Financial position

Principles and objectives of financial management

The KION Group pursues a conservative financial policy of maintaining a strong cross-over credit profile with reliable access to debt capital markets. By pursuing an appropriate financial management strategy, the KION Group makes sufficient cash and cash equivalents available at all times to meet the Group companies’ operational and strategic funding requirements. In addition, the KION Group optimises its financial relationships with customers and suppliers, manages any collateral security offered and mitigates the financial risk to its enterprise value and profitability, notably currency risk, interest-rate risk, price risk, counterparty risk and country risk. In this way, the KION Group creates a stable funding position from which to maintain profitable growth.

The financial resources within the KION Group are provided on the basis of an internal funding approach. The KION Group collects liquidity surpluses of the Group companies in central or regional cash pools and, where possible, covers subsidiaries’ funding requirements with intercompany loans. This funding enables the KION Group to present a united front in the capital markets and strengthens its hand in negotiations with banks and other market participants. The Group occasionally arranges additional credit lines for KION Group companies with local banks or leasing companies in order to comply with legal, tax and other regulations.

The KION Group is a publicly listed corporate group and therefore ensures that its financial management takes into account the interests of shareholders and those of the banks providing its funding. For the sake of all stakeholders, the KION Group makes sure that it maintains an appropriate ratio of internal funding to borrowing. The KION Group’s borrowing is based on a long-term approach. The core components of this borrowing will become due for repayment in the years 2018 to 2021.

Depending on requirements and the market situation, the KION Group will also avail itself of the funding facilities offered by the public capital markets in future. The KION Group therefore seeks to maintain an investment-grade credit rating in the capital and funding markets by rigorously pursuing a value-based strategy, implementing proactive risk management and ensuring a solid funding structure. Since June 2016, rating agency Standard & Poor’s has classified the KION Group as BB+ with a negative outlook, while the rating from Moody’s since 1 November 2016 has been Ba1 with a negative outlook. Shortly after the reporting date on 4 January 2017, Fitch Ratings issued the KION Group with a long-term issuer rating of BBB– with a stable outlook. This is the first time that the KION Group has received an investment-grade rating.

The KION Group maintains a liquidity reserve in the form of unrestricted, agreed and confirmed credit lines and cash in order to ensure long-term financial flexibility and solvency. The Group also uses derivatives to hedge currency risk.

Main capital market activities in the reporting period

Analysis of capital structure

Analysis of capital expenditure

Analysis of liquidity