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Cargotec Investor Relations has received several questions on the coronavirus and its impact on the company. You can find below some typical questions and answers we have received.

2019-nCoV, as the virus is officially dubbed, could potentially affect Cargotec in several ways as we have for example sales, assembly operations and suppliers based in China where the outbreak has had most notable impacts. Cargotec is constantly monitoring the situation and its development. It is also important to point out that in 2019 only 5% of Cargotec’s revenue was coming from China. On the other hand, for example Oxford Economics already revised down their world GDP growth estimate for 2020.

Equals the situation on February 24. We are continuously monitoring development of the situation. 

What is your overall exposure to China?

We have exposure to China through sales, supply chain, subsidiaries, JVs, offices and assembly sites. In 2019 only 5% of Cargotec’s revenue was coming from China.

What kind of financial effect is the coronavirus expected to have?

It’s still early to estimate the full financial effect of the virus on Cargotec, but currently we don’t see a major impact on our full year results. Currently we have lower capacity utilisation in Chinese units due to the longer ramp up period after the holiday season, and this may have a short term negative impact on Chinese business in Q1 and potentially in Q2. Some deliveries may be delayed and there may be challenges to get some components as also the suppliers have lower capacity utilization.

Equals the situation on February 24. We are continuously monitoring the development of the situation.

Are you expecting any impact on orders received? 

Customers are postponing decisions especially in China and this may impact orders received negatively in Q1. 

Equals the situation on February 24. We are continuously monitoring the development of the situation. 

How is your revenue from China split between business areas?

Our business areas Kalmar and MacGregor, that make the majority of our sales in China. In 2019, 4.6% of Kalmar’s sales and 17.8% of MacGregor’s sales came from China. China’s share of Hiab’s sales was below 1%.

How many employees do you have in China?

We have about 600 employees in China.

Where are your Chinese production sites located and in which business areas they belong?

Kalmar has assembly operations in Shanghai and MacGregor production in Tianjin and we have some JVs in China.

Have the production sites been working normally?

The production sites have been ramping up after the holiday period, but our capacity utilization is below normal level.  Coronavirus has had some effect on the speed of the ramp up, as all the workers have not been able to return back home after the holiday period due to travel restrictions. Our employees are returning to work gradually. 

Equals the situation on February 24. We are continuously monitoring the development of the situation. 

Do you have joint ventures in China?

At the end of 2019, Cargotec had 7 JVs registered in China. Cargotec’s share of these companies’ net income was EUR -3.6 million. Cargotec also has one associated company in China, Jiangsu Rainbow Heavy Industries Co., Ltd., which reported net income of EUR 7.4 million in 2019. Cargotec’s shareholding of the company was 7.9%.

If the virus spreads to Europe, what effects it will have on your business?

There is not enough information to speculate. 

Equals the situation on February 24. We are continuously monitoring the development of the situation. 

Are there any indirect effects on your business for example through supply chain?

This far the impact on supply chain has been related to problems to get single components. It is difficult to estimate the full impact and we are monitoring the development closely. Lower capacity utilization in Chinese factories may impact deliveries also in coming quarters. 

Equals the situation on February 24. We are continuously monitoring the development of the situation. 

How do you see the coronavirus affecting China’s economy?

It’s difficult to estimate long term effects. In February, Oxford Economics revised down its estimates due to Coronavirus on China’s GDP growth and it is expected  to plunge to just 3.8% y/y in 2020. At the moment it seems that the impact is clearly significant in Q1 but there will be rebound in Q2 and Q3. According to Oxford Economics, the virus will also have a similar effect on China’s industrial production and that will be reflected in the World’s GDP growth rate. 

Equals the situation on February 24. We are continuously monitoring the development of the situation. 

What kind of other knock-on effects might the virus have on you?

The situation includes many uncertainties, so it is impossible to have a thorough view on all of the impacts. However, we are following the situation closely, and will adjust our estimations accordingly when necessary. Currently, we don’t see a major impact on our full year results. 

Equals the situation on February 24. We are continuously monitoring the development of the situation. 

What is purchased from China that is subsequently used as inputs for product / service sold in the rest of the world?

We are operating in asset light model with mainly assembly only production and we have global supply chains including Chinese companies. 

How do you quantify / qualify your indirect exposures to China?

On a group level, the total exposure is limited. 

Cargotec is a leading provider of cargo and load handling solutions with the goal of becoming the leader in intelligent cargo handling. Cargotec's business areas Kalmar, Hiab and MacGregor offer products and services that ensure our customers a continuous, reliable and sustainable performance.