Letter to shareholders

Of course it is not only thanks to Dematic that the KION Group is fully equipped to fulfil – and benefit from – our customers’ expectations regarding innovation and solutions in the world of Intralogistics 4.0. Sophisticated technology has made our smart trucks even safer, and we have refined our fleet data management systems. We are breaking down the barriers of automation with STILL’s award-winning autonomous order picker, iGo neo: this intelligent truck follows the operator at every turn like a willing colleague. What’s more, Linde has expanded its range of Linde-MATIC trucks equipped with robotics, while Egemin has unveiled new, compact versions of its automatic guided vehicle systems. We have also made huge advances in cutting-edge drive technology: Linde and STILL went to market with the first counterbalance trucks powered by a lithium-ion battery in 2016.

Our traditional business of forklift trucks and warehouse technology on the one hand and the automation solutions from Dematic on the other are the perfect fit, and not only in technological terms. The two companies complement each other because they both have a strong market position and regional presence, which will open up cross-selling potential in the medium term. Dematic will make use of the KION Group’s outstanding reputation and the leading position of its brands in key markets such as Europe, China and Brazil, while KION benefits from Dematic’s strong standing in the US and European automation markets. Moreover, the combination of the KION Group’s comprehensive sales and service network and Dematic’s large installed base will also result in opportunities for further growth in the software and service businesses and in the retrofitting and upgrading of systems. The benefits that each company has for the other will also generate cost synergies.

Customer needs, market requirements, the technology: everything is changing from the ground up, and our Company is of course evolving at the same time. Since acquiring Dematic, we have put a new management and reporting structure in place for the KION Group. The Industrial Trucks & Services, Supply Chain Solutions and Corporate Services segments have replaced the Linde, STILL, Financial Services and Other segments. Industrial Trucks & Services consists of the KION Group’s existing business and is made up of four regional operating units: Linde Material Handling EMEA and STILL EMEA, which each concentrate on Europe, the Middle East and Africa, plus KION APAC and KION Americas, which hold cross-brand responsibility for the Asia-Pacific region and the Americas respectively. Supply Chain Solutions comprises the global Dematic operating unit, Egemin Automation and Retrotech, while Corporate Services includes head-office functions and groupwide services such as internal logistics and IT services.

In the magazine section of this annual report at www.kiongroup.com/A_New_Era, you can discover what this new era for the KION Group means – including on a personal level – to the people who head up our operating units. You will also find videos, photos and stories illustrating how the KION Group is actually tackling changing markets and technologies for the benefit of our customers.

We have made significant progress with establishing our CTO organisation, which has been managed by our Chief Technology Officer Dr Eike Böhm since the summer of 2015. The organisation brings together key technical functions of the KION Group in a centralised structure. The responsibilities have now been fully defined, the CTO organisation’s more than 2,000 employees have attended workshops to learn about its purpose and objectives and major projects have got under way. We are therefore well on track to harness the full potential of cross-brand collaboration on product development, of course with Dematic on board.

Our new and future-proof structures following the purchase of Dematic, the constant innovation in our core business of forklift trucks, warehouse technology and related services, the corresponding changes to our Group’s structure – these are all vital elements in achieving the targets of our Strategy 2020: more growth, increased resilience to crises, higher profitability and greater efficiency. One of our core tasks in 2017 will therefore be to press ahead with the integration of Dematic so that we can add even more value for our customers, shareholders, employees and partners in the years to come. To support the change that is needed inside the Company, we launched the ‘Lift up’ initiative last year as a way of communicating the new structures and embedding them in the corporate culture.

Clearly, the only constant in the KION Group is change. This was never more obvious than last year, and yet we again generated profitable growth. We met our forecasts for 2016 in full, achieving record results. Excluding the purchase of Dematic, our revenue, adjusted EBIT, adjusted margin, and net income reached unprecedented levels, as did the value of our order intake. The profitability of the KION Group (excluding Dematic) rose to 9.9 per cent. In our outlook for 2017, we predict further profitable growth in both of our new core segments, Industrial Trucks & Services and Supply Chain Solutions.

We can thank our now more than 30,000 highly motivated and skilled employees around the world for these outstanding results. I would like to take this opportunity, on behalf of the entire Executive Board, to offer them my sincere thanks for their fantastic efforts.