[41] Segment report

The Executive Board, as the chief operating decision-maker (CODM), manages the KION Group on the basis of the following segments: Industrial Trucks & Services, Supply Chain Solutions and Corporate Services. Segment reporting therefore takes into account the organisational and strategic focus of the KION Group.

Description of the segments

Industrial Trucks & Services

So that it can fully cater to the needs of material handling customers worldwide, the business model of the Industrial Trucks & Services segment covers key steps of the value chain: product development, manufacturing, sales and service, truck rental and used trucks, fleet management and financial services that support the core industrial truck business. The segment operates a multi-brand strategy involving the three international brands Linde, STILL and Baoli plus the national brands Fenwick, OM STILL and OM Voltas.

Supply Chain Solutions

The Supply Chain Solutions segment, with its Dematic Operating Unit, is a strategic partner to customers in a variety of industries, supplying them with integrated technology and software solutions with which to optimise their supply chains. Manual and automated solutions are provided for all functions along customers’ supply chains, from goods inward and multishuttle warehouse systems to picking and value-added packing. This segment is primarily involved in customer-specific, longer-term project business operated under the leadership of the Dematic brand name. With global resources, ten production facilities worldwide and regional teams of experts, Dematic is able to plan and deliver logistics solutions with varying degrees of complexity anywhere in the world.

Corporate Services

The Corporate Services segment comprises the other activities of the holding and service companies in the KION Group. The service companies provide services for all segments in the KION Group. The bulk of the total revenue in this segment is generated by internal IT and logistics services.

Segment management

The KPIs used to manage the segments are order intake, revenue and adjusted EBIT. Segment reporting therefore includes a reconciliation of externally reported consolidated earnings before interest and tax (EBIT) – including effects from purchase price allocations and non-recurring items – to the adjusted EBIT for the segments (‘adjusted EBIT’). Intra-group transactions are generally conducted on an arm’s-length basis. Segment reports are prepared in accordance with the same accounting policies as the consolidated financial statements, as described in note [7].

> TABLES 114 – 115 show information on the KION Group’s operating segments for 2017 and 2016.

Segment report 2017

114

in € million

Industrial Trucks & Services

Supply Chain Solutions

Corporate Services

Consolidation /Reconciliation

Total

1

Capital expenditure including capitalised development costs, excluding leased and rental assets

2

On intangible assets and property, plant and equipment excluding leased and rental assets

3

Number of employees (full-time equivalents) as at balance sheet date 31/12/; allocation according to the contractual relationship

Revenue from external customers

5,626.9

2,001.8

24.8

7,653.6

Intersegment revenue

4.0

4.5

241.8

–250.3

Total revenue

5,630.9

2,006.3

266.6

–250.3

7,653.6

Earnings before taxes

592.3

–21.9

485.6

–587.7

468.3

Financial income

48.1

66.8

49.3

–32.0

132.2

Financial expenses

–93.4

–64.8

–86.0

30.8

–213.3

= Net financial expenses / income

–45.3

2.0

–36.6

–1.1

–81.1

EBIT

637.6

–23.8

522.2

–586.5

549.4

+ Non-recurring items

1.7

29.9

8.5

0.0

40.1

+ PPA items

0.9

175.3

0.0

176.2

= Adjusted EBIT

640.1

181.4

530.7

–586.5

765.6

Segment assets

8,117.1

4,690.1

1,787.8

–3,366.5

11,228.4

Segment liabilities

5,240.4

1,970.3

4,243.7

–3,374.8

8,079.6

Carrying amount of equity- accounted investments

80.3

0.0

0.0

80.3

Profit from equity-accounted investments

13.6

0.0

0.0

13.6

Capital expenditure1

153.7

47.0

17.5

218.3

Amortisation and depreciation2

113.3

191.3

15.4

319.9

Order intake

5,859.5

2,099.2

266.6

–246.2

7,979.1

Number of employees3

24,090

6,820

698

31,608

Segment report 2016

115

in € million

Industrial Trucks & Services

Supply Chain Solutions

Corporate Services

Consolidation /Reconciliation

Total

1

Capital expenditure including capitalised development costs, excluding leased and rental assets

2

On intangible assets and property, plant and equipment excl. leased and rental assets

3

Number of employees (full-time equivalents) as at balance sheet date 31/12/; allocation according to the contractual relationship

Revenue from external customers

5,200.5

364.7

22.1

5,587.2

Intersegment revenue

2.1

1.3

220.0

–223.4

Total revenue

5,202.6

366.0

242.0

–223.4

5,587.2

Earnings before taxes

511.7

–42.8

230.6

–360.4

339.2

Financial income

52.2

7.5

44.7

–15.5

88.9

Financial expenses

–93.5

–18.6

–89.0

16.5

–184.5

= Net financial expenses / income

–41.3

–11.1

–44.3

1.1

–95.7

EBIT

553.0

–31.7

274.9

–361.5

434.8

+ Non-recurring items

5.4

5.7

31.0

–0.0

42.2

+ PPA items

28.5

31.9

0.0

60.4

= Adjusted EBIT

586.9

6.0

305.9

–361.5

537.3

Segment assets

8,914.0

5,144.9

1,588.2

–4,350.1

11,297.0

Segment liabilities

4,700.9

2,550.3

5,910.7

–4,360.6

8,801.3

Carrying amount of equity- accounted investments

72.7

0.0

0.0

72.7

Profit from equity-accounted investments

6.5

0.0

0.0

6.5

Capital expenditure1

142.7

9.4

14.5

166.7

Amortisation and depreciation2

137.1

36.7

17.6

191.4

Order intake

5,383.2

431.2

242.0

–223.3

5,833.1

Number of employees3

23,064

6,810

670

30,544

External revenue by region is presented in > TABLE 116.

Revenue with third parties broken down by customer location

116

in € million

2017

2016

Western Europe

4,627.8

3,982.7

Eastern Europe

537.9

459.6

Middle East and Africa

152.9

100.3

North America

1,266.5

295.9

Central and South America

163.1

148.6

Asia-Pacific

905.5

600.1

Total revenue

7,653.6

5,587.2

Revenue in Germany came to €1,423.1 million in 2017 (2016: €1,321.1 million). There are no relationships with individual customers that generate revenue deemed to be significant as a proportion of total consolidated revenue.

Financial income and expenses including all interest income and expenses are described in notes [12] and [13].

The non-recurring items mainly comprised consultancy costs – in particular costs relating to the acquisition and integration of Dematic – and, in the previous year, start-up costs for the new plant in Monterrey, Mexico. They totalled €40.1 million in 2017 (2016: €42.2 million).

The effects from purchase price allocations comprised net write-downs and other expenses in relation to the hidden reserves and charges identified as part of the acquisition processes.

Capital expenditure includes additions to intangible assets and property, plant and equipment. Leased assets are described in note [18]. > TABLE 117

Capital expenditures broken down by company location (excl. leased and rental assets)

117

in € million

2017

2016

Western Europe

162.8

133.4

Eastern Europe

6.6

3.7

Middle East and Africa

0.6

0.2

North America

31.6

16.6

Central and South America

3.5

1.0

Asia-Pacific

13.3

11.8

Total capital expenditures

218.3

166.7

Capital expenditure in Germany came to €122.6 million in 2017 (2016: €100.9 million).

Depreciation/amortisation relates to intangible assets with finite useful lives and property, plant and equipment.

The regional breakdown of non-current assets excluding financial assets, financial instruments, deferred tax assets and post-employment benefits is shown in > TABLE 118.

Non-current assets broken down by company location*

118

in € million

2017

2016

*

Prior-year figures were adjusted due to retrospective changes of the purchase price allocation (PPA) for Dematic

Western Europe

4,369.6

4,209.3

Eastern Europe

200.7

152.2

Middle East and Africa

6.5

6.6

North America

2,380.0

2,838.4

Central and South America

90.7

104.0

Asia-Pacific

519.6

548.5

Total non-current assets (IFRS 8)

7,567.0

7,858.9

Non-current assets attributable to Germany amounted to €3,143.7 million as at 31 December 2017 (31 December 2016: €3,058.4 million).