Economic environment and business performance

Macroeconomic conditions

Global economic conditions continued to be plagued by uncertainty in the first half of 2013. As a result, the International Monetary Fund (IMF) has slightly lowered its forecast for 2013 as a whole. Whereas positive economic data strengthened expectations of a sustained recovery for the US economy, there was a decline in the pace of growth in the BRIC countries. Western Europe remained in a mild recession. The crisis in the euro zone is far from over, and this is also slowing the speed of growth in the rest of the world—particularly in the other EU countries and eastern Europe. While the German economy has been stagnating, economic output in crisis-hit Greece, Italy, Portugal and Spain has fallen more sharply.

As well as GDP growth, global demand for machinery and equipment is largely driven by willingness to invest and world trade volumes. According to economic research institutes, these indicators have risen slightly higher in the year to date than in the same period last year. A modest rise looks probable for 2013 as a whole, although the average underlying pace for the year is likely to be slow.

Sectoral conditions

Sales markets

The number of new industrial trucks ordered around the world was 3.8 per cent higher in the first half of 2013 than in the first six months of 2012. In China, the number of new truck orders was up by 7.7 per cent, so the dip in the world’s single biggest market appears to be over. Strong demand in North America was a further key growth driver. Growth rates in Central and South America as well as eastern Europe were also high, but were of less consequence in absolute terms.

Only the first-half results in western Europe reflected a fall-off in demand. The economic situation in this region discouraged companies from investing despite truck fleets remaining in great need of renewal. However, the western European market rallied during the first half of the year, returning to 2012 levels in the second quarter after a subdued start to the year. >> TABLE 02

Procurement markets and conditions in the financial markets

Commodity prices have a direct impact on around 25 per cent of the cost of the materials needed to manufacture an industrial truck in the KION Group.

In the first six months of 2013, purchase prices for steel and energy were generally down on the same period in 2012. As an example, the price of Brent crude oil, which is quoted in US dollars and which affects the price of other fuels, was 6.3 per cent below comparable prices of the previous year.

The pound sterling depreciated against the euro and the value of the Brazilian real fell sharply in the second quarter, while the Chinese renminbi remained stable overall, despite relatively high volatility.

Level of orders

As a result of the weak market in western Europe, the number of new industrial trucks ordered from the KION Group’s brand companies fell to around 73,800, which was 2.3 per cent down on the first half of 2012. In the second quarter, the order intake was just 600 units short of the high level seen the previous year. In terms of units, 34 per cent of the order intake was attributable to the emerging markets, primarily China, other Asian countries, eastern Europe and Brazil.

The total order intake in the first half of 2013 amounted to € 2,250.2 million, which was 6.6 per cent down on the first six months of 2012 (€ 2,409.8 million). However, when adjusted for the hydraulics business, which had still been included in 2012, the order intake was down by just 3.6 per cent.

The order book for new trucks stood at € 750.7 million, which was 7.1 per cent below the order book at the end of 2012 (€ 807.8 million).