Earnings

EBIT and EBITDA

Earnings before interest and tax (EBIT) for the nine-month period declined year on year to €237.7 million (Q1 – Q3 2013: €266.7 million) and were significantly affected by a €32.0 million impairment charge on the 30 per cent stake held in Linde Hydraulics GmbH & Co. KG, which had a negative impact on the profit (loss) from equity-accounted investments.

Adjusted EBIT came to €308.7 million, which was up on the comparable prior-year figure of €300.9 million despite higher administrative expenses following the IPO. The adjusted EBIT margin improved slightly to reach 9.2 per cent, compared with 9.1 per cent for the first nine months of 2013.

The adjusted EBIT figure does not include any current earnings-related items from the KION acquisition. The figure is also adjusted for non-recurring items such as the purchase-price-related, non-operating items resulting from the sale of Linde Hydraulics. In the quarter under review, the €32.0 million impairment charge on Linde Hydraulics was recognised as a non-cash, non-recurring item. >> Table 05

EBITDA declined by 1.7 per cent to €507.4 million due to the impairment charge on Linde Hydraulics. Adjusted EBITDA was a considerable 6.3 per cent higher than the prior-year figure (Q1-Q3 2013: €527.4 million). This equates to an adjusted EBITDA margin of 16.6 per cent (Q1 – Q3 2013: 15.9 per cent). >> Table 06

Key influencing factors for earnings

The cost of sales was virtually unchanged year on year at €2,390.0 million (Q1 – Q3 2013: €2,388.0 million). Gross profit therefore rose by 5.8 per cent to reach €982.3 million (Q1 – Q3 2013: €928.8 million). The key reasons for this trend were the improved product mix and a greater proportion of service business.

Selling expenses went up by 4.3 per cent year on year to €421.0 million (Q1 – Q3 2013: €403.7 million). The reasons for this rise included the first-time consolidation of the German dealer Willenbrock and the appearances at trade fairs by Linde Material Handling and STILL in the second quarter. The increase in administrative expenses, which advanced by 7.9 per cent to €236.6 million (Q1-Q3 2013: €219.3 million), was due in part to higher costs incurred since the IPO and higher IT costs.

The main factor in the sharp decrease to €0.8 million reported under ‘Other’ (Q1 – Q3 2013: €49.7 million) was the €32.0 million impairment charge on Linde Hydraulics, which was recognised under the share of profit (loss) of equity-accounted investments. In the first nine months of 2013, the ‘Other’ item had included a positive non-recurring item of €8.1 million from the sale of the hydraulics business. >> Table 07

Net financial expenses

In the first nine months of 2014, net financial expenses improved to €61.8 million, compared with €182.4 million in the corresponding prior-year period. The remeasurement of existing options in connection with Linde Hydraulics resulted in financial income of €43.0 million. Early repayment of two tranches of the corporate bonds in the second quarter of 2014 led to non-recurring financial expenses of €23.2 million. Adjusted for these effects, net financial expenses amounted to €81.6 million in the reporting period.

Income taxes

Income tax expenses amounted to €57.2 million. The tax rate in the first nine months of the year was 32.5 per cent. The lower tax expense in the comparative period of 2013 was mainly attributable to the recognition of deferred tax assets on previously unusable loss carryforwards.

Net income for the period

The KION Group’s net income after taxes totalled €118.6 million. This was significantly higher than the prior-year figure of €81.3 million. One of the main factors in the improvement was lower interest expenses following optimisation of the funding structure. Diluted and basic earnings per share for the nine-month period came to €1.19. Based on an average of 98.9 million no-par-value shares, pro-forma earnings per share for the first nine months of 2013 came to €0.82.