Financial position

The liabilities in connection with the bridge loan for the acquisition of Dematic (acquisition facilities agreement, AFA) were reduced by a further €100.0 million as a result of an early repayment during the reporting period. As a result, there was an outstanding floating-rate loan of €500.0 million as at 31 March 2019. It is due to mature in October 2021. By restructuring its debt, the KION Group reduces its interest payments.

The KION Group has issued guarantees to the banks for all of the payment obligations under the senior facilities agreement (SFA) and the AFA and it is the borrower in respect of all the payment obligations resulting from the promissory note. All covenants were complied with as at the end of the first quarter of 2019.

Analysis of capital structure

At €9,964.6 million, current and non-current liabilities rose by €300.9 million as at the reporting date (31 December 2018: €9,663.7 million). The increased volume of business led to a rise not only in liabilities attributable to financing of the direct and indirect long-term leasing business but also in trade payables.

Non-current financial liabilities declined to €1,719.6 million due to partial repayment of the AFA (31 December 2018: €1,818.7 million). The increase of €42.8 million in current financial liabilities to €269.3 million (31 December 2018: €226.5 million) was due to drawdowns from the revolving credit facility under the SFA that were needed to fund working capital. As at 31 March 2019, the unused revolving credit facility under the SFA stood at €1,025.5 million (31 December 2018: €1,048.2 million). Net financial debt (non-current and current financial liabilities less cash and cash equivalents) fell once again to reach €1,824.8 million (31 December 2018: €1,869.9 million). This equated to 1.1 times the annualised adjusted EBITDA. > TABLE 11

At €1,118.8 million, the retirement benefit obligation was higher than at the end of last year (31 December 2018: €1,043.0 million), largely owing to lower discount rates.

The continuing expansion of the long-term direct and indirect leasing business led to a moderate increase in the funding volume during the quarter under review. This volume totalled €2,001.2 million as at 31 March 2019 (31 December 2018: €1,906.0 million). Of this total, €1,379.0 million (31 December 2018: €1,165.3 million) related to the financing of the long-term direct and indirect leasing business in the form of liabilities from financial services, which also include the residual value obligations arising from the indirect leasing business in an amount of €315.8 million (31 December 2018: €319.5 million). The remaining amount of €622.2 million was attributable to lease liabilities (31 December 2018: €740.6 million).

A sum of €332.5 million, representing a portion of the financing of the short-term rental fleet, was recognised under liabilities from financial services (31 December 2018: €307.1 million). Overall, liabilities from financial services rose by €239.1 million to €1,711.5 million (31 December 2018: €1,472.4 million).

Current and non-current other financial liabilities totalled €861.5 million (31 December 2018: €813.2 million). In addition to the remaining €259.7 million for the financing of the short-term rental fleet by means of sale and leaseback sub-lease transactions (31 December 2018: €289.9 million), they include liabilities from procurement leases amounting to €422.1 million (31 December 2018: €421.2 million).

Contract liabilities, which amounted to €562.1 million (31 December 2018: €570.1 million), mainly related to advance payments from customers in connection with the long-term project business in the Supply Chain Solutions segment.

At €3,422.2 million, consolidated equity was higher than the figure of €3,305.1 million reported at the end of 2018. This was predominantly due to the net income for the period of €93.1 million. The lower level of interest rates resulted in actuarial losses. Their negative impact was more than offset by very positive effects from currency translation, which as a result pushed up consolidated equity by a total of €29.4 million. The equity ratio was 25.6 per cent, which was virtually the same level as at 31 December 2018 (25.5 per cent). > TABLE 10

Analysis of capital expenditure

The KION Group’s total capital expenditure on property, plant and equipment and on intangible assets (excluding right-of-use assets from procurement leases) came to €55.6 million in the first quarter, compared with €48.9 million in the first three months of 2018. Spending in the Industrial Trucks & Services segment continued to be focused on capital expenditure on product development and on the expansion and modernisation of production and technology facilities. Capital expenditure in the Supply Chain Solutions segment mainly related to development costs.

Analysis of liquidity

Cash and cash equivalents declined to €164.0 million as at 31 March 2019 (31 December 2018: €175.3 million). Taking into account the revolving credit facility that was still freely available, the unrestricted cash and cash equivalents available to the KION Group as at 31 March 2019 amounted to €1,187.1 million (31 December 2018: €1,219.8 million).

Net cash provided by operating activities totalled €132.0 million, which was significantly higher than the figure for the prior-year period of €63.0 million. As well as the higher level of EBIT, the smaller increase in working capital compared to the prior-year period made a positive contribution to cash flow from operating activities. In particular, trade payables rose significantly year on year due to volume-related and reporting date-related effects. The expansion of the leasing and rental business gave rise to cash payments of €88.4 million (Q1 2018: €63.0 million).

Net cash used for investing activities amounted to €50.0 million and was on a par with the first quarter of last year (Q1 2018: €50.2 million). Within this figure, cash payments for capital expenditure on product development and on property, plant and equipment (excluding right-of-use assets related to procurement leasing) rose to €55.6 million (Q1 2018: €48.9 million).

Free cash flow – the sum of cash flow from operating activities and investing activities – thus improved to €82.0 million (Q1 2018: €12.7 million).

Net cash used for financing activities of €97.0 million (Q1 2018: net cash provided by financing activities of €35.5 million) was mainly attributable to a further partial repayment of a tranche of the long-term AFA that was partly offset by drawdowns from the revolving credit facility. Overall, financial debt taken on during the reporting period stood at €622.0 million (Q1 2018: €451.6 million); repayments amounted to €681.9 million (Q1 2018: €385.8 million). Payments made for interest portions and principal portions under procurement leases amounted to €30.2 million in the quarter under review (Q1 2018: €28.4 million). The net cash used for current interest payments decreased from €8.6 million in the first quarter of 2018 to €5.4 million in the reporting period due to lower average net debt during the year. > TABLE 12