Earnings and profitability

EBIT, EBITDA and ROCE

Earnings before interest and tax (EBIT) improved by 2.8 per cent to €434.8 million (2015: €422.8 million). Although there was a growth-related rise in gross profit, selling and administrative expenses also increased. Generally, the earnings figures went up as a result of the acquisition of Dematic, which was included in each of the figures for the first time, but only for two months. In addition, functional costs rose because of the negative effects from purchase price allocation – especially that relating to Dematic – and because of the non-recurring transaction costs associated with the Dematic acquisition. The non-recurring items in 2015 amounting to €33.0 million related mainly to expenses and impairment losses in connection with the efficiency measures initiated under the Strategy 2020.

EBIT adjusted for non-recurring items and purchase price allocation effects (adjusted EBIT) amounted to €537.3 million (2015: €482.9 million). The adjusted EBIT margin improved to 9.6 per cent (2015: 9.5 per cent). > TABLE 019

As a consequence of the inclusion of Dematic for two months, return on capital employed (ROCE) was 6.8 per cent (2015: 11.9 per cent). While adjusted EBIT increased, there was also a substantial rise in capital employed.

Earnings before interest, tax, depreciation and amortisation (EBITDA) reached €889.5 million, compared with €824.2 million in the prior year. Adjusted EBITDA rose to €931.6 million (2015: €850.0 million). This equated to an adjusted EBITDA margin of 16.7 per cent. > TABLE 020

Key influencing factors for earnings

The cost of sales rose by 10.4 per cent to €4,034.6 million (2015: €3,655.1 million). Gross profit amounted to €1,552.6 million, up by 7.6 per cent on the 2015 figure of €1,442.8 million. The gross margin was 27.8 per cent compared with 28.3 per cent in 2015.

Selling expenses grew by 7.2 per cent to €662.4 million in 2016 (2015: €618.0 million) as a result of the stepping up of sales activities – also in connection with the inclusion of Egemin Automation for the whole of the year and as a result of the acquisition of Dematic and Retrotech. At €411.2 million, administrative expenses were higher than in the prior year (€355.9 million) for a number of reasons, including consultancy expenses incurred in connection with the Dematic acquisition. Research and development costs in the same period increased year on year to €96.5 million (2015: €89.7 million). The ‘other’ item came to €52.3 million (2015: €43.6 million). This included the share of profit (loss) of equity-accounted investments, which amounted to a profit of €6.5 million (2015: profit of €10.6 million) as well as gains and losses from exchange differences. > TABLE 021

Net financial income / expenses

The net financial expenses representing the balance of financial income and financial expenses increased by €3.1 million year on year to €95.7 million (2015: net financial expenses of €92.6 million). Non-recurring financial expenses of €25.7 million arose in February 2016 as a result of the new financing structure, but these have already been fully offset by the optimised financing arrangements put in place during the reporting year. The bridge loan drawn down to finance the Dematic acquisition led to a higher interest cost in the fourth quarter of 2016.

Income taxes

Income tax expenses amounted to €93.1 million (2015: €109.2 million). The tax rate was 27.4 per cent (2015: 33.1 per cent).

Net income and appropriation of profit

Net income amounted to €246.1 million, up by 11.3 per cent on the 2015 figure of €221.1 million. Net income of €245.5 million (2015: €217.1 million) was attributable to the shareholders of KION GROUP AG. Basic earnings per share came to €2.38 (2015: €2.20) based on 103.2 million (2015: 98.7 million) no-par-value shares. Diluted earnings per share came to €2.38 (2015: €2.20) based on an average number of shares of 103.3 million (2015: 98.7 million) during the year. These calculations did not include around 164.5 thousand 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 the Supervisory Board propose to the Annual General Meeting to be held on 11 May 2017 that an amount of €86.9 million be appropriated from the distributable profit of KION GROUP AG for the 2016 financial year of €129.2 million for the payment of a dividend of €0.80 per dividend-bearing share. It is also proposed that a further sum of €42.3 million be transferred to other revenue reserves and that €0.1 million be carried forward to the next accounting period. It is therefore planned to distribute 35 per cent of the net income accruing to KION GROUP AG shareholders in dividends.