Business performance in the Group

Strong business performance amid muted sectoral conditions

Despite falling demand in the global markets for industrial trucks and supply chain solutions, the KION Group achieved a substantial recovery in earnings and margins and was able to deliver a successful overall business performance in 2023. The Group’s profitability was boosted by measures – now largely implemented – to enhance operational and commercial agility in the supply chain and in production in both operating segments and by the previous year’s price increases in the Industrial Trucks & Services segment.

In the Industrial Trucks & Services segment, the continual improvement in the availability of materials in 2023 helped make it possible to manufacture forklifts and warehouse trucks without major interruptions and therefore to reduce delivery times over the course of the year. The higher production output and the price adjustments carried out in 2022 resulted in a sharp year-on-year increase in revenue and adjusted EBIT that saw the segment’s profitability return to the level of previous years following a weak performance in 2022. With regard to orders on hand, the decline in order volume was due mainly to customers’ temporary reluctance to invest. 

In the Supply Chain Solutions segment, the focus in the reporting period was on a more efficient management of project delivery across all phases of the project cycle. The measures initiated in the prior year were continued as well. Ongoing monitoring of project costs and expansion of the supplier base remained the focus of attention here. However, the project business (business solutions) fell behind schedule in working through lower-margin orders from the order book, the contracts for which do not yet include adequate price adjustment clauses. Moreover, the expected overall costs for some projects went up over the course of the year, partly due to delays in their completion. Amid the subdued sectoral conditions, customers were also noticeably reluctant to invest in long-term, big-ticket projects. The ongoing measures that had been initiated in 2022 and the slowly growing proportion of higher-margin customer projects contributed to the improvement in earnings achieved in 2023 as a whole.

On June 16, 2023, the KION Group signed an agreement for the sale of the Industrial Trucks & Services segment’s business in Russia as part of a management buyout. As at the reporting date, the transaction was still waiting for approval from the Russian authorities.

Systematically strengthening the market position and technological position

The KION Group forged ahead with its efforts to strengthen its market position and technological position, and this was reflected in its capital expenditure of €442.8 million in 2023 (2022: €382.7 million). In Jinan, China, works to complete the new Supply Chain Solutions plant are progressing on schedule. The new plant will be used to manufacture Dematic brand items such as Multishuttle systems, components for automated guided vehicle systems, and conveyor belts and systems. Following the ramp-up phase in 2022, the industrial truck plant that is also located in Jinan was able to increase its capacity utilization substantially to around 14,000 trucks in 2023 (2022: around 5,000 trucks) thanks to high demand from customers. In Kahl am Main, Germany, the KION Group has been constructing an automated distribution center for the efficient delivery of spare parts to customers. Construction of the center started in February 2023 and it will serve both operating segments. This facility will be equipped with warehouse technology solutions from Dematic. It is scheduled to go into operation in the first half of 2025. In the Industrial Trucks & Services segment, investments were also made in expanding the industrial truck plant at the Summerville site in the US with the aim of increasing production capacity and the degree of inhouse production.

Development of a global platform for the brand companies in the Industrial Trucks & Services segment was a further focus of efforts to boost the technological position. In the European market, for example, the KION Group launched its first trucks built with a modular configuration and designed for load capacities up to 3.5 tonnes.

The production facility for fuel cell systems for industrial trucks – initially warehouse trucks – that has been built at the Hamburg site went into operation on schedule in 2023, with the first systems introduced to the market in November. 

The KION Group develops and produces its own lithium-ion batteries for its electric-powered industrial trucks at the site in Karlstein am Main. Since September 2023, a process has been in place to reuse up to 95 percent of the materials from these batteries. This is the result of the KION Group entering into a strategic partnership with Li-Cycle Holdings Corp., a leading North American recycler of lithium-ion batteries, in March 2023. The KION Group is planning for up to 5,000 tonnes of used battery material to have been professionally processed at the new Li-Cycle premises in Magdeburg by 2030.

At the start of July 2023, the KION Group signed up to the Science Based Targets initiative (SBTi) in order to provide transparency regarding its efforts to reduce greenhouse emissions. In line with the SBTi principles, the KION Group has set itself the goal of operating on a net-zero emissions basis along its entire value chain by 2050. The commitment to climate-neutral business practices is based on a fundamental scientific framework and is designed to help achieve the objective of the United Nations Paris climate agreement of limiting global warming to 1.5°C.

Significantly improved liquidity and solid financing situation

In 2023, the KION Group’s free cash flow was well into positive territory at €715.2 million (2022: negative free cash flow of minus €715.6 million) thanks to the strong level of operating profit and improved management of working capital. The improved liquidity situation also allowed financial debt to be reduced year on year. In 2023, KION GROUP AG carried out a series of financing measures to extend the maturity profile of its financial debt, including the issue of a promissory note in multiple tranches with terms of up to seven years that is linked to the achievement of sustainability criteria. In addition, the syndicated revolving credit facility (RCF) with a variable interest rate was extended by one year to 2028. From the current perspective, the KION Group therefore believes that it remains on a solid footing in terms of its future funding capability.