Strategy of the KION Group

Objectives of the KION 2027 strategy

The KION Group forged ahead with the implementation of its KION 2027 strategy during the reporting year. The KION 2027 strategy provides the framework for profitable growth in the Group and specifies groupwide targets. The strategy is aligned with the KION Group’s vision: ‘We are the best company in the world at understanding our customers’ material handling needs and providing the right solutions.’

The KION 2027 strategy is unlocking the potential of both operating segments and placing an even greater focus on a shared, customer-centric innovation, sales and brand strategy. The emphasis is on developing and marketing integrated, automated and sustainable supply chain solutions and mobile automation solutions for customers around the world. In the Industrial Trucks & Services segment, products and services are being transitioned to sustainable energy concepts and being complemented with consultancy and project work. And in the Supply Chain Solutions segment, the range of options for customers is being expanded through system solutions for special requirements in the relevant customer segments. The KION 2027 strategy provides the framework in the Group and sets groupwide targets:

  • Growth: The KION Group aims to grow at a faster rate than the global material handling market by evolving into a solutions provider in both segments.
  • Profitability: The KION Group wants to retain its position as the most profitable supplier in the industry and improve its adjusted EBIT margin so that it is permanently in double digits.
  • Efficient use of capital: The KION Group continually strives to optimise the return on capital employed (ROCE). Besides increasing earnings, the focus here is on asset management and efficient use of capital.
  • Resilience: Profitability throughout the various market cycles is to be guaranteed by a robust business model. This will involve greater diversification in terms of regions and customer sectors alongside efforts to expand the service business and further optimise the production network.

During the reporting year, the KION Group paved the way for further expansion of the business in the key growth market of China. For example, plans were finalised for an additional plant for counterbalance trucks in Jinan in Eastern China, which will form an important base for the further successful implementation of the KION Group’s growth strategy. Particular attention was also paid to increasing the Company’s resilience through even greater international diversification of new business and through a strong service business. By expanding its production capacity in southern China, Poland and India and by continuing to invest significantly in the development of products and solutions, the KION Group intends to become even more robust in the face of downturns in the market cycle and disruptions to global trade.

Strategic fields of action and measures in 2019

Five fields of action have been defined for the KION 2027 strategy – energy, digital, automation, innovation and performance – for which a wide range of strategic measures were implemented in 2019:

Fields of action

Solutions for Material Handling

  • Energy

    We are leading the material handling industry in the efficient use of energy through our products and solutions. We focus on new energy sources for industrial trucks and related services.

  • Digital

    We transform our business into the digital world. For customers we develop digital solutions to improve their intralogistics efficiency. Internally we digitalize our processes to improve our performance.

  • Automation

    Our solutions allow customers to benefit from automation effectively, supporting them on their journey to “lights-out” warehouses.

  • Innovation

    We drive innovation in the material handling industry through an effective innovation ecosystem and a state-of-the-art development process & speed.

  • Performance

    We continuously improve the efficiency in our Group as well as the performance of our products.

Energy

The KION Group continually develops its products and solutions so that its customers are able to use energy as efficiently and sustainably as possible. Electric-powered forklift trucks and warehouse trucks already make up 85.5 per cent of the KION Group’s order intake in terms of units. A focus of the strategy is to develop and commercialise new energy sources for industrial trucks and related services, such as the provision of advice on energy matters.

The joint venture KION Battery Systems GmbH, agreed with BMZ Holding GmbH in 2019, is an important part of this. Both partners can draw on comprehensive expertise in the field of lithium-ion technology. At the BMZ site in Karlstein am Main, Germany, a production facility is being created that is set to initially manufacture batteries for counterbalance trucks and then at a later point in time also make batteries for warehouse trucks. The collaboration is strengthening the KION Group’s position in the energy-efficient drive technology segment and creating capacity to equip everything from entire future truck fleets to heavy-duty trucks capable of handling large loads.

In a parallel development, Linde and STILL have expanded their lithium-ion battery portfolio and are now covering the main load ranges in various capacity classes in response to customer requirements. The new models that Linde and STILL have brought to the market are available with a lithium-ion battery, as is the N20 low-lift order picker, now much improved in terms of ergonomics and safety, and the RX series of electric forklift trucks from STILL, including the new RX 60. Linde’s portfolio of fuel cell trucks was also expanded (see ‘Research and development’).

Digital

The KION Group is gearing its business to customers’ increasingly digitalised processes in order to improve their intralogistics efficiency. The digitalisation of customer solutions – including through the use of the proprietary warehouse management system Dematic iQ – is being accompanied by the digitalisation of internal processes and resulting improvements in performance. The KION Group is not only integrating software into its solutions but is also increasingly marketing software solutions as standalone products. Internal organisational structures are also being modernised in order to pave the way for agile development and embed it across the Group.

Dematic launched iQ Virtual onto the market in the reporting year, an emulation and simulation platform that enables automated intralogistics systems to be visualised and validated. The digital networking of industrial trucks is also playing an ever greater role. The H20–H35 IC counterbalance trucks from the 1202 product line that Linde has recently introduced onto the market reflect this trend and offer digital networking capability as standard. As part of the digitalisation of internal processes, fleet management solutions have been migrated to KION’s corporate cloud so that they can be made available to customers even more quickly than before.

Automation

In the field of automation, the KION Group offers specific and scalable solutions for a wide range of customer requirements, from single forklift trucks right up to fully automated large-scale warehouses. These are helping customers move closer to the goal of a ‘lights-out’ warehouse. Since 2019, because of their huge importance for the intralogistics of the future, mobile automation activities have been coordinated on a cross-segment basis by the Mobile Automation unit, which forms part of KION’s digital function.

The mobile automation team has forged ahead with incorporating autonomous trucks and automated guided vehicle systems (AGVs) into end-to-end solutions for warehouses. Dematic Compact, an automated system for the transport of pallets, is one of the new solutions on offer in this segment. The IFOY Award presented to STILL in the category AGV & Intralogistics Robot in 2019 (see ‘Customers’) provided further confirmation of the company’s prominent position in the market.

The piloting of Dematic’s PackMyRide, the first fully automated parcel-loading solution for the ‘last mile’ stage of delivery, was another step taken last year. PackMyRide integrates the intralogistics systems with automated guided vehicle systems and thus uses the full breadth of the KION Group’s technology. A further innovation is Dematic’s micro-fulfilment automation system, which was introduced in the fourth quarter of 2019 and is tailored to the requirements of omnichannel retailers with high throughput rates.

Innovation

The KION Group develops technologies on a cross-segment basis and in doing so drives forward innovation in the material handling market. It is continuing to invest significantly in research and development at a rate of 2.7 per cent of revenue.

In addition to efficient development processes, the KION Group also works with an effective innovation ecosystem. It partners with research institutes, universities and companies so that it can go to market with new products and solutions within a short space of time. Support comes from KION Invest, which since early 2019 has been working with start-ups to drive forward new technologies and business models that will benefit KION Group customers in the future.

KION Digital Campus, the KION Group’s agile innovation laboratory for new digital solutions and business models, continued to provide support last year in important product developments, including digitally networked forklifts and warehouse trucks for Industry 4.0 applications.

Performance

The KION Group is continually improving internal efficiency, optimising the performance of its products from a customer perspective and fully leveraging synergies.

The efficiency drive continued at European production sites in the Industrial Trucks & Services segment in 2019 and in some areas was completed. From early 2021, efficiency is set to be further enhanced by the relocation of a product series from Aschaffenburg to the new Polish site in Kolbaskowo, near Szczecin.

In the past year, a group-wide programme (Performance Excellence) was launched to optimise processes and increase efficiency. The programme, which addresses various areas for increasing earnings and reducing costs, already showed first signs of success and led to cost savings in the fiscal year under review. It is also expected to contribute to the Company’s success in the coming fiscal years.

Efforts also continued to be focused on making product development even more efficient, based on a global, modular platform strategy that allows for localisation with minimal effort.

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