Business performance in the Group
Business in the KION Group was influenced by further sharp rises in the cost of materials, energy, and logistics, and by persistent bottlenecks in procurement markets in the first half of 2022. The situation had been difficult even before the outbreak of war in Ukraine, and was exacerbated by the continuation of military action in the second quarter. Coronavirus lockdowns also had an effect, particularly in Asia.
In the first quarter, the KION Group stopped all deliveries of products to Russia and Belarus, including the supply of spare parts and the provision of related services, in both segments due to the international sanctions imposed in connection with the war in Ukraine. Local operations in the service business in Russia are being maintained by the sales companies and their KION employees in the country. The Industrial Trucks & Services segment recognized a substantial volume of impairment losses, especially in respect of assets of Russian subsidiaries. Non-recurring items relating to business in Russia reduced net income for the first half of 2022 by around €30 million in total.
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. This new Dematic site will be used to manufacture items such as racks for the 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.
An ultra-modern parts warehouse with high-bay storage facilities and automated, digitalized, and intelligently networked processes is being built in Kahl am Main, Germany. Known as the Kahl Regional Distribution Center, it will occupy a total area of around 31,000 square meters. A sum in the mid-double-digit millions of euros is being invested in the facility, which is due to commence operations in spring 2024.
The KION Group is also investing in the manufacture of energy-efficient lithium-ion battery systems. In April 2022, KION Battery Systems GmbH (KBS) launched a second production line for lithium-ion batteries that will be used to power mobile warehouse trucks.
As scheduled, the short-term promissory note of €92.5 million was repaid in May 2022. The volume of the commercial paper program launched by the KION Group in 2020 was increased by €250.0 million, from €500.0 million to €750.0 million, in April 2022. By the reporting date, around €500 million of commercial paper had been issued under this program in order to cover short-term funding requirements. In June, additional loans of €300.0 million were arranged with banks in view of the existing uncertainties in the capital markets and the temporarily elevated level of capital commitment.