Earnings
EBIT and EBITDA
Earnings before interest and tax (EBIT) fell sharply, by €520.6 million, to €103.3 million in the first nine months of 2022 (Q1–Q3 2021: €623.9 million). EBIT included budgeted purchase price allocation effects amounting to an expense of €69.0 million in the first three quarters of the year (Q1–Q3 2021: expense of €63.1 million). In the reporting period, there were also non-recurring items amounting to a total expense of €38.3 million (Q1–Q3 2021: expense of €4.1 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 €210.6 million (Q1–Q3 2021: €691.1 million). The adjusted EBIT margin fell sharply to 2.6 percent as a result (Q1–Q3 2021: 9.2 percent). In the third quarter, adjusted EBIT amounted to minus €101.1 million (Q3 2021: €228.9 million). This loss was primarily attributable to the rise in expected overall project costs in the SCS segment.
in € million |
Q3 |
Q3 |
Q1 – Q3 |
in % of revenue |
Q1 – Q3 |
in % of revenue |
|---|---|---|---|---|---|---|
EBIT |
–131.2 |
209.1 |
103.3 |
1.3% |
623.9 |
8.3% |
Adjustment by functional costs: |
|
|
|
|
|
|
+ Cost of sales |
16.2 |
9.5 |
44.7 |
0.5% |
28.4 |
0.4% |
+ Selling expenses and administrative expenses |
14.1 |
13.0 |
48.5 |
0.6% |
42.5 |
0.6% |
+ Research and development costs |
0.1 |
0.0 |
0.1 |
0.0% |
0.1 |
0.0% |
+ Other costs |
–0.2 |
–2.8 |
14.0 |
0.2% |
–3.9 |
–0.1% |
Adjusted EBIT |
–101.1 |
228.9 |
210.6 |
2.6% |
691.1 |
9.2% |
adjusted for non-recurring items |
6.2 |
–1.4 |
38.3 |
0.5% |
4.1 |
0.1% |
adjusted for PPA items |
24.0 |
21.2 |
69.0 |
0.8% |
63.1 |
0.8% |
Earnings before interest, tax, depreciation, and amortization (EBITDA) stood at just €867.9 million in the reporting period (Q1–Q3 2021: €1,317.6 million). Adjusted EBITDA was also down markedly at €893.8 million (Q1–Q3 2021: €1,321.4 million), giving an adjusted EBITDA margin of 10.8 percent (Q1–Q3 2021: 17.5 percent).
in € million |
Q3 |
Q3 |
Q1 – Q3 |
in % of revenue |
Q1 – Q3 |
in % of revenue |
|---|---|---|---|---|---|---|
EBITDA |
128.4 |
443.7 |
867.9 |
10.5% |
1,317.6 |
17.5% |
Adjustment by functional costs: |
|
|
|
|
|
|
+ Cost of sales |
5.4 |
–0.0 |
13.8 |
0.2% |
0.0 |
0.0% |
+ Selling expenses and administrative expenses |
0.9 |
1.4 |
10.4 |
0.1% |
8.0 |
0.1% |
+ Research and development costs |
0.1 |
0.0 |
0.1 |
0.0% |
0.0 |
0.0% |
+ Other costs |
–0.2 |
–3.2 |
1.6 |
0.0% |
–4.2 |
–0.1% |
Adjusted EBITDA |
134.6 |
441.9 |
893.8 |
10.8% |
1,321.4 |
17.5% |
adjusted for non-recurring items |
6.2 |
–1.9 |
25.9 |
0.3% |
3.8 |
0.0% |
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 18.6 percent to €6,679.0 million (Q1–Q3 2021: €5,631.3 million). The gross margin was significantly squeezed by the disruption in the supply chains and the resulting huge increase in costs for materials, energy, and logistics in both segments. In the Supply Chain Solutions segment, higher expected overall project costs weighed heavily on earnings in the third quarter of 2022. It was only possible to pass on a small proportion of the project-related cost increases to customers because the existing long-term customer agreements did not contain adequate price adjustment clauses. Such clauses were not introduced until the middle of the second quarter of 2022 and then only for new project agreements. In the Industrial Trucks & Services segment, the in-year raising of sale prices has so far done little to compensate for the increase in costs as the segment has predominantly been working through orders received before the prices were increased. Costs were also driven up by production inefficiencies and delays to projects caused by supply chain disruptions. The KION Group’s gross margin therefore slumped to 19.0 percent in the period under review (Q1–Q3 2021: 25.3 percent).
At 12.0 percent, the increase in selling and administrative expenses was greater than the growth in revenue. Selling expenses rose particularly sharply owing to the stepping up of sales activities. By contrast, administrative expenses rose at a slower rate, which was partly due to lower personnel expenses in connection with variable remuneration components.
Research and development expenditure rose by 14.1 percent in total, in part due to the targeted increase in staffing levels. Automation, digitalization, and new energy continued to be among the main areas of focus in the third quarter.
Purchase price allocation effects included in the cost of sales and in other functional costs increased compared with the first three quarters 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 €12.6 million (Q1–Q3 2021: profit of €11.5 million).
The change in the cost of sales and in other functional costs is shown in the following condensed income statement.
in € million |
Q3 |
Q3 |
Change |
Q1 – Q3 |
Q1 – Q3 |
Change |
|---|---|---|---|---|---|---|
Revenue |
2,706.4 |
2,565.8 |
5.5% |
8,243.0 |
7,533.7 |
9.4% |
Cost of sales |
–2,332.4 |
–1,928.7 |
–20.9% |
–6,679.0 |
–5,631.3 |
–18.6% |
Gross profit |
373.9 |
637.2 |
–41.3% |
1,564.0 |
1,902.4 |
–17.8% |
Selling expenses and administrative expenses |
–452.4 |
–393.1 |
–15.1% |
–1,317.5 |
–1,176.0 |
–12.0% |
Research and development costs |
–50.0 |
–41.9 |
–19.3% |
–146.3 |
–128.2 |
–14.1% |
Other |
–2.8 |
7.0 |
< –100% |
3.2 |
25.7 |
–87.8% |
Earnings before interest and tax (EBIT) |
–131.2 |
209.1 |
< –100% |
103.3 |
623.9 |
–83.4% |
Net financial expenses |
–1.9 |
–5.9 |
67.1% |
–12.1 |
–25.1 |
52.0% |
Earnings before tax |
–133.2 |
203.2 |
< –100% |
91.3 |
598.8 |
–84.8% |
Income taxes |
40.3 |
–63.6 |
> 100% |
–24.3 |
–168.0 |
85.5% |
Net loss / income |
–92.9 |
139.6 |
< –100% |
66.9 |
430.8 |
–84.5% |
Net financial expenses
The net financial expenses, representing the balance of financial income and financial expenses, improved substantially to €12.1 million (Q1–Q3 2021: €25.1 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. However, interest expense on financial liabilities increased due to the rise in the total financing volume in the period under review. Currency effects in connection with financing weighed heavily on net financial income/expenses.
Income taxes
Income tax expenses fell to €24.3 million (Q1–Q3 2021: €168.0 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 26.7 percent in the first nine months of the year (Q1–Q3 2021: 28.1 percent).
Net income for the period
Net income for the period stood at €66.9 million, which was considerably below the level for the prior-year period (Q1–Q3 2021: €430.8 million). This figure included an expense of around €34 million for non-recurring items relating to business in Russia. Basic earnings per share attributable to the shareholders of KION GROUP AG came to €0.48 (Q1–Q3 2021: €3.26) based on 131.1 million (Q1–Q3 2021: 131.1 million) no-par-value shares.