Earnings and profitability

EBIT, EBITDA and ROCE

Earnings before interest and tax (EBIT) advanced by 21.8 per cent to €422.8 million. The prior-year figure of €347.0 million had included an impairment loss of €13.5 million relating to the equity investment in Linde Hydraulics. This had led to a substantial increase in non-recurring items, which amounted to a net expense of €57.0 million in 2014, compared with a net expense of only €33.0 million in 2015. This mainly comprised expenses and impairment losses in connection with the efficiency measures initiated under the Strategy 2020.

Earnings before interest and tax, adjusted for non-recurring items and KION acquisition items (adjusted EBIT), rose to €482.9 million, an increase of 9.0 per cent compared with the previous year (2014: €442.9 million) and the highest ever figure in the history of the Company. The adjusted EBIT margin was unchanged year on year at 9.5 per cent. Most of the significant improvement in gross profit (up by 11.6 per cent) was offset by higher expenses in the individual functional divisions resulting from currency effects, changes to collective bargaining agreements and other factors.

At 11.9 per cent, return on capital employed (ROCE) was slightly above the prior-year figure (2014: 11.4 per cent). The increase in adjusted EBIT was partly offset by a moderate rise in the capital employed. > TABLE 018

Earnings before interest, tax, depreciation and amortisation (EBITDA) reached €824.2 million, compared with €714.2 million in the prior year. Adjusted EBITDA rose to €850.0 million (2014: €780.4 million). This equates to an adjusted EBITDA margin of 16.7 per cent, the same as it had been in 2014. > TABLE 019

Key influencing factors for earnings

Compared with the rise in revenue, there was a disproportionately low increase of 7.9 per cent in the cost of sales to €3,601.7 million (2014: €3,337.4 million). Gross profit therefore climbed by 11.6 per cent to €1,496.2 million (2014: €1,340.5 million) and the gross margin improved from 28.7 per cent to 29.3 per cent. One of the factors in this improvement was the higher margin in the new truck business, which resulted in part from a relatively low increase in the cost of materials and higher proportion of customised equipment.

Selling expenses grew by 8.3 per cent to €618.0 million (2014: €570.5 million) and thus rose at a slightly lower rate than revenue. The increase in research and development costs to €143.0 million (2014: €125.7 million) was attributable, among other factors, to expenses in connection with implementing the Strategy 2020. The higher personnel expenses and other administrative expenses for innovations in drive technology and the further development of the global product platforms were partly offset by savings that have already been generated through measures to increase efficiency. General administrative expenses, which went up by 10.0 per cent to €355.9 million in 2015 (2014: €323.6 million), were also affected by implementation of the Strategy 2020. Furthermore, currency effects and changes to collective bargaining agreements pushed up costs across all functional divisions.

The ‘other’ item of €43.6 million was higher than the previous year’s figure of €26.4 million. This increase was mainly due to the total net income from equity investments of €20.3 million, which is recognised under this item. This includes a share of profit of equityaccounted investments amounting to €10.6 million. In 2014, the total loss of €33.9 million from the equity-accounted Linde Hydraulics resulted in an overall net loss from equity investments of €23.4 million. In addition to net income (loss) from equity investments and other income and expenses, the ‘other’ item also contains income and expenses resulting from exchange differences. The net figure was down by €14.5 million compared with 2014. > TABLE 020

Net financial income / expenses

There was a significant improvement in the balance of financial income and financial expenses, leading to net financial expenses of €92.6 million compared with a prior-year figure (adjusted for non-recurring items) of €108.8 million. The main factor here was the optimisation of the funding structure in 2014 resulting from the early repayment of two tranches of the corporate bonds. This resulted in one-off financial expenses of €23.2 million, which were also included in the financial expenses of €88.8 million reported in 2014 as well as financial income from the remeasurement of options in connection with Linde Hydraulics (€43.2 million).

Income taxes

Income tax expenses amounted to €109.2 million (2014: €80.0 million). This increase of €29.2 million was mainly attributable to the rise in earnings in 2015 and to current tax expenses for previous years. It was partly offset by deferred tax income that resulted mainly from the recognition of deferred tax assets related to loss carryforwards and interest carryforwards. The tax rate was 33.1 per cent (2014: 31.0 per cent).

Net income and appropriation of profit

Net income amounted to €221.1 million, exceeding the 2014 figure of €178.2 million by 24.0 per cent. Net income of €217.1 million (2014: €176.7 million) was attributable to the shareholders of KION GROUP AG. Basic and diluted earnings per share came to €2.20 (2014: €1.79) based on an average number of no-par-value shares in the year of 98.7 million (2014: 98.7 million). This did not include 160,050 no-par-value treasury shares that had been repurchased by KION GROUP AG as part of a buy-back to support the KION Employee Equity Programme.

The Executive Board and Supervisory Board of KION GROUP AG will propose a dividend of €0.77 per share to the Annual General Meeting on 12 May 2016. As there were 98,739,950 dividend-bearing shares as at 31 December 2015, this equates to a total dividend payout of €76.0 million. A total of around 35.0 per cent of the net income accruing to the KION GROUP AG shareholders will therefore be distributed in dividends.