Earnings and profitability

EBIT, EBITDA and ROCE

Earnings before interest and tax (EBIT) jumped significantly year on year, rising by €404.9 million to €794.8 million. The figure for 2020 of €389.9 million had been heavily impacted by the coronavirus pandemic. EBIT for 2021 included a good level of positive non-recurring items, which amounted to income of €37.8 million (2020: expense of €65.1 million). The prior-year figure had mainly included components of the capacity and structural program (expense of €45.8 million) and impairment losses on non-current assets. The very satisfying level of orders on hand enabled the KION Group to adjust the capacity program and reverse excess provisions; taking account of the ongoing program costs, there were positive non-recurring items amounting to income of €8.2 million. Plan adjustments affecting defined benefit obligations resulted in further non-recurring items that amounted to income of €32.7 million. At the same time, purchase price allocation effects declined slightly to an expense of €84.8 million (2020: €91.9 million).

The Group’s EBIT adjusted for purchase price allocation effects and non-recurring items (adjusted EBIT) amounted to €841.8 million, which was up substantially (by 53.9 percent) on the figure for 2020 of €546.9 million. The adjusted EBIT margin improved from 6.6 percent in the previous year to 8.2 percent in the reporting year.

Earnings before interest, tax, depreciation, and amortization (EBITDA) rose to €1,735.7 million (2020: €1,327.7 million). The Group’s EBITDA adjusted for the positive non-recurring items (adjusted EBITDA) amounted to €1,696.9 million (2020: €1,383.5 million), giving an adjusted EBITDA margin of 16.5 percent (2020: 16.6 percent).

Adjusted EBITDA for the long-term lease business, which is derived from internal reporting and assumes a minimum rate of return on the capital employed, amounted to €324.3 million (2020: €326.3 million).

Return on capital employed (ROCE), which is the ratio of adjusted EBIT to capital employed, was up sharply year on year at 9.1 percent (December 31, 2020: 6.2 percent). This can be explained by the sharp rise in earnings and a proportionately smaller increase in capital employed at the end of 2021.

Key influencing factors for earnings

The cost of sales rose at a similar rate to revenue, increasing by 23.4 percent to €7,770.7 million (2020: €6,296.8 million). The gross margin was squeezed by the effects of higher material prices and logistics costs, inefficiencies resulting from supply and resource bottlenecks, and the relatively small increase in volumes in the high-margin service business in the SCS segment. However, this was more or less offset by the smaller increase in the level of fixed costs within cost of sales relative to the increase in revenue. The KION Group’s gross margin therefore remained virtually unchanged year on year at 24.5 percent (2020: 24.5 percent).

The rise in other functional costs was largely due to the increased volume of business. There was also higher variable remuneration across all functional divisions on the back of the Group’s good business performance. Nevertheless, other functional costs went up to a much lesser degree than revenue. Selling expenses rose by just 5.9 percent, partly because of the ongoing restrictions on travel and marketing activities. Administrative expenses increased by 10.6 percent year on year, partly due to the implementation of strategic projects, while costs for research and development climbed by 11.4 percent.

The savings achieved in connection with the ongoing structural program had a positive impact on functional costs. Positive non-recurring items affecting changes to pension plans also helped to reduce functional costs.

The change in the cost of sales and in other functional costs is shown in the following table.

The ‘other’ item, which came to €31.1 million (2020: minus €26.2 million), includes not only income and expense resulting from currency translation but also line items such as the share of profit (loss) of equity-accounted investments, which amounted to a profit of €13.1 million (2020: loss of €2.2 million). The prior-year figure for the ‘other’ item had also been weighed down by impairment losses on non-current assets.

Net financial expenses

The net financial expenses, representing the balance of financial income and financial expenses, improved to €35.1 million (2020: €88.3 million). The main reasons for this were the ongoing reduction in financial debt, improved net interest income / expense from the lease business, and lower net interest expense from defined benefit plans. Moreover, the comparative figure for 2020 had included expenses in connection with the funding measures taken as a precaution in order to protect the Group’s financial strength during the coronavirus pandemic.

Income taxes

Income tax expenses rose significantly year on year to €191.7 million (2020: €90.7 million), reflecting the increase in earnings. The effective tax rate fell to 25.2 percent (2020: 30.1 percent). The figure for 2020 had been influenced by high non-tax-deductible expenses and by losses that could not be utilized for tax purposes owing to the level of earnings. By contrast, increased tax deductibles and additional tax credits in the Group led to a sharp drop in the tax rate in 2021.

Net income and appropriation of profit

Net income amounted to €568.0 million, which was almost double the prior-year figure of €210.9 million. This figure included a net loss attributable to non-controlling interests of €0.3 million (2020: €4.4 million). The net income attributable to the shareholders of KION GROUP AG was €568.3 million (2020: €215.3 million). Basic earnings per share attributable to the shareholders of KION GROUP AG came to €4.34 (2020: €1.81) based on 131.1 million (2020: 118.9 million) no-par-value shares. Diluted earnings per share, which is calculated by adding the potential dilutive no-par-value shares under the Employee Equity Program, amounted to €4.33 (2020: €1.81) based on a weighted average number of shares of 131.1 million (2020: 118.9 million).

KION GROUP AG reported net income of €197.1 million in 2021 (2020: net loss of €6.5 million). The Executive Board and the Supervisory Board will propose to the Annual General Meeting to be held on May 11, 2022 that an amount of €196.7 million be appropriated for the payment of a dividend of €1.50 per dividend-bearing share. This equates to a proposed dividend payout rate of around 35 percent of the net income attributable to the shareholders of KION GROUP AG.