Fundamentals of the KION Group

Management and control

The Annual General Meeting elected Dr Christina Reuter to the Supervisory Board on 12 May 2016. Dr Reuter is chief engineer and head of department at the Laboratory for Machine Tools and Production Engineering at RWTH Aachen University which is part of a cluster of excellence under the German government’s project Industrie 4.0. She replaces Wolfgang Faden, who stepped down from the Supervisory Board. There were no changes on the Executive Board during the first half of the year.

Strategy of the KION Group

The KION Group Strategy 2020, described in the 2015 group management report, is aimed at leveraging cross-regional and cross-brand synergies even more effectively and closing the gap on the global market leader by 2020. To achieve this, the KION Group is relying on its successful multi-brand approach, underpinned by a comprehensive modular and platform strategy. It is strengthening its presence in key markets and resolutely stepping up its activities in the fields of automation and service. Furthermore, in order to entrench its position as the most profitable supplier in the market, the KION Group aims to improve its EBIT margin so it is permanently in the double-digit range – a target that remains unchanged in communications since the IPO. Further details on the Strategy 2020 can be found in the 2015 group management report.

A comprehensive portfolio of solutions for Intralogistics 4.0 is at the core of the Strategy 2020. The KION Group believes that connected machinery, products, processes and logistics are essential to creating intelligent supply chains and value chains.

KION Group signs sale and purchase agreement for Dematic

The KION Group will become one of the leading global providers of intelligent intralogistics solutions by acquiring Dematic, a best-in-class automation provider and specialist in supply chain optimisation. The KION Group agreed with funds managed by AEA Investors and Ontario Teachers’ Pension Plan as the sellers on this landmark transaction to create a true global provider with close to 30,000 employees, more than €6.7 billion in revenue on the basis of calendar year 2015 and a strong profitability with a combined adjusted EBIT margin of approx. 9.4 per cent for this period. After deductions for certain liabilities, the KION Group expects the purchase price for the shares to amount to approx. € 1.9 billion, based on an enterprise value of Dematic of € 2.9 billion. The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to be closed in the course of the fourth quarter of 2016.

Dematic is a leading global supplier of advanced integrated automation technology, software and services to optimize supply chains and to meet the material handling automation needs of its customers. The company’s product and systems portfolio ranges from Automated Guided Vehicles (AGVs), palletizers, storage and picking equipment including automated storage and retrieval systems, sorters and conveyors to a leading integrated software platform and automation technologies. Dematic has been growing annually by more than 12 per cent since 2013. It generated approx. € 1.6 billion in revenue and achieved an adjusted EBIT of around €150 million during the calendar year 2015. Dematic employs almost 6,000 skilled logistics professionals - including over 3,000 engineers in software development, R&D, engineering, project management and customer service - to support its customers globally, with engineering centers and manufacturing facilities located around the globe. With more than 100 locations Dematic is present in 22 countries. The company is a leading player in the USA, Europe, and worldwide. Dematic has implemented more than 4,500 integrated systems for small, medium and large companies with business in a broad variety of industries around the globe including the fast-growing e-commerce business.

The purchase of Dematic will establish the KION Group as a global leader in Intralogistics 4.0. Leveraging its sales and service networks, technologies and resources, the enlarged company will be able to seamlessly offer the full material handling product and service offering to customers of all sizes in a broad range of industries across the world. This most comprehensive material handling solutions offering in the market ranges from manually operated industrial trucks to complete fully automated warehouses. The KION Group will thus enhance its position as one-stop supplier for intelligent supply chain and automation solutions and is now perfectly positioned for attractive and profitable growth driven by megatrends like Industry 4.0, digitalization and e-commerce.

Both companies contribute strong complementary market positions and geographical footprint as an opportunity for revenue growth. Dematic will leverage the KION Group’s service network and brand reputation in key markets like Europe, China and Brazil, whereas the KION Group will take advantage of Dematic’s strong position in the US and European automation markets in particular. This complementarity is also the source of cost synergies from this combination. KION Group’s strong sales and service network together with Dematic’s sizeable installed base provides the basis for unlocking further revenue potential from services and systems upgrades.

In the past year, the KION Group already started to build up a strong position as provider of automated systems solutions by acquiring Egemin Automation and Retrotech, thereby making further inroads in this attractive and growing market.