Earnings and profitability
EBIT, EBITDA and ROCE
Earnings before interest and tax adjusted for non-recurring items and purchase price allocation effects (adjusted EBIT) fell by 35.7 percent to €546.9 million (2019: €850.5 million). This was mainly due to the decline in gross profit as a result of the fall in revenue and a proportionately smaller decrease in selling expenses and administrative expenses. Research and development costs were almost unchanged year on year. The decline in earnings was predominantly attributable to the first half of the year, which was hit hard by the lockdown measures. The adjusted EBIT margin was down significantly year on year at 6.6 percent (2019: 9.7 percent).
Including non-recurring items and purchase price allocation effects, EBIT came to €389.9 million (2019: €716.6 million). This year-on-year fall, which was far more pronounced than the decrease in adjusted EBIT, was primarily due to an expense of €45.8 million for non-recurring items relating to the capacity and structural program that has been initiated. In 2020, 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 is now largely complete. In total, non-recurring items amounted to an expense of €65.1 million (2019: €42.9 million). The figure for non-recurring items in 2019 had included expenses for restructuring and reorganization-related measures under the KION 2027 strategy.
In addition to expenses under the capacity and structural program, significant non-recurring items in 2020 also included impairment losses on property, plant, and equipment and on the long-term equity investment in Linde Hydraulics GmbH & Co. KG, which is accounted for using the equity method. Negative purchase price allocation effects increased slightly year on year to €91.9 million (2019: €91.0 million).
in € million |
2020 |
in % of revenue |
2019 |
in % of revenue |
|---|---|---|---|---|
EBIT |
389.9 |
4.7% |
716.6 |
8.1% |
Adjustment by functional costs: |
|
|
|
|
+ Cost of sales |
54.9 |
0.7% |
54.3 |
0.6% |
+ Selling expenses and administrative expenses |
84.5 |
1.0% |
73.6 |
0.8% |
+ Research and development costs |
2.9 |
0.0% |
0.9 |
0.0% |
+ Other costs |
14.7 |
0.2% |
5.1 |
0.1% |
Adjusted EBIT |
546.9 |
6.6% |
850.5 |
9.7% |
adjusted for non-recurring items |
65.1 |
0.8% |
42.9 |
0.5% |
adjusted for PPA items |
91.9 |
1.1% |
91.0 |
1.0% |
Earnings before interest, tax, depreciation, and amortization (EBITDA) decreased to €1,327.7 million (2019: €1,614.6 million). Adjusted EBITDA came to €1,383.5 million (2019: €1,657.5 million). The adjusted EBITDA margin fell from 18.8 percent in 2019 to 16.6 percent in 2020.
in € million |
2020 |
in % of revenue |
2019 |
in % of revenue |
|---|---|---|---|---|
EBITDA |
1,327.7 |
15.9% |
1,614.6 |
18.3% |
Adjustment by functional costs: |
|
|
|
|
+ Cost of sales |
14.8 |
0.2% |
14.8 |
0.2% |
+ Selling expenses and administrative expenses |
37.1 |
0.4% |
26.5 |
0.3% |
+ Research and development costs |
2.7 |
0.0% |
0.6 |
0.0% |
+ Other costs |
1.3 |
0.0% |
0.9 |
0.0% |
Adjusted EBITDA |
1,383.5 |
16.6% |
1,657.5 |
18.8% |
adjusted for non-recurring items |
55.8 |
0.7% |
42.9 |
0.5% |
adjusted for PPA items |
0.0 |
0.0% |
0.0 |
0.0% |
Adjusted EBITDA for the long-term leasing business, which is derived from internal reporting and assumes a minimum rate of return on the capital employed, amounted to €326.3 million (2019: €333.3 million).
Return on capital employed (ROCE), which is the ratio of adjusted EBIT to capital employed, was down sharply year on year at 6.2 percent (December 31, 2019: 9.7 percent). This can be explained by the proportionately smaller decrease in capital employed at the end of 2020 than the decrease in earnings.