Konecranes: Lifting for the Long Term
Konecranes is one of the world’s leading companies in cranes, lifting equipment and material handling solutions, serving industrial companies, ports and terminals around the world. The company combines the sale of new equipment with a large service business that maintains, repairs and modernizes cranes throughout their long operating lives. With leading market positions, a global service network and growing opportunities from automation, electrification and digitalization, Konecranes aims to benefit from the changing needs of global industry and logistics. The question remains: Does this global lifting leader deserve a spot in your portfolio?
This is not financial advice. I am not a financial advisor, and I publish these analyses to document my own research and share my thoughts with readers and followers. If you are considering investing in any of the companies or ideas discussed, you should always do your own research and, if necessary, consult a qualified financial professional. All investing involves risk, and you may lose some or all of the money you invest.
For full disclosure, I do not own shares in Konecranes at the time of writing this analysis. I publicly share my investment portfolio, including all of my current holdings and changes I make over time. If you are interested in seeing what I currently invest in and learning how you can follow or copy my portfolio, you can read more here.
The Business
Konecranes traces its roots back more than a century to the founding of KONE Corporation in Finland in 1910. KONE began manufacturing cranes in 1933, initially expanding into hoists and harbor cranes before gradually building an international lifting equipment business. International expansion accelerated during the 1980s, particularly in the United States, and in 1994 the crane business was separated from KONE as KCI Konecranes. Since then, the company has expanded both organically and through acquisitions, including the transformative acquisition of Terex’s Material Handling & Port Solutions business in 2017, which added brands such as Demag, Gottwald and Noell and significantly increased Konecranes’ installed base, service opportunities and global scale. Today, Konecranes is one of the world’s leading material handling companies. Its equipment is used to lift and move materials in factories, warehouses, steel mills, power plants, paper mills, shipyards, ports, container terminals and many other industrial environments. While a crane may appear to be a relatively simple piece of industrial equipment, modern lifting systems increasingly combine mechanical components with motors, control systems, sensors, connectivity, software and automation. For many customers, these systems are critical infrastructure. If an important crane stops operating in a factory, steel mill or container terminal, part of the customer’s production or material flow can stop with it. Reliability, safety and service availability are therefore often more important than simply purchasing the cheapest equipment. Konecranes divides its operations into three Business Areas: Industrial Service, Industrial Equipment and Port Solutions. The three businesses each represent a meaningful part of the company, although their economics differ significantly. Industrial Service is particularly important because it generates recurring revenue from maintaining, repairing and modernizing lifting equipment and provides greater stability through economic cycles than equipment sales. Industrial Service maintains, repairs, modernizes and monitors industrial cranes and hoists throughout their operating lives. Services range from inspections and preventive maintenance to repairs, spare parts, remote monitoring, predictive maintenance, consulting, retrofits and major modernizations. Konecranes can therefore remain involved with a crane for decades after it has originally been installed. Importantly, Konecranes does not restrict this business to equipment that it has manufactured itself. It services cranes and hoists from essentially all manufacturers, and around half of the equipment covered by its service agreement base is manufactured by other companies. A crane sold by a competitor can therefore eventually become a Konecranes service customer. Konecranes takes a lifecycle approach to maintenance rather than simply responding when equipment breaks. Through inspections, operating information, sensors, connectivity and predictive maintenance, the company aims to identify problems before they result in costly downtime. This is increasingly valuable as cranes become more sophisticated and require specialized expertise to maintain. Industrial Equipment represents the manufacturing side of Konecranes’ industrial crane business. It supplies everything from relatively small hoists and workstation lifting systems to standard overhead cranes and highly specialized process cranes capable of lifting hundreds of tons. Customers operate across industries including general manufacturing, automotive, metals, paper and forest products, waste to energy, power generation and other process industries. Most Industrial Equipment sales come from standardized equipment, while the remainder comes from specialized solutions designed for particular applications. Standardization allows Konecranes to manufacture equipment from common modules and platforms rather than engineering every crane from the beginning. This reduces complexity and allows engineering, sourcing and manufacturing costs to be spread across larger volumes. At the same time, Konecranes retains control over important technology inside the crane. A central part of this is what the company calls its Core of Lifting. This is an integrated package including the gearbox, motor, control system and connectivity technology developed specifically for lifting applications. Designing these critical components internally allows Konecranes to optimize how the mechanical, electrical and digital parts of the crane work together. Konecranes combines this technology with a multi-brand distribution strategy. Equipment is sold directly under the Konecranes name as well as through brands such as Demag, R&M, SWF, Verlinde and Donati. This gives the company access to different customer groups and distribution channels while allowing much of the underlying technology and infrastructure to be shared. Industrial Equipment and Industrial Service also reinforce each other. Every crane Konecranes sells creates a potential future service relationship, while every service relationship creates opportunities to sell spare parts, modernizations, replacement equipment and new cranes. This allows Konecranes to participate in much more of the equipment lifecycle than the initial sale alone. Port Solutions is the third major part of Konecranes and supplies equipment, software and services used to move containers and other cargo through ports, intermodal terminals and shipyards. Konecranes is the leading Western supplier of container handling equipment and offers one of the broadest portfolios in the industry. Its offering stretches from lift trucks and mobile harbor cranes to yard cranes, straddle carriers, automated guided vehicles and enormous ship to shore cranes used to unload some of the world’s largest container vessels. Konecranes also supplies shipyard cranes and software systems that can coordinate equipment and optimize operations across entire container terminals. This breadth is strategically important because Konecranes is not dependent on a single type of port or container handling technology. A medium-sized regional port may require mobile harbor cranes and lift trucks, while one of the world’s largest container terminals may require automated yard equipment and enormous ship to shore cranes. Its offering also extends inland to intermodal terminals where containers are transferred between trains and trucks. The three businesses together create a model in which equipment, technology and service reinforce one another. Konecranes can design and manufacture equipment, provide the critical components and controls inside it, connect the equipment digitally, monitor its condition, maintain it throughout its life, modernize it as technology changes and eventually supply its replacement. The customer relationship can therefore extend across much of the equipment’s lifecycle rather than ending when the original crane is delivered. Konecranes also has a highly diversified customer base across more than 50 countries and numerous industries. Industrial customers include general manufacturing, metals, automotive, power generation, petrochemicals, pulp and paper and other process industries, while Port Solutions serves container terminals, intermodal terminals and shipyards. Historically, no individual customer has represented more than 2% of sales and the ten largest customers combined have accounted for less than 10%. Konecranes’ competitive moat is primarily built on its global service network, technological expertise, scale, leading market positions and the integration of equipment with lifecycle services. The strongest part of the moat is arguably its service network. Manufacturing a crane is one business, but maintaining cranes across many countries is a fundamentally different challenge. Konecranes has thousands of specialized service technicians and one of the world’s most extensive crane service networks. Replicating this would require establishing local branches, recruiting and training specialized technicians, maintaining spare parts availability and building relationships with industrial customers across numerous markets. Scale makes this network increasingly difficult to replicate. Having more customers in a geographic area allows technicians to spend more time servicing equipment and less time travelling between customers. Konecranes can also spread investments in training, spare parts, digital infrastructure and maintenance systems across a much larger customer base than smaller competitors. The ability to service third-party equipment strengthens this position further. Konecranes is not limited to the cranes it originally manufactured, which allows it to build relationships with customers that initially purchased equipment from competitors. These relationships can eventually lead to modernizations, replacement equipment and new crane sales. There are also switching costs, although they should not be overstated. Customers can change maintenance providers, but switching becomes less attractive when Konecranes has accumulated maintenance history, equipment data and knowledge of a customer’s operations. Reliability and response time are particularly important because the financial consequences of an unexpected crane failure can greatly exceed the cost of maintenance itself. Technology represents another important component of the moat. Konecranes has accumulated decades of specialized engineering knowledge in lifting applications and maintains a substantial patent portfolio. Its Core of Lifting gives it control over important components such as motors, gearboxes, controls and connectivity rather than relying entirely on third-party systems. Because these components are designed specifically to work together in lifting applications, Konecranes can optimize reliability, safety, energy efficiency and performance at a system level. Common components can also be deployed across multiple crane platforms, providing benefits in manufacturing, purchasing, spare parts and technician training. Digitalization increasingly connects this technology advantage with the service business. Sensors and control systems embedded in cranes generate operating data that can be used for remote monitoring and predictive maintenance. As Konecranes’ connected installed base grows, the company gains more information about how equipment and components perform under different operating conditions. The advantage is not simply having access to data. Konecranes can combine that data with engineering expertise, spare parts and a global physical service organization. Identifying that a crane may develop a problem is valuable, but being able to send a qualified technician with the necessary parts to solve the problem is what ultimately matters to the customer. Scale is also an advantage in Industrial Equipment. The industrial crane market remains fragmented and includes many relatively small regional manufacturers. Konecranes operates with global manufacturing, sourcing, research and development, distribution and service capabilities and can spread investments in automation, software, electrification and product development across a much larger business. A smaller competitor may be able to manufacture a mechanically competitive crane, but matching Konecranes across equipment development, connectivity, predictive maintenance, global service and spare parts availability is considerably more difficult. Its multi-brand strategy further extends its reach by allowing the company to serve different customer groups and distribution channels while sharing much of the underlying technology and infrastructure. Port Solutions has a somewhat different moat because competition in large container handling equipment is more concentrated and includes powerful international and Chinese manufacturers. Here, Konecranes’ advantages primarily come from the breadth of its portfolio, automation capabilities, software, engineering expertise, installed base and lifecycle services. Konecranes ranks among the leading suppliers across the major product categories for ports and container terminals. Few companies can provide such a broad range of equipment, stretching from relatively small lift trucks to some of the largest cranes in the world, while also providing automation, software, modernization and service. Automation may strengthen these customer relationships over time. Once equipment, control systems and software become integrated into the daily operation of a container terminal, changing suppliers can become more complicated than simply replacing an individual piece of machinery. Reliability, interoperability, maintenance capabilities and compatibility with existing systems become increasingly important. Brand reputation also matters in Konecranes’ markets. Cranes frequently perform safety-critical and mission-critical tasks, sometimes lifting extremely heavy loads above employees, production equipment or valuable cargo. Equipment failure can result in costly downtime and potentially serious accidents. Customers therefore have incentives to choose manufacturers with proven technology, established service capabilities and long operating histories. Konecranes’ global footprint strengthens this advantage. Multinational industrial customers can use the same service provider across multiple factories and countries, while international port operators can work with Konecranes across different terminals. A local competitor may be highly capable in one market but unable to provide comparable support across a customer’s international operations.
Management
Marko Tulokas serves as the President and CEO of Konecranes, a role Marko Tulokas assumed in June 2025 after more than two decades with the company. Marko Tulokas joined Konecranes in 2004 and has held a wide range of leadership positions across the organization, including roles in Industrial Equipment, Industrial Service and the Asia Pacific region. This gives Marko Tulokas extensive experience with Konecranes’ products, customers, technology and operations and makes the appointment a promotion of a long serving internal executive rather than bringing in an external leader unfamiliar with the business. Before becoming CEO, Marko Tulokas served briefly as President of Industrial Equipment, one of Konecranes’ three main Business Areas. Marko Tulokas had previously led Standard Equipment and, from 2022 to 2024, was responsible for Industrial Service and Equipment in the Asia Pacific region. Earlier positions included leading Industrial Cranes and Products, Industrial Cranes, Products and Applications and Industrial Crane Solutions. Marko Tulokas has therefore spent much of his career close to the core industrial equipment business while also gaining experience in service and international operations. This background is particularly relevant for Konecranes because the company’s business model depends on the relationship between equipment and service. Understanding how cranes are designed, manufactured and sold is important, but so is understanding how the installed equipment base creates service, modernization and replacement opportunities over many years. Marko Tulokas has held leadership responsibilities on both sides of this relationship and has also managed operations in Asia Pacific, an important region where Konecranes faces both growth opportunities and increasing competition from Chinese manufacturers. Marko Tulokas was appointed President of Industrial Equipment at the beginning of 2025 as part of a change to Konecranes’ operating model. At the time, Konecranes specifically tasked Marko Tulokas with accelerating operational efficiency within Industrial Equipment while maintaining close collaboration between Industrial Equipment and Industrial Service. Only a few months later, the Board selected Marko Tulokas to succeed Anders Svensson as President and CEO. When announcing the appointment, Chair Pasi Laine highlighted Marko Tulokas’s extensive knowledge of Konecranes’ people, customers, technology, offering and the material handling industry. Marko Tulokas also brings a technical and business education that fits the nature of Konecranes. Marko Tulokas holds a Master of Science in Engineering as well as an MBA. Before joining Konecranes, Marko Tulokas worked in several supply chain management positions at Asko Appliances and Uponor. The combination of engineering, business education and more than two decades of operating experience inside Konecranes provides Marko Tulokas with a strong understanding of both the technical and commercial sides of the company. An important point when assessing Marko Tulokas is that Marko Tulokas inherited a company that was already performing well. The strategy had been updated under previous CEO Anders Svensson, profitability had improved substantially and Konecranes had strengthened its financial targets shortly before Marko Tulokas became CEO. Marko Tulokas is therefore not leading a turnaround. The challenge is instead to preserve the operational improvements already achieved while continuing to grow the company and develop its competitive advantages. Konecranes entered this period with a strategy centered on deeper customer relationships, greater efficiency, technology innovation, responsible business and organizational development. Marko Tulokas has so far largely continued this strategic direction rather than introducing a radical change. Konecranes is focused on expanding its service agreement base, improving operational efficiency, increasing service activities in ports, and capturing opportunities from automation, electrification and digitalization. The company is also continuing to invest in its Core of Lifting technology and increasingly connected equipment. This continuity makes sense given that Marko Tulokas was already deeply involved in Konecranes before becoming CEO and participated in the development and execution of the existing strategy. Marko Tulokas has also emphasized the resilience of Konecranes’ business model in an uncertain global environment. This resilience comes from the combination of equipment and service, broad geographical exposure and a diversified customer base. At the same time, Konecranes sees changes in global supply chains, automation, electrification and increasing technological requirements as opportunities rather than simply risks. The company increased its long term profitability ambitions in 2025, targeting a comparable EBITA margin of between 13% and 16% depending on the cycle, with higher profitability ambitions for Industrial Service in particular. The first year under Marko Tulokas has started from a strong position. Konecranes described 2025 as a record year, with strong order intake and a record comparable EBITA margin despite geopolitical uncertainty and relatively subdued conditions in parts of the industrial market. However, Marko Tulokas only became CEO halfway through the year, meaning that much of the performance reflected decisions, strategy and operational improvements implemented before the appointment. It would therefore be premature to attribute Konecranes’ recent financial improvement primarily to Marko Tulokas. Marko Tulokas nevertheless enters the CEO role with unusually deep company specific experience. More than 20 years at Konecranes means Marko Tulokas has experienced different economic cycles, worked across several parts of the organization and developed knowledge of both the equipment and service businesses. This reduces the learning curve normally associated with a new CEO and provides continuity as Konecranes moves from improving profitability toward sustaining those improvements while pursuing further profitable growth. Management incentives also provide some alignment with shareholders. Marko Tulokas participates in Konecranes’ performance based incentive programs, which incorporate measures related to profitability and growth. Marko Tulokas also owned 71,277 Konecranes shares at the end of 2025 after adjusting for the 2026 share split.
The Numbers
The first number we will look into is the return on invested capital, also known as ROIC. We want to see a 10-year history, with all numbers exceeding 10% in each year. Konecranes has historically struggled to meet this threshold. ROIC was 5,9% in both 2016 and 2017 and remained below 10% through 2022. It reached a low of 5,2% in 2019 before gradually improving to 6,4% in 2020, 7,5% in 2021 and 7,3% in 2022. The development has changed considerably over the past three years. ROIC increased to 11,9% in 2023, 14,5% in 2024 and 15,9% in 2025. Konecranes has therefore exceeded our 10% requirement for three consecutive years, with ROIC increasing in each of those years. The main reason for the improvement is that Konecranes has become considerably more profitable without requiring a similar increase in the capital invested in the business. This can be seen particularly clearly in the development of the company’s operating margins. Konecranes’ comparable EBITA margin increased from 9,5% in 2022 to 11,4% in 2023, 13,1% in 2024 and a record 14,0% in 2025. Sales also increased during this period, but the improvement in operating profit was considerably greater. Several factors have contributed to this margin improvement. Pricing has been important, particularly following the inflation and supply chain pressures experienced earlier in the decade. Konecranes was able to increase prices to compensate for higher costs, while higher sales volumes allowed the company to spread its fixed costs across a larger revenue base. The normalization of supply chains also helped Konecranes convert its large order book into sales more efficiently after the disruptions experienced in previous years. Operational improvements have been another important contributor. Konecranes has spent several years simplifying its business, improving productivity and making its equipment operations more efficient. The company has focused on operational excellence, better sales execution, product platform harmonization and simplifying its operating model. Importantly, the improvement has been broad based rather than depending on a single part of the company. Profitability has improved across Industrial Service, Industrial Equipment and Port Solutions. The growing importance and profitability of the service business also supports higher returns on capital. Industrial Service is considerably more profitable than the equipment businesses and does not require the same level of manufacturing assets to generate additional sales. Konecranes can grow Service partly by increasing the number of cranes covered by service agreements and selling more maintenance, spare parts and modernizations through its existing service network. As this business grows, it can therefore improve the overall economics of Konecranes without requiring capital to increase at the same rate as earnings. Looking ahead, there are reasons to believe that ROIC can remain above its historical levels, although I would not expect it to continue increasing every year. The most important reason is that Konecranes itself believes much of the improvement in profitability is sustainable. After already achieving substantial margin expansion, the company increased its long term profitability ambitions. Konecranes now targets a comparable EBITA margin of 13% to 16%, with Industrial Service targeting 21% to 25%, Industrial Equipment 8% to 11% and Port Solutions 9% to 11%.
The next numbers are the book value + dividend. In my old format this was known as the equity growth rate. It was the most important of the four growth rates I used to use in my analyses, which is why I will continue to use it moving forward. As you are used to see the numbers in percentage, I have decided to share both the numbers and the percentage growth year over year. To put it simply, equity is the part of the company that belongs to its shareholders – like the portion of a house you truly own after paying off part of the mortgage. Growing equity over time means the company is becoming more valuable for its owners. So, when we track book value plus dividends, we’re essentially looking at how much value is being built for shareholders year after year. Konecranes’ equity development has been positive over the past decade, although there have been a few years of decline. Book value plus dividends increased from 446 in 2016 to 2.087 in 2025. It declined by 2,2% in 2016 and 2,9% in 2019, while increasing in every other year. The unusually large increase of 186,8% in 2017 stands out, but the more important development is what has happened in recent years. Equity growth accelerated from 5,3% in 2022 to 11,3% in 2023, 16,5% in 2024 and 12,3% in 2025. Hence, Konecranes has not only grown equity over the longer term but has recently been building shareholder value at a considerably faster rate. One reason for the large increase in 2017 was the acquisition of Terex’s Material Handling & Port Solutions business. This was a transformative transaction that significantly increased the size of Konecranes and changed its balance sheet. It added businesses and assets including Demag, Gottwald and Noell and expanded Konecranes’ global installed base. This means the 186,8% increase should not be interpreted as normal organic equity growth and is unlikely to be representative of what shareholders should expect in an ordinary year. Beyond this acquisition effect, the main reason equity has generally increased is that Konecranes has remained profitable and retained part of its earnings in the business. A company can use its profits in several ways, including reinvesting them, making acquisitions, reducing debt or distributing them to shareholders. Konecranes has paid dividends throughout the period but has generally retained enough of its earnings to gradually increase shareholders’ equity as well. This has become particularly visible since 2022 because Konecranes’ profitability has improved substantially. Net profit increased from EUR 138,5 million in 2022 to EUR 275,6 million in 2023, EUR 368,4 million in 2024 and EUR 399,8 million in 2025. As profits have increased, Konecranes has been able to distribute dividends while still retaining a meaningful amount of earnings inside the company. This has supported the stronger equity growth seen during the past three years. The improvement is also visible in equity per share. Equity per share increased from EUR 18,10 in 2022 to EUR 20,14 in 2023, EUR 23,45 in 2024 and EUR 26,35 in 2025 before adjusting for the subsequent share split. This is particularly encouraging because it shows that the increase in total equity has also translated into more equity attributable to each share rather than simply reflecting an increase in the number of shares outstanding. Higher operating profitability has been the most important underlying driver. Konecranes has improved profitability across all three Business Areas through better pricing, cost management, operational efficiency and stronger execution. The comparable EBITA margin increased from 9,5% in 2022 to 11,4% in 2023, 13,1% in 2024 and 14,0% in 2025. Generating substantially more profit from roughly the same business provides Konecranes with more earnings that can either be returned to shareholders or retained to strengthen equity. Looking ahead, there are reasons to believe that equity can continue growing over the longer term, although growth is unlikely to reach double digit percentages every year. The most important factor will be whether Konecranes can maintain its recently improved profitability. The company is targeting a comparable EBITA margin of 13% to 16%, which suggests that management expects profitability to remain considerably above the levels seen during much of the previous decade. Konecranes also enters this period with a strong balance sheet. This gives the company several ways to create additional shareholder value. Profits can be reinvested into the existing businesses, used for acquisitions or distributed through dividends. Konecranes has historically used acquisitions to complement organic growth, and its strong financial position gives management room to pursue suitable opportunities without immediately putting significant pressure on the balance sheet. However, investors should not expect the recent growth rates to continue in a straight line. Konecranes operates in cyclical markets, and weaker industrial investment or lower demand from ports could reduce earnings in some years. Large acquisitions can also materially change equity, while dividends and other capital allocation decisions influence how much profit remains on the balance sheet.
Finally, we will analyze the free cash flow. Free cash flow, in short, refers to the cash that a company generates after covering its operating expenses and capital expenditures. I use levered free cash flow margin because I believe that margins provide a better understanding of the numbers. Free cash flow yield refers to the amount of free cash flow per share that a company is expected to generate in relation to its market value per share. Konecranes’ free cash flow has been volatile over the past decade. Free cash flow increased from EUR 82 million in 2016 to EUR 221 million in 2017 before declining to EUR 71 million in 2018. It subsequently recovered to EUR 363 million in 2020 but fell again over the following two years, reaching just EUR 22 million in 2022. Since then, the development has improved significantly. Free cash flow increased to EUR 505 million in 2023, remained strong at EUR 422 million in 2024 and reached a record EUR 520 million in 2025. The levered free cash flow margin shows the same volatility, ranging from just 0,7% in 2022 to 12,7% in 2023 and 12,4% in 2025. One reason for these large fluctuations is the nature of Konecranes’ business. The company manufactures equipment and delivers large projects, particularly within Port Solutions. The timing of when customers pay Konecranes and when Konecranes needs to pay suppliers, purchase materials and build equipment can therefore have a significant impact on how much cash the company generates in an individual year. Customer advance payments are particularly important. For some large projects, Konecranes receives part of the payment from the customer before the equipment is delivered. This can make cash generation particularly strong during one period, while the company may then spend some of that cash as the equipment is manufactured and delivered. Free cash flow can therefore move considerably from year to year even when the underlying business has not changed nearly as much. This helps explain some of the weakness in 2022 and the significant improvement that followed. Supply chain problems meant that Konecranes had to hold more materials and unfinished equipment while waiting for components and completing customer orders. This tied up cash in the business. As supply chains normalized and Konecranes was able to complete and deliver more of these orders, some of this cash was released again, contributing to the large increase in free cash flow in 2023. However, the strong cash generation since 2023 is not simply the result of the timing of customer and supplier payments. Konecranes has also become considerably more profitable. As discussed earlier, the comparable EBITA margin increased from 9,5% in 2022 to 11,4% in 2023, 13,1% in 2024 and 14,0% in 2025. Higher profitability means Konecranes generates more profit from each euro of sales, which should ultimately also result in more cash being generated by the business. The record free cash flow in 2025 benefited from both higher profitability and favorable timing of payments. Konecranes collected cash from customers efficiently while also benefiting from advance payments related to customer projects. At the same time, investments in factories, equipment and other long term assets remained relatively modest compared with the amount of cash generated by the business. Together, these factors helped Konecranes reach record free cash flow. I would nevertheless be careful about assuming that free cash flow will continue increasing from the 2025 record every year. Management has explained that the amount of cash tied up in inventories and customer projects was particularly favorable at the end of 2025 and was probably better than what should be considered normal over the longer term. The timing of large customer projects and payments can also move in either direction from one year to another. This means free cash flow could decline in a future year even if Konecranes continues to perform well. For example, the company could need to purchase more materials before receiving payments from customers, or several large projects could reach stages where Konecranes needs to spend cash that it received earlier. Such a decline would not necessarily mean that the underlying business had become weaker. The more important question is therefore whether Konecranes can generate stronger free cash flow over the longer term than it has historically. There are reasons to believe it can. The most important is the improvement in profitability. Konecranes expects its comparable EBITA margin in 2026 to remain approximately at the 2025 level, while its longer term target is between 13% and 16%. If the company can sustain profitability around these levels, it should generate considerably more cash than when margins were much lower. The growing service business should also support cash generation over time. Industrial Service generates revenue from maintenance, repairs, spare parts and modernizations and is considerably more profitable than the equipment businesses. Growth in this part of Konecranes should therefore provide a strong source of cash while also making the company somewhat less dependent on customers purchasing new equipment. Another positive factor is that Konecranes does not need to spend an unusually large amount on factories and equipment to maintain its business. The company still needs to invest in manufacturing equipment, facilities, technology, automation and product development, but these investments have generally been relatively modest compared with the cash generated by the business. This allows a meaningful portion of the cash generated from operations to remain as free cash flow. Free cash flow is nevertheless likely to remain volatile. Large equipment and port projects can cause substantial differences in the timing of cash coming into and leaving the company. I would therefore focus more on Konecranes’ ability to generate strong free cash flow over several years than on whether free cash flow increases every single year. Konecranes has several uses for the cash it generates. Its first priority is reinvesting in its existing operations to support growth and improve productivity. This includes investments in manufacturing, technology, digitalization and automation that can make the company more efficient and strengthen its competitive position. Acquisitions are another important use of cash. Konecranes has a long history of acquisitions and intends acquisitions to remain part of its growth strategy. Management is primarily interested in smaller acquisitions and businesses that can strengthen Konecranes’ existing operations or expand into closely related areas. The company has indicated that it continuously evaluates acquisition opportunities of different sizes. Dividends are also an important part of how Konecranes uses its cash. The company aims to pay a stable to increasing dividend per share over the economic cycle. Strong cash generation allowed Konecranes to increase its dividend from EUR 0,55 per share for 2024 to EUR 0,75 per share for 2025, adjusted for the 2026 share split. Management has also emphasized that this higher dividend still leaves the company with sufficient financial flexibility to pursue acquisitions. Konecranes can also use excess cash for share buybacks or additional dividends when management believes there is more cash available than the company needs for investments, acquisitions and the regular dividend. These appear to be secondary priorities, with investments in the existing business, acquisitions and regular dividends coming first. The free cash flow yield suggests that while Konecranes does not trade at as attractive a valuation as it has in some previous years, it still appears relatively attractively valued. However, we will revisit the valuation later in the analysis.
Debt
Another important aspect to consider is debt. It is crucial to assess whether a business has a manageable level of debt that can be repaid within a three-year period, calculated by dividing total long-term debt by earnings. Upon analyzing Konecranes’ financials, the company currently has 0,5 years of earnings in debt, which is comfortably below the three-year threshold. Konecranes therefore has a very manageable level of debt relative to the profits it generates. The financial position has also strengthened considerably in recent years, helped by the company’s strong profitability and cash generation. Rather than needing to use cash to support a heavily indebted balance sheet, Konecranes has been able to reduce its financial obligations while continuing to invest in the business and pay dividends. This became particularly clear in 2025. Konecranes generated record free cash flow of EUR 520 million and ended the year with more cash than debt. Management stated that the company had more than EUR 160 million in net cash at the end of the year. In simple terms, this means that Konecranes had enough cash to repay all of its interest bearing debt and would still have had more than EUR 160 million remaining. This strong financial position provides Konecranes with considerable flexibility. The company can continue investing in its existing operations, increase dividends and pursue acquisitions without currently being dependent on taking on significant additional debt. This is particularly useful for Konecranes because acquisitions have historically been an important part of the company’s growth strategy. Konecranes could choose to increase debt in the future, particularly if it makes a larger acquisition, so the current level should not necessarily be expected to remain this low permanently. However, starting from such a strong financial position gives the company substantial room to do so without immediately putting the balance sheet under pressure. Overall, debt does not appear to be a concern for Konecranes at present. With just 0,5 years of earnings in long-term debt, strong free cash flow and more cash than debt at the end of 2025, the company comfortably meets our debt requirement.
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Risks
Macroeconomic factors are a risk for Konecranes because demand for many of the company’s products depends on the willingness of industrial companies and ports to make large investments. Customers do not need to purchase a new crane every year, and investments in new lifting equipment can often be postponed when the economic outlook becomes uncertain. This means that weaker economic growth, lower industrial activity or declining business confidence can result in customers delaying new projects and equipment purchases. This is particularly relevant for Industrial Equipment. Demand for industrial cranes is closely connected to industrial production, factory investments and how much of customers’ existing production capacity is being used. When factories are operating close to full capacity, companies have a greater reason to expand production and invest in new equipment. When demand for their own products weakens and they have unused production capacity, there is less reason to purchase additional cranes. Industrial Equipment can therefore experience meaningful changes in demand throughout an economic cycle. Konecranes has recently seen some of this caution among customers. Management has described an environment where industrial activity in Europe and the United States has been relatively flat and customers have become more hesitant when making investment decisions. In the United States, the previously very strong pipeline of potential Industrial Equipment orders has also flattened somewhat. This does not necessarily mean that projects have disappeared, but uncertainty can cause customers to take longer before committing to an investment. Geopolitical uncertainty can make this problem worse. Trade tensions, tariffs, conflicts and changes in government policies can make it more difficult for companies to predict future demand, production costs and where products should be manufactured. A customer considering building a new factory or expanding an existing facility may therefore postpone the decision until there is greater clarity. Konecranes has specifically observed that uncertainty surrounding geopolitics and trade policies has made some customers more cautious and has made the timing of orders more difficult to predict. The conflicts in the Middle East provide another example. Konecranes itself has relatively limited direct exposure to the region, with around 180 employees across four countries, representing approximately 1% of its workforce. The larger risk is therefore not necessarily the company’s direct operations in the Middle East. Instead, conflicts can increase economic and geopolitical uncertainty and make customers in other parts of the world more cautious about committing to large investments. Management has already observed increased hesitation among some customers as geopolitical uncertainty has remained high. Port Solutions is exposed to macroeconomic conditions in a different way. Ports invest in cranes and container handling equipment based partly on expectations for global trade and container volumes. Large port projects can also represent significant investments that customers may be willing to postpone. A slowdown in global trade, weaker container growth or greater uncertainty about future trade routes could therefore cause ports and terminal operators to delay investments. Industrial Service is also exposed to economic conditions, although generally less than the equipment businesses. Demand for maintenance depends partly on how much customers use their cranes and other equipment. If industrial production declines, factories may operate at lower capacity and use their equipment less frequently. This can reduce the immediate need for certain maintenance activities, repairs and spare parts. Management has also observed that customers can postpone planned service work during periods of uncertainty. This is important because an inspection can lead to additional maintenance, repairs and spare part sales. If customers postpone the initial inspection, these additional sales can also be delayed. A prolonged economic downturn could therefore affect not only demand for new equipment but also parts of Konecranes’ service business. A severe economic downturn could also put pressure on Konecranes’ profitability. Manufacturing businesses have costs that cannot immediately be reduced when sales decline. If Konecranes sells fewer cranes, these costs are spread across fewer products, which can reduce profit margins. Lower demand could also increase competition for the projects that remain, making it more difficult to maintain prices.
Competition is a risk for Konecranes because the company operates in markets where customers can choose between several global, regional and local suppliers of cranes, lifting equipment and port equipment. Competition differs between Konecranes’ businesses, but it can affect both the number of orders the company wins and the prices it can charge. If competitors offer similar equipment at lower prices, Konecranes may have to reduce its prices to remain competitive, which could put pressure on profit margins. Competition is particularly important in Industrial Equipment, where Konecranes competes with global manufacturers as well as numerous smaller regional companies. Competitors include companies such as Columbus McKinnon, Kito, ABUS, GH and OMIS, while Chinese manufacturers such as Weihua have also developed significant positions in industrial cranes. Smaller local manufacturers can be particularly competitive on simpler equipment where customers may place greater emphasis on the purchase price than on technology, service capabilities or the total cost of owning the equipment. Chinese competition has become an increasingly important consideration. Management has repeatedly highlighted continued competitive pressure from Chinese manufacturers and has acknowledged that Chinese companies are expanding their presence outside their domestic market. This is not a new development, but management continues to monitor it closely and has described Chinese competition as an important competitive pressure. One reason this pressure could increase is the development of the Chinese domestic market. If demand in China is weak or Chinese manufacturers have more production capacity than they need for their home market, they have a greater incentive to sell equipment internationally. Restrictions on Chinese companies selling into certain countries can further concentrate this competition in the markets that remain accessible. Management has explained that this has changed the competitive balance to some extent in some markets, although the development differs significantly between Konecranes’ different products and regions. Price is one of the most important risks from this competition. Chinese manufacturers can sometimes offer equipment at lower prices than Western competitors. This can be particularly challenging for standard cranes and other products where there may be fewer obvious differences between competing products. If customers view two cranes as providing similar functionality, a significantly lower purchase price can become an important factor in the decision. Konecranes then faces a difficult choice. The company can maintain its prices and risk losing orders to lower priced competitors, or it can reduce prices to remain competitive and accept lower profit on each crane sold. If price competition becomes significantly more intense, it could therefore negatively affect either Konecranes’ market share, its profit margins or both. The risk is particularly relevant for Port Solutions. Konecranes competes for large port and container terminal projects against some of the world’s largest crane manufacturers, including Chinese companies such as ZPMC and Sany as well as Western competitors such as Liebherr and Kalmar. Konecranes currently holds strong market positions and ranks among the top three suppliers across its different port and container terminal product categories, but large individual projects can still be highly competitive. This matters because port cranes can represent very large contracts. Losing a major project therefore does not simply mean losing the initial equipment sale. A crane can remain in operation for decades and require spare parts, maintenance, repairs, upgrades and modernizations throughout its lifetime. Winning the original equipment order can therefore create opportunities for additional revenue for many years. Conversely, when a competitor wins the equipment order, Konecranes may also lose some of these future opportunities. Technology is another important area of competition. Konecranes increasingly differentiates its products through automation, electrification, digital monitoring, safety features and its own lifting technology. However, competitors are investing in many of the same areas. Chinese manufacturers are not competing solely through lower prices and are continuing to develop their technology and expand their product offerings. Konecranes therefore needs to continue investing in research and development simply to maintain its current technological position. This creates a risk because technological advantages are not necessarily permanent. Features that differentiate Konecranes today can eventually become available from competitors. If another manufacturer develops better automation, more efficient equipment or similar technology at a lower price, Konecranes could lose some of the advantages that currently allow it to charge higher prices. Industrial Service itself is generally less exposed to global competition than the equipment businesses. Konecranes considers its global service network unique and sees only limited global or regional competition in industrial crane maintenance. However, Konecranes still competes with many smaller local service companies. These businesses can sometimes offer lower prices because they have lower costs and focus on a limited geographic area. Konecranes has historically chosen not to compete aggressively with the cheapest service providers, instead focusing on customers willing to pay for safety, productivity, reliability and a broader service offering. This creates another potential risk if customers become more price sensitive. During weaker economic periods, companies may focus more heavily on reducing maintenance expenses and choose cheaper local providers rather than Konecranes’ more comprehensive offering. Konecranes therefore needs to demonstrate that the higher price of its service is justified by greater reliability, less downtime and better productivity.
Rising input costs are a risk for Konecranes because manufacturing and delivering cranes requires significant amounts of steel, components, transportation, energy and other externally purchased products and services. Konecranes manufactures some important components itself, but purchases most of the components used in its products from external suppliers. This means that increases in the cost of materials, components or transportation can negatively affect profitability if the company cannot fully pass these higher costs on to customers. Steel is particularly important because cranes are large steel intensive products. Changes in steel prices can therefore have a noticeable effect on the cost of manufacturing equipment. Steel prices were relatively stable during 2025 and even declined slightly toward the beginning of 2026, but management expects some increase during 2026. A larger increase than expected could raise the cost of producing cranes and other equipment. Konecranes attempts to reduce this risk by adjusting the prices of its products when steel prices change. Management has explained that steel represents a sufficiently large part of the cost of many products that changes in steel costs are built into the company’s pricing systems. This means that when steel becomes more expensive, Konecranes generally intends to increase its selling prices accordingly. However, this does not completely protect Konecranes. The main problem is timing. Konecranes can receive an order months before the equipment is manufactured and delivered, particularly for larger projects. The selling price may therefore already have been agreed with the customer before Konecranes experiences an unexpected increase in its own costs. It can be difficult to go back to the customer and increase the price of an order that has already been agreed. This creates a particular risk when costs increase suddenly. If steel, transportation or other costs gradually increase, Konecranes has more opportunity to adjust the prices of new orders. If costs rise rapidly after an order has already been agreed, the company may have to absorb some of the additional cost itself. The profit generated from that particular order would then be lower than originally expected. Freight is another important cost for Konecranes. The company sells large equipment around the world, including very large port cranes and other products that can be expensive to transport. Management has indicated that freight represents a considerably larger cost for Konecranes than fuel. Rising shipping and transportation prices can therefore have a meaningful impact on the cost of delivering equipment to customers. Konecranes has some protection against higher transportation costs on certain project deliveries because transportation prices may already have been agreed when the transportation is ordered. However, this protection does not apply to all freight costs. If transportation prices suddenly increase, Konecranes may initially have to absorb some of the additional expense before it can increase prices for new customer orders. Fuel prices create a similar risk. Konecranes is not generally protected against changes in fuel prices, although the company can use fuel surcharges in some situations. Higher fuel prices can increase transportation costs and also affect the cost of Konecranes’ large service organization, where thousands of technicians travel to customer locations to inspect, maintain and repair equipment. Energy is another input cost, although Konecranes has greater protection in this area. The company has agreements in place that reduce its exposure to sudden changes in electricity and gas prices. This can provide temporary protection when energy markets become volatile. However, such arrangements do not permanently remove the risk of higher energy costs, particularly if prices remain elevated for a prolonged period. Konecranes is also exposed to increases in the prices of components and services purchased from other companies. Most of the components used in its products come from external suppliers, while the company also relies on outside companies for activities such as transportation and certain parts of production. If these suppliers face higher costs themselves, they may eventually increase the prices they charge Konecranes. Government policies can also influence Konecranes’ input costs. Management has specifically mentioned the European Union’s Carbon Border Adjustment Mechanism as something that could contribute to higher steel costs over the longer term. Management does not currently expect this to have a significant immediate effect on Konecranes, but regulations that increase the cost of producing or importing carbon intensive materials such as steel could eventually result in higher purchasing costs.
Reasons to invest
Favorable megatrends is a reason to invest in Konecranes because several long term changes in manufacturing, logistics and global trade are increasing the need for more automated, efficient and environmentally friendly material handling. Konecranes has identified sustainability, digitalization and automation, and changes in global trade and manufacturing as some of the most important trends shaping its markets. Management believes these trends provide opportunities for Konecranes to grow faster than the overall market. Automation is one of the most important opportunities. Cranes have traditionally depended heavily on human operators, but customers are increasingly looking for equipment that can perform more tasks automatically. This is particularly relevant in ports, warehouses and industrial facilities where large amounts of material need to be moved continuously and where improving productivity can have a significant financial impact. Labor shortages strengthen the case for automation. Many industrial companies and ports are finding it increasingly difficult or expensive to recruit enough skilled workers. Automated cranes and material handling systems can reduce the number of people required to perform repetitive tasks while allowing existing employees to focus on activities that are more difficult to automate. This means that automation can become attractive even when customers are not expanding their overall production capacity. Safety provides another reason for customers to automate. Moving containers, steel, machinery and other heavy materials can expose employees to potentially dangerous situations. Greater automation can remove people from some of these environments and reduce the amount of manual interaction required with heavy equipment. Konecranes can therefore sell automation not only as a way to reduce costs but also as a way for customers to improve workplace safety. Konecranes is well positioned for this development because automation is already incorporated across much of its product portfolio. The company offers different levels of automation, ranging from technologies that assist crane operators to fully automated material handling systems. This allows customers to introduce automation gradually rather than replacing their entire operation at once. Ports provide one of the clearest opportunities. Container terminals need to move enormous numbers of containers between ships, storage areas, trucks and trains. Automating these movements can improve predictability, increase productivity and reduce the need for employees to work in dangerous areas. Konecranes already offers automated yard cranes, automated guided vehicles and software used to coordinate container movements, giving the company exposure to increasing automation throughout the terminal. Digitalization is closely connected to this trend. Modern cranes are increasingly becoming connected machines that continuously generate information about how they are being used. Konecranes has tens of thousands of connected cranes around the world and has developed digital technologies that allow customers to monitor equipment and understand how efficiently it is operating. Electrification is another important long term driver. Industrial companies and ports are under increasing pressure to reduce emissions, while many customers have established their own climate targets. This creates demand for equipment that uses less energy and replaces diesel powered machinery with electric alternatives. The opportunity is particularly relevant in ports, where container handling traditionally involves large amounts of heavy equipment operating for many hours each day. Electrifying this equipment can reduce fuel consumption and emissions while potentially lowering operating costs. Konecranes has therefore been expanding electric alternatives across its port equipment portfolio, including electric lift trucks, mobile harbor cranes and other container handling equipment. Sustainability goes beyond electrification. Customers increasingly want equipment that uses less energy, lasts longer and can be upgraded rather than completely replaced. Konecranes designs cranes with long operating lives and offers modernization solutions that allow older equipment to receive new controls, automation and electrical systems. This can help customers improve productivity and reduce environmental impact without necessarily replacing an entire crane. Stricter environmental requirements can further accelerate this development. Governments, ports and large industrial companies are increasingly setting targets for reducing emissions. Equipment manufacturers that can help customers meet these requirements should therefore benefit as older and less efficient equipment is gradually replaced or upgraded. Konecranes’ position across both industrial lifting and port equipment gives it exposure to this transition in several different end markets. Another important megatrend is the changing structure of global manufacturing. For decades, companies increasingly concentrated production in countries where manufacturing costs were lowest and transported products over long distances. Geopolitical tensions, tariffs and the disruptions experienced in recent years have encouraged more companies to reconsider this model. Some businesses are moving production closer to their customers or spreading manufacturing across more countries to reduce dependence on a single region. This can create demand for Konecranes because moving or expanding manufacturing capacity requires physical infrastructure. A new factory producing steel, vehicles, machinery or other industrial products may require cranes and material handling equipment regardless of whether total global production increases. Changing where products are manufactured can therefore create equipment demand simply because new production facilities need to be built and equipped. Changing manufacturing locations can also reshape global trade routes. If companies increasingly source products from countries outside China or move production closer to end markets, goods may travel through different ports and logistics networks. Some ports may need additional capacity while entirely new terminals or transportation connections may become necessary. Konecranes believes this regionalization of trade could significantly increase the importance of intermodal transportation, where containers are transferred between ships, trains and trucks. Management expects the intermodal market to expand substantially toward 2030 as more trade takes place within regions rather than exclusively through long distance routes. Konecranes already supplies equipment used at both ports and inland intermodal terminals, giving the company exposure to this development.
Service is a reason to invest in Konecranes because the company has built a global service business around maintaining, repairing and modernizing cranes throughout their long operating lives. Service operations account for around 40% of Konecranes’ sales when service activities within Port Solutions are included, providing the company with a large source of revenue beyond simply selling new equipment. Konecranes wants to increase the importance of service further, which could support both growth and profitability while making the overall business less dependent on customers continuously investing in new cranes. The attractiveness of Industrial Service can be seen in its profitability. In 2025, Industrial Service generated a comparable EBITA margin of 21,8%, compared with 11,7% for Industrial Equipment and 9,2% for Port Solutions. This means that additional service sales can have a particularly attractive effect on Konecranes’ overall profitability. An important part of the growth opportunity is that Konecranes is not limited to servicing cranes that it originally manufactured. The company services equipment from virtually all manufacturers, and around half of the equipment covered by its service agreements is from other manufacturers. This significantly increases the potential market because Konecranes can build a customer relationship even when another company originally sold the crane. This also creates an interesting opportunity because a large proportion of industrial cranes around the world are still maintained by their owners rather than professional service companies. Management estimates that roughly two thirds of the global industrial crane fleet is still serviced internally by customers. If more companies decide to outsource maintenance, Konecranes can potentially grow without needing the overall number of cranes in operation to increase significantly. There are several reasons why customers may increasingly choose to outsource this work. Maintaining industrial cranes requires trained technicians, knowledge of safety requirements and increasingly specialized knowledge of electronics, software and automation. As cranes become more technologically advanced, maintaining them can become more difficult for customers to handle internally. At the same time, labor shortages and aging workforces can make it harder for industrial companies to maintain their own teams of specialized crane technicians. Konecranes’ scale gives it an advantage in capturing this opportunity. The company has thousands of service technicians operating across a global branch network. A customer with factories in several countries can therefore use Konecranes across much of its operations rather than relying on different local maintenance providers at every location. The same network also allows Konecranes to respond to breakdowns, provide spare parts and perform inspections close to where customers operate. The economics of this network can improve as it becomes denser. If Konecranes adds more customers and cranes in an area where it already has technicians, those technicians can spend more time working on customer equipment and less time travelling between locations. The company can therefore generate additional sales without increasing its costs at the same rate. Management describes Service as a volume business, where higher sales generally also support higher profitability. The most important driver of future Service growth is what Konecranes calls its agreement base. These are cranes and other equipment covered by ongoing service agreements with customers. Management considers the agreement base the core growth engine of Industrial Service because each additional agreement provides Konecranes with an ongoing relationship with the customer and creates opportunities for inspections, maintenance, spare parts, repairs and modernizations over time. The agreement base continued to grow even during the relatively difficult demand environment in 2025. Management said that it increased by around 4,5% during the year despite customers generally being cautious and using their cranes less frequently. This is encouraging because it suggests that Konecranes can continue adding equipment to its service network even when industrial conditions are not particularly strong. Konecranes has a clear plan for expanding this agreement base. The first part is adding new customers and equipment by increasing its coverage and using different approaches depending on the type of customer. The second is expanding existing agreements by offering customers additional services. The third is improving the customer experience so that more agreements are renewed. Finally, Konecranes wants to improve the productivity of its technicians so that it can deliver more service work efficiently. Expanding existing customer relationships could be particularly valuable. A service agreement does not necessarily remain unchanged throughout the lifetime of a crane. Konecranes can begin with inspections and basic maintenance and later add more comprehensive maintenance, spare parts, repairs, remote monitoring and modernizations. This means that growth can come both from adding more cranes to the agreement base and from generating more revenue from each crane already covered. Modernization represents another attractive opportunity. Industrial cranes can remain operational for decades, but their controls, electrical systems, hoists and safety technology can become outdated long before the physical crane structure reaches the end of its useful life. Customers can therefore modernize existing equipment rather than replacing the entire crane. The modernization of a crane at the Lochay Power Station in Scotland provides an example. Konecranes upgraded a crane originally installed in 1958 by replacing the trolley and control systems and installing new hoists. This demonstrates how an extremely old piece of equipment can continue generating revenue opportunities decades after it was originally installed. Modernization should become increasingly relevant as automation, digitalization and safety requirements develop. A structurally sound crane may still need new controls, sensors or electrical systems to meet modern requirements. This provides Konecranes with an opportunity to benefit from technological change even when customers decide not to purchase completely new equipment.
Acquisitions is a reason to invest in Konecranes because acquisitions have been an important part of the company’s growth for decades and provide an additional source of growth alongside its existing businesses. Konecranes has acquired nearly 100 companies since beginning its international expansion in the 1970s, giving the company considerable experience in identifying, acquiring and integrating businesses. Acquisitions have helped transform Konecranes from the crane division of a Finnish industrial company into one of the world’s leading suppliers of industrial cranes, port equipment and material handling solutions. The long history is important because Konecranes is not introducing a new acquisition strategy. The company has been using acquisitions for more than 40 years and has completed transactions across North America, Europe and Asia. These acquisitions have served several purposes. Some have expanded Konecranes into new countries, some have strengthened its position in existing markets, while others have added new products, technologies or customer relationships. Konecranes’ first international acquisition was Wisbech Refsum in Norway in 1973. The company subsequently expanded further through transactions such as R&M Materials Handling in the United States in 1983 and Verlinde in France in 1986. These acquisitions helped establish Konecranes outside Finland long before the crane business became an independent company in 1994. The most important acquisition in Konecranes’ history was the acquisition of Terex Corporation’s Material Handling & Port Solutions business in 2017. The transaction significantly increased the size and international reach of Konecranes and brought important businesses and brands such as Demag and Gottwald into the group. It strengthened Konecranes across both industrial lifting equipment and port equipment and substantially expanded the company’s global presence. The Terex transaction also demonstrates that Konecranes has experience integrating very large businesses. Konecranes initially targeted EUR 140 million in annual cost savings from the combination and achieved this target between 2017 and 2019. These savings came from combining overlapping operations, purchasing, manufacturing and administrative activities. This helped improve the economics of the transaction beyond simply adding the acquired revenue. The acquisition also significantly increased Konecranes’ installed equipment base. This is particularly valuable because selling a crane can create a relationship with the customer that lasts for decades. The acquired Demag equipment population therefore provided Konecranes with a much larger base of equipment from which it could generate future spare parts, modernization and other lifecycle revenue. Acquisitions can consequently create value beyond the revenue and profit generated by the acquired company at the time of purchase. Konecranes has continued making more targeted transactions since the Terex acquisition. In 2020, the company acquired the remaining 50% of MHE Demag that it did not already own. This strengthened its position across Southeast Asia, including countries where industrialization and manufacturing investment provide opportunities for long term growth. The acquisition of Whiting Corporation’s industrial and nuclear crane businesses in 2023 provides another example of how Konecranes can use acquisitions to strengthen its position in attractive specialized markets. Whiting had a strong position in North American industrial cranes and particularly in applications such as nuclear power, where lifting equipment needs to meet demanding safety and reliability requirements. The transaction therefore added capabilities and customer relationships in an area where technical expertise can be particularly valuable. Konecranes expanded its port operations further through the acquisition of Peinemann Port Services and Peinemann Container Handling in Rotterdam in 2024. Rotterdam is one of the world’s most important port locations, making the acquisition strategically relevant for Konecranes’ position in European container handling. The planned acquisition of a 70% interest in Mitsubishi Electric Corporation’s wire rope hoist and gear motor business in Japan provides a more recent example of how Konecranes can use acquisitions to enter markets where its position has historically been smaller. Management has described Japan as the third largest market in the world for cranes, crane services and wire rope hoists, making it strategically important for the company’s longer term growth. This transaction is particularly interesting because entering a mature market such as Japan organically can be difficult. Customers may already have long relationships with domestic suppliers, while establishing manufacturing, distribution and customer relationships from the beginning can require significant time and investment. Acquiring an established operation can give Konecranes immediate access to products, employees, customers and local knowledge that could otherwise take many years to develop. This illustrates one of the broader advantages of acquisitions for Konecranes. The crane industry remains fragmented in many parts of the world, particularly at the regional level. Numerous smaller companies manufacture equipment or have strong positions in particular countries and customer segments. Konecranes can use acquisitions to gain access to these markets rather than having to build every position organically. Acquisitions can also strengthen Konecranes’ product portfolio. The company has historically acquired businesses specializing in areas such as chain hoists, process cranes, explosion proof equipment, lift trucks, straddle carriers, container handling software and nuclear cranes. Konecranes can then combine these products and technologies with its existing engineering capabilities, global sales organization and customer relationships. This can make an acquired business more valuable as part of Konecranes than it was independently. A smaller crane manufacturer may have attractive products but limited international distribution. Once it becomes part of Konecranes, those products can potentially be offered to customers across a much larger geographic network. At the same time, Konecranes can introduce its own products and technologies to the acquired company’s existing customers.
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Valuation
Now it is time to calculate the share price. I perform three different calculations that I learned at a Phil Town seminar. If you want to make the calculations yourself for this or other stocks, you can do so through the tools page on my website, where you have access to all three calculators for free.
The first is called the Margin of Safety price, which is calculated based on earnings per share (EPS), estimated future EPS growth, and estimated future price-to-earnings ratio (P/E). The minimum acceptable rate of return is 15%. I chose to use an EPS of 1,68, which is from 2025. I have selected a projected future EPS growth rate of 8%. Finbox expects EPS to grow by 8,3% in the next five years. Additionally, I have selected a projected future P/E ratio of 16, which is twice the growth rate. This decision is based on Konecranes' historically higher price-to-earnings (P/E) ratio. Finally, our minimum acceptable rate of return has already been established at 15%. After performing the calculations, we determined the sticker price (also known as fair value or intrinsic value) to be EUR 14,34. We want to have a margin of safety of 50%, so we will divide it by 2. This means that we want to buy Konecranes at a price of EUR 7,17 (or lower, obviously) if we use the Margin of Safety price.
The second calculation is known as the Ten Cap price. The rate of return that a company owner (or stockholder) receives on the purchase price of the company essentially represents its return on investment. The minimum annual return should be at least 10%, which I calculate as follows: The operating cash flow last year was 570, and capital expenditures were 49. I attempted to analyze their annual report to calculate the percentage of capital expenditures allocated to maintenance. I couldn't find it, but as a rule of thumb, you can expect that 70% of the capital expenditures will be allocated to maintenance purposes. This means that we will use 34 in our calculations. The tax provision was 117. We have 237,6 outstanding shares. Hence, the calculation will be as follows: (570 – 34 + 117) / 237,6 x 10 = EUR 27,48 in Ten Cap price.
The final calculation is called the Payback Time price. It is a calculation based on the free cash flow per share. With Konecranes' Free Cash Flow Per Share at EUR 2.19 and a growth rate of 8%, if you want to recoup your investment in 8 years, the Payback Time price is EUR 25,16.
Conclusion
I believe Konecranes is an intriguing company with good management. It has built a moat through its global service network, technological expertise, scale, leading market positions and the combination of equipment with lifecycle services. Konecranes’ ROIC has improved significantly in recent years, increasing from 7,3% in 2022 to 11,9% in 2023, 14,5% in 2024 and 15,9% in 2025. While its long term track record remains below our preferred level, the recent improvement suggests that Konecranes is becoming considerably more efficient at generating returns on the capital invested in the business. Free cash flow has historically been volatile, but cash generation has strengthened considerably in recent years, reaching a record EUR 520 million in 2025. Free cash flow will likely continue to fluctuate due to the timing of large projects and customer payments, but higher profitability and the growing service business should support stronger cash generation over the long term. Macroeconomic factors are a risk because demand for new cranes and port equipment depends heavily on industrial investment, global trade and customer confidence. During periods of weaker economic activity or increased uncertainty, customers can postpone major equipment purchases and even some service work, which can negatively affect sales and profitability. Competition is another risk, as Konecranes faces global, regional and local competitors that can pressure both market share and pricing, particularly in Industrial Equipment and Port Solutions. Growing international competition from lower priced Chinese manufacturers could force Konecranes to either accept fewer orders or lower its prices, which could negatively affect growth and profit margins. Rising input costs also represent a risk because steel, components, freight, fuel and energy are important costs in manufacturing and delivering its equipment. While Konecranes generally aims to pass higher costs on to customers, sudden increases can temporarily pressure profit margins because prices for existing orders may already have been agreed. On the positive side, several favorable megatrends could support long term growth. Automation, digitalization, electrification, sustainability and changing global manufacturing and trade patterns are increasing demand for modern material handling solutions, and Konecranes is well positioned to benefit through its offering in automated and electric equipment for factories, ports and intermodal terminals. Service is another reason to invest because it provides highly profitable and more recurring revenue from maintaining, repairing and modernizing cranes throughout their long operating lives. With around two thirds of the global industrial crane fleet still maintained internally, Konecranes has significant room to expand its service agreement base and benefit from increasing maintenance outsourcing. Acquisitions provide another growth opportunity, with Konecranes having completed nearly 100 acquisitions over several decades. Its experience integrating acquired businesses, combined with a fragmented industry and opportunities to expand into new markets, products and technologies, should provide further acquisition opportunities over the long term. I believe there are many things to like about Konecranes, and buying shares below the Ten Cap price of EUR 27 could be a good long term investment.
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