Summary of business performance

Economic conditions

According to the International Monetary Fund (IMF), the war in Ukraine will take a heavy toll on the global economy. The IMF also believes that the existing supply chain disruptions and continuing commodity and energy price rises will result in a significantly higher inflation rate. Based on its latest assessment dated April 19, 2022, the IMF anticipates global growth of just 3.6 percent along with an inflation rate of 5.7 percent for developed economies and 8.7 percent for emerging markets and developing countries. The IMF has thus once again updated its global growth target for 2022, which had stood at 4.4 percent in January 2022.

The internationally applicable sanctions on Russia and Belarus led to further price rises in the commodity markets. As well as marked price increases for energy commodities such as gas, oil and coal, the prices of palladium, nickel and other metals also spiked temporarily. Russia is one of the main exporters of nickel, most of which is used to produce steel and batteries. The higher inflation rates are prompting central banks to start moving away from their previously very expansionary monetary policy.

According to the IMF, the global economy still faces risks due to restrictions relating to the coronavirus pandemic, especially if lockdown measures continue to hamper production in China.

The KION Group believes that the war in Ukraine initially had only a moderately adverse impact on the material handling market in the first quarter of 2022. Demand for industrial trucks in the KION Group’s sales markets was again higher than in the prior-year period. According to the KION Group, the market in the EMEA and Americas regions expanded significantly in the period under review, while in the APAC region the number of new trucks ordered was slightly above the prior-year period due to the sustained uptrend in China. At the same time, however, there continued to be considerable restrictions on deliveries as a result of the coronavirus pandemic. In addition, the sectoral environment is adversely affected by the absence of intermediate products and the closure of key transportation routes due to the war in Ukraine. The delays in the supply chain led to restrictions on the supply of urgently needed bought-in parts to production facilities across the industry. This resulted in a protracted period of significantly longer delivery times, including for the KION Group’s brand companies.

Because the relevant trade association has changed the publishing dates for market data on order intake for industrial trucks, no robust data on order numbers in the overall market is available for the reporting period.

Supply chain delays also weighed heavily on the project business for supply chain solutions. The KION Group believes that the global market for supply chain solutions continued to expand significantly in the first quarter. Once again, this market growth was driven by the EMEA and Americas regions. It is not yet possible to fully gauge how the war in Ukraine and the internationally applicable sanctions on Russia and Belarus are affecting economic growth in the KION Group’s customer sectors.

According to the KION Group, the medium- to long-term growth trend remains intact and this is backed up by market studies.

Having temporarily depreciated sharply, the ruble and other eastern European currencies stabilized at the end of the first quarter of 2022. The KION Group experienced only moderate currency effects in this region because its volume of business there is low.

Business performance in the Group

Business in the KION Group continued to be influenced by further sharp rises in the cost of materials and logistics costs and by persistent bottlenecks in procurement markets; the already difficult situation worsened with the outbreak of the war in Ukraine. Moreover, coronavirus lockdowns were reimposed that particularly affected Asia.

Due to the war in Ukraine, the Group stopped all deliveries of ITS and SCS products to Russia and Belarus, including the supply of spare parts and the provision of related services. Local business operations in Russia – restricted to ongoing service business – are being maintained by the sales companies and their KION employees in the country. The ITS segment has recognized impairment losses in a substantial volume, especially in respect of assets of the Russian subsidiaries, which had a combined carrying amount of approximately €50 million as at the reporting date. Non-recurring items relating to business in Russia reduced net income for the period by almost €30 million in total. In 2021, the KION Group generated less than 1 percent of its consolidated revenue in Russia, Belarus, and Ukraine combined.

The KION Group’s capital expenditure program was able to continue as planned, despite the difficult situation in the procurement markets. In Jinan, in China’s Shandong province, the new factory for Linde and Baoli counterbalance trucks went into regular operation in February 2022. It is designed for a capacity of up to 40,000 industrial trucks and supports the strengthening of the Group’s market position in the fast-growing value segment. Construction of a new plant for supply chain solutions in Jinan has also begun. The new plant will be used to manufacture items such as racks for the Dematic Multishuttle system, components for automated guided vehicle systems, and conveyor belts and systems. The factory is scheduled to go into operation in the first quarter of 2023.

The European research project IMOCO (Intelligent Motion Control), which started in February, is aimed at the safe deployment of fully self-driving trucks and mobile robots in fast-moving intralogistics environments. Artificial intelligence (AI) provides support for the various functions, namely navigation, the collection and movement of goods, and delivery to their final position. STILL is providing the German project consortium with its semi-autonomous iGo neo truck as the product basis and is coordinating the integration of components.

The KION Group is investing a sum in the mid double-digit millions to create a new premium facility in Kahl am Main, Germany. This 31,000m2 automated distribution center for the spare parts of the two operating segments will be built at the Linde Material Handling GmbH site. It will have approximately 300 employees and is due to go into operation in spring 2024.