Condensed Statement of Income

Condensed income statement of the KION Group *)

€ million

Q1
2013

Q1
2012

Change

*)

2012 key figures were adjusted due to the retrospective application of IAS 19R (2011)

 

 

 

 

Revenue

1,085.2

1,144.4

-5.2%

Cost of sales

-783.1

-824.8

5.1%

Gross profit

302.1

319.6

-5.5%

Selling expenses

-137.8

-136.6

-0.9%

Research and development costs

-29.4

-33.1

11.2%

Administrative expenses

-72.7

-70.1

-3.7%

Other

24.3

11.0

>100.0%

Earnings before interest and taxes (EBIT)

86.4

90.7

-4.7%

Financial result

-47.6

-51.3

7.1%

Earnings before taxes

38.8

39.4

-1.5%

Income taxes

-10.3

-22.9

55.3%

Net income

28.6

16.5

73.2%

Our revenue can be broken down by product category as follows:

Revenue by product category

€ million

Q1
2013

Q1
2012

Change

 

 

 

 

New business

611.4

624.0

-2.0%

Hydraulics

48.6

-100.0%

Service offering

473.7

471.8

0.4%

- After sales

283.8

284.0

-0.1%

- Rental business

107.8

107.7

0.1%

- Used trucks

52.8

53.3

-0.9%

- Other

29.3

26.8

9.6%

Total revenue

1,085.2

1,144.4

-5.2%

Revenue

Due to economic weakness, especially in Western Europe, unit sales of new trucks declined slightly by 2.8%, to 38,000 units for the three-month period ended March 31, 2013, from 39,100 units for the three-month period ended March 31, 2012. However, unit sales remained at a high level, notwithstanding the slight decrease from the very high levels in the three-month period ended March 31, 2012. Our total order intake in monetary terms decreased by 5.1%, to €1,145.3 million for the three-month period ended March 31, 2013, from €1,207.2 million for the three-month period ended March 31, 2012. This decrease was primarily due to the sale of our LHY Business. Our order book decreased by 15.5% to €832.2 million as of March 31, 2013, from €984.3 million as of March 31, 2012.

For Q1/2013, revenue slightly decreased by 2.0% in our new trucks business, to €611.4 million, from €624.0 million for Q1/2012. This decrease was primarily due to a change in our product mix. Despite this decrease, our service offering in Q1/2013 amounted to €473.7 million, compared to €471.8 million in Q1/2012, a 0.4% increase. This increase resulted from a 9.5% increase from our product category “Other”, which includes advisory services, IT solutions, warehouse technology systems and part of the remaining hydraulic components business. Our after sales business and rental business remained almost unchanged, with a 0.1% decrease and a 0.1% increase, respectively, to €283.8 million and €107.8 million for Q1/2013, compared to €284.0 million and €107.7 million for Q1/2012, respectively. However, our used trucks business declined slightly by 0.9% to €52.8 million in Q1/2013, compared to €53.3 million in Q1/2012. Due to the sale of our LHY Business on December 27, 2012, we did not generate any revenue in the hydraulics business in Q1/2013. On a comparable basis, without the Former Linde Hydraulic Business, which accounted for revenue of €48.4 million for the three-month period ended March 31, 2012 our total revenue between the two quarters remained relatively stable, with a slight decline of 1.0% primarily due to the fact that revenue for the three-month period ended March 31, 2012 had been exceptionally strong.

Cost of Sales

Our cost of sales decreased by 5.1% to €783.1 million in Q1/2013, compared to €824.8 million in Q1 2012. Our variable cost of sales decreased as a consequence of a lower number of units sold and decreased raw material prices for steel, oil and energy. For Q1/2013, approximately 25% of our material costs are subject to raw material price changes. Furthermore, our labor costs decreased mainly due to the sale of the LHY Business.

Gross Profit and Gross Margin

Our gross profit decreased by 5.5% to €302.1 million in Q1/2013, compared to €319.6 million in Q1/2012. This was caused by the decrease in revenue and cost of sales primarily due to the sale of the LHY Business. Gross margin remained nearly stable at 27.8% for Q1/2013, compared to 27.9% for Q1/2012.

Selling Expenses

Our selling expenses increased by 0.9% to €137.8 million in Q1/2013, from €136.6 million in Q1/2012, primarily due to the first consolidation of the new sales and service entity Linde Creighton Ltd, which was consolidated in the second quarter of 2012. Consequently, our selling expenses as a percentage of revenue increased to 12.7% for Q1/2013, as compared to 11.9% for Q1/2012.

Research and Development Costs

For Q1/2013, our research and development costs were €29.4 million, a 11.2% decrease from Q1/2012, when research and development costs amounted to €33.1 million. This decrease was mainly related to the sale of the LHY Business and the corresponding research and development costs previously incurred. As a percentage of revenue, our R&D costs amounted to 2.7% in Q1/2013 compared to 2.9% in Q1/2012.

Administrative Expenses

Our administrative expenses increased by 3.7% to €72.7 million in Q1/2013 from €70.1 million in Q1/2012, mainly due to tariff increases and new consolidation, partly offset by the sale of our LHY Business. As a percentage of revenue, our administrative expenses were 6.7% and 6.1%, respectively, for Q1/2013 and the three-month period ended March 31, 2012.

Other Income and Expense

Other income and expense primarily consist of gains and losses related to foreign exchange rate differences resulting from the measurement of financial assets and receivables denominated in a foreign currency. Additionally, gains and losses related to the sale, disposal or impairment of long-lived assets as well as profit from the release of deferred lease profits are included. Our net other income and expense significantly increased from an income of €5.6 million in Q1/2012 to an income of €25.5 million in Q1/2013. The increase was mainly due to positive net exchange rate effects which increased by €4.6 million compared to Q1/2012. Sundry income of €18.8 million for the three-month period ended March 31, 2013 includes income of €8.1 million related the sale of our controlling interest (70.0%) in Linde Hydraulics KG in the previous financial year.

Profit (loss) from at-equity Investments / Other Financial Result

The profit (loss) from at-equity investments/other financial result decreased from positive €5.4 million in Q1/2012 to negative €1.1 million in Q1/2013. The main reason for the decrease was due to the positive Non-recurring Items in Q1/2012 related to the remeasurement of the existing shares owned by KION in Linde Creighton Ltd., which resulted in a profit of €4.8 million, as well as the net loss after taxes amounting to €1.3 million from our 30.0% investment in Linde Hydraulics KG for Q1/2013. This loss includes depreciation and amortization of Linde Hydraulic KG’s purchase price allocation, which amounted to €1.4 million for Q1/2013. The other financial result was €0.2 million for Q1/2013 and €0.5 million for the prior year period.

Earnings Before Interest and Taxes (EBIT), Adjusted EBIT, Adjusted EBITDA

The following tables show the adjustments to calculate Adjusted EBIT and Adjusted EBITDA:

Adjusted EBIT *)

€ million

Q1
2013

Q1
2012

Change

*)

2012 key figures were adjusted due to the retrospective application of IAS 19R (2011)

 

 

 

 

Net income (+) / loss (-) for the period

28.6

16.5

73.2%

Income taxes

-10.3

-22.9

55.3%

Financial result

-47.6

-51.3

7.1%

EBIT

86.4

90.7

-4.7%

+ Non-recurring items

-1.3

1.5

<-100%

+ KION acquisition items

7.6

9.0

-14.9%

= Adjusted EBIT

92.8

101.2

-8.3%

Adjusted EBITDA *)

€ million

Q1
2013

Q1
2012

Change

1

Amortization and depreciation includes amortization, depreciation and impairment charges

*)

2012 key figures were adjusted due to the retrospective application of IAS 19R (2011)

 

 

 

 

EBIT

86.4

90.7

-4.7%

Amortization and depreciation1

82.6

83.0

-0.5%

EBITDA

169.0

173.6

-2.7%

+ Non-recurring items

-1.3

1.4

<-100.0%

+ KION acquisition items

0.2

0.4

-39.8%

= Adjusted EBITDA

167.9

175.4

-4.3%

Our EBIT was €86.4 million for Q1/2013, compared to €90.7 million for Q1/2012. This decrease was primarily the result of the sale of the LHY Business and the corresponding reduction in gross profit. Positive foreign exchange effects and additional funds received as part of the sale of the LHY Business partly off-set this decrease.

Our Adjusted EBIT, which excludes Non-recurring Items and KION Acquisition Items, decreased by €8.4 million to €92.8 million for Q1/2013 from €101.2 million for Q1/2012. The decreased Adjusted EBIT corresponds to an Adjusted EBIT Margin of 8.5% for Q1/2013, compared to an Adjusted EBIT Margin of 8.8% for Q1/2012. Excluding the Former Linde Hydraulic Business which accounted for €10.8 million of adjusted EBIT for the three-month period ended March 31, 2012, our adjusted EBIT on a comparable basis amounted to €90.3 million for the prior year period. Consequently as adjusted for the sale of the Former Linde Hydraulic Business, our adjusted EBIT increased by 2.7 % between the three-month period ended March 31, 2013 and the three-month period ended March 31, 2012.

For Q1/2013, Non-recurring Items amounted to positive €1.3 million, primarily as a result of additional income related to the sale of the LHY Business of €8.1 million, which was partly off-set by restructuring and consulting fees. For Q1/2012, Non-recurring Items were negative €1.5 million resulting from restructuring and consulting fees, which were partly off-set by the positive effects from the remeasurement of our shares held in Linde Creighton Ltd. and the positive effects from the sale of a property in Basingstoke, United Kingdom.

The KION Acquisition Items had a negative impact of €7.6 million for Q1/2013, compared to negative €9.0 million for Q1/2012. The effects of the purchase price allocation in connection with the KION acquisition primarily include depreciation, amortization, impairment and reversal of impairment charges, as well as administration charges for KION Holding 1 GmbH.

Financial Income and Expense

Financial result, comprised of the net of financial income and expense, increased by 7.1% from negative €51.3 million in Q1/2012 to negative €47.6 million in Q1/2013. This increase was mainly the result of the interest costs for the Shareholder Loan of €7.0 million in Q1/2012 which were not incurred in Q1/2013 due to the repayment of the Shareholder Loan in 2012. Furthermore, the interest expense from loans decreased by €10.4 million, mainly due to the repayment of loans from funds received as part of the Weichai strategic industrial cooperation and from the issuance of our corporate bond on February 6, 2013. Interest expense from corporate bonds amounted to €13.5 million for the three-months period ended March 31, 2013 an increase of €4.7 million compared to the three-month period ended March 31, 2012. In addition, the amortization of finance costs amounted to €6.6 million for Q1/2013, an increase of €4.6 million compared Q1/2012, primarily due to the issuance of 2020 Senior Notes and the redemption of the indebtedness under the SFA with the amortization of the relating capitalized borrowing costs. The result from foreign currency exchange rate gains and losses from financing decreased by €3.1 million, to a gain of €4.0 million for Q1/2013, primarily due to the movement in the EUR/USD exchange rate.

Income Taxes

For Q1/2013, net income tax expense was €10.3 million, compared to a net income tax expense of €22.9 million for Q1/2012. The current income tax expense decreased slightly to €18.7 million for Q1/2013, compared to a current income tax expense of €19.9 million for Q1/2012. Deferred income tax expense was positive €8.5 million for Q1/2013, compared to a deferred income tax expense of negative €3.0 million. The reduction in deferred taxes is primarily due to temporary timing differences and changes in tax rated certain legal jurisdictions.

Net Income for the Period

For Q1/2013, we reported net income of €28.6 million, compared to a net income of €16.5 million for Q1/2012. This significant increase was mainly driven by the improved financial result, which increased by 7.1% to negative €47.6 million for Q1/2013, as compared to negative €51.3 million for Q1/2012 and by the improved net other income which increased from €5.6 million for Q1/2012 to €25.5 million in Q1/2013. Furthermore, our income tax expenses decreased substantially from €22.9 million in Q1/2012 to €10.3 million in Q1/2013.

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