the ability to fulll
daily payment obligations.
For managing the liquidity risks, the Group has established
EUR 400 million committed revolving credit facility with an
international loan syndication (2017–2024). At the end of
2020 the facility was unutilized. To cover the short-term
funding needs, Konecranes Finance Corporation can borrow
from institutional investors through domestic commercial
paper program (totaling EUR 500 million). In addition,
business units around the world have working capital facilities
totaling some EUR 250 million to cover the day-to-day
funding needs. Cash and cash equivalents totalled EUR 593.7
million at the end of 2020 (EUR 378.9 million in 2019).
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See note 27.3 for the maturity prole of the Group’s nancial
liabilities.
33.4. Capital structure management
The primary objective of the Group’s capital structure
management is to ensure that it maintains a good credit
status and a healthy capital ratio to support its business
operations. At the same time, the Group also aims to
maximize shareholder value by effective use of capital.
The Group manages its capital structure and ne-tunes it to
adjust to probable changes in economic conditions. These
actions may include adjusting the dividend payment to
shareholders, buying back own shares or issuing new shares.
The Group monitors its capital structure using gearing ratio.
This is calculated as a ratio of interest-bearing liabilities less
liquid assets less loans receivable to total equity. At the end
of 2020, the gearing ratio was 46.1% (52.6% in 2019).
The Group has a quantitative target for the capital structure
in which the Interest-bearing net debt to equity ratio
(gearing) should be below 80%.
The Group decides on the split between long-term and short-
term debt in relation to the gearing ratio level. The following
table shows the rough guidelines for the portion of long–term
debt of total debt under different gearing ratio levels:
Gearing ratio level
Portion of long–term
of total debt
Under 50% Under 1/3
Between 50–80% Between 1/3 and 2/3
Over 80% Over 2/3
The Group monitors the gearing ratio level on a weekly basis.
The target of the Group’s capital management has been met
in recent years.
34. Hedge activities and derivatives
Derivatives are initially recorded in the balance sheet at
fair value and subsequently measured at fair value at each
balance sheet date. All derivatives are carried as assets
when fair value is positive and liabilities when fair value is
negative. Derivative instruments that are not designated as
hedges (hedge accounting) are measured at fair value, and
the change in fair value is recognized in the consolidated
statement of income. When the derivative is designated as
a cash-ow hedge (hedge accounting) the effective part of
the change in fair value is recognized in other comprehensive
income. Any ineffective part is recognized in the consolidated
statement of income. The foreign exchange forward contracts
are measured based on the closing date’s observable spot
exchange rates and the quoted yield curves of the respective
currencies. Interest rate swaps are measured based on
present value of the cash ows, which are discounted based
on the quoted yield curves.
34.1. Nominal and fair values of derivative
nancial instruments
2020
Nominal
value
2020
Fair value
2019
Nominal
value
2019
Fair value
Foreign exchange
forward contracts
1,052.2 15.6 1,145.4 1.9
Currency options 0.0 0.0 21.4 0.0
Total 1,052.2 15.6 1,166.8 2.0
Derivatives not designated as hedging
instruments
The Group enters into other foreign exchange and electricity
forward contracts or currency options with the intention
of reducing the risks of expected sales and purchases, these
other contracts are not designated in hedge relationships
and are measured at fair value through prot or loss.
See note 32.3 for the fair values of the derivatives recognized in assets
and liabilities.
Cash ow hedges
Foreign currency risk
Foreign exchange forward and option contracts measured at
fair value through OCI are designated as hedging instruments
in cash ow hedges of forecast sales and purchases in US
dollar. These forecast transactions are highly probable, and
they comprise about 29.8% of the Group’s total hedged
transaction ows. The foreign exchange forward contract
balances vary with the level of expected foreign currency
sales and purchases and changes in foreign exchange
forward rates.
At the inception of these deals the Group assesses whether
the critical terms of the foreign currency forward contracts
match the terms of the expected highly probable forecast
transactions. On a quarterly basis the Group performs
qualitative effectiveness test by checking that the hedging
instrument is linked on the relevant assets and liabilities,
projected business transactions or binding contracts
according to the hedging strategy and that there are no
related credit risks. Hedge ineffectiveness is recognized
through prot or loss.
The cash ow hedges of the expected future sales and
purchases in 2020 and 2019 were assessed to be highly
effective and a net unrealized loss, with a deferred tax asset
relating to the hedging instruments, is included in OCI.
The amounts recognized in OCI are shown in the table below
and the reclassications to prot or loss during the year are
as shown in the consolidated statement of income.
34.2. Fair value reserve of cash ow hedges
2020 2019
Balance as of January 1 -0.5 0.1
Gains and losses deferred to equity
(fair value reserve)
8.1 -0.7
Change in deferred taxes -1.6 0.1
Balance as of December 31 6.0 -0.5
108 Financial Review 2020
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35. Merger plan with Cargotec
Corporation
On October 1, 2020 Konecranes Plc (“Konecranes”) and
Cargotec Corporation (“Cargotec”) announced that their
respective Boards of Directors signed a combination
agreement (the “Combination Agreement”) and a merger
plan to combine the two companies through a merger
(the “Future Company”). The EGM on December 18, 2020
approved the merger of Konecranes into Cargotec in
accordance with the merger plan signed by the Boards of
Directors of Konecranes and Cargotec on October 1, 2020
and approved the Merger Plan.
The customer industries of the Future Company will
include container handling, manufacturing, transportation,
construction and engineering, paper and pulp, metals
productions, mining, power, chemicals and marine industries.
The Future Company’s name will be determined and
announced at a later stage. Pursuant to the merger plan,
the Board of Directors of Cargotec will propose to the
shareholders’ general meeting of Cargotec to be convened
prior to the completion of the merger that the articles of
association of Cargotec will be amended in connection with
the registration of the execution of the merger to contain
a new name of the Future Company. The location of the
headquarters of the Future Company will be decided later.
The proposed combination will be implemented as a statutory
absorption merger whereby Konecranes will be merged into
Cargotec. Prior to or in connection with the completion of the
merger, Cargotec will issue new shares without payment to
the shareholders of Cargotec in proportion to their
existing shareholding by issuing two (2) new class A shares
for each class A share and two (2) new class B shares
for each class B share, including new shares to be issued
to Cargotec for its treasury shares. Upon completion,
Konecranes’ shareholders will receive as merger consideration
0.3611 new class A shares and 2.0834 new class B shares
in Cargotec for each share they hold in Konecranes on the
record date. This implies that Konecranes shareholders would
own approximately 50 percent of the shares and votes of
the Future Company, and Cargotec shareholders would own
approximately 50 percent of the shares and votes of the
Future Company. In addition to the merger consideration
shares, all the existing class A shares of Cargotec will be
listed on Nasdaq Helsinki in connection with the merger.
Konecranes will propose to a general meeting of shareholders
to be held before the completion of the merger to distribute
an extra distribution of funds in connection with the trans-
action in the total amount of approximately EUR 158 million,
corresponding to EUR 2.00 per share, to Konecranes’
shareholders before the combination is completed. The extra
distribution of funds will be paid in addition to the ordinary
distribution(s). With respect to ordinary distributions in 2021,
the Boards of Directors of Konecranes and Cargotec will
propose to their respective annual general meetings to be
held in 2021 to effect a distribution of funds of up to
EUR 70 million so that each company shall distribute
an approximately equal amount before the combination
is completed. Konecranes and Cargotec have obtained
necessary commitments for the nancing of the completion
of the merger.
The completion of the Merger is subject to necessary merger
control approvals having been obtained and other conditions
to completion having been fullled. The planned Merger
completion date is January 1, 2022, however, the date is
subject to change and the actual completion date may be
earlier or later than January 1, 2022.
109 Financial Review 2020
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Company list
(1,000 EUR)
Subsidiaries owned
by the parent company
Book
value of
shares
Parent
company’s
share, %
Group’s
share, %
Finland:
Konecranes Finance Oy 46,448 100 100
Konecranes Finland Oy 17,163 26.02 100
Konecranes Global Oy 102,391 100 100
Subsidiaries
owned by the group
Book value
of shares
Group’s
share, %
Australia: Konecranes Pty. Ltd. 19,550 100
MHE-Demag Australia Pty Ltd 16,643 100
Austria: Konecranes and Demag Ges.m.b.H. 29,775 100
Bangladesh: Konecranes and Demag (Bangladesh) Ltd. 98 100
Belgium: S.A. Konecranes N.V. 6,150 100
Brazil: Konecranes Demag Brasil Ltda. 32,688 100
Canada: Konecranes Canada Inc. 893 100
Chile: Konecranes Chile SpA 1 100
China: Cranes and Parts Trading (Shanghai) Co.,Ltd. 5,862 100
Dalian Konecranes Company Ltd. 1,870 100
Demag Cranes & Components (Shanghai) Co., Ltd. 14,349 100
Konecranes (Shanghai) Co. Ltd. 0 100
Konecranes (Shanghai) Company Ltd. 3,967 100
Konecranes Manufacturing (Jiangsu) Co., Ltd. 26,479 100
Konecranes Port Machinery (Shanghai) Co., Ltd. 6,914 100
SWF Krantechnik Co., Ltd. 734 100
Czech Republic: Konecranes and Demag s.r.o. 2,823 100
Denmark: Konecranes Demag A/S 13,890 100
Estonia: Konecranes Oü 0 100
Finland: Nosturiexpertit Oy 10 100
France: KCI Holding France SAS 40,500 100
Konecranes (France) SAS 2,545 100
MHPS Cranes France SAS 8,131 100
Verlinde SAS 10,720 100
Germany: Demag Cranes & Components GmbH 744,243 100
Eurofactory GmbH 1,239 100
Konecranes GmbH 482,300 100
Konecranes Holding GmbH 315,262 100
Konecranes Lifting Systems GmbH 1,504 100
Konecranes Real Estate GmbH Co. & KG 33,652 94
Konecranes Real Estate Verwaltungs GmbH 0 100
Kranservice Rheinberg GmbH 1,492 100
SWF Krantechnik GmbH 15,500 100
(1,000 EUR)
Subsidiaries
owned by the group
Book value
of shares
Group’s
share, %
Greece:
Konecranes Hellas Lifting Equipment and Services
S.A.
60 100
Hong Kong: Konecranes Hong Kong Limited 0 100
Hungary: Konecranes Kft. 889 100
Konecranes Supply Hungary Kft. 2,233 100
India: Konecranes and Demag Private Limited 17,250 100
Indonesia: Pt. Konecranes 0 99.93
PT MHE-Demag Indonesia 3,174 100
PT MHE-Demag Technology Indonesia 291 67
Ireland: Konecranes and Demag Limited 300 100
Israel: Konecranes Israel Ltd 0 100
Italy: Demag Cranes & Components S.r.l. 13,997 100
Donati Sollevamenti S.r.l. 2,561 100
MHPS Italia S.r.l. 0 100
Japan: Konecranes Company, Ltd. 0 100
Latvia: SIA Konecranes Latvija 2 100
Lithuania: UAB Konecranes 139 100
Luxembourg: Materials Handling International S.A. 300 100
Malaysia: Konecranes Sdn. Bhd. 681 100
Mechanical Handling Engineering (M) Sdn Bhd 377 100
MHE-Demag Logistics Malaysia Sdn Bhd 2,353 100
MHE-Demag Malaysia Sdn Bhd 6,175 100
Rainelds Estate Sdn Bhd 1,237 100
Mexico: Konecranes Mexico S.A. de C.V. 2,188 100
Morocco: Konecranes Maghreb S.a.r.l. 50 100
The
Netherlands:
Konecranes B.V. 4,201 100
Konecranes Holding B.V. 313,851 100
Port Software Solutions B.V. 43,080 69.78
TBA B.V. 3,678 69.78
Norway: Konecranes AS 3,588 100
Peru: Konecranes Peru S.R.L. 0 100
Philippines: Konecranes Philippines Inc. 728 100
MHE-Demag (P), Inc. 4,835 100
Poland: Konecranes and Demag Sp. z o.o. 1,359 100
Portugal: Konecranes and Demag, Lda. 3,293 100
Romania: S.C. Konecranes S.A. 98 100
S.C. TBA RO S.r.l. 10 69.78
Russia: AO "Konecranes Demag Rus" 160 100
Saudi Arabia: Saudi Cranes & Steel Works Factory Co. Ltd. 9,515 100
110 Financial Review 2020
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(1,000 EUR)
Subsidiaries
owned by the group
Book value
of shares
Group’s
share, %
Singapore: KCI Cranes Holding (Singapore) Pte. Ltd. 114,764 100
Konecranes Pte. Ltd. 63,574 100
MHE-Demag (S) Pte. Ltd. 181,318 100
SWF Krantechnik Pte. Ltd. 154 100
Slovakia: Konecranes Slovakia s.r.o. 200 100
Slovenia: Konecranes, d.o.o. 200 100
South Africa: Konecranes and Demag (Pty) Ltd. 0 100
MHPS (Pty) Ltd 0 100
Port Equipment Southern Africa (Pty) Ltd 0 100
Spain: Konecranes and Demag Ibérica, S.L.U. 31,799 100
Sweden: Konecranes AB 1,362 100
Konecranes Lifttrucks AB 23,157 100
Konecranes Sweden Holding AB 1,682 100
Ulvaryd Fastighets AB 1,295 100
Switzerland: Konecranes and Demag AG 17,205 100
Taiwan: MHE-Demag Taiwan Company Limited 1,598 100
Thailand: Katrolin Enterprise (T) Ltd 81 100
Katrolin Holding (T) Ltd 93 100
Konecranes (Thailand) Ltd.* 104 49
Mahakorn (T) Ltd 79 100
MHE-Demag (T) Ltd 283 100
MHE-Demag Technology (T) Ltd 261 100
Scenic Wealth (T) Ltd 135 100
Turkey: Konecranes Ticaret Ve Servis Limited Sirketi 93 100
Ukraine: Konecranes Ukraine JSC 2,049 100
PJSC "Zaporozhje Kran Holding" 229 100
JSC "Zaporozhcran" 0 90.43
United Arab
Emirates:
Demag Cranes & Components Holding Ltd. 0 100
Demag Cranes & Components (Middle East) FZE 13,064 100
Konecranes Middle East FZE 1,774 100
United
Kingdom:
Demag Cranes and Components Guarantee Ltd. 0 100
Demag Cranes & Components Holdings Ltd. 0 100
KCI Holding UK Ltd. 13,656 100
Konecranes Demag UK Limited 6,301 100
Lloyds Konecranes Pension Trustees Ltd. 0 100
Morris Material Handling Ltd. 5,965 100
TBA Doncaster Limited 1,275 58.62
TBA Leicester Limited 9,481 62.8
UKMHPS Limited 38,671 100
U.S.A. Demag Cranes & Components Corp. 55,208 100
KCI Holding USA Inc. 53,901 100
Konecranes, Inc. 43,428 100
(1,000 EUR)
Subsidiaries
owned by the group
Book value
of shares
Group’s
share, %
Konecranes Nuclear Equipment & Services, LLC 0 100
MMH Americas, LLC 0 100
Morris Material Handling, Inc. 58,217 100
R&M Materials Handling, Inc. 6,682 100
Vietnam: Konecranes Vietnam Co., Ltd 0 100
MHE-Demag Vietnam Company Ltd 2,460 100
* Konecranes Group has the majority representation on the entity's board of directors and approves all major
operational decisions and thereby Konecranes consolidates it in the Group's nancial statements.
Joint operations
Assets
value
Group’s
share, %
Estonia: AS Konesko 4,448 49.46
Finland: Kiinteistöosakeyhtiö Kuikantorppa 261 50
Investments accounted for using the equity method
Assets
value
Group’s
share, %
China: Guangzhou Technocranes Company, Ltd. 557 25
Jiangyin Dingli Shengshai High Tech Industrial Crane
Company, Ltd.
168 30
Shanghai High Tech Industrial Crane Company, Ltd. 2,196 28
Finland: Fantuzzi Noell Baltic Oy 602 25
France: Boutonnier Adt Levage S.A. 386 25
Levelec S.A. 202 20
Manulec S.A. 213 25
Manelec S.A.R.L. 80 25
S.E.R.E. Maintenance S.A. 204 25
Germany:
AQZ Ausbildungs- und Qualizierungszentrum
Düsseldorf GmbH
0 30
Singapore: MHE-Demag Techonology (S) Pte. Ltd. 541 49.99
Switzerland: Demag IP Holdings GmbH 120 50
Thailand: CSA Crane Service Asia Company Ltd 62 49
United Arab
Emirates:
Crane Industrial Services LLC 1,238 49
Other shares and interests
Book value
of shares
Group’s
share, %
Finland: East Ofce of Finnish Industries Oy 50 5.26
Dimecc Oy 120 5.69
Levator Oy 0 19
Vierumäen Kuntorinne Oy 345 3.3
France: Heripret Holding SAS 53 19
Malaysia: Kone Products & Engineering Sdn. Bhd. 0 10
Venezuela: Gruas Konecranes CA 20 10
Others: 228
Total: 816
111 Financial Review 2020
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Parent company statement of income − FAS
(1,000 EUR)
Jan 1–Dec 31
2020
Jan 1–Dec 31
2019
Note:
Other operating income 437 5
2 Depreciation and impairments -134 -119
3 Other operating expenses -14,787 -19,737
Operating prot -14,485 -19,851
4 Financial income and expenses 71,685 66,709
Income before appropriations and taxes 57,200 46,857
5 Appropriations 58,352 57,171
6 Income taxes -8,441 -8,879
Net income 107,112 95,149
112 Financial Review 2020
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Parent company balance sheet − FAS
(1,000 EUR) Dec 31, 2020 Dec 31, 2019
Note:
ASSETS
NON-CURRENT ASSETS
Tangible assets
7 Machinery and equipment 689 578
Advance payments 2 0
691 578
8 Investments
Investments in Group companies 153,040 153,040
Other shares and similar rights of ownership 170 170
153,210 153,210
Total non-current assets 153,901 153,788
CURRENT ASSETS
Long-term receivables
Loans receivable from Group companies 1,070,232 1,033,486
1,070,232 1,033,486
Short-term receivables
Accounts receivable 1,619 8
Amounts owed by Group companies
Accounts receivable 3,704 3,104
10 Deferred assets 86,335 102,816
Other receivables 398 433
10 Deferred assets 6,260 3,582
98,318 109,942
Cash in hand and at banks 3 3
Total current assets 1,168,553 1,143,431
TOTAL ASSETS 1,322,454 1,297,219
(1,000 EUR) Dec 31, 2020 Dec 31, 2019
Note:
SHAREHOLDERS’ EQUITY AND LIABILITIES
11 EQUITY
Share capital 30,073 30,073
Share premium account 39,307 39,307
Paid in capital 774,591 769,365
Retained earnings 104,037 103,848
Net income for the period 107,112 95,149
1,055,119 1,037,741
APPROPRIATIONS
Depreciation difference 114 146
LIABILITIES
Non-current liabilities
12 Bond 249,482 249,120
249,482 249,120
Provisions 346 763
Long-term liabilities
Loans payable−Intercompany 1,792 0
1,792 0
Current liabilities
Accounts payable 1,453 3,701
Liabilities owed to Group companies
Accounts payable 1,527 214
13 Accruals 3,493 15
Other short-term liabilities 66 52
13 Accruals 9,063 5,468
15,602 9,450
Total liabilities 267,222 259,332
TOTAL SHAREHOLDERS' EQUITY
AND LIABILITIES
1,322,454 1,297,219
113 Financial Review 2020
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Parent company cash ow − FAS
(1,000 EUR)
Jan 1–Dec 31
2020
Jan 1–Dec 31
2019
Cash ow from operating activities
Operating income -14,485 -19,851
Adjustments to operating prot
Depreciation and impairments 134 119
Group contributions from subsidiaries 57,190 65,640
Operating income before changes in net working capital 42,840 45,908
Change in interest-free short-term receivables 3,112 -1,234
Change in interest-free short-term liabilities 5,524 871
Change in net working capital 8,636 -363
Cash ow from operations before nancing items and taxes 51,476 45,545
Interest received 5,246 16,332
Interest paid -4,401 -4,383
Other nancial income and expenses -1,599 6
Income taxes paid -8,786 -17,206
Financing items and taxes -9,540 -5,252
NET CASH FROM OPERATING ACTIVITIES 41,936 40,293
(1,000 EUR)
Jan 1–Dec 31
2020
Jan 1–Dec 31
2019
Cash ow from investing activities
Capital expenditure and advance payments to tangible assets -271 -36
Capital expenditure and advance payments to intangible assets 24 0
Proceeds from sale of xed assets 0 0
Dividends received 83,000 80,000
NET CASH USED IN INVESTING ACTIVITIES 82,752 79,964
Cash ow before nancing activities 124,688 120,257
Cash ow from nancing activities
Proceeds from share based payments and share issues 5,226 612
Repayments of long-term receivables -34,954 -26,262
Dividends paid -94,960 -94,607
NET CASH USED IN FINANCING ACTIVITIES -124,688 -120,257
CHANGE OF CASH AND CASH EQUIVALENTS 0 0
Cash and cash equivalents at beginning of period 3 3
Cash and cash equivalents at end of period 3 3
CHANGE OF CASH AND CASH EQUIVALENTS 0 0
114 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Notes to the parent company’s
nancial statement
1. Accounting principles
The nancial statements of the company have been prepared
in euro and in accordance with accounting principles
generally accepted in Finland.
Statement of income
(1,000,000 EUR)
2. Depreciation and impairments
2020 2019
Machinery and equipment 0.1 0.1
Total 0.1 0.1
2020 2019
Wages and salaries 4.1 3.7
Pension costs 0.3 0.4
Other personnel expenses 0.1 0.1
Other operating expenses 0.3 0.3
Total 4.7 4.6
2020 2019
Remuneration to Board 0.7 0.8
Other wages and salaries 3.4 2.9
Total 4.1 3.7
2020 2019
Financial income from
long-term investments:
Dividend income from Group companies 73.0 60.0
Dividend income total 73.0 60.0
Interest income from
long-term receivables:
From Group companies 5.3 11.4
Interest income from
long-term receivables total
5.3 11.4
Financial income from
long-term investments total
78.3 71.4
Interest and other nancial income 0.1 0.1
Interest and other nancial
income total
0.1 0.1
Interest expenses and
other nancial expenses:
Other nancial expenses 6.5 4.7
Interest expenses and other
nancial expenses total
6.5 4.7
Financial income and expenses total 84.8 66.8
3. Other operating expenses
and personnel
Costs and expenses in the Statement of Income were
as follows:
Wages and salaries in accordance with the
Statement of Income
4. Financial income and expenses
5. Appropriations
6. Income taxes
7. Machinery and equipment
2020 2019
Difference between planned
and untaxed depreciations
0.0 0.0
Group contributions received
from subsidiaries
58.3 57.2
Total 58.3 57.2
2020 2019
Taxes on appropriations 11.7 11.4
Taxes on ordinary operations -3.2 -2.7
Taxes from previous years 0.0 0.1
Total 8.4 8.9
2020 2019
Acquisition costs as of January 1 1.0 0.9
Increase 0.3 0.0
Acquisition costs as of December 31 1.2 1.0
Accumulated depreciation January 1 -0.4 -0.2
Accumulated depreciation -0.1 -0.1
Total as of December 31 0.7 0.6
2020 2019
The average number of personnel 5 6
Auditors fees
Audit 0.5 0.5
Other services 0.6 0.1
Total 1.1 0.6
115 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
8. Investments 11. Equity
9. Treasury shares
10. Deferred assets
12. Interest-bearing liabilities
14. Contingent liabilities and
pledged assets
15. Nominal and fair values of
derivative nancial instruments
13. Accruals
2020 2019
Acquisition costs as of January 1 153.2 153.2
Total as of December 31 153.2 153.2
2020 2019
Share capital as of January 1 30.1 30.1
Share capital as of December 31 30.1 30.1
Share premium account January 1 39.3 39.3
Share premium account
as of December 31
39.3 39.3
Paid in capital as of January 1 769.4 768.8
Increase 5.2 0.6
Decrease 0.0 0.0
Paid in capital as of December 31 774.6 769.4
Retained earnings as of January 1 199.0 198.5
Dividend paid -95.0 -94.6
Retained earnings as of December 31 104.0 103.8
Net income for the period 107.1 95.1
Shareholders' equity
as of December 31
1,055.1 1,037.7
Distributable equity
Paid in capital as of December 31 774.6 769.4
Retained earnings as of December 31 104.0 103.8
Net income for the period 107.1 95.1
Total 985.7 968.4
2020 2019
Number of shares as of January 1 82,480 105,403
Increase 300,000 0
Decrease -295,033 -22,923
Number of shares as of December 31 87,447 82,480
2020 2019
Group contributions 58.3 57.2
Payments which will be realized during
the next nancial year
31.7 46.7
Interest 2.6 2.6
Total 92.6 106.4
2020 2019
Bond 249.5 249.1
Total 249.5 249.1
2020 2019
For obligations of subsidiaries
Group guarantees 1,550.9 1,256.9
Leasing liabilities
Next year 0.5 0.5
Later on 0.8 1.3
Total 1.3 1.8
2020 2020 2019 2019
Fair
value
Nominal
value
Fair
value
Nominal
value
Foreign exchange
forward contracts
0.0 0.1 0.0 0.7
2020 2019
Total by category
Guarantees 1,550.9 1,256.9
Other liabilities 1.3 1.8
Total 1,552.2 1,258.7
2020 2019
Income taxes 0.0 0.0
Wages, salaries and other personnel
expenses
1.1 1.5
Other items 11.4 4.0
Total 12.5 5.5
2020 2019
Domicile
Carrying
value
Carrying
value
Konecranes Finance Corp. Hyvinkää 46.4 46.4
Konecranes Finland Corp. Hyvinkää 4.2 4.2
Konecranes Global Corp. Hyvinkää 102.4 102.4
Total 153.0 153.0
2020 2019
East Ofce of Finnish Industries Oy 0.1 0.1
Dimecc Oy 0.1 0.1
Total 0.2 0.2
Investments in Group companies
Other shares and similar rights of ownership
Leasing contracts mainly have a maturity of three years and
they have no terms of redemption.
Derivatives are used for currency rate hedging only.
The derivative nancial instruments are recognized according
to KPL 5:2a at fair value in the parent company nancial
statements and the company does not apply hedge
accounting for these derivatives.
116 Financial Review 2020
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Board of Directors’ proposal to the annual general meeting
The parent company’s non-restricted equity is EUR 985,739,389.75 of which the net income for the year
is EUR 107,111,563.90.
The Group’s non-restricted equity is EUR 1,166,562,000.
According to the Finnish Companies Act, the distributable funds of the company are calculated based on the parent company’s
non-restricted equity. For the purpose of determining the amount of the dividend the Board of Directors has assessed the
liquidity of the parent company and the economic circumstances subsequent to the nancial year-end.
Based on such assessments the Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.88
will be paid on each share and that the remaining non-restricted equity is retained in shareholders’ equity.
Espoo, February 3, 2021
Christoph Vitzthum
Chairman of the Board
Ulf Liljedahl
Board member
Niko Mokkila
Board member
Päivi Rekonen
Board member
Rob Smith
President and CEO
Janina Kugel
Board member
Janne Martin
Board member
Per Vegard Nerseth
Board member
117 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Auditor’s report
(Translation of the Swedish original)
To the Annual General Meeting of Konecranes Plc
Report on the Audit of the Financial
Statements
Opinion
We have audited the nancial statements of Konecranes
Plc (business identity code 0942718-2) for the year ended
December 31, 2020. The nancial statements comprise the
consolidated balance sheet, income statement, statement
of comprehensive income, statement of changes in equity,
statement of cash ows and notes, including a summary
of signicant accounting policies, as well as the parent
company’s balance sheet, income statement, statement
of cash ows and notes.
In our opinion
• the consolidated nancial statements give a true and
fair view of the group’s nancial position as well as its
nancial performance and its cash ows in accordance with
International Financial Reporting Standards (IFRS)
as adopted by the EU.
• the nancial statements give a true and fair view of the
parent company’s nancial performance and nancial
position in accordance with the laws and regulations
governing the preparation of nancial statements in
Finland and comply with statutory requirements.
Our opinion is consistent with the additional report submitted
to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing
practice in Finland. Our responsibilities under good auditing
practice are further described in the Auditor’s Responsibilities
for the Audit of Financial Statements section of our report.
We are independent of the parent company and of the group
companies in accordance with the ethical requirements
that are applicable in Finland and are relevant to our audit,
and we have fullled our other ethical responsibilities in
accordance with these requirements.
In our best knowledge and understanding, the non-audit
services that we have provided to the parent company and
group companies are in compliance with laws and regulations
applicable in Finland regarding these services, and we have
not provided any prohibited non-audit services referred to
in Article 5 (1) of regulation (EU) 537/2014. The non-audit
services that we have provided have been disclosed in note
7.1 to the consolidated nancial statements and note 4 to the
parent company nancial statements.
We believe that the audit evidence we have obtained is
sufcient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most signicance in our audit of the
nancial statements of the current period. These matters
were addressed in the context of our audit of the nancial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
We have fullled the responsibilities described in the Auditor’s
responsibilities for the audit of the nancial statements
section of our report, including in relation to these matters.
Accordingly, our audit included the performance of
procedures designed to respond to our assessment of the
risks of material misstatement of the nancial statements.
The results of our audit procedures, including the procedures
performed to address the matters below, provide the
basis for our audit opinion on the accompanying nancial
statements.
We have also addressed the risk of management override of
internal controls. This includes consideration of whether there
was evidence of management bias that represented a risk of
material misstatement due to fraud.
118 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Key Audit Matter How our audit addressed the Key Audit Matter
Revenue recognition of long-term contracts
and related provisions
We refer to note 2.2 Use of estimates and
judgments, note 2.3 Summary of signicant
accounting policies, note 5, note 6 and note 24.
In accordance with its accounting principles,
Konecranes applies the percentage of completion
(PoC) method (performance obligations satised
over time) for recognizing revenue from long-term
crane projects. The percentage of completion is
based on the cost-to-cost method.
The percentage of completion method of account-
ing involves the use of signicant management
assumptions, estimates and projections, principally
relating to future material, labor and project-related
overhead costs and the estimated stage of comple-
tion. In year 2020, approximately 16% percent of
the sales of 3.2 billion euro were recognized under
the PoC method. Revenue recognition of long-term
contracts is a key audit matter and a signicant risk
of misstatement as dened by EU Regulation No
537/2014, point (c) of Article 10(2).
Konecranes makes several types of provisions
related to risks associated with long-term project
contracts and PoC accounting. These PoC related
provisions require high level of management
judgment and are a key audit matter due to
that reason.
Our audit procedures to address the risk of material
misstatement in respect of the long-term contracts
included among others:
• Assessing the Group’s accounting policies over
revenue recognition of long-term contracts;
• Gaining an understanding of the PoC revenue
recognition process;
• Examination of the project documentation
and testing the PoC calculations and inputs
of estimates in the calculations and comparing
the estimates to actuals;
• Analytical procedures;
• Assessing signicant judgments made by
management based on an examination of
the associated project documentation and
discussion on the status of projects under
construction with nance and project managers
of the Company; and
• Assessing the Group’s disclosures in respect
of revenue recognition.
We have designed our audit procedures to be
responsive to this specic audit area and our
procedures included among others:
• Gaining an understanding of the PoC related
provisions process;
• Testing the provision calculations and the
inputs of estimates in these calculations and
comparing estimates to actuals; and
• Performing inquiries with management with
regards to any signicant events or legal
matters that could affect the provisions.
Key Audit Matter How our audit addressed the Key Audit Matter
Revenue recognition
We refer to note 2.3 Summary of signicant
accounting policies and note 5.
According to the Group’s accounting policies
revenue is recognized at an amount of conside-
ration to which the Group expects to be entitled
in exchange for transferring promised goods or
services to a customer. Goods and services are
generally considered to be transferred when the
customer obtains control. The terms and conditions
of sales contracts vary by market and, in addition,
the local management might feel pressure to
achieve the revenue targets set.
Revenue recognition is a key audit matter and a
signicant risk of material misstatement as denes
by EU Regulation No 537/2014, point (c) of
Article 10(2) due to the signicant risk relating
to an incorrect timing of recognition of revenue.
Our audit procedures to address the risk of material
misstatement in respect of correct timing of
revenue recognition included among others:
• Analytical procedures;
• Assessing the Group’s accounting policies over
revenue recognition compared to applicable
accounting standards;
• Assessing the revenue recognition process and
-methodologies and testing controls;
• Testing revenue with substantive analytical
procedures and by testing sales transactions;
• Assessing the Group’s disclosures
in respect of revenues.
Valuation of goodwill
We refer to note 2.2 Use of estimates and
judgments, note 2.3 Summary of signicant
accounting policies and note 13.
The value of goodwill at the date of the nancial
statements amounted to 1,016.7 million euro
representing 25% of total assets and 81% of equity
(2019: 908.2 million euro, 24% of the total assets
and 73% of equity).
Valuation of goodwill is tested annually through
goodwill impairment test. Konecranes has allocated
goodwill to cash generating units (CGUs) which
is the level for goodwill impairment test.
The recoverable amount of a cash generating unit
is based on value in use calculations, the outcome
of which could vary signicantly if different as-
sumptions were applied. There are a number
of assumptions used to determine the value in
use of the cash generating units, including revenue
growth, development of xed costs, the operating
margin and the discount rate applied. Changes in
the above-mentioned assumptions may result in
an impairment of goodwill.
Our audit procedures included, among others,
involving our valuation specialists to assist us in
evaluating the assumptions and methodologies
used by the Group, in particular those relating
to the discount rate. We specically focused on
the cash generating units for which reasonably
possible changes in assumptions could cause
the carrying value to exceed its recoverable
amount. We also assessed the historical accuracy
of managements’ estimates. We assessed the
Group’s disclosures in note 13 in the nancial
statements about the assumptions to which
the outcome of the impairment tests were
more sensitive
119 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Key Audit Matter How our audit addressed the Key Audit Matter
The annual impairment test is a key audit matter
because
• The assessment process is complex and is
based on numerous judgmental estimates;
• It is based on assumptions relating to market
or economic conditions; and
• Of the signicance of the goodwill to the
balance sheet total.
Valuation of goodwill is a signicant risk of
misstatement as dened by EU Regulation No
537/2014, point (c) of Article 10(2).
MHE-Demag business combination
We refer to note 2.2 Use of estimates and
judgments, note 2.3 Summary of signicant
accounting policies and note 4.
Konecranes acquired a 50% share of
MHE-Demag on January 2, 2020.
After the acquisition Konecranes holds 100%
of the shares in MHE-Demag. The purchase
consideration amounted to 148.3 million euro.
MHE-Demag was previously accounted for as
a joint venture. The acquisition is a business
combination achieved in stages where the
previously held equity interest in MHE-Demag
is remeasured at fair value, and accordingly
a gain amounting to 21.1 million euro was
recognized to income statement.
Assets acquired and liabilities and contingent
liabilities assumed in a business combination
are measured at acquisition-date fair value.
Management judgment relates specically to
determining the fair value of acquired assets
and liabilities, in particular determining the fair
values of separately identiable intangible
assets such as customer contracts, order book
and trademarks.
The business combination is a key audit matter
as it involves valuation processes and -methods,
and judgments made by management.
Our audit procedures included amongst other:
• Assessing together with our valuation
specialists the valuation processes and
methodologies to identify acquired assets
and liabilities and to determine the fair value
of these;
• Testing the purchase consideration;
• Testing the accounting treatment of the
business combination achieved in stages;
• Assessing the disclosures in respect
of business combinations.
Responsibilities of the Board of Directors
and the Managing Director for the Financial
Statements
The Board of Directors and the Managing Director are
responsible for the preparation of consolidated nancial
statements that give a true and fair view in accordance
with International Financial Reporting Standards (IFRS)
as adopted by the EU, and of nancial statements that
give a true and fair view in accordance with the laws and
regulations governing the preparation of nancial statements
in Finland and comply with statutory requirements. The
Board of Directors and the Managing Director are also
responsible for such internal control as they determine is
necessary to enable the preparation of nancial statements
that are free from material misstatement, whether due to
fraud or error.
In preparing the nancial statements, the Board of Directors
and the Managing Director are responsible for assessing the
parent company’s and the group’s ability to continue as going
concern, disclosing, as applicable, matters relating to going
concern and using the going concern basis of accounting.
The nancial statements are prepared using the going
concern basis of accounting unless there is an intention
to liquidate the parent company or the group or cease
operations, or there is no realistic alternative but to do so.
Auditor’s Responsibilities
for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance on
whether the nancial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with good
auditing practice will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in aggregate,
they could reasonably be expected to inuence the economic
120 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
decisions of users taken on the basis of the nancial
statements.
As part of an audit in accordance with good auditing practice,
we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of
the nancial statements, whether due to fraud or error,
design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufcient and
appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the
parent company’s or the group’s internal control.
• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and
related disclosures made by management.
• Conclude on the appropriateness of the Board of
Directors’ and the Managing Director’s use of the going
concern basis of accounting and based on the audit
evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast signicant
doubt on the parent company’s or the group’s ability
to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures
in the nancial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions
may cause the parent company or the group to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content
of the nancial statements, including the disclosures,
and whether the nancial statements represent the
underlying transactions and events so that the nancial
statements give a true and fair view.
• Obtain sufcient appropriate audit evidence regarding
the nancial information of the entities or business
activities within the group to express an opinion on the
consolidated nancial statements. We are responsible for
the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and signicant audit ndings, including
any signicant deciencies in internal control that we identify
during our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
signicance in the audit of the nancial statements of the
current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benets of such
communication.
Other Reporting Requirements
Information on our audit engagement
We were rst appointed as auditors by the Annual General
Meeting on March 8, 2006, and our appointment represents a
total period of uninterrupted engagement of 15 years.
Other information
The Board of Directors and the Managing Director are res-
po n sible for the other information. The other information
comprises the report of the Board of Directors and the
info rma tion included in the Governance publication but
does not include the nancial statements and our auditor’s
report thereon. We have obtained the report of the Board of
Directors prior to the date of this auditor’s report, and the
Governance publication is expected to be made available to
us after that date.
Our opinion on the nancial statements does not cover the
other information.
In connection with our audit of the nancial statements, our
responsibility is to read the other information identied above
and, in doing so, consider whether the other information is
materially inconsistent with the nancial statements or our
knowledge obtained in the audit, or otherwise appears to
be materially misstated. With respect to report of the Board
of Directors, our responsibility also includes considering
whether the report of the Board of Directors has been
prepared in accordance with the applicable laws and
regulations.
In our opinion, the information in the report of the Board
of Directors is consistent with the information in the nancial
statements and the report of the Board of Directors has
been prepared in accordance with the applicable laws and
regulations.
121 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
If, based on the work we have performed on the other
information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material
misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Opinions based on assignment
of the Audit Committee
We support that the nancial statements should be adopted.
The proposal by the Board of Directors regarding the use
of the distributable equity shown in the balance sheet
for the parent company is in compliance with the Limited
Liability Companies Act. We support that the Members of the
Board of Directors and the Managing Director of the parent
company should be discharged from liability for the nancial
period audited by us.
Helsinki, February 3, 2021
Ernst & Young Oy
Authorized Public Accountant Firm
Kristina Sandin
Authorized Public Accountant
122 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
Shares and shareholders
Number of
shares
and votes
% of shares
and votes
1 HC Holding Oy Ab 7,931,238 10.0%
2 Solidium Oy 6,744,506 8.5%
3 Gustavson Stig and family* 2,366,157 3.0%
4 Ilmarinen Mutual Pension Insurance Company 2,255,000 2.8%
5 Varma Mutual Pension Insurance Company 1,916,061 2.4%
6 Holding Manutas Oy 1,125,000 1.4%
7 Elo Mutual Pension Insurance Company 1,061,497 1.3%
8 OP Investment Funds 877,668 1.1%
9 Föreningen Konstsamfundet r.f. 850,000 1.1%
10 Danske Capital Funds 717,197 0.9%
Ten largest registered
shareholders' total ownership
25,844,324 32.6%
Nominee registered shares 30,025,156 37.9%
Other shareholders 23,264,979 29.4%
Shares held by Konecranes Plc 87,447 0.1%
Total 79,221,906 100.0%
Change in
shareholding
in 2020
Number of
shares
owned
% of
shares and
votes
Board of Directors -12,375 20,713 0.0%
Konecranes Leadership Team -69,934 170,044 0.2%
Total -82,309 190,757 0.2%
Shares
Number of
share-
holders
% of
share-
holders
Number of
shares and
votes
% of
shares and
votes
1−100 21,455 54.8% 943,643 1.2%
101−1,000 15,402 39.4% 5,144,752 6.5%
1,001−10,000 2,040 5.2% 5,385,978 6.8%
10,001−100,000 169 0.4% 4,877,333 6.2%
100,001−1,000,000 32 0.1% 8,602,899 10.9%
1,000,001 – 9 0.0% 24,242,145 30.6%
Registered shareholders total 39,107 100.0% 49,196,750 62.1%
Nominee registered shares 12 0.0% 30,025,156 37.9%
Total 39,119 100.0% 79,221,906 100.0%
% of shares
and votes
Households 16.9%
Public sector organizations 16.5%
Private companies 14.7%
Financial and insurance institutions 6.7%
Non-prot organizations 6.2%
Foreigners 0.9%
Nominee registered shares 37.9%
Total 100.0%
According to the register of Konecranes Plc’s shareholders kept by Euroclear Finland Oy, there were
39,119 (2019: 25,991) shareholders at the end of the year 2020.
Largest shareholders according to the share register on December 31, 2020
Shares owned by the members of the Board and of Directors and of the
Konecranes Leadership Team on December 31, 2020
Breakdown of share ownership by number or shares owned
on December 31, 2020
Breakdown of share ownership by shareholder category
on December 31, 2020
* Konecranes Plc has on December 28, 2011 received information according to which the Chairman of the
company’s Board of Directors Stig Gustavson has donated all of his shares in Konecranes Plc to his near relatives
retaining himself for life the voting rights and right to dividend attached to the donated shares. The donation
encompassed in total 2,069,778 shares.
Source: Euroclear Finland Oy, December 31, 2020.
123 Financial Review 2020
Corporate Governance Corporate Governance Statement 2020 Remuneration Statement 2020 Risk Management Financial Review
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217:EURxbrli:sharesKonecranes PlcHyvinkääPublicly Listed CompanyFinlandKoneenkatu 8, 05830 Hyvinkää, FinlandHyvinkääKonecranes is a world-leading manufacturer and servicer of cranes, lifting equipment and machine tools, serving a broad range of customers, including manufacturing and process industries, shipyards, ports and terminals. Konecranes operates internationally, with its products being manufactured in North and South America, Europe, Africa, the Middle East, and Asia and sold worldwide. Konecranes has three reportable segments, which it calls Business Areas: Business Area Service, Business Area Industrial Equipment and Business Area Port Solutions.Konecranes PlcKonecranes PlcN/A