KION GROUP AG
Business activities
KION GROUP AG is the strategic management holding company in the KION Group. KION GROUP AG holds all the shares in Dematic Holdings GmbH, Frankfurt am Main, and thus directly holds all the shares in the subsidiaries in the Supply Chain Solutions segment. Furthermore, KION GROUP AG is the sole shareholder of Linde Material Handling GmbH, Aschaffenburg, which holds almost all the shares of the companies in the Industrial Trucks & Services segment. KION GROUP AG collects liquidity surpluses of the Group companies in a cash pool and, where possible, covers subsidiaries’ funding requirements with intercompany loans. As a rule, the external financing of the Group’s activities is handled by KION GROUP AG. Managerial holding company functions and the performance of other services, in return for a consideration, are also part of KION GROUP AG’s remit.
The annual financial statements of KION GROUP AG are prepared in accordance with the provisions in the German Commercial Code (HGB) and the German Stock Corporation Act (AktG). The management report is combined with the group management report. Pursuant to section 315e (1) HGB, the consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). Differences between the accounting policies in accordance with HGB and those in accordance with IFRS arise primarily in connection with the accounting treatment of financial instruments, provisions, deferred taxes, and procurement leases.
Management system
The main key performance indicator for KION GROUP AG is adjusted EBIT (IFRS). It is defined as earnings before interest and tax adjusted for non-recurring items and is derived from KION GROUP AG’s operating profit and net investment income. A reconciliation to adjusted EBIT (IFRS) is shown in a table in the following chapter.
Financial performance of KION GROUP AG
KION GROUP AG does not have any operating activities itself. The revenue of €112.1 million reported for 2023 (2022: €100.1 million) largely arose from the performance of services for affiliated companies.
Other operating income fell by €66.9 million to €18.3 million and included, in particular, gains on the measurement of bank accounts and cash pools in foreign currencies.
The cost of materials related to revenue from the provision of services and mostly consisted of expenses for consultancy services.
Personnel expenses amounted to €74.0 million, a year-on-year rise of €21.5 million. This growth was primarily attributable to an increase in variable, performance-related salary components, such as short-term incentives and share-based remuneration.
Other operating expenses fell by €83.2 million to €153.7 million. This decrease was mainly due to lower exchange rate losses resulting from the measurement of bank accounts and cash pools in foreign currencies amounting to €12.9 million (2022: €111.5 million). In a countervailing effect, KION GROUP AG saw its expenses for consultancy and other third-party services go up by €11.0 million to €109.7 million in 2023.
Impairment losses decreased by €12.5 million to €0.3 million. This reduction primarily related to the impairment losses of €12.4 million that had been recognized on financial receivables in the prior year due to the inability to recover financial receivables from Russian subsidiaries as a result of the war in Ukraine.
Net investment income rose by €236.9 million to €542.8 million in 2023. This increase was mainly due to the sharp rise in income from the profit-transfer agreement in place with Linde Material Handling GmbH, which amounted to €467.0 million (2022: €172.6 million). By contrast, income from the profit-transfer agreement with Dematic Holdings GmbH fell to €82.8 million (2022: €138.2 million).
Adjusted EBIT (IFRS), which is derived from operating profit and net investment income, increased in total by €220.9 million to €445.5 million.
The net financial income of €35.6 million (2022: €31.6 million) consisted of interest expense and similar charges totaling €140.6 million (2022: €52.5 million) and other interest and similar income amounting to €176.3 million (2022: €84.1 million). Interest expense and similar charges related to interest charged on intercompany liabilities in an amount of €74.3 million (2022: €18.3 million) and interest expense for external financial liabilities in an amount of €65.5 million (2022: €27.5 million). Other interest and similar income mainly comprised interest income of €169.5 million (2022: €82.2 million) arising from intercompany receivables. It also included income from cover assets of €3.2 million (2022: expense of €1.6 million).
KION GROUP AG recorded tax expenses of €107.6 million as a result of its role as the parent company of the tax group for nearly all domestic subsidiaries in 2023 (2022: tax income of €0.2 million). This change was due to the much improved earnings situation of the tax group last year.
Total net income of €373.0 million was generated in the year under review (2022: €220.6 million).
in € million |
2023 |
2022 |
Change |
|---|---|---|---|
Revenue |
112.1 |
100.1 |
12.0% |
Other operating income |
18.3 |
85.2 |
–78.5% |
Material expenses |
–0.2 |
–0.2 |
0.0% |
Personnel expenses |
–74.0 |
–52.5 |
–41.0% |
Other operating expenses |
–153.7 |
–236.9 |
35.1% |
Depreciation, amortization & impairment expense |
–0.3 |
–12.8 |
97.7% |
Operating loss |
–97.8 |
–117.1 |
16.5% |
Net income (loss) from participations |
542.8 |
305.9 |
77.4% |
Net interest income (loss) |
35.6 |
31.6 |
12.7% |
Income taxes |
–107.6 |
0.2 |
< −100% |
Net income |
373.0 |
220.6 |
69.1% |
in € million |
2023 |
2022 |
Change |
|---|---|---|---|
Operating loss |
–97.8 |
–117.1 |
16.5% |
Net income (loss) from participations |
542.8 |
305.9 |
77.4% |
Valuation effects local gaap / IFRS |
–0.2 |
54.0 |
< −100% |
Non-recurring items |
0.7 |
–18.2 |
> 100% |
Adjusted EBIT (IFRS) |
445.5 |
224.6 |
98.4% |
In the prior year, the differences between the accounting policies in accordance with HGB and those in accordance with IFRS had resulted mainly from the recognition, in adjusted EBIT (IFRS), of currency effects and of the impairment of financial receivables due from Russian subsidiaries. The prior year’s non-recurring items had related to the intragroup charging of costs to subsidiaries.
Net assets and financial position of KION GROUP AG
The total assets of KION GROUP AG decreased by approximately 0.5 percent to €8,124.2 million as at December 31, 2023.
At €4,239.1 million, financial assets were virtually unchanged and largely comprised the carrying amounts of the equity investments in Dematic Holdings GmbH (€2,862.2 million) and Linde Material Handling GmbH (€1,368.4 million).
Cash and cash equivalents increased by €39.3 million to €87.4 million as at the reporting date.
Receivables and other assets amounted to €3,793.3 million (December 31, 2022: €3,873.9 million). The bulk of this total, €3,746.7 million, consisted of loans and cash pool receivables due from other Group companies (December 31, 2022: €3,797.7 million). The total also included the Company’s entitlement to the transfer of profits from Linde Material Handling GmbH in an amount of €467.0 million (December 31, 2022: €172.6 million) and to the transfer of profits from Dematic Holdings GmbH in an amount of €82.8 million (December 31, 2022: €138.3 million). There were long-term loans to Group companies of €49.7 million (December 31, 2022: €433.8 million).
in € million |
Dec. 31, 2023 |
Dec. 31, 2022 |
Change |
|---|---|---|---|
Assets |
|
|
|
Property, plant and equipment |
1.4 |
1.5 |
–7.9% |
Financial assets |
4,239.1 |
4,238.2 |
0.0% |
Receivables and other assets |
3,793.3 |
3,873.9 |
–2.1% |
Cash and cash equivalents |
87.4 |
48.1 |
81.7% |
Deferred income |
2.9 |
3.5 |
–17.1% |
Total assets |
8,124.2 |
8,165.3 |
–0.5% |
|
|
|
|
Equity and liabilities |
|
|
|
Equity |
5,161.2 |
4,813.1 |
7.2% |
Retirement benefit obligation |
68.3 |
73.0 |
–6.4% |
Tax provisions |
34.0 |
0.3 |
> 100% |
Other provisions |
52.6 |
25.7 |
> 100% |
Liabilities |
2,808.1 |
3,253.2 |
–13.7% |
Total equity and liabilities |
8,124.2 |
8,165.3 |
–0.5% |
By pursuing an appropriate financial management strategy, the KION Group – through KION GROUP AG – makes sufficient cash and cash equivalents available at all times to meet the Group companies’ operational and strategic funding requirements. KION GROUP AG is a publicly listed company and therefore ensures that its financial management takes into account the interests of shareholders and financing partners. For the sake of these stakeholders, KION GROUP AG strives for an appropriate ratio of internal funding to borrowing.
Equity increased by €348.1 million in the reporting year. After taking into account the dividend payment of €24.9 million and the net income for the year of €373.0 million, equity rose to €5,161.2 million (December 31, 2022: €4,813.1 million). The equity ratio was 63.5 percent as at the reporting date (December 31, 2022: 58.9 percent).
Provisions increased by €55.9 million to €154.9 million, mainly because provisions for taxes rose by €33.7 million to €34.0 million. This change was due to the much improved earnings situation of the tax group last year, which meant that the current tax expense exceeded the prepayments that had been made. In addition, personnel provisions for KION GROUP AG went up by €18.0 million to €39.0 million. This rise was primarily due to the increase in the provision for short-term incentives and share-based remuneration. By contrast, the retirement benefit obligation declined by €4.7 million to a total of €68.3 million.
Liabilities amounted to €2,808.1 million (December 31, 2022: €3,253.2 million) and predominantly consisted of loan liabilities and cash pool liabilities to other Group companies amounting to €1,443.0 million (December 31, 2022: €1,411.6 million), liabilities to banks of €829.8 million (December 31, 2022: €1,024.9 million), and the corporate bond of €500.0 million (December 31, 2022: €500.0 million). After deduction of cash and cash equivalents, the resulting net debt amounted to €1,242.4 million as at the reporting date (December 31, 2022: €1,467.8 million).
In 2020, KION GROUP AG launched a corporate bond program (EMTN program) with a total volume of €3 billion. The first bond was placed on the capital markets under this program in 2020 and had a nominal amount of €500.0 million, a maturity date in 2025, and a coupon of 1.625 percent. The bond is not collateralized.
Given the persistent uncertainties in the capital markets, KION GROUP AG took further steps to secure its funding requirements in the period under review.
The Company issued further promissory notes with a total nominal amount of €375.0 million in 2023. Nearly all of the new tranches have a variable interest rate (Euribor + margin) and mature between now and 2030.
In September 2023, the term of the variable-rate revolving credit facility (RCF) with a total volume of €1,385.7 million was extended by one year until October 2028. The contractually agreed interest terms are linked to KION GROUP AG’s credit rating and to compliance with sustainability KPIs.
Five bilateral bank loans with a total volume of €475.0 million were repaid in 2023, in some cases ahead of schedule.
The commercial paper program was increased by €250.0 million to €750.0 million in April 2022. Of this amount, €20.0 million had been drawn down as at December 31, 2023.
The liabilities to banks and the promissory notes are not collateralized.
Employees
The average number of employees at KION GROUP AG in 2023 was 301 (2022: 286). KION GROUP AG employed 314 people as at December 31, 2023 (December 31, 2022: 289).
Future growth and risk situation
Outlook
The earnings performance of KION GROUP AG should continue to mirror that of the Group going forward. This is because it is the Group’s parent company and therefore its net investment income will reflect the earnings of the subsidiaries. The outlook for the KION Group is therefore largely reflected in the expectations of KION GROUP AG.
The business performance and position of KION GROUP AG are largely determined by the business performance and success of the Group. Detailed reports in this regard are set out in the ‘Business performance in the Group’ and ‘Financial position and financial performance of the KION Group’ sections.
A significant year-on-year increase in adjusted EBIT (IFRS) is therefore anticipated for 2024.
Risks and opportunities
The business performance of KION GROUP AG is essentially subject to the same risks and opportunities as those of the Group because the Group participates directly in the performance of the global subsidiaries through their contributions to earnings.
KION GROUP AG also has guarantees and indemnities in place with affiliated companies and banks and insurance companies in an amount of €5,184.1 million. These relate mainly to lease obligations. In addition, KION GROUP AG is jointly and severally liable for a revolving credit facility of €1,400 million agreed in 2023 to finance the lease business of the subsidiaries. As at the reporting date, the existing contingent liabilities were reviewed with regard to their risk situation. The Executive Board of KION GROUP AG regards the risk of potential trigger events as not probable.