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KION income surges in shrinking market

Wednesday, 31 Jul 2019 ( #934 ) - Frankfurt, Germany
News Story
Following a strong start to the year, the KION Group maintained its path of profitable growth over the course of the first half of 2019. In a challenging market environment, consolidated revenue for the first six months saw a significant year-on-year increase of 12.6% percent to EUR4.364 billion (USD4.86 billion).

KION attributes a significant improvement in earnings to the fact that operational challenges caused by bottlenecks at suppliers to the industrial truck segment in 2018 had been largely resolved, but also to a modest rise in the price of materials and the relatively small increase in selling expenses and general administrative expenses.

Net income for the period surged by 47.7% percent to EUR218.3 million (USD243.3 million) on the back of the good operating performance.

Order intake for the period January to June amounted to EUR4.197 billion (USD4.677 billion), a modest year-on-year fall of 2.6%. However, the company points out that order intake in the supply chain solutions segment had been exceptionally strong in the first half of 2018, primarily thanks to the project business.

Looking more broadly, KION notes that in the first half of 2019, the global market for industrial trucks was unable to replicate the growth seen in previous years. This was due in particular to current economic uncertainties but also to the impact of ongoing trade disputes, the growing levels of debt in emerging and developing economies, and the possibility of a no-deal Brexit.

The number of new trucks ordered worldwide fell by 5.2% compared with the first half of 2018 to 759.500. New orders decreased by 7% in the EMEA region. The Americas region saw a significant year-on-year decline of 14.2%. Only the APAC region registered an increase in the first six months of 2019, albeit of just 0.8%.

According to the KION Group's estimates, the trend toward warehouse automation and toward sorting solutions and automated goods transport is continuing and it generated strong demand in the market for supply chain solutions. This trend was further bolstered by capital investment in connection with multichannel and e-commerce strategies. A growing number of businesses invested in the expansion and optimisation of their warehouse and logistics capacities and in automated warehouse systems that include not only solutions for individual processes, such as picking and packing, but also fully integrated end-to-end solutions.

"We recorded significant revenue growth and a very good operating profit in the first half of 2019," says Gordon Riske, chief executive officer of KION Group AG. "This sharp rise in earnings is particularly pleasing in light of the increasingly challenging conditions in the market. The good results for the first half of the year show that the KION Group remains on the right track. However, the headwinds from diminishing global trade, a slowdown in capital expenditure worldwide, political uncertainties, and trade disputes are increasing."
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