Financial position

The principles and objectives applicable to financial management as at September 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 €11,437.0 million as at September 30, 2022, which was €755.0 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 €2,213.4 million (December 31, 2021: €1,050.5 million). Non-current financial liabilities stood at €1,287.4 million (December 31, 2021: €898.7 million). The carrying amount of the corporate bond issued, which is included in this line item, amounted to €496.5 million (December 31, 2021: €495.6 million). In addition to the non-current promissory notes, which had a carrying amount of €319.5 million (December 31, 2021: €326.1 million), non-current financial liabilities predominantly comprised liabilities to banks. The latter increased to €440.9 million (December 31, 2021: €46.6 million) as a result of the new long-term loans granted in June and July 2022, which have a total volume of €400.0 million.

Current financial liabilities rose to €926.0 million as at September 30, 2022 (December 31, 2021: €151.9 million). The increase was mainly due to paper issued under the commercial paper program during the reporting period; the volume issued as at September 30, 2022 was €592.0 million (December 31, 2021: €0.0 million). Current liabilities to banks stood at €319.6 million, which was also higher than at the end of 2021 (December 31, 2021: €57.4 million). They included, for example, the new short-term loan of €100.0 million granted in June 2022 and the drawdown of €131.6 million under the revolving credit facility (RCF) that became effective on the reporting date.

Net financial debt (non-current and current financial liabilities less cash and cash equivalents) rose sharply to €1,856.8 million as at September 30, 2022 (December 31, 2021: €567.6 million). This equated to 1.5 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 €2,942.5 million as at September 30, 2022 (December 31, 2021: €1,600.1 million), the liabilities from the short-term rental business of €509.5 million (December 31, 2021: €488.9 million) and the liabilities from procurement leases of €576.1 million (December 31, 2021: €543.6 million) are added to net financial debt.

Non-current and current liabilities from the lease business came to €3,127.2 million as at September 30, 2022 (December 31, 2021: €3,070.8 million). Of this total, €2,950.8 million was attributable to the financing of the direct lease business (December 31, 2021: €2,858.3 million) and €176.5 million to the repurchase obligations resulting from the indirect lease business (December 31, 2021: €212.6 million).

Non-current and current other financial liabilities stood at €714.7 million as at September 30, 2022 (December 31, 2021: €652.0 million).

Contract liabilities, which mainly relate to prepayments received from customers in connection with the long-term project business in the Supply Chain Solutions segment, decreased to €757.2 million (December 31, 2021: €854.8 million).

The retirement benefit obligation and similar obligations under defined benefit pension plans fell to €755.2 million as at September 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 €571.8 million to €5,740.7 million as at September 30, 2022 (December 31, 2021: €5,168.9 million). The net income of €66.9 million earned during the period under review 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 €398.7 million (after deferred taxes) and were recognized in other comprehensive income. The currency translation gains of €303.1 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 improved to 33.4 percent (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 period under review (excluding right-of-use assets from procurement leases) gave rise to cash payments of €252.6 million (Q1–Q3 2021: €199.1 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 and the construction of a new plant for supply chain solutions in the Chinese city of Jinan, Shandong province.

Analysis of liquidity

Cash and cash equivalents declined to €356.6 million as at September 30, 2022 (December 31, 2021: €483.0 million).

Taking into account the credit facility of €868.4 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 September 30, 2022 amounted to €1,191.6 million (December 31, 2021: €1,473.7 million).

Cash flow from operating activities amounted to a net cash outflow of minus €728.1 million in the first nine months of 2022, which was down sharply compared with the net cash provided by operating activities of €340.5 million in the prior-year period. Within this total, the considerable rise in net working capital reduced the level of cash flow from operating activities by €897.8 million. The build-up of unfinished and finished trucks in the Industrial Trucks & Services segment, which was caused by the supply chain disruptions, was further contained in the third quarter thanks to the measures introduced during the year in relation to the supplier network and production. However, stocks of materials and supplies – particularly steel and electronics – were increased in order to counter procurement risks. Other factors were postponed milestone payments from customers as a result of project delays and the volume-related growth of receivables from customers.

Net cash used for investing activities amounted to minus €243.7 million and was therefore higher than in the prior-year period (Q1–Q3 2021: minus €205.8 million). Within this total, cash payments for capital expenditure on production facilities, product development, and purchased property, plant, and equipment rose to minus €252.6 million (Q1–Q3 2021: minus €199.1 million).

Free cash flow – the sum of cash flow from operating activities and investing activities – was clearly negative at minus €971.9 million (Q1–Q3 2021: positive cash flow of €134.7 million).

Net cash provided by financing activities amounted to €831.3 million in the first nine months of 2022 (Q1–Q3 2021: net cash used of minus €141.6 million). The net addition to financial debt of €1,161.5 million (Q1–Q3 2021: €48.1 million) mainly related to the commercial paper program and to the drawdown and subsequent repayment of amounts under the revolving credit facility (RCF) during the reporting period. Furthermore, new bank loans were arranged and, as scheduled, the fixed-rate tranche of the promissory note was repaid during the period under review. Payments made for interest portions and principal portions under procurement leases totaled minus €111.1 million (Q1–Q3 2021: minus €105.0 million). Current interest payments edged up to minus €24.9 million (Q1–Q3 2021: minus €24.2 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.