Konecranes condemns Russia’s aggression towards Ukraine. We are saddened and upset by the war and deeply concerned for our Ukrainian employees and their families. Their safety and well-being are number one priority for Konecranes as a company now. The Konecranes community is supporting them and their compatriots through local and global efforts. We join the global call for peace and a swift end to the war.
Questions on Ukraine
What kind of operations does Konecranes have in Ukraine?
Konecranes operates a crane and component factory in Zaporizhzhia, in the south-eastern part of Ukraine. The factory is one of the Industrial Equipment supply factories for crane components. The factory is a crane manufacturing unit for Eastern Europe deliveries. It also offers extra capacity for Konecranes’ western crane deliveries specialized in large steel structures. The factory has approximately 350 employees.
In addition, Konecranes has approximately 70 people working in crane service, port service, spare parts and industrial crane sales operations mainly in Odessa, Mariupol and Zaporizhzhia.
The vast majority of Konecranes employees in Ukraine is local people.
How is Konecranes supporting its employees in Ukraine?
We have local contingency and emergency plans in place, and we continue to pay salaries and wages to our Ukrainian employees. The local management have been doing all they can to take care of our people in the middle of this inhumane situation and our global specialist team is following up the situation on a daily basis. Also, our HR and HSEQ teams are organizing ways to help, since this is the most efficient way to get our help delivered. For example, our Polish HR and operational teams support Konecranes employees and their families in providing transport, temporary accommodation and guidance on registering as refugees, and these efforts are financed and supported by the Konecranes Group.
Konecranes has made a donation to the International Red Cross, supporting victims and refugees of the Ukraine conflict. With this effort, we want to support and show our solidarity for people who are suffering from this humanitarian crisis.
What happens to the planned production at Konecranes factory in Zaporizhzhia?
The production at our factory was stopped after the war started. Konecranes has a long history of operating in Ukraine and has been preparing for different scenarios and contingency plans. Those contingency plans have now been activated and we have redirected our production to alternative sources and supply network. The same deliveries and capacity can be offered from other factories and suppliers from Europe, for example our own production sites in Slany, Czech Republic, and Liebengrün, Germany. There will be additional costs carried by us and delays in customer deliveries for the goods produced or planned to be produced at our Ukrainian factory. However, in this inhumane situation our main focus is on the safety and well-being of our Ukrainian employees and their families.
How big is Konecranes exposure to Ukraine in terms sales?
In 2021, Konecranes net sales to Ukraine totalled less than €5 million.
How much order backlog does your factory in Ukraine have? How much does this production contribute to Konecranes in terms of sales?
Since all production at our factory in Zaporizhzhia is sold to internal customers, our factory’s order backlog is not relevant. The factory has mainly produced steel structures and components for named and specific customer deliveries. When the war started, the sales value of the planned production and finished or semi-finished goods at Zaporizhzhia was some €39m. The annual production volume at Zaporizhzhia has been approximately €20m in recent years.
We have now redirected production to our other factories. This will generate additional costs and cause delays in some customer deliveries. However, in this inhumane situation our main focus is on the safety and well-being of our Ukrainian employees and their families.
What kind of financial impacts does the war have on your assets in Ukraine?
As the level of uncertainty regarding our operations in Ukraine remains high due to the ongoing war, Konecranes has impaired all Ukraine related assets, including inventories and receivables, in Q1 2022. The impact of the impairments on EBIT is approximately €8 million negative, and the full amount will be included in adjustments.
Questions on Russia and Belarus
What kind of operations does Konecranes have in Russia?
Konecranes has approximately 200 employees in Russia and all three Business Areas (Service, Industrial Equipment and Port Solutions) have customers in Russia.
What is Konecranes’ sales exposure to Russia?
In 2021, Konecranes' net sales to Russia totaled approximately €55 million, representing less than 2% of Konecranes’ consolidated net sales.
What are your plans regarding your Russian business going forward?
We have decided not to take any new business from Russia. The downscaling of our Russian business will be gradual and will be done in accordance with local laws and regulations, and the safety and wellbeing of our Russian employees will be prioritized.
As a result of this decision, in Q1 2022, Konecranes has written off €79 million of orders from Russia and cancelled €32 million of sales to Russia, as these projects have been discontinued. The orders had been booked and the project revenues recognised prior to 2022. The impact of the cancelled sales on Q1 EBIT is approximately €39 million negative and the full amount will be included in adjustments.
Konecranes is headquartered in the EU and naturally complies with the sanctions set by the EU, the US and other relevant jurisdictions.
How about Belarus? What kind of operations and business do you have there?
Konecranes doesn’t have any employees based in Belarus and in 2021, Konecranes sales exposure to Belarus was less than €1 million. As of March 4, 2022, Konecranes has ceased all business to Belarus.
What is your exposure to Russian or Belarussian suppliers?
Konecranes has a very limited number of Russian suppliers with respect to deliveries to customers outside Russia. Konecranes does not have suppliers from Belarus for deliveries outside Belarus. Our suppliers are subject to ongoing sanction screenings. We have enhanced sanction screenings further to ensure compliance with quickly evolving sanction regimes.
