Overall assessment of the economic situation
In the first half of 2021, the KION Group recorded significant improvements in all key performance indicators compared with the pandemic-hit prior-year period. The Group recorded sharp growth in order intake and revenue along with even stronger improvement in its earnings, with both operating segments contributing to this growth.
Consolidated revenue improved by 26.5 per cent to €4,967.9 million (H1 2020: €3,927.3 million). The year-on-year revenue growth in the Supply Chain Solutions segment was particularly pronounced at 52.8 percent. In addition to the high overall volume of orders, this was because the segment worked through big-ticket orders for warehouse automation that had been placed in North America and Europe in 2020. The Industrial Trucks & Services segment also saw a jump in its revenue, by 14.9 percent, that was partly due to the pandemic-related restrictions on production in the prior-year period and to the resulting pent-up demand, particularly at the beginning of 2021.
The Group’s order intake went up by 33.7 percent to €5,881.7 million (H1 2020: €4,400.1 million), with the marked recovery of new truck business in the Industrial Trucks & Services segment playing a significant part. Against a backdrop of continued rapid growth in the market as a whole, the segment recorded its highest ever level of order intake in a half-year period. The increase in the Supply Chain Solutions segment was attributable to both the project business and the service business. In the prior-year period, order intake in the SCS segment had been far less affected by the coronavirus pandemic than order intake in the Industrial Trucks & Services segment.
The Group’s adjusted EBIT for the six-month period amounted to €462.2 million, which was more than double the figure for the first half of 2020 of €204.8 million. The adjusted EBIT margin improved significantly year on year to 9.3 percent (H1 2020: 5.2 percent) and is thus edging close again to the medium-term target range of 10 – 12 percent following the sharp fall in 2020 as a result of the pandemic. This improvement in profitability was attributable to the higher gross margin combined with a relatively low increase in selling expenses, development costs, and administrative expenses. This includes the savings already achieved under the ongoing capacity and structural program. However, there was a countervailing effect from the year-on-year increase in personnel expenses, which was mainly attributable to variable remuneration components.
Net income increased sharply to €291.2 million (H1 2020: €50.6 million). Basic earnings per share rose to €2.21 (H1 2020: €0.46). Free cash flow amounted to €301.5 million (H1 2020: minus €219.6 million), which strengthened the Group’s financial position. This increase in free cash flow was due primarily to the rise in operating profit but also – despite the growth in the volume of business – to the relatively low growth in net working capital as at the reporting date.
The KION Group used the further improvement in its liquidity situation to reduce its financial debt. Net financial debt fell by €162.4 million to €717.6 million as at June 30, 2021 and therefore equated to just 0.4 times adjusted EBITDA on an annualized basis. A key factor in this decrease was a further early repayment of a variable-rate tranche of the promissory note.