Photo: ARNE DEDERT/ZUMA PRESS

KION Group ends FY 2023 strong

Posted on Feb 29, 2024 in Nuts & Bolts

Strong financial year 2023: KION more than doubles adjusted EBIT and margin with outstanding free cash flow

• Record level revenue of € 11.434 billion (2022: € 11.136 billion)
• Adj. EBIT more than doubled to € 790.5 million
• (2022: € 292.4 million)
• Adj. EBIT margin of 6.9 percent (2022: 2.6 percent)
• Outstanding free cash flow of € 715.2 million (2022: € -715.6 million)
• Dividend proposal of € 0.70 per share (2022: € 0.19)

KION Group significantly increased its profitability and free cash flow in 2023, closing the financial year with very good results in earnings – despite a decline in global demand for industrial trucks and supply chain solutions. The strong momentum was mainly driven by supply chain improvement measures in both segments, commercial actions in the Industrial Trucks & Services segment and project management process improvements in the Supply Chain Solutions segment.

Rob Smith, CEO KION Group AG

”In 2023, the KION Group benefited from a year of delivering on our strategy as we took further significant steps along our path to sustainable and profitable growth,“ says Rob Smith, CEO of KION GROUP AG. ”We significantly improved profitability in both our business segments and for KION. The substantial progress in our results, the commercial and operational agility measures, and the changes of our organizational and leadership setup form a strong basis for our future business success.“

At € 11.434 billion, Group revenue grew slightly by 2.7 percent (2022: € 11.136 billion) and reached a record level. Revenue development differed across both operating segments. The Industrial Trucks & Services segment grew significantly by 15.3 percent to € 8.480 billion (2022: € 7.356 billion), mainly driven by higher production levels as well as price increases implemented in the previous year. The service business also grew. Revenue in the Supply Chain Solutions segment declined by 21.3 percent to € 2.997 billion (2022: € 3.807 billion), mainly driven by subdued customer demand in the project business (Business Solutions) over the previous quarters. The increased cost of capital had a negative impact on customers’ investment decisions for the construction of new warehouse space and therefore also on investments in warehouse automation. The stable and higher-margin service business (Customer Services) grew in the reporting period.

Adjusted EBIT at Group level increased significantly and more than doubled to
€ 790.5 million (2022: € 292.4 million). The adjusted EBIT margin thus improved significantly to 6.9% (2022: 2.6 percent).

The Industrial Trucks & Services segment again achieved a double-digit adjusted EBIT margin of 10.0 percent, corresponding to an adjusted EBIT of € 848.5 million (2022: € 420.5 million). Following a loss in the previous financial year, the Supply Chain Solutions segment achieved a positive adjusted EBIT margin of
1.5 percent with an adjusted EBIT of € 44.3 million (2022: € -45.6 million).

Net income tripled to € 314.4 million (2022: € 105.8 million). Free cash flow reached a strong € 715.2 million (2022: € -715.6 million), due to overall good earnings and improved working capital management during the end of the year.

KION shareholders will benefit from the strong financial year 2023: The Executive Board and Supervisory Board of KION GROUP AG will propose a dividend of € 0.70 (2022: € 0.19) per share for the 2023 financial year at the Annual General Meeting on May 29, 2024. This corresponds to a total dividend payout of € 91.8 million. The payout ratio amounts to around 30 percent with earnings per share of € 2.33 for the 2023 financial year. It is within the targeted payout corridor of 25 percent to 40 percent.

Sustainability remains in the focus

In July 2023, the KION Group committed to the goals of the Science Based Targets initiative (SBTi) to make the measures and successes on the way to climate neutrality transparent. As of 2023, the KION Group received an MSCI ESG Rating of AAA. This is the first time that the KION Group has achieved the top score and ranks among the top 10 per cent in its industry (Construction & Farm Machinery & Heavy Trucks). As at December 22, 2023, the KION Group ranked 94th percentile in its industry (“IEQ Machinery and Electrical Equipment”) in the S&P Global Corporate Sustainability Assessment 2023. With the “A-” award in the CDP Climate Change Rating 2023, which was awarded in February 2024, the KION Group underpins its leading position in sustainability. Detailed information can be found in the Non-financial Report 2023 of KION GROUP AG, which will be published today. (https://www.kiongroup.com/en/About-us/Sustainability/)

Outlook

The KION Group predicts slight growth in the market for new industrial trucks in 2024 based on order numbers. This will be driven mainly by an anticipated upturn in the APAC and EMEA regions, whereas demand is expected to decrease in the Americas region.

The size of the supply chain solutions market, as measured by revenue, will slightly increase in 2024 according to the KION Group and backed up by research from Interact Analysis. The continuing trend toward automation and the anticipated fall in the cost of capital over the course of the year are expected to make companies more likely to invest in warehouse automation. Meanwhile, the predicted sustained demand for mobile automation is set to boost the market for supply chain solutions. The KION Group believes that the positive medium- and long-term trends in the supply chain solutions market remain intact.

For 2024, reflecting the midpoint of the performance range that has been projected, the Executive Board of KION GROUP AG expects the Group’s revenue to increase slightly and its adjusted EBIT to rise significantly compared with 2023. Return on Capital Employed (ROCE) is expected to be slightly higher than in the previous year. Free cash flow in 2024 will be in positive territory in line with the expected healthy financial performance but will be below the high free cash flow of the previous year.

In the Industrial Trucks & Services segment, a slight increase in revenue to between
€ 8.5 billion and € 9.0 billion is expected for the 2024 financial year. This is based on the good order backlog, an expected modest increase in order numbers in new business due to the anticipated market situation and a growing service volume. Adjusted EBIT for ITS is expected to improve to between € 850 million and € 950 million with a double-digit adjusted EBIT margin. This is due to the expected increase in sales and positive effects from price increases, while wage costs are expected to rise moderately.

In the Supply Chain Solutions segment, the focus remains on strengthening operational resilience. Due to the lower order backlog at the end of 2023, which also includes a higher proportion of long-term projects, SCS is expected to generate revenue of between € 2.7 billion and € 3.0 billion in the 2024 financial year. Adjusted EBIT is expected to see a substantial increase (between € 60 million and € 120 million).

KION Group Figures for the Financial Year 2023 and the Fourth Quarter ending December 31, 2023

[1] Figures as at balance sheet date Dec. 31.

[2] Adjusted for effects of purchase price allocations as well as non-recurring items.

[3] Net income attributable to shareholders of KION GROUP AG: € 306 million (2022: € 98 million).

[4] Free cash flow is defined as cash flow from ongoing business plus cash flow from investment activity.

[5] Number of full-time equivalents incl. apprentices and trainees as at balance sheet date Dec. 31.