Financial position

The principles and objectives applicable to financial management as at March 31, 2021 were largely the same as those described in the 2020 combined management report.

Analysis of capital structure

Non-current and current liabilities rose to €10,022.0 million as at the reporting date (December 31, 2020: €9,784.8 million). This was primarily due to the growth in trade payables and contract liabilities in line with the volume of business.

In view of the repayment of the variable-rate tranche of the promissory note with a nominal amount of €167.0 million, which is planned for the end of April 2021, the tranche has now been recognized under current financial liabilities. Consequently, non-current financial liabilities fell to €949.1 million as at the reporting date (December 31, 2020: €1,117.4 million). The carrying amount of the promissory notes included in this line item amounted to €422.7 million (December 31, 2020: €590.0 million). Non-current financial liabilities also largely include the corporate bond issued, which has a carrying amount of €494.8 million (December 31, 2020: €494.5 million).

Current financial liabilities rose to €222.4 million (December 31, 2020: €77.1 million), predominantly as a result of the repayment-related reclassification of the variable-rate tranche of the promissory note. Net financial debt (non-current and current financial liabilities less cash and cash equivalents) decreased to €656.4 million as at March 31, 2021 (December 31, 2020: €880.0 million). This equated to 0.5 times adjusted EBITDA on an annualized basis (December 31, 2020: 0.6 times). To reconcile the net financial debt with the industrial net operating debt of €1,681.3 million as at March 31, 2021 (December 31, 2020: €1,912.6 million), the liabilities from the short-term rental business of €494.7 million and the liabilities from procurement leases of €530.2 million were added to net financial debt.

Non-current and current liabilities from the leasing business rose to €2,858.5 million as at March 31, 2021 (December 31, 2020: €2,739.3 million). Of this total, €2,609.1 million was attributable to financing of the direct leasing business (December 31, 2020: €2,483.6 million) and €249.4 million to the repurchase obligations resulting from the indirect leasing business (December 31, 2020: €255.7 million). Liabilities from the financing of the direct leasing business included liabilities arising from sale and leaseback sub-lease transactions with leasing companies in an amount of €1,144.9 million (December 31, 2020: €1,125.0 million), liabilities from lease facilities in an amount of €434.1 million (December 31, 2020: €411.3 million), and liabilities from securitization in an amount of €1,030.1 million (December 31, 2020: €947.3 million).

Non-current and current liabilities from the short-term rental business, which totaled €494.7 million (December 31, 2020: €505.6 million), declined in line with the slight fall in rental assets.

Non-current and current other financial liabilities stood at €657.1 million as at March 31, 2021 (December 31, 2020: €646.9 million). This item included liabilities from procurement leases amounting to €530.2 million (December 31, 2020: €527.0 million), for which right-of-use assets were recorded. Contract liabilities, of which a large proportion related to the long-term project business, increased to €664.3 million owing to prepayments from customers (December 31, 2020: €550.8 million).

The retirement benefit obligation and similar obligations fell to €1,269.4 million owing to significantly higher discount rates (December 31, 2020: €1,450.3 million).

Consolidated equity rose to €4,667.0 million as at the end of the first quarter of 2021 (December 31, 2020: €4,270.8 million). The net income of €137.0 million earned during the quarter under review contributed to the rise in equity, as did the actuarial gains and losses arising from the measurement of pensions, which amounted to a net gain of €145.0 million (after deferred taxes) and were recognized in other comprehensive income. The currency translation gains of €120.1 million, also recognized in other comprehensive income, had a positive impact on equity too. The equity ratio therefore improved to 31.8 percent (December 31, 2020: 30.4 percent).

Analysis of capital expenditure

The focusing of the capital expenditure program as a result of the coronavirus pandemic resulted in a decrease in the volume of capital expenditure compared with the first quarter of 2020. The KION Group’s total capital expenditure on property, plant, and equipment and on intangible assets (excluding right-of-use assets from procurement leases) totaled €58.0 million in the reporting quarter (Q1 2020: €81.0 million). Spending in the Industrial Trucks & Services segment continued to be focused on capital expenditure on product development and on the expansion and modernization of production and technology facilities. Capital expenditure in the Supply Chain Solutions segment primarily related to development costs.

Analysis of liquidity

Cash and cash equivalents increased by €200.6 million to €515.1 million as at March 31, 2021 (December 31, 2020: €314.4 million). Taking into account the credit facility that was still freely available and, as at the reporting date, had not been drawn down at all, the unrestricted cash and cash equivalents available to the KION Group as at March 31, 2021 amounted to €1,657.4 million (December 31, 2020: €1,457.3 million).

Net cash provided by operating activities totaled €331.4 million. This represented a significant improvement compared with the net cash used for operating activities of minus €60.5 million in the prior-year period and was mainly due to the rise in earnings from operations and the reduction in the amount of working capital tied up. The change in net working capital amounted to an inflow of €101.2 million (Q1 2020: outflow of minus €121.6 million).

The net cash used for investing activities amounted to just minus €69.8 million in the reporting period (Q1 2020: minus €161.6 million). Within this figure, cash payments for capital expenditure on production facilities, product development, and purchased property, plant, and equipment came to minus €58.0 million, which was down sharply on the prior-year period (Q1 2020: minus €81.0 million). In addition, the acquisition of the remaining shares in Hans Joachim Jetschke Industriefahrzeuge (GmbH & Co.) KG and JETSCHKE GmbH resulted in a cash outflow totaling minus €13.9 million, of which €2.0 million had been paid as an advance payment in December 2020. Cash flow from investing activities in the prior-year period had included net payments of minus €85.8 million for the acquisition of UK software company Digital Applications International Limited (DAI).

Free cash flow – the sum of cash flow from operating activities and investing activities – came to €262.1 million. This represented a significant improvement compared with the prior-year period, which had been affected by acquisition items (Q1 2020: minus €222.1 million).

Net cash used for financing activities came to minus €66.8 million (Q1 2020: net cash provided of €245.1 million), partly due to the repayment of current liabilities to banks. Payments made for interest portions and principal portions under procurement leases totaled minus €33.8 million (Q1 2020: minus €32.1 million).