Financial position

The principles and objectives applicable to financial management as at March 31, 2022 were largely the same as those described in the 2021 combined management report.

Analysis of capital structure

Non-current and current liabilities amounted to €10,875.2 million as at March 31, 2022, which was €193.2 million higher than the figure as at December 31, 2021 of €10,682.0 million. This was primarily driven by the growth in current financial liabilities and trade payables, whereas the defined benefit obligation and contract liabilities, in particular, declined compared with the end of 2021.

Non-current and current financial liabilities totaled €1,421.1 million (December 31, 2021: €1,050.5 million). Non-current financial liabilities stood at €902.2 million (December 31, 2021: €898.7 million). The carrying amount of the corporate bond issued, which is included in this line item, amounted to €495.9 million (December 31, 2021: €495.6 million). In addition, non-current financial liabilities mainly comprised the non-current promissory notes, which have a carrying amount of €323.7 million (December 31, 2021: €326.1 million), and liabilities to banks of €51.9 million (December 31, 2021: €46.6 million).

Current financial liabilities rose to €518.9 million as at the reporting date (December 31, 2021: €151.9 million), of which €330.0 million was attributable to issuances under the commercial paper program in the first quarter. In addition, current liabilities to banks increased to €94.9 million (December 31, 2021: €57.4 million).

Net financial debt (non-current and current financial liabilities less cash and cash equivalents) amounted to €1,037.5 million as at the reporting date (December 31, 2021: €567.6 million). This equated to 0.6 times adjusted EBITDA on an annualized basis (December 31, 2021: 0.3 times). To reconcile the net financial debt with the industrial net operating debt of €2,055.4 million as at March 31, 2022 (December 31, 2021: €1,600.1 million), the liabilities from the short-term rental business of €475.7 million (December 31, 2021: €488.9 million) and the liabilities from procurement leases of €542.3 million (December 31, 2021: €543.6 million) are added to net financial debt.

Non-current and current liabilities from the lease business came to €3,092.3 million as at March 31, 2022 (December 31, 2021: €3,070.8 million). Of this total, €2,890.4 million was attributable to financing of the direct lease business (December 31, 2021: €2,858.3 million) and €201.9 million to the repurchase obligations resulting from the indirect lease business (December 31, 2021: €212.6 million).

Non-current and current liabilities from the short-term rental business declined to a total of €475.7 million (December 31, 2021: €488.9 million).

Non-current and current other financial liabilities stood at €665.2 million as at March 31, 2022 (December 31, 2021: €652.0 million). This item included liabilities from procurement leases amounting to €542.3 million (December 31, 2021: €543.6 million), for which right-of-use assets were recorded.

Contract liabilities, which mainly relate to prepayments received from customers in connection with the long-term project business in the Supply Chain Solutions segment, decreased to €787.9 million (December 31, 2021: €854.8 million).

The retirement benefit obligation and similar obligations under defined benefit pension plans fell to €1,108.9 million as at March 31, 2022 (December 31, 2021: €1,265.3 million). This was due to significantly higher discount rates compared with the end of 2021.

Consolidated equity went up by €304.6 million to €5,473.5 million as at March 31, 2022 (December 31, 2021: €5,168.9 million). The net income of €80.2 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 €129.2 million (after deferred taxes) and were recognized in other comprehensive income. The currency translation gains of €91.2 million, also recognized in other comprehensive income, had a positive impact on equity too. The equity ratio improved to 33.5 percent (December 31, 2021: 32.6 percent).

Analysis of capital expenditure

The KION Group’s capital expenditure on property, plant, and equipment and on intangible assets in the first quarter of 2022 (excluding right-of-use assets from procurement leases) gave rise to cash payments of €81.4 million (Q1 2021: €58.0 million). The focus in the Industrial Trucks & Services segment was on the expansion and modernization of production and technology facilities. Capital expenditure in the Supply Chain Solutions segment predominantly related to development costs.

Analysis of liquidity

Cash and cash equivalents decreased to €383.6 million as at the reporting date (December 31, 2021: €483.0 million) owing to the change in free cash flow. Taking into account the credit facility of €973.2 million that was still freely available (December 31, 2021: €1,000.0 million), the unrestricted cash and cash equivalents available to the KION Group as at March 31, 2022 amounted to €1,337.3 million (December 31, 2021: €1,473.7 million).

Cash flow from operating activities amounted to a net cash outflow of minus €354.9 million, which was down sharply compared with the net cash provided by operating activities of €331.9 million in the prior-year period. As well as the reduction in earnings from operations, the considerable rise in net working capital of €433.8 million reduced the level of cash flow from operating activities. There was a particularly sharp rise in inventories in the ITS segment owing to the supply problems. Moreover, higher contract balances in the SCS segment’s project business meant that further liquidity was tied up.

Net cash used for investing activities amounted to minus €77.8 million in the reporting period, which was a higher amount than in the comparative period (Q1 2021: minus €69.8 million). Within this total, cash payments for capital expenditure on production facilities, product development, and purchased property, plant, and equipment rose to minus €81.4 million (Q1 2021: minus €58.0 million).

Free cash flow – the sum of cash flow from operating activities and investing activities – declined markedly to minus €432.6 million (Q1 2021: €262.1 million).

Net cash provided by financing activities amounted to €326.9 million in the quarter under review (Q1 2021: net cash used of minus €66.8 million). This change was primarily due to financial debt taken on in connection with the commercial paper program. Payments made for interest portions and principal portions under procurement leases totaled minus €37.7 million (Q1 2021: minus €33.8 million). Current interest payments increased to minus €4.3 million (Q1 2021: minus €2.3 million).