Earnings

EBIT and EBITDA

Earnings before interest and tax (EBIT) more than doubled year on year to €550 million (2011: €213 million). The reasons for this rise of €337 million include one-off items, sustained growth of unit sales in established regional markets, and stable demand from China and eastern Europe. Another factor in the increase in EBIT was improved capacity utilisation in the new truck business.

The non-recurring items included in EBIT totalled €153 million (2011: €-115 million). The capital increase and the sale of significant portions of the hydraulics business resulted in a net gain before taxes of €212 million after deduction of consultancy costs and contractual obligations. In addition to the net gain of €103 million from the sale of the hydraulics business, this includes a gain of €109 million from the remeasurement of the remaining 30 per cent of shares held at fair value. There was also a one-off gain of €13 million resulting from remeasurement of the shareholding in Linde Creighton. Non-recurring losses were largely the result of follow-up costs in connection with the closure of production facilities and the restructuring of the container handler and heavy forklift truck business, including necessary impairment of assets. These, combined with consultancy costs, amounted to losses of €71 million.

The effects of the purchase price allocation in connection with the KION acquisition equated to a loss of €41 million in 2012, compared to the loss reported in 2011 of €36 million. They essentially consist of depreciation and impairment, as well as administrative expenses for KION Holding 1 GmbH.

Adjusted EBIT, which excludes non-recurring items and KION acquisition items, advanced by €74 million to €438 million (2011: €365 million). This equates to an adjusted EBIT margin of 9.3 per cent (2011: 8.3 per cent).

EBITDA grew from €569 million in 2011 to €915 million in 2012, while adjusted EBITDA rose by €82 million year on year to €747 million. Accordingly, the adjusted EBITDA margin improved from 15.2 per cent to 15.8 per cent.

Financial result

The financial result – financial income offset against financial expense – improved from €-272 million in 2011 to €-239 million in 2012. Interest expenses arising from loan liabilities fell significantly owing to a change in interest rates. By contrast, interest expenses arising from capital market liabilities were higher than in 2011 because the bond had only existed for eight months of that year. The balance of finance costs arising from translation differences increased €33 million year on year. The reasons for this include other income from the translation of loans denominated in US dollars, which were contrasted by an expense in the previous year.

Income taxes

Income taxes amounted to an expense of €150 million (2011: €34 million). Within this amount, current income tax expenses increased by €73 million to €122 million, largely owing to the improvement in operating performance and the net tax effects of €62 million resulting from the sale of the hydraulics business. As in the previous year, additional deferred tax assets were not recognised because it is unlikely that the corresponding benefit can be utilised.

Net income (loss)

Following the net loss of €93 million reported for 2011, KION generated net income of €161 million in the year under review. This difference of €254 million largely resulted from an increase in adjusted EBIT and a net gain from the sale of the hydraulics business. These positive effects were partly offset by the rise in income taxes.

Key influencing factors for earnings

The disproportionately low rise in the cost of sales, which went up by 5.3 per cent to €3,430 million (2011: €3,256 million), was the result of more efficient production operations, greater capacity utilisation and an overall fall in commodity prices. Compared with revenue, selling expenses remained virtually unchanged. Research and development costs advanced by 4.1 per cent to €124 million (2011: €120 million) on the back of larger-scale projects that made it necessary to increase headcount, in particular in preliminary development and series development.

Higher consultancy costs for strategic projects primarily contributed to the 10.5 per cent increase in administrative expenses, which totalled €313 million.

The balance of other expenses and income (see notes 10 and 11, Sectoral conditions section) was €235 million (2011: €11 million). Other income of €294 million (2011: €82 million) was mainly attributable to one-off income generated from the sale of the hydraulics business. The decline in other expenses to €60 million (2011: €70 million) primarily resulted from the decrease in impairment losses on non-current assets and the decrease in book losses from the sale of non-current assets.