Financial position

The principles and objectives applicable to financial management as at September 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 €10,256.2 million as at September 30, 2021, which was €471.4 million higher than the figure as at December 31, 2020 of €9,784.8 million. This was primarily driven by the growth in trade payables and liabilities from the leasing business in line with the volume of business.

Non-current and current financial liabilities stood at €1,246.0 million, which was higher than at the end of 2020 (December 31, 2020: €1,194.5 million).

Non-current financial liabilities fell to €876.0 million (December 31, 2020: €1,117.4 million), partly because of the repayment of the variable-rate tranche of the promissory note with a nominal amount of €167.0 million in April 2021. As a result of this repayment, the carrying amount of non-current promissory notes stood at only €326.6 million as at September 30, 2021 (December 31, 2020: €590.0 million). Alongside this, non-current financial liabilities largely comprised the corporate bond issued, which had a carrying amount of €495.3 million (December 31, 2020: €494.5 million).

Current financial liabilities rose to €370.1 million as at September 30, 2021 (December 31, 2020: €77.1 million). This rise was largely due to issuances under the commercial paper program in order to fund the higher level of net working capital. Another reason was that, unlike at the end of 2020, 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) amounted to €931.0 million as at September 30, 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 to the industrial net operating debt of €1,913.7 million as at September 30, 2021 (December 31, 2020: €1,912.6 million), the liabilities from the short-term rental business of €468.7 million and the liabilities from procurement leases of €514.0 million are added to net financial debt.

Non-current and current liabilities from the leasing business rose to €2,991.5 million as at September 30, 2021 (December 31, 2020: €2,739.3 million). Of this total, €2,767.8 million was attributable to financing of the direct leasing business (December 31, 2020: €2,483.6 million) and €223.7 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 €468.7 million (December 31, 2020: €505.6 million), declined as a result of the decrease in rental assets.

Non-current and current other financial liabilities stood at €622.0 million as at the end of the reporting period (December 31, 2020: €646.9 million). This item included liabilities from procurement leases amounting to €514.0 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 €566.4 million (December 31, 2020: €550.8 million).

The retirement benefit obligation and similar obligations fell to €1,263.7 million owing to higher discount rates (December 31, 2020: €1,450.3 million).

Consolidated equity rose by €697.6 million to €4,968.5 million as at the end of the third quarter (December 31, 2020: €4,270.8 million). The net income of €430.8 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 €178.6 million (after deferred taxes) and were recognized in other comprehensive income. The currency translation gains of €145.6 million, also recognized in other comprehensive income, had a substantial positive impact on equity too. KION GROUP AG’s dividend payout reduced equity by €53.7 million. Overall, the equity ratio improved to 32.6 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 €199.1 million in the reporting period (Q1–Q3 2020: €189.9 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, eastern China, and in Kołbaskowo in Poland. The latter went into operation in the third quarter. Capital expenditure in the Supply Chain Solutions segment primarily related to development costs.

Analysis of liquidity

Cash and cash equivalents stood at €315.0 million as at September 30, 2021 (December 31, 2020: €314.4 million). Taking into account the €1,149.9 million of the credit facility that was still freely available (December 31, 2020: €1,150.0 million), the unrestricted cash and cash equivalents avail-able to the KION Group as at September 30, 2021 amounted to €1,455.5 million (December 31, 2020: €1,457.3 million). KION GROUP AG entered into an agreement for a new syndicated revolving credit facility (RCF) with a smaller total volume of €1,000.0 million on October 4, 2021 that can be used straight away; the previous credit facility, which had a volume of €1,150.0 million, was terminated at the same time. Drawdowns under the new credit facility generally have a variable interest rate.

Net cash provided by operating activities increased sharply year on year to €340.5 million (Q1–Q3 2020: €170.1 million), mainly due to the significant improvement in operating profit. The largely volume-related increase in net working capital of €448.1 million (Q1–Q3 2020: €277.0 million) reduced the level of cash flow from operating activities.

The net cash used for investing activities of minus €205.8 million was lower than in the prior-year period (Q1–Q3 2020: minus €284.4 million), when net payments of minus €89.3 million had been included for the acquisition of UK software company Digital Applications International Limited (DAI). By contrast, cash payments for capital expenditure on production facilities, product development, and purchased property, plant, and equipment rose to minus €199.1 million (Q1–Q3 2020: minus €189.9 million). Furthermore, the acquisition of the remaining shares in Hans Joachim Jetschke Industriefahrzeuge (GmbH & Co.) KG and JETSCHKE GmbH resulted in a cash outflow totaling minus €11.9 million; in addition, minus €2.0 million had been paid as an advance payment in December 2020.

Free cash flow – the sum of cash flow from operating activities and investing activities – came to €134.7 million. This represented a very significant improvement when viewed in comparison with the prior-year period, which had been affected by acquisition items (Q1–Q3 2020: minus €114.3 million).

Net cash used for financing activities amounted to minus €141.6 million (Q1–Q3 2020: net cash provided of €347.7 million). Overall, financial debt taken on during the reporting period amounted to €525.6 million (Q1–Q3 2020: €2,977.6 million), which was mainly due to the issuance of commercial paper; repayments amounted to minus €477.5 million (Q1–Q3 2020: minus €2,518.1 million). Payments made for interest portions and principal portions under procurement leases totaled minus €105.0 million (Q1–Q3 2020: minus €98.2 million). Current interest payments rose to minus €24.2 million (Q1–Q3 2020: minus €18.8 million) as a result of the first payment of the annual coupon for the corporate bond issued in September 2020. 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 (Q1–Q3 2020: minus €4.7 million).