Financial position

The principles and objectives applicable to financial management as at June 30, 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 €11,210.6 million as at June 30, 2022, which was €528.6 million higher than the figure as at December 31, 2021 of €10,682.0 million. The increase was driven primarily by the rise in financial liabilities and, to a lesser extent, by higher trade payables. It was partly offset, in particular, by a lower defined benefit obligation.

Non-current and current financial liabilities rose to a total of €1,808.6 million (December 31, 2021: €1,050.5 million). Non-current financial liabilities stood at €1,088.5 million (December 31, 2021: €898.7 million). The carrying amount of the corporate bond issued, which is included in this line item, amounted to €496.2 million (December 31, 2021: €495.6 million). In addition to the non-current promissory notes, which had a carrying amount of €321.8 million (December 31, 2021: €326.1 million), non-current financial liabilities mainly comprised liabilities to banks of €239.7 million (December 31, 2021: €46.6 million). The growth of the latter is attributable to new long-term loans of €200.0 million that were arranged in June 2022.

Current financial liabilities rose to €720.1 million as at June 30, 2022 (December 31, 2021: €151.9 million). The increase was mainly due to paper totaling €508.5 million that was issued under the commercial paper program in the first half of the year. In addition, current liabilities to banks increased to €192.4 million (December 31, 2021: €57.4 million), of which €100.0 million is attributable to a new loan arranged in June 2022.

Net financial debt (non-current and current financial liabilities less cash and cash equivalents) rose sharply to €1,429.1 million as at June 30, 2022 (December 31, 2021: €567.6 million). This equated to 0.9 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 €2,490.3 million as at June 30, 2022 (December 31, 2021: €1,600.1 million), the liabilities from the short-term rental business of €502.3 million (December 31, 2021: €488.9 million) and the liabilities from procurement leases of €558.9 million (December 31, 2021: €543.6 million) are added to net financial debt.

Non-current and current liabilities from the lease business came to €3,117.8 million as at June 30, 2022 (December 31, 2021: €3,070.8 million). Of this total, €2,930.2 million was attributable to the financing of the direct lease business (December 31, 2021: €2,858.3 million) and €187.6 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 totaled €502.3 million (December 31, 2021: €488.9 million).

Non-current and current other financial liabilities stood at €678.4 million as at June 30, 2022 (December 31, 2021: €652.0 million). This item included liabilities from procurement leases amounting to €558.9 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, edged up to €868.1 million (December 31, 2021: €854.8 million).

The retirement benefit obligation and similar obligations under defined benefit pension plans fell to €858.6 million as at June 30, 2022 (December 31, 2021: €1,265.3 million). This was mainly due to significantly higher discount rates compared with the end of 2021.

Consolidated equity went up by €446.1 million to €5,614.9 million as at June 30, 2022 (December 31, 2021: €5,168.9 million). The net income of €159.8 million earned during the first half of 2022 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 €304.8 million (after deferred taxes) and were recognized in other comprehensive income. The currency translation gains of €179.0 million, also recognized in other comprehensive income, had a positive impact on equity too. KION GROUP AG’s dividend payout reduced equity by €196.7 million. The equity ratio was 33.4 percent as at June 30, 2022 (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 six months of 2022 (excluding right-of-use assets from procurement leases) gave rise to cash payments of €166.1 million (H1 2021: €123.3 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 €379.5 million as at June 30, 2022 (December 31, 2021: €483.0 million) owing to the decline in free cash flow. Taking into account the credit facility of €993.9 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 June 30, 2022 amounted to €1,340.5 million (December 31, 2021: €1,473.7 million).

Cash flow from operating activities amounted to a net cash outflow of minus €433.0 million, which was down sharply compared with the net cash provided by operating activities of €437.7 million in the prior-year period. As well as the reduction in earnings from operations, the considerable rise in net working capital reduced the level of cash flow from operating activities by €632.4 million. Inventories increased, mainly in the Industrial Trucks & Services segment due to the difficult supply situation. In addition, higher contract balances in the project business of the Supply Chain Solutions segment resulted in more liquidity being tied up.

Net cash used for investing activities amounted to minus €158.5 million and was therefore higher than in the prior-year period (H1 2021: minus €136.3 million). Within this total, cash payments for capital expenditure on production facilities, product development, and purchased property, plant, and equipment rose to minus €166.1 million (H1 2021: minus €123.3 million).

Free cash flow – the sum of cash flow from operating activities and investing activities – declined markedly to minus €591.5 million (H1 2021: €301.5 million).

Net cash provided by financing activities amounted to €473.4 million in the first half of 2022 (H1 2021: net cash used of minus €309.9 million). Additions to financial debt primarily related to the paper issued under the commercial paper program and the new bank loans arranged in June 2022. This was partly offset by the scheduled repayment of the fixed-rate tranche of the promissory note in May 2022. Payments made for interest portions and principal portions under procurement leases totaled minus €73.0 million (H1 2021: minus €69.8 million). Current interest payments decreased slightly to minus €13.3 million (H1 2021: minus €13.7 million). The payment of a dividend to the shareholders of KION GROUP AG resulted in an outflow of funds of minus €196.7 million, which equates to €1.50 per share.