KION shares

Equity markets make gains despite economic woes

The German equity markets recorded price gains over the course of 2023. The DAX closed the year at 16,752 points, which was up by 20.3 percent compared with its 2022 closing price and only minimally below its high for the year of 16,794 points recorded on December 11, 2023.

The equity markets made an excellent start to 2023 thanks to positive corporate news and the end of the coronavirus pandemic. And until the middle of the year, they appeared immune to burgeoning recessionary risks and the progressive tightening of monetary policy aimed at tackling the high rate of core inflation. The only exception was a brief correction that occurred in March due to concerns about a domino effect in the wake of localized turmoil in the banking sector, but the markets quickly shrugged this off.

However, significant volatility returned to the equity markets in the third quarter as it was no longer possible to ignore the macroeconomic risk factors, and the DAX ceded some of its gains. The sudden escalation of the conflict in the Middle East following the attack on Israel pushed prices down even more, before they began trending upward again in November. This was underpinned by increasingly moderate inflation rates, falling commodity prices and, especially in the closing weeks of the year, speculation about imminent interest-rate cuts that was fueled by statements from the US Federal Reserve. The MDAX was unable to match the DAX’s performance and made a gain of only 8 percent compared with its 2022 closing price.

KION shares end 2023 with a strong gain

In 2023, KION shares were able to recoup some of the substantial losses that they had suffered in the previous year. They ended the reporting year at €38.67, which was 44 percent higher than their 2022 closing price. They therefore comfortably outperformed the MDAX and DAX. The raising of the outlook following positive trends for adjusted EBIT and free cash flow in the first and second quarters of 2023 did not initially boost the share price in either instance. The KION Group believes that this was because of the continuing uncertainties in the markets and the deterioration in financing conditions. By contrast, the raising of the Group’s outlook for adjusted EBIT and free cash flow in the third quarter of 2023 and the main share indices’ rally toward the end of the year did ultimately mean that the KION share price closed 2023 with a significant gain.

The closing price on December 29, 2023, based on around 131.1 million outstanding shares, equates to market capitalization of €5.1 billion, of which approximately €2.7 billion was attributable to shares in free float.

Share price performance in 2023 compared with the DAX and MDAX (both indexed to KION)

Significantly higher dividend planned

KION GROUP AG’s 2023 Annual General Meeting took place on May 17, 2023 in Frankfurt, Germany, and returned to being held as an in-person event for the first time since the outbreak of the coronavirus pandemic. Approximately 84 percent of the share capital was represented and all of the motions were approved by a majority of votes. The proposals approved by the Annual General Meeting included the distribution of a dividend of €0.19 per share, resulting in a total distribution to shareholders of around €24.9 million and an addition of €85.0 million to retained earnings.

The Executive Board and Supervisory Board of KION GROUP AG will propose a dividend for 2023 of €0.70 per share (2022: €0.19) to the Annual General Meeting on May 29, 2024. This gives a total dividend payout of €91.8 million. The significant increase compared with the prior-year amount is due to the improvement in earnings and free cash flow. With earnings per share for 2023 of €2.33, this equates to a dividend payout rate of around 30 percent, which is once again within the target corridor of between 25 percent and 40 percent.

Stable shareholder structure

As far as the Company is aware, the shareholder structure remained unchanged in the reporting year. Weichai Power Co., Ltd., Weifang, People’s Republic of China, had a stake of around 46.5 percent as at the end of 2023, which means it is still the biggest single shareholder, while KION GROUP AG continued to hold around 0.1 percent of the shares. Consequently, the number of shares held in treasury was unchanged at 73,876 as at the reporting date (December 31, 2022: 73,876). The free float was therefore also unchanged at 53.4 percent at the end of 2023 (December 31, 2022: 53.4 percent). To the knowledge of the Company, approximately 65 percent of the free float was held by institutional investors in Europe, approximately 33 percent by institutional investors in the Americas region, and approximately 2 percent by institutional investors in the APAC region.

Shareholder structure as at December 31, 2023

Freefloat by country as at December 31, 2023

KION shares predominantly recommended as a buy

As at December 31, 2023, 24 brokerage houses were following and regularly reporting on the KION Group (December 31, 2022: 22). Of this total, 16 analysts recommended KION shares as a buy, seven rated them as neutral, and only one brokerage house advised selling them. The average target price specified by the sell-side analysts was €44.81 (December 31, 2022: €37.17).

Credit ratings remain solid

The KION Group’s credit ratings remained at a solid level in the year under review. Standard & Poor’s confirmed its BBB– rating in April 2023 and changed the outlook from CreditWatch negative to negative. Since October 2022, Fitch Ratings has awarded a long-term issuer default rating of BBB with a stable outlook and a short-term issuer default rating of F2.

This was partly due to the increase in free cash flow and the successful outcome of the financing activities in 2023. On October 10, 2023, KION GROUP AG issued a promissory note in several tranches with a total nominal amount of €375.0 million, thereby extending the maturity profile of the Group’s financial liabilities. The promissory note, whose tranches predominantly have a variable rate and maturity periods of up to seven years, is linked to the fulfillment of sustainability criteria (ESG-linked promissory note).