Opportunity report

Principles of opportunity management

Opportunity management, like risk management, forms a central part of the Company’s day-to-day management. Individual areas of opportunity are identified within the framework of the strategy process. Opportunities are determined and managed on a decentralized basis in line with the Group strategy.

There are monthly reports on the opportunity situation as part of the regular Group reporting process. As a result, the KION Group is in a position to ascertain at an early stage whether market trends, competitive trends, or events within the Group require individual areas of opportunity to be re-evaluated. This may lead to reallocation of the budgets earmarked for the realization of opportunities. Such decisions are made on the basis of the potential of the opportunity, drawing on previous experience. There is no management system for the evaluation of opportunities comparable to the system for risk management.

Categorization of opportunities

‘Opportunities’ are understood as positive deviations from the expectations set out in the outlook relating to the economic situation and the KION Group’s business situation. Opportunities are divided into three categories:

Market opportunities describe the potential resulting from trends in the market and competitive environment and from the regulatory situation.
Strategic opportunities are based on implementation of the Group’s strategy. They may lead to positive effects that exceed planning assumptions.
Business-performance opportunities arise in connection with operational activities along the value chain, such as restructuring or cost-cutting measures.

Opportunity situation

Market opportunities

The economy as a whole may fare better in 2024 than has been assumed for the purposes of the outlook. In a positive macroeconomic scenario, order intake and revenue could exceed the target ranges, which would have a positive effect on earnings too.

In its outlook for 2024, the IMF notes the possibility of inflation decreasing even more quickly than anticipated, for example because of falling energy prices. This could lead to the restrictive monetary policy being eased and therefore improved funding conditions, which would in turn bolster investment demand. The recovery of domestic demand driven by consumers spending their excess savings or as a result of government support packages is also given as a potential positive scenario and could potentially have a favorable effect on demand for material handling solutions.

In addition, unforeseen circumstances may occur in the wider market at any time – such as quality problems at competitors or the effects of consolidation – that increase demand for products from the KION Group brands. New, unforeseen regulatory initiatives could be launched, for example the tightening of health and safety regulations or emissions standards, that would push up demand for products offered by the KION Group brands. There may also be positive currency effects that were not factored into the planning.

There are four overarching trends, in particular, that present medium- to long-term market opportunities for the KION Group:

Commercial pressures and pressure from society and governments to forge ahead with the transition to a green economy mean that material handling solutions are increasingly required to be climate neutral. This is stimulating demand for industrial and warehouse trucks powered by electric drives, which is a particular area of strength for the KION Group, especially in regard to lithium-ion technology and fuel cell systems.
The KION Group’s main customer segments for supply chain solutions are predicted to expand, in some cases significantly, in the next few years, accelerated by the change in consumer behavior. The increasing trend toward online shopping is driving demand for warehouse automation solutions, including networked automated guided vehicle systems, mobile robotics applications, and industry-specific system solutions.
The anticipated growth in the emerging markets, most notably China, is fueling increased demand for industrial trucks and related services in the APAC region. Particularly good opportunities are available in the fast-growing value segment, in which the KION Group is intending to outstrip the market’s growth thanks to its multi-brand strategy, a modular platform for diesel and electric forklift trucks, and the expansion of local production facilities.
Demographic change is resulting in a shortage of workers. This is pushing up demand for warehouse automation, mobile automation, and robotics solutions.

Strategic opportunities

The positive impact of the strategic activities under the KION 2027 strategy is already appropriately reflected in the expectations regarding the KION Group’s financial performance in 2024. Nevertheless, the individual activities could create positive effects that exceed expectations. There is also a possibility that new strategic opportunities that could not be anticipated and were therefore not part of the planning may arise over the course of the year, for example in the form of acquisitions and strategic partnerships.

The KION Group’s medium- to long-term strategic opportunities in the Industrial Trucks & Services operating segment arise, in particular, from

achievement of a leading global market and technology position with regard to truck automation and innovative drive technologies as an integral element of automated warehouse solutions;
a greater presence in the value price segment, particularly as a result of the systematic implementation of the segment-wide, modular platform strategy (global value platform);
stronger involvement in the electrification of warehousing and logistics processes, including by ensuring availability of lithium-ion technology across the entire product range and expanding market share in the lightweight warehouse truck sector;
further strengthening of the KION Group’s market-leading position in the EMEA region (measured in terms of units) and achievement of a stronger position in the APAC and Americas regions, in particular by opening new production facilities and technology centers, boosting its technological expertise through focused research and development activities, developing new equipment geared to the specific needs of customers in the individual regions, making greater use of shared modules, and harnessing potential for cross-selling between the two operating segments; and
expansion of the service and financial services portfolio at every stage of the product lifecycle, taking advantage of the high number of trucks in use.

The KION Group’s medium- to long-term strategic opportunities in the Supply Chain Solutions operating segment arise, in particular, from

further expansion of the KION Group’s position in the market for intralogistics solutions by focusing on fast-growing market segments with a balanced portfolio of short-term and long-term projects;
continual development of intelligent and networked automation solutions, incorporating software, robotics, and mechatronics; and
ongoing development of a high-margin, lifecycle-oriented service approach and continuous expansion of the installed base of supply chain solutions.

Business-performance opportunities

Business-performance opportunities arise firstly from ongoing activities to modernize and streamline the KION Group’s production facilities and from the worldwide integration of the production network. By investing in new locations and expanding existing ones, products can be assembled nearer to the markets in which they are to be sold, economies of scale can be achieved across the Group, and synergies can be leveraged. Secondly, activities are carried out under the KION 2027 strategy aimed at improving operational excellence in research and development, production, and logistics, and at lowering material and quality costs, for example by reducing the complexity of the product range.

The following may lead to an increase in profitability in the short to medium term:

Continued measures to improve the general cost structure and internal processes in procurement, production, logistics, and project management may help the KION Group to achieve growth more efficiently in the future.
Ongoing efficiency increases in the production network, including through the integration of additional sites, automation projects, and the relocation of production, may boost sales and improve the gross margin.
In the Supply Chain Solutions operating segment, increasing the scalability of products and solutions by refining subsystems and standard modules that integrate hardware, control units, and software may help to reduce costs and increase quality.
Effective use and centralized coordination of global development capacities may create synergies and economies of scale.

Summary of opportunities

The outlined opportunities offer significant possibilities for the KION Group in the medium to long term beyond the underlying forecast period. In addition, new opportunities are actively sought and their implementation examined, and, if necessary, substantiated. If opportunities arise in addition to the forecast developments or if they materialize more quickly than expected, this could have a positive impact on our financial position and financial performance. Overall, the KION Group’s opportunities have not changed significantly compared with the previous year.