Business performance in the Group
Resilient and flexible business model
The KION Group weathered further waves of the coronavirus pandemic in 2021 without any notable outages anywhere in the value chain. Measures taken to protect the health of employees, especially when dealing with suppliers and customers, remained in force throughout, and virtually all sites avoided chains of infection.
Thanks to the measures taken in the previous year to stabilize the availability of materials and the initiatives launched to increase efficiency in the production and service network, the KION Group was able to maintain its position despite the difficult situation in the procurement markets and recorded significant increases in both order intake and revenue.
In the Industrial Trucks & Services segment, the production and supply bottlenecks at suppliers grew over the course of the year to include numerous production materials. Against this backdrop of difficult market conditions, which affected the entire industry and resulted in longer delivery times, the KION Group announced a scheduled price increase in the EMEA region for the end of 2021, which reflected the significant rise in material prices. This prompted some customers to bring their orders forward in the fourth quarter. As at the end of the year, the order book had grown significantly as a result of pent-up demand from previous years and delays to deliveries until 2022 due to shortages of materials.
In the Supply Chain Solutions (SCS) segment, significantly higher material prices and supply bottlenecks affecting bought-in parts also resulted in noticeable inefficiencies and delays to the implementation of projects. Despite rapid processing of the large volume of orders from the prior period, the order book was even higher as at the end of the year as a result of strong demand from customers for warehouse automation.
Following the corporate action taken in 2020 to build up the KION Group’s financial strength in response to the coronavirus pandemic and to increase the flexibility of its funding over the long term, the Group enjoyed a comfortable level of liquidity in 2021, which it used to reduce its financial debt. For example, a variable-rate tranche of the promissory note that was due to mature in 2024 and had a nominal amount of €167.0 million was repaid ahead of schedule at the end of April 2021. In October, KION GROUP AG entered into an agreement for a new syndicated revolving credit facility (RCF) with a total volume of €1,000.0 million. The new credit facility, which is also intended to improve funding conditions, has a term of five years that can be extended by up to two years with the consent of the syndicate of banks. The previous credit facility, whose term was due to end in February 2023 and which had a volume of €1,150.0 million, was terminated at the same time. From 2023, the new credit facility’s interest rate will depend on selected ESG criteria of the KION Group, in line with the principles of sustainable corporate governance.
Continued investment in global growth
The KION Group continued with its ongoing growth projects according to plan in 2021, with some already completed successfully. Further capital expenditure projects were launched in connection with the targets defined in the KION 2027 strategy. Focusing mainly on China and eastern Europe, these projects should enable the volume of business and local production to be increased in the fast-growing regions of the global material handling market.
At the new plant in Jinan, in China’s Shandong province, pre-production of Linde and Baoli counterbalance trucks started in December 2021, followed by the launch of regular production in February 2022. With a capacity of up to 40,000 industrial trucks, the plant is an addition to the network of production sites in China and will help to consolidate the Group’s position in the fast-growing value segment. The KION Group also aims to capitalize on opportunities for growth resulting from the increasing electrification of industrial trucks in China. The operator of the new plant is KION (Jinan) Forklift Co., Ltd., which was established with Weichai Power Co., Ltd. and in which the KION Group holds a 95.0 percent stake. Capital expenditure on this project amounted to around €100 million in total.
In November 2021, the KION Group announced the construction of a new plant for supply chain solutions in Jinan, which will further expand its product portfolio for warehouses and distribution centers in Asia, especially in China, which is one of the fastest-growing markets for supply chain solutions. The new plant will be used to manufacture items such as racks for the Dematic Multishuttle system, components for automated guided vehicle systems, and conveyor belts and systems. The factory is scheduled to go into operation in the first quarter of 2023. The planned level of capital spending will be just under €40 million.
The new industrial truck plant in Kołbaskowo, near Szczecin in Poland, came on stream in the second quarter of 2021. Its production line has a capacity of up to 12,000 industrial trucks.
To further strengthen its technological and market position, particularly in the areas of automation and digitalization, the KION Group complemented its organic growth projects with strategic acquisitions in 2021. In the Supply Chain Solutions segment, the KION Group entered into an agreement in July 2021 to acquire 49.0 percent of the share capital and voting rights in a leading provider of warehouse and supply chain automation solutions in India. The plan set out in the agreement is for the KION Group to then acquire the remaining 51.0 percent of the shares in two further tranches by 2025. The KION Group’s total investment over time is expected to be in the high double-digit millions of euros. Completion of the transaction is subject to approval by the authorities in India.
At the end of September 2021, the KION Group agreed a strategic partnership with ifesca GmbH, a start-up specializing in the energy industry, by acquiring a stake of around 20 percent. ifesca’s AI-based energy management platform offers an innovative range of solutions for predictive and resource-efficient energy management that are to be gradually integrated into the KION Group’s product portfolio as part of an end-to-end approach to energy management.
In the Industrial Trucks & Services segment, the KION Group further strengthened Linde Material Handling’s dealer network by acquiring the remaining shares in the Hamburg-based wholesaler and service provider Hans Joachim Jetschke Industriefahrzeuge (GmbH & Co.) KG and JETSCHKE GmbH in February 2021. As a result of the acquisitions, these companies are now wholly owned subsidiaries. The purchase consideration for 79.0 percent of the shares totaled €13.9 million.