The forward-looking statements and information given below are based on the Company’s current expectations and assessments. Consequently, they involve a number of risks and uncertainties. Many factors, several of which are beyond the control of the KION Group, affect the Group’s business activities and profitability. Any unexpected developments in the global economy would result in the KION Group’s performance and profits differing significantly from those forecast below. The KION Group does not undertake to update forward-looking statements to reflect subsequently occurring events or circumstances. Furthermore, the KION Group cannot guarantee that future performance and actual profits generated will be consistent with the stated assumptions and estimates and can accept no liability in this regard.
Actual business performance may deviate from our forecasts due, among other factors, to the opportunities and risks described here. Performance particularly depends on macroeconomic and industry-specific conditions and may be negatively affected by increasing uncertainty or a worsening of the economic and political situation.
Forecast for 2014
The overall assessment of the financial situation compares the forecasts included in the 2013 group management report and subsequent interim reports with actual performance in 2014.
The forecasts in this section are derived from the KION Group’s multiple-year market, business and financial plan, which is based on certain assumptions. Market planning takes into account macroeconomic and industry-specific performance, which is described below. Business planning and financial planning are based on expected market performance, but also draw on other assumptions, such as those relating to changes in the cost of materials, the KION Group’s ability to command higher prices from customers and movements in exchange rates.
Expected macroeconomic conditions
In the opinion of the International Monetary Fund (IMF), the pace of global economic growth will pick up in 2015, although not as strongly as forecast previously. In its January outlook, the IMF expects the global economy to grow at a rate of 3.5 per cent and the eurozone at 1.2 per cent in 2015. Growth of 2.4 per cent is predicted for the industrial countries in 2015 compared with 1.8 per cent in 2014, with the United States as the biggest growth driver. In view of slower growth in China and the anticipated slump in Russia, growth in the emerging and developing countries is only expected to stay at around the same level of 4.3 per cent. The forecast for economic conditions is based on the assumption that, alongside tightening public finances, monetary policy will remain expansionary and geopolitical tensions will ease. Moreover, the IMF believes advantages created by low oil prices will be offset by unfavourable factors worldwide.
Expected sectoral conditions
The overall market for industrial trucks will continue to depend heavily on economic conditions in key sales markets, with the level of capital investment and the growth in global trade being particularly crucial. In 2014, the global market for industrial trucks expanded by around 8 per cent, a slightly stronger rate than in the previous year despite mixed economic conditions overall. This increase was primarily driven by a recovery of demand in western Europe coupled with strong growth in China and North America. Given the overall economic prospects and in anticipation of a stable investment climate, the KION Group expects a further increase, albeit moderate, in the worldwide market volume in 2015. Besides the predicted growth in the emerging markets of Asia, the major factors will be stabilisation of the sales situation in western Europe with sustained replacement and catch-up investment plus healthy market conditions in North America. However, risks are presented by the unstable geopolitical situation and the related significant slowdown in Russia’s growth. This could have a negative impact on neighbouring countries in eastern Europe and for the eurozone. In addition deflationary tendencies could dampen companies’ willingness to invest.
Market expectations also remain positive over the longer-term perspective. Based on current macroeconomic forecasts and in view of the rise in global trade volumes, the KION Group expects an average annual growth rate (in units) of about 4 per cent for the global market over the next few years and does not expect there to be significant changes in the proportion of total revenue generated by each product segment.
Expected business situation and financial performance
By continuing with the implementation of its Strategy 2020, the KION Group intends to achieve even better results in 2015 than the record figures reported for 2014.
Based on the forecasts for market conditions, the KION Group expects both order intake and consolidated revenue to be slightly higher than in 2014. The growth in consolidated revenue will continue to be underpinned by a strong contribution from the service business in western Europe and the emerging markets in 2015.
The KION Group also expects a slight year-on-year rise in adjusted EBIT in 2015. Costs resulting from implementation of the Strategy 2020 will have to be factored in, which should lead to a sustained improvement in the EBIT margin in subsequent years. For this reason, the Group expects the adjusted EBIT margin for 2015 to remain at the record level reached in 2014. The forecast is based on the assumption that material prices will remain stable.
The KION Group expects free cash flow in 2015 to be slightly below the very high level achieved in the previous year. This is due to increased capital expenditure on the one hand, and to higher anticipated tax payments on the other.
Expected financial position
Having repaid the corporate bonds in an amount exceeding €500 million using funds from the revolving credit facility and other bank loans, the KION Group was able to further optimise its funding structure last year and considerably decrease the level of interest payable in subsequent years. There was also a substantial reduction in net debt, which dropped to €811 million in 2014.
In 2015, the KION Group plans to use free cash flow to lower its net debt still further.
Overall statement on expected performance
The basis for the long-term success of the KION Group is the strong position occupied by its global and regional brands in western Europe and the emerging markets. The global brands Linde Material Handling and STILL, in particular, safeguard their technology leadership and underline their status as premium brands by maintaining high levels of capital expenditure and R&D spending.
By pursuing its Strategy 2020 and other measures, the KION Group is expecting profitable growth for 2015 overall and aims to achieve a sustained improvement in its market position worldwide.