Earnings
EBIT and EBITDA
Earnings before interest and tax (EBIT) totaled €234.6 million, which was 43.4 percent below the figure for the prior-year period (H1 2021: €414.8 million). EBIT included budgeted purchase price allocation effects amounting to an expense of €45.0 million in the first half of 2022 (H1 2021: expense of €41.8 million). In the reporting period, there were also non-recurring items amounting to a total expense of €32.1 million (H1 2021: expense of €5.5 million) that essentially reflected impairment losses on assets of the Russian subsidiaries.
EBIT adjusted for non-recurring items and purchase price allocation effects (adjusted EBIT) decreased to €311.7 million (H1 2021: €462.2 million). The adjusted EBIT margin fell sharply to 5.6 percent as a result (H1 2021: 9.3 percent).
in € million |
Q2 |
Q2 |
Q1 – Q2 |
in % of revenue |
Q1 – Q2 |
in % of revenue |
|---|---|---|---|---|---|---|
EBIT |
116.8 |
221.3 |
234.6 |
4.2% |
414.8 |
8.4% |
Adjustment by functional costs: |
|
|
|
|
|
|
+ Cost of sales |
11.1 |
9.4 |
28.6 |
0.5% |
18.9 |
0.4% |
+ Selling expenses and administrative expenses |
13.3 |
15.1 |
34.4 |
0.6% |
29.5 |
0.6% |
+ Research and development costs |
0.0 |
0.0 |
0.0 |
0.0% |
0.1 |
0.0% |
+ Other costs |
0.2 |
1.4 |
14.2 |
0.3% |
–1.1 |
–0.0% |
Adjusted EBIT |
141.4 |
247.2 |
311.7 |
5.6% |
462.2 |
9.3% |
adjusted for non-recurring items |
1.6 |
5.0 |
32.1 |
0.6% |
5.5 |
0.1% |
adjusted for PPA items |
23.0 |
20.9 |
45.0 |
0.8% |
41.8 |
0.8% |
Earnings before interest, tax, depreciation, and amortization (EBITDA) stood at €739.6 million in the reporting period (H1 2021: €873.9 million). Adjusted EBITDA came to €759.2 million (H1 2021: €879.5 million), giving an adjusted EBITDA margin of 13.7 percent (H1 2021: 17.7 percent).
in € million |
Q2 |
Q2 |
Q1 – Q2 |
in % of revenue |
Q1 – Q2 |
in % of revenue |
|---|---|---|---|---|---|---|
EBITDA |
366.5 |
452.7 |
739.6 |
13.4% |
873.9 |
17.6% |
Adjustment by functional costs: |
|
|
|
|
|
|
+ Cost of sales |
0.8 |
0.0 |
8.4 |
0.2% |
0.0 |
0.0% |
+ Selling expenses and administrative expenses |
0.6 |
3.6 |
9.5 |
0.2% |
6.6 |
0.1% |
+ Research and development costs |
0.0 |
0.0 |
0.0 |
0.0% |
0.0 |
0.0% |
+ Other costs |
0.4 |
1.4 |
1.8 |
0.0% |
–1.0 |
–0.0% |
Adjusted EBITDA |
368.2 |
457.7 |
759.2 |
13.7% |
879.5 |
17.7% |
adjusted for non-recurring items |
1.7 |
5.0 |
19.7 |
0.4% |
5.6 |
0.1% |
adjusted for PPA items |
0.0 |
–0.0 |
0.0 |
0.0% |
0.0 |
0.0% |
Key influencing factors for earnings
The cost of sales rose at a much faster rate than revenue, increasing by 17.4 percent to €4,346.6 million (H1 2021: €3,702.6 million). The gross margin in the first half of the year was squeezed by higher costs for materials, energy, and logistics. During the reporting period, the increases made by the KION Group in its list prices on the sale side, prompted by the continued rise in material prices, had not yet had any significant impact on earnings. Costs were also driven up by production inefficiencies and delays to projects caused by supply chain disruptions. The KION Group’s gross margin therefore dropped to 21.5 percent in the period under review (H1 2021: 25.5 percent).
Selling and administrative expenses went up by a total of 10.5 percent. This slightly slower rate of increase compared with revenue can be explained by a year-on-year fall in personnel expenses in connection with variable remuneration components.
Research and development expenditure rose by 11.6 percent in total, in part due to the targeted increase in staffing levels at the development sites. New energy, automation, and digitalization continued to be the main areas of focus.
There was a moderate increase in purchase price allocation effects included in the cost of sales and in other functional costs compared with the first half of 2021 due to currency effects. The ‘other’ item included not only foreign currency exchange rate gains and losses but also line items such as the share of profit (loss) of equity-accounted investments, which amounted to a profit of €10.9 million (H1 2021: profit of €10.3 million).
The change in the cost of sales and in other functional costs is shown in the following condensed income statement.
in € million |
Q2 |
Q2 |
Change |
Q1 – Q2 |
Q1 – Q2 |
Change |
|---|---|---|---|---|---|---|
Revenue |
2,802.2 |
2,592.8 |
8.1% |
5,536.7 |
4,967.9 |
11.4% |
Cost of sales |
–2,216.3 |
–1,942.8 |
–14.1% |
–4,346.6 |
–3,702.6 |
–17.4% |
Gross profit |
585.9 |
649.9 |
–9.9% |
1,190.1 |
1,265.2 |
–5.9% |
Selling expenses and administrative expenses |
–430.7 |
–395.8 |
–8.8% |
–865.1 |
–782.9 |
–10.5% |
Research and development costs |
–49.4 |
–45.8 |
–7.8% |
–96.4 |
–86.3 |
–11.6% |
Other |
11.0 |
13.0 |
–15.7% |
5.9 |
18.8 |
–68.5% |
Earnings before interest and tax (EBIT) |
116.8 |
221.3 |
–47.2% |
234.6 |
414.8 |
–43.5% |
Net financial expenses |
–7.4 |
–9.2 |
19.7% |
–10.1 |
–19.2 |
47.3% |
Earnings before tax |
109.4 |
212.1 |
–48.4% |
224.5 |
395.6 |
–43.3% |
Income taxes |
–29.8 |
–57.9 |
48.5% |
–64.7 |
–104.4 |
38.1% |
Net income |
79.6 |
154.2 |
–48.4% |
159.8 |
291.2 |
–45.1% |
Net financial expenses
The net financial expenses, representing the balance of financial income and financial expenses, improved markedly to €10.1 million (H1 2021: €19.2 million). This was mainly due to a better level of net interest income/expense from the lease business and positive changes in the fair value of interest-rate derivatives. In addition, interest expense on financial liabilities was down year on year because of improved funding conditions. By contrast, negative exchange-rate effects in connection with financing went up.
Income taxes
Income tax expenses fell to €64.7 million (H1 2021: €104.4 million) owing to the lower level of earnings and to tax rebates for previous years. No deferred tax assets were recognized in respect of the impairment losses on assets of the Russian subsidiaries in the period under review. The effective tax rate was 28.8 percent in the first six months of the year (H1 2021: 26.4 percent).
Net income for the period
Net income for the period stood at €159.8 million, which was substantially below the level for the prior-year period (H1 2021: €291.2 million). This figure included an expense of around €30 million for non-recurring items relating to business in Russia. Basic earnings per share attributable to the shareholders of KION GROUP AG came to €1.21 (H1 2021: €2.21) based on 131.1 million (H1 2021: 131.1 million) no-par-value shares.