KION shares

Equity markets under pressure

The German equity markets closed 2022 a little weaker than where they started it after a rollercoaster ride of a year. The DAX reached its high for the year of 16,272 points on January 5, 2022 before following a rocky but ultimately downward descent that lasted until the end of the third quarter of 2022. Investors were very much rattled by the fundamental shift in the geopolitical order resulting from the outbreak of war in Ukraine in February 2022 and this caused prices to tumble in the first quarter of the year.

Selling pressure persisted into the second and third quarter of 2022 because of rising inflation and because the war massively exacerbated the disruptions and bottlenecks that were already affecting supply chains. There were growing fears of a recession as well, driven mainly by increases in commodity prices and the threat of shortages in the supply of energy. The sharp rises in interest rates aimed at curbing inflation further fueled the negative expectations for the economy and also meant that fixed-income asset classes were given higher investment weightings. On September 29, 2022, the DAX slid just below the 12,000 point mark, which turned out to be its low for the year. In the fourth quarter of 2022, the emergence of hopes that interest rates would not rise quite as steeply going forward and that inflation would slow ultimately pushed the DAX back up to 13,924 points, which limited its overall loss for the year to 12.3 percent. The MDAX closed the year at 25,118 points, a year-on-year decline of 28.5 percent.

Disproportionately sharp fall in the KION share price in a challenging trading environment

Amid generally negative conditions for the stock markets, KION shares registered a very substantial decline of 72.3 percent last year based on a closing price of €26.77 on December 30, 2022. This was partly attributable to the tense geopolitical situation and the markets’ resulting concerns about a recession. The share price was also adversely affected by the KION Group’s withdrawal of its outlook on April 4, 2022– combined with lower earnings expectations – and a changed risk situation with respect to procurement. On September 13, 2022, KION GROUP AG announced that higher costs in the project business of the Supply Chain Solutions segment would have a significant negative impact on its earnings. It also issued a new outlook for the year as a whole, with ranges much lower than those provided in the outlook that had been withdrawn in April 2022. On October 7, 2022, the KION share price therefore slumped to a low for the year of €18.66 over the course of the day. However, it staged a moderate recovery during the final trading weeks of 2022.

The closing price on December 30, 2022, based on around 131.1 million shares, equates to market capitalization of €3.5 billion, of which approximately €1.9 billion was attributable to shares in free float.

Share price performance in 2022 compared with the DAX and MDAX (both indexed to KION)

Continuity in the dividend policy

KION GROUP AG’s 2022 Annual General Meeting on May 11, 2022 again took place as a virtual event without shareholders being physically present. Approximately 70 percent of the share capital was represented and all of the motions were approved by a majority of votes. This included the distribution of a dividend of €1.50 per share, resulting in a total distribution to shareholders of around €196.7 million. With earnings per share for 2021 of €4.34, this equates to a dividend payout rate of about 35 percent.

The Executive Board and Supervisory Board of KION GROUP AG will propose a dividend for 2022 of €0.19 per share (2021: €1.50) to the Annual General Meeting on May 17, 2023. This gives a total dividend payout of €24.9 million. The amount is significantly lower than in the prior year because of the deterioration in earnings and free cash flow. With earnings per share for 2022 of €0.75, this equates to a dividend payout rate of around 25 percent, which is within the target corridor of between 25 percent and 40 percent.

Stable shareholder structure

As far as the Company is aware, the shareholder structure remained largely unchanged in the reporting year. Weichai Power Co., Ltd., Weifang, People’s Republic of China, held an indirect stake of 46.5 percent as at the end of 2022 (December 31, 2021: 45.2 percent), which means it is still the biggest single shareholder, while KION GROUP AG's shareholding remained unchanged at around 0.1 percent. A total of 22,348 shares (2021: 15,953 shares) were acquired by staff under the KION Employee Equity Program (KEEP). Consequently, the number of shares held in treasury stood at 73,876 as at the reporting date (December 31, 2021: 96,224). The free float therefore remained virtually unchanged at 53.4 percent at the end of 2022 (December 31, 2021: 54.7 percent).

Shareholder structure as at December 31, 2022

KION shares mainly recommended as a buy

As at December 31, 2022, 22 brokerage houses were following and reporting on the KION Group (December 31, 2021: 21). Of this total, 16 analysts recommended KION shares as a buy, five rated them as neutral, and only one brokerage house advised selling them. The average target price specified by the sell-side analysts was €37.17 (December 31, 2021: €107.00).

Solid financing situation with credit ratings still good

The credit ratings awarded to the KION Group held their ground on a solid basis last year despite the performance of the business. This was partly due to the measures taken to stabilize free cash flow and the successful outcome of the financing activities in 2022. In order to secure its financial flexibility, KION GROUP AG increased its commercial paper program by €250 million to €750 million and arranged a total of six bilateral loan facilities, each of which amounted to €100 million. In December 2022, the volume of the revolving credit facility linked to ESG criteria was increased by around €0.4 billion to around €1.4 billion and its term was increased by one year to the fourth quarter of 2027, which further improves the maturity profile. 

In October 2022, Fitch Ratings confirmed the Group’s long-term issuer default rating of BBB with a stable outlook. Fitch Ratings had already confirmed the short-term issuer default rating of F2 in September of the reporting year.

Standard & Poor’s kept the issuer rating at BBB–, but put the outlook on CreditWatch Negative.