Financial position

The principles and objectives applicable to financial management as at June 30, 2021 were largely the same as those described in the 2020 combined management report.

Analysis of capital structure

Non-current and current liabilities amounted to €10,008.1 million as at June 30, 2021, which was €223.3 million higher than the figure as at December 31, 2020 of €9,784.8 million. This was primarily due to the growth in trade payables and liabilities from the leasing business in line with the volume of business.

Non-current and current financial liabilities fell by a total of €163.1 million to €1,031.4 million (December 31, 2020: €1,194.5 million). The decline was predominantly due to the repayment of the variable-rate tranche of the promissory note with a face value of €167.0 million in April 2021. As a result of this repayment, the carrying amount of non-current promissory notes stood at only €326.8 million as at June 30, 2021 (December 31, 2020: €590.0 million). Alongside this, non-current financial liabilities largely comprise the corporate bond issued, which has a carrying amount of €495.0 million (December 31, 2020: €494.5 million).

Current financial liabilities rose to €171.0 million as at June 30, 2021 (December 31, 2020: €77.1 million). This is mainly because the fixed-rate tranche of the promissory note maturing in May 2022 and with a nominal amount of €92.5 million is now recognized under current financial liabilities. Net financial debt (non-current and current financial liabilities less cash and cash equivalents) decreased to €717.6 million as at June 30, 2021 (December 31, 2020: €880.0 million). This equated to 0.4 times adjusted EBITDA on an annualized basis (December 31, 2020: 0.6 times). To reconcile the net financial debt to the industrial net operating debt of €1,722.3 million as at June 30, 2021 (December 31, 2020: €1,912.6 million), the liabilities from the short-term rental business of €481.7 million and the liabilities from procurement leases of €523.0 million are added to net financial debt.

Non-current and current liabilities from the leasing business rose to €2,942.1 million as at June 30, 2021 (December 31, 2020: €2,739.3 million). Of this total, €2,707.0 million was attributable to financing of the direct leasing business (December 31, 2020: €2,483.6 million) and €235.1 million to the repurchase obligations resulting from the indirect leasing business (December 31, 2020: €255.7 million).

Non-current and current liabilities from the short-term rental business, which totaled €481.7 million (December 31, 2020: €505.6 million), declined in line with the rental assets.

Non-current and current other financial liabilities stood at €641.4 million as at June 30, 2021 (December 31, 2020: €646.9 million). This item included liabilities from procurement leases amounting to €523.0 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 in the Supply Chain Solutions segment, stood at €562.0 million (December 31, 2020: €550.8 million).

The retirement benefit obligation and similar obligations fell to €1,275.5 million owing to higher discount rates (December 31, 2020: €1,450.3 million).

Consolidated equity rose to €4,761.0 million as at June 30, 2021 (December 31, 2020: €4,270.8 million). The net income of €291.2 million earned during the period 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 €151.8 million (after deferred taxes) and were recognized in other comprehensive income. The currency translation gains of €103.3 million, also recognized in other comprehensive income, had a positive impact on equity too. KION GROUP AG’s dividend payout reduced equity by €53.7 million. Overall, the equity ratio improved to 32.2 percent (December 31, 2020: 30.4 percent).

Analysis of capital expenditure

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 €123.3 million (H1 2020: €130.0 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. In the reporting period, the Company also invested in the construction of the new plants at the production sites in Jinan, China, and in Kołbaskowo in Poland. Capital expenditure in the Supply Chain Solutions segment primarily related to development costs.

Analysis of liquidity

Owing to the healthy increase in free cash flow, the €313.8 million in cash and cash equivalents recognized as at June 30, 2021 was at nearly the same level as at December 31, 2020 (€314.4 million) even after the repayment of financial debt and the dividend payout. Taking into account the €1,148.8 million of the credit facility that was still freely available (December 31, 2020: €1,150.0 million), the unrestricted cash and cash equivalents available to the KION Group as at June 30, 2021 amounted to €1,453.9 million (December 31, 2020: €1,457.3 million).

At €437.7 million, net cash provided by operating activities was up significantly on the figure for the prior-year period, which was just into negative territory at minus €2.6 million. The main reason for this improvement was the sharp rise in operating profit. In addition, the fact that the €61.7 million growth in net working capital was lower than that in the prior-year period (H1 2020: €205.4 million) meant that there was less of a drag on cash flow from operating activities.

The net cash used for investing activities amounted to minus €136.3 million in the reporting period (H1 2020: minus €217.0 million). Within this figure, cash payments for capital expenditure on production facilities, product development, and purchased property, plant, and equipment amounted to minus €123.3 million, which was lower than in the first six months of the previous year (H1 2020: minus €130.0 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 €89.3 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 €301.5 million. This represented a very significant improvement compared with the prior-year period, which had been affected by acquisition items (H1 2020: minus €219.6 million).

Net cash used for financing activities came to minus €309.9 million (H1 2020: net cash provided of €269.6 million), primarily due to the aforementioned repayment of the variable-rate tranche of the promissory note and the repayment of other current liabilities to banks. Payments made for interest portions and principal portions under procurement leases totaled minus €69.8 million (H1 2020: minus €65.6 million). Current interest payments declined to minus €13.7 million (H1 2020: minus €16.5 million) due to the further repayment of financial debt. The payment of a dividend to the shareholders of KION GROUP AG in May 2021 resulted in an outflow of funds of minus €53.7 million, whereas the corresponding payment had not yet been made in the first half of 2020 because the Annual General Meeting was postponed to the third quarter.