Report of the Supervisory Board of KION GROUP AG
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Dr. Michael Macht
Chairman of the Supervisory Board
Dear shareholders,
We lived through truly unprecedented times in 2021. Exceptional growth in demand for our Company’s products and solutions – but also highly challenging conditions – prevailed in nearly all of the markets in which we act as a reliable partner to our customers, offering solutions to their needs. In the year under review, Germany and other regions of importance to our Company experienced a third wave of coronavirus before a brief spell of falling case numbers in the summer followed by a fourth wave at the end of the year. The biggest problems affecting the production and delivery of our trucks and solutions were created by the procurement markets: shortages of various intermediate products, particularly semiconductor chips, coupled with higher prices for certain commodities and skyrocketing logistics costs. Political and economic tensions took their toll on the business and regulatory environment in which our Company operates. We witnessed a push for the regionalization of supply chains along with rising inflation rates in many major economies. Very robust demand for material handling products and Dematic’s automation solutions proved more than a fleeting trend, with order intake and revenue reaching an all-time high in both segments. KION ended 2021 with a record order book volume, thereby putting itself in an excellent position for the start of the new year, which once again began with an uncertain outlook. The Company’s rapid growth has more than made up for the decline experienced in crisis-hit 2020. This rollercoaster ride has placed huge demands on everyone in our Company, on our employees and their family and friends. The same goes for our customers and our suppliers, our other business partners, and ultimately our shareholders. On behalf of the entire Supervisory Board, I would like to thank our Company’s employees and the Executive Board for their outstanding work in these extremely difficult and uncertain times. This dedication was needed in order to continue providing our customers with our high-performance products and outstanding services in the adverse economic environment created by the coronavirus pandemic. Against this backdrop, we particularly commend all the people working in our Company’s healthcare services, who very prudently and promptly implemented appropriate and effective measures to protect everyone, both within the KION Group and at our customers’ sites.
The Supervisory Board advised and monitored the Executive Board as it took a prudent but resolute approach during these unparalleled times. In doing so, we gave the Executive Board our backing, not only in respect of the countermeasures introduced at short notice in 2020 but also with regard to implementation of the structural initiatives with a medium- to long-term effect aimed at safeguarding the Company’s future commercial success in the different markets for its products.
Both the Executive Board and the Supervisory Board acknowledge the trust that all stakeholders – not least our shareholders, but also our customers and suppliers – have placed in our Company during these uncertain times. And we are very much aware of the responsibility that this imposes on us.
Highlights of 2021 – robust growth and the foundations for future business success
Over the course of the reporting year, it became clear that demand in the Industrial Trucks & Services (ITS) and Supply Chain Solutions (SCS) segments was increasing very strongly. In nearly every regional market, our Company registered demand for its products, solutions, and services on a scale never seen before. The boom experienced in the SCS segment in 2020 continued apace across the various customer segments, which are mainly served by Dematic.
Alongside the necessary structural changes, primarily in the ITS segment in the EMEA region, the Company built on the profitable growth-oriented capital expenditure and innovation programs that had begun in 2020.
A major milestone was reached in the Chinese city of Jinan on December 16, 2021, when a new factory for the manufacture of a new generation of counterbalance trucks came on stream. In parallel to the launch of this fully automated production facility, which was constructed in record time, the first truck to be built there from our value product segment rolled off the assembly line. This momentous day also saw the ground-breaking ceremony for the construction of a new production facility for the SCS segment’s future activity in the Chinese market. These three landmark events are a clear sign of the Company’s resolve to capture significant market share in this highly attractive market. Another highlight was the on-time completion and launch of the ITS segment’s new plant in Kołbaskowo, Poland.
In its deliberations on the SCS segment’s business, the Supervisory Board particularly concentrated on the growth prospects for the various regions that are key to the performance of this business. The focus was on the prerequisites for both organic growth and growth by acquisition in order to satisfy the rapidly rising demand for the products of the SCS segment.
Another fundamentally important matter for the Company was its decision to establish a common, standardized KION process landscape combined with the implementation of a new IT system for enterprise resource planning (ERP). The objectives of this project are to strike the right balance between process harmonization on the one hand and the different requirements of the KION Operating Units on the other and to put in place a new groupwide ERP system based on SAP S/4HANA and supplementary software products. The system incorporates all of the main business processes within our Group and lays down standards for the management and quality of data across the Company.
The Supervisory Board was involved in every key step of the realization of these fundamental initiatives for the future of our Company and gave the necessary approvals unanimously.
The final highlight to be mentioned is the Supervisory Board meeting in September 2021, at which the Executive Board discussed the updated KION 2027 strategy with the Supervisory Board. Following the signing off in 2017 of the Company’s strategy for the period up to 2027, the time had come to take stock of and analyze the advancing megatrends that are currently shaping our Company’s success and will continue to do so in the future. Important aspects of this discussion were the changes in respect of sustainability, including the shift to greener sources of energy. The Company is very serious about its responsibility for providing sustainable products and solutions, ensuring the well-being of its employees, protecting the environment, upholding human rights, and contributing to the society in which we live and has defined sustainability as an important field of action for the future. Other topics covered by the discussion included further developments pertaining to advancing urbanization and the importance of e-commerce services, changing social structures, rapid progress in the fields of automation and robotics, and big data. These trends have led to shifts in the significance of individual product segments that will become important in terms of achieving the Company’s strategic targets and have now been factored into the updated KION 2027 strategy. Overall, this gives rise to evolving structures for the achievement of our goal for the Company of generating above-average profitable growth over the period covered by the strategy.
The resolute and focused pursuit of our KION 2027 strategy has set the Company on the right course and will ensure that we remain very well positioned going forward.
At its meeting on March 2, 2022, the Supervisory Board also discussed and approved the proposal made by the Executive Board that the distributable profit of KION GROUP AG be appropriated for the payment of a dividend of €1.50 per no-par-value share. In doing so, the Supervisory Board took account of the Company’s financial situation and performance, its medium-term financial and capital-expenditure planning, and the interests of the shareholders. The Supervisory Board believes the proposed dividend is appropriate.
The details of this report were discussed thoroughly at the Supervisory Board meeting on March 2, 2022, when it was adopted.
Dr. Michael Macht
Chairman