[43] Segment report

The Executive Board, as the chief operating decision-maker (CODM), manages the KION Group on the basis of the following segments: Industrial Trucks & Services, Supply Chain Solutions, and Corporate Services. The segments have been defined in accordance with the KION Group’s organizational and strategic focus.

Description of the segments

Industrial Trucks & Services

So that it can fully cater to the needs of material handling customers worldwide, the business model of the Industrial Trucks & Services segment covers key steps of the value chain: product development, manufacturing, sales and service, truck rental and used trucks, fleet management, and leasing to support the core industrial truck business. The segment operates a multi-brand strategy involving the three international brands Linde, STILL, and Baoli plus the two local brands Fenwick and OM.

Supply Chain Solutions

The Supply Chain Solutions segment, with its Dematic Operating Unit, is a strategic partner to customers in a variety of industries, supplying them with integrated technology and software solutions with which to optimize their supply chains. Manual and automated solutions are provided for all functions along customers’ supply chains, from goods inward and multishuttle warehouse systems to picking and value-added packing. This segment is primarily involved in customer-specific, longer-term project business operated under the leadership of the Dematic brand. With global resources, nine production facilities worldwide, and regional teams of experts, Dematic is able to plan and deliver logistics solutions with varying degrees of complexity anywhere in the world.

Corporate Services

The Corporate Services segment comprises holding companies and service companies that provide services such as IT, logistics, and general administration across all segments. The bulk of the total revenue in this segment is generated by internal IT and logistics services.

Segment management

The KPIs used to manage the segments are order intake, revenue, and adjusted EBIT. Segment reporting therefore includes a reconciliation of externally reported consolidated earnings before interest and tax (EBIT) – including effects from purchase price allocations and non-recurring items – to the adjusted EBIT for the segments (‘adjusted EBIT’). Intra-group transactions are generally conducted on an arm’s-length basis. Segment reports are prepared in accordance with the same accounting policies as the consolidated financial statements, as described in note [7].

The following tables show information on the KION Group’s operating segments for 2020 and 2019:

External revenue by region is presented in the > tables ‘Disaggregation of revenue with third parties’.

In 2020, revenue came to €1,458.0 million in Germany (2019: €1,700.5 million), €1,636.0 million in the US (2019: €1,604.6 million), and €937.6 million in France (2019: €1,056.6 million).

In 2020, revenue of €892.7 million (2019: €621.2 million) was generated from one single external customer and predominantly in the Supply Chain Solutions segment. Moreover, the general decline in revenue in the Industrial Trucks & Services segment in 2020 meant that a higher proportion of the KION Group’s total revenue was attributable to this customer.

Net financial income and expenses, including all interest income and interest expense, are described in notes [13] and [14].

The non-recurring items in 2020 under the capacity and structural program amounted to an expense of €45.8 million. This program gave rise to personnel expenses in connection with adjustments to personnel capacity that are being made, particularly in the Industrial Trucks & Services segment. These adjustments include the restructuring of the UK sales organization, which resulted in expenditure of €8.6 million and is now largely complete.

In addition to expenditure under the capacity and structural program, significant non-recurring items in the Industrial Trucks & Services segment resulted from the impairment loss of €10.7 million recognized on the long-term equity investment in Linde Hydraulics GmbH & Co. KG, which is accounted for using the equity method.

The effects from purchase price allocations comprised net write-downs and other expenses in relation to the step-ups and charges identified as part of the acquisition processes.

Non-recurring items and the effects of purchase price allocations also included impairment losses totaling €13.6 million on property, plant, and equipment used by specific customers in the Supply Chain Solutions segment.

Capital expenditure includes additions to intangible assets and property, plant, and equipment (excluding right-of-use assets related to procurement leases) and is broken down in the table below. Leased assets are shown in note [18] and rental assets in note [19].

Capital expenditure in Germany came to €130.7 million in 2020 (2019: €156.6 million).

The regional breakdown of non-current assets excluding financial instruments, deferred tax assets and post-employment benefits is as follows:

As at December 31, 2020, non-current assets attributable to Germany amounted to €3,362.6 million (2019: €3,387.9 million) and to the US €2,092.4 million (2019: €2,356.8 million).