Earnings

EBIT and EBITDA

Earnings before interest and tax (EBIT) amounted to €77.0 million, which was 10.9 per cent below the same period of the previous year (Q1 2013: €86.4 million). Non-recurring items had resulted in income of €1.3 million in the prior-year period, whereas they led to expenses of €4.5 million in the first quarter of this year. As had been the case in the first three months of 2013, these one-off expenses included losses related to the purchase price allocation for the equity-accounted Linde Hydraulics. It should be noted that the figure for the first quarter of 2013 had also included additional non-recurring income of €8.1 million relating to the hydraulics business, which was sold in December 2012. Depreciation, amortisation and impairment losses in connection with the KION acquisition in 2006 went down by €1.8 million to €5.9 million in the first quarter of 2014. Adjusted EBIT, which excludes non-recurring items and KION acquisition items, totalled €87.4 million (Q1 2013: €92.8 million). This decline of 5.8 per cent is largely due to the fact that the figure for the first quarter of 2013 had included positive exchange differences of €3.5 million, whereas these were insignificant in the period under review. The adjusted EBIT margin decreased from 8.5 per cent to 8.0 per cent in the first three months of 2014. >> TABLE 05

EBITDA was down slightly year on year, declining by 1.5 per cent to €166.5 million (Q1 2013: €169.0 million). By contrast, there was a moderate rise in adjusted EBITDA, which climbed to €171.2 million (Q1 2013: €167.9 million). This equates to an adjusted EBITDA margin of 15.7 per cent (Q1 2013: 15.5 per cent). >> TABLE 06

Key influencing factors for earnings

Unlike revenue, the cost of sales was down by 0.8 per cent on the first three months of 2013 at €776.5 million (Q1 2013: €783.1 million). The growth in revenue from new trucks tailored to specific customer requirements had a positive impact on the gross margin, as did the higher proportion of total revenue accounted for by the service business. Gross profit advanced by 3.4 per cent to €312.5 million.

At €139.2 million, selling expenses were almost at the same level as in the first three months of 2013. Administrative expenses were slightly higher year on year at €74.4 million (Q1 2013: €72.7 million) owing to changes to collective bargaining agreements, among other things.

The reasons for the sharp decline in the ‘Other’ item, which dropped by €16.8 million to €7.6 million, included positive exchange differences in the prior-year period and the non-recurring item resulting from the sale of the hydraulics business in the prior-year period. The loss from equity-accounted investments amounted to €1.6 million (Q1 2013: loss of €1.3 million) and is included in the ‘Other’ item. The main reason for this was the pro-rata loss from Linde Hydraulics, which was the result of current depreciation, amortisation and impairment losses in connection with its purchase price allocation (PPA), among other factors. >> TABLE 07

Net financial expenses

There was a significant improvement in the balance of financial income and financial expenses, leading to net financial expenses of €30.3 million (Q1 2013: €47.6 million). The main reason for this was the decline in interest expenses arising from loan liabilities following repayment in full of the acquisition finance and repayment of the floating-rate portion of the 2011/2018 corporate bond (floating rate note, €175.0 million). On a long-term basis, this more than offset the higher interest expenses arising from the capital market liabilities that resulted from issuing the second bond in February 2013 with a higher fixed interest rate than the floating-rate bank liabilities that it replaced. Net financial income from exchange differences reduced by €3.8 million to €0.3 million following repayment in full of the foreign-currency loan denominated in US dollars and the termination of corresponding hedging instruments in the previous year.


Income taxes

Income taxes amounted to €18.9 million compared with €10.3 million in the first three months of 2013. One of the main reasons for the increase was the higher level of earnings before tax. The deferred tax expense of €4.7 million (Q1 2013: deferred tax income of €8.5 million) was predominantly the result of utilising deferred tax assets relating to loss carryforwards of the German tax group.

Net income for the period

The KION Group’s net income after taxes totalled €27.8 million, which was slightly down on the €28.6 million reported in the first quarter of the previous year. Diluted and basic earnings per share for the reporting period came to €0.28 (Q1 2013: €0.44). Based on an average of 98.9 million no-par-value shares, pro-forma earnings per share for the first quarter of 2013 also came to €0.28.