Earnings

EBIT and EBITDA

Total earnings before interest and tax (EBIT) amounted to € 177.9 million, which was 8.9 per cent below the same period the previous year (€ 195.4 million). The impact on earnings resulting from the decline in revenue and the sale of the hydraulics business was partly offset by further improvement of the cost structure and by the Group’s ability to implement price increases in the market.

One of the factors that depressed earnings was the cost of the IPO and the accompanying capital increases. Of the total costs of € 29.9 million, € 8.6 million was recognised in expenses while the remaining transaction costs were recognised directly in equity. Including the costs of the IPO and the accompanying capital increases, non-recurring items included in EBIT came to € 7.2 million (H1 2012: gain of € 21.4 million, adjusted for the hydraulics business).

The KION acquisition items relate to the acquisition of the KION Group, which was formed at the end of 2006 when it was spun off from Linde AG, Munich. The associated effects of the purchase price allocation equated to an expense of € 15.3 million in the reporting period compared with an expense of € 18.3 million in the first half of 2012, and largely comprised depreciation, amortisation and impairment.

Adjusted EBIT, which excludes non-recurring items and KION acquisition items, amounted to € 200.4 million—4.2 per cent higher than the comparable prior-year figure of € 192.3 million. The adjusted EBIT margin was 9.0 per cent compared with 8.7 per cent in the first half of 2012. >> TABLE 05

EBITDA was down by 5.3 per cent on the first half of 2012 at € 344.6 million (H1 2012: € 363.7 million). Adjusted EBITDA amounted to € 351.4 million, which was above the comparable figure of € 334.7 million for the first half of 2012 (excluding the hydraulics business). The adjusted EBITDA margin was 15.7 per cent compared with 15.1 per cent in the first six months of 2012. >> TABLE 06

Key influencing factors for earnings

The cost of sales fell to € 1,618.2 million (H1 2012: € 1,663.4 million). The favourable movement in commodity prices, the cost benefits derived from the successful restructuring of the group of production sites and the resultant increase in capacity utilisation failed to compensate in full for the loss of revenue due to the sale of the high-margin hydraulics business.

The increase in administrative expenses from € 146.5 million in the first half of 2012 to € 152.3 million was largely attributable to the expenses connected with the IPO that were not deducted directly from the capital reserves.

Other income rose by € 26.6 million to € 65.9 million (H1 2012: € 39.3 million). In addition to higher commission income compared with the first half of 2012, this item also included additional income of € 8.1 million resulting from the sale of our controlling interest (70 per cent) in Linde Hydraulics GmbH & Co. KG.

Profit from equity-accounted investments fell from € 11.7 million in the first six months of 2012 to € 3.3 million in the period ended 30 June 2013. During the acquisition of the remaining 51 per cent of the shares in Linde Creighton Ltd., Basingstoke, UK, income of € 8.0 million was realised on the revaluation of the shares, which were already equity-accounted in the first half of 2012. >> TABLE 07

Net financial income / expenses

Net financial expenses were € 112.0 million, an improvement of € 13.3 million on the first half of 2012 (expense of € 125.3 million). The sharp decrease in expenses was principally the result of converting the shareholder loan of € 671.0 million provided by Superlift Holding S.à r.l. into equity at the end of 2012 and of repaying financial liabilities using the capital contribution of € 467.0 million made by Weichai Power when it purchased a 25 per cent stake in what is now KION GROUP AG. Higher coupon payments on the senior secured bond issued in February had a countervailing effect (see section “Major developments in the first half of 2013”).

Income taxes

Income tax expenses of € 44.2 million in the first half of 2012 contrasted with tax income of € 4.4 million in the reporting period. While current tax expenses were approximately equal to those in the same period in 2012, deferred tax expense was much higher, exceeding the comparable figure for 2012 by € 47.3 million. As the result of a profit-and-loss transfer agreement between KION Material Handling GmbH (formerly KION GROUP GmbH) and Linde Material Handling GmbH which was signed in April 2013, additional deferred tax assets of € 36.2 million were recognised in the second quarter on loss carryforwards that it had not previously been possible to utilise.

Net income

After taxes, net income amounted to € 70.3 million. This constitutes a sharp rise on the first half of 2012 (H1 2012: € 25.9 million). Pro forma earnings per share for the first six months of 2013 amounted to € 0.70 based on 98.9 million no-par-value shares (according to IAS 33 € 1.07).