Outlook

Expected economic conditions

Compared with the forecasts made in the 2019 annual report, economic conditions have deteriorated substantially. Although economic output is beginning to recover – albeit still hesitantly in many regions – after its slump in the early part of 2020, the forecast for the year as a whole is for a sharp fall in global economic output and the global volume of trade. The IMF currently anticipates that global economic output will fall by 4.4 percent over 2020 as a whole. Risks include, in particular, further outbreaks of the virus, which could result in the renewed shutdown of public life and economic activity.

The forward-looking statements and information given below are based on the Company’s current expectations and assessments against the backdrop of the uncertain conditions that currently prevail. Consequently, they involve a relatively high number of risks and uncertainties. A further economic downturn in key sales markets would lead to KION Group’s performance and financial results differing significantly from those in the outlook.

Different business sectors present a mixed picture. The current decline in global economic output is expected to continue depressing the market for industrial trucks and services over the remainder of the year. Looking at the year as a whole, China is the only sales region predicted to see market growth, whereas the market will contract in the rest of the world, including in the EMEA sales region. Despite the adverse effects of the coronavirus pandemic, the market for supply chain solutions is likely to grow as a result of the sustained uptrend in e-commerce.

Expected business situation and financial performance of the KION Group

In light of uncertainty about how the pandemic will unfold, its likely duration, and its impact on the global economy and sectoral conditions, the Executive Board of the KION Group retracted the outlook for the 2020 financial year in March that had been published in the 2019 annual report.

Given its robust market position and the cutting-edge nature of its automation and material handling technologies, the KION Group expects steady demand for its products once the pandemic is over and the global economy has picked up. However, the Group anticipates a significant decline in some key performance indicators for the 2020 financial year compared with 2019. The pandemic is resulting in a marked reluctance to invest. Coupled with the restrictions in the service business in the Industrial Trucks & Services segment, this will have a noticeable adverse impact on consolidated revenue for the year as a whole, which in turn will negatively affect adjusted EBIT and free cash flow. Thanks to the good level of orders in the Supply Chain Solutions segment, the Group’s order intake is expected to be at a level more in line with that seen in 2019.

Over the course of 2020, the KION Group initiated – primarily in the Industrial Trucks & Services segment – a capacity and structural program. The program is aimed at streamlining and optimizing the organizational structures and capacity in production, sales, and service, particularly in Europe, to reflect the anticipated medium-term market environment after the coronavirus pandemic. The planned measures, which may include personnel measures in certain functional divisions in addition to cross-location bundling of certain functions, should generate long-term cost savings. The expenses that have been incurred in 2020 and will be incurred in the future in connection with the program will be treated as non-recurring items; their amount depends on factors such as the ongoing negotiations with local employee representative bodies and whether the market recovers in the short term. These expenses are therefore not included in adjusted EBIT for 2020 and will predominantly impact on free cash flow in 2021.

Assuming a persistent stabilization of the industry-specific conditions for the Industrial Trucks & Services segment, the KION Group now expects order intake to be between €8,900 million and €9,600 million. The target figure for consolidated revenue is in the range of €7,850 million to €8,450 million. The target range for adjusted EBIT is €465 million to €545 million. Free cash flow is expected to be in a range between €50 million and €150 million. The target figure for ROCE is in the range of 5.2 percent to 6.2 percent.

Order intake in the Industrial Trucks & Services segment is expected to be between €5,500 million and €5,800 million. The target figure for revenue is in the range of €5,450 million to €5,750 million. The target range for adjusted EBIT is €265 million to €305 million.

Order intake in the Supply Chain Solutions segment is expected to be between €3,400 million and €3,800 million. The target figure for revenue is in the range of €2,400 million to €2,700 million. The target range for adjusted EBIT is €235 million to €275 million.