Earnings

EBIT and EBITDA

Earnings before interest and tax (EBIT) rose year on year by 9.9 percent to €129.4 million (Q1 2022: €117.8 million). EBIT included budgeted purchase price allocation effects amounting to an expense of €25.4 million in the first three months of 2023 (Q1 2022: expense of €22.1 million). There were also non-recurring items amounting to a total expense of €1.2 million. The expense of €30.5 million reported in the prior-year period had predominantly related to impairment losses on assets in connection with the business in Russia.

EBIT adjusted for non-recurring items and purchase price allocation effects (adjusted EBIT) decreased to €156.0 million (Q1 2022: €170.3 million). The adjusted EBIT margin, which had stood at 2.8 percent in the final quarter of 2022, improved to an encouraging 5.6 percent in the first three months of 2023. The adjusted EBIT margin for the first quarter of the prior year had been 6.2 percent.

EBIT
in € million	Q1 2023	in % of revenue	Q1 2022	in % of revenue
EBIT	129.4	4.7%	117.8	4.3%
Adjustment by functional costs:
+ Cost of sales	9.6	0.3%	17.5	0.6%
+ Selling expenses and administrative expenses	15.3	0.6%	21.1	0.8%
+ Research and development costs	0.0	0.0%	0.0	0.0%
+ Other costs	1.6	0.1%	13.9	0.5%
Adjusted EBIT	156.0	5.6%	170.3	6.2%
adjusted for non-recurring items	1.2	0.0%	30.5	1.1%
adjusted for PPA items	25.4	0.9%	22.1	0.8%

Earnings before interest, tax, depreciation, and amortization (EBITDA) stood at €387.0 million in the reporting quarter (Q1 2022: €373.1 million). Adjusted EBITDA was down slightly at €389.6 million (Q1 2022: €391.0 million). The non-recurring items in the prior-year period had mainly related to write-downs of current assets in connection with the business in Russia. The adjusted EBITDA margin for the reporting quarter stood at 14.0 percent (Q1 2022: 14.3 percent).

EBITDA
in € million	Q1 2023	in % of revenue	Q1 2022	in % of revenue
EBITDA	387.0	13.9%	373.1	13.6%
Adjustment by functional costs:
+ Cost of sales	0.9	0.0%	7.6	0.3%
+ Selling expenses and administrative expenses	3.0	0.1%	8.9	0.3%
+ Research and development costs	0.0	0.0%	0.0	0.0%
+ Other costs	–1.3	–0.0%	1.4	0.1%
Adjusted EBITDA	389.6	14.0%	391.0	14.3%
adjusted for non-recurring items	2.6	0.1%	17.9	0.7%
adjusted for PPA items	0.0	0.0%	0.0	0.0%

Key influencing factors for earnings

The cost of sales rose by only 0.3 percent to €2,137.4 million in the first quarter of 2023 (Q1 2022: €2,130.3 million) despite revenue increasing by 1.7 percent. The gross margin therefore improved to 23.1 percent (Q1 2022: 22.1 percent). This was partly down to the success of the operational measures that the Group had put in place in 2022 in response to the disruptions to supply chains and substantial cost pressures. In addition, the price increases implemented in the Industrial Trucks & Services segment in the prior year began to take effect earlier than expected as a result of newer orders being brought forward.

At 7.7 percent, the year-on-year increase in selling and administrative expenses was greater than the growth in revenue. This disproportionate rise in costs was due not only to the increase in personnel expenses in connection with variable remuneration components but also to the intensification of sales activities and the KION Group’s strategic projects in procurement and IT. Research and development expenditure was up by a significant 16.4 percent in connection with the KION 2027 strategy. New energy, automation, and digitalization continued to be the main areas of focus for this forward-thinking approach.

Purchase price allocation effects included in the cost of sales and in other functional costs were slightly higher than in the first quarter of 2022 owing to currency effects. The ‘other’ item amounted to income of €8.2 million (Q1 2022: expense of €5.1 million). The prior-year figure had mainly related to impairment losses on non-current assets in connection with the business in Russia. The share of profit (loss) of equity-accounted investments amounted to a profit of €0.1 million in the reporting period (Q1 2022: profit of €2.7 million).

The change in the cost of sales and in other functional costs is shown in the following condensed income statement.

Condensed consolidated income statement
in € million	Q1 2023	Q1 2022	Change
Revenue	2,781.0	2,734.5	1.7%
Cost of sales	–2,137.4	–2,130.3	–0.3%
Gross profit	643.6	604.2	6.5%
Selling expenses and administrative expenses	–467.7	–434.4	–7.7%
Research and development costs	–54.7	–47.0	–16.4%
Other	8.2	–5.1	> 100%
Earnings before interest and tax (EBIT)	129.4	117.8	9.9%
Net financial expenses	–35.7	–2.8	< –100%
Earnings before tax	93.7	115.0	–18.5%
Income taxes	–20.2	–34.8	42.1%
Net income	73.5	80.2	–8.3%

Net financial expenses

The net financial expenses, representing the balance of financial income and financial expenses, stood at €35.7 million (Q1 2022: €2.8 million). This significant deterioration in net financial expenses compared with the first quarter of the prior year was attributable to the higher level of interest rates, the marking-to-market of interest-rate derivatives, and the increase in net financial debt over the course of 2022.

Income taxes

Income tax expenses amounted to €20.2 million (Q1 2022: €34.8 million). The effective tax rate for the reporting quarter came to 21.5 percent (Q1 2022: 30.3 percent). One of the reasons for the higher rate in the prior-year period was that no deferred tax assets had been recognized in respect of negative non-recurring items relating to business in Russia.

Net income for the period

Net income for the period amounted to €73.5 million, down by €6.7 million on the figure of €80.2 million achieved in the first quarter of 2022. Basic earnings per share attributable to the shareholders of KION GROUP AG came to €0.55 (Q1 2022: €0.61) based on a weighted average of 131.1 million no-par-value shares (Q1 2022: 131.1 million) .