Earnings
EBIT and EBITDA
Earnings before interest and tax (EBIT) improved markedly to €490.9 million in the reporting period (Q1–Q3 2022: €103.3 million), a rise of €387.6 million. The figure for the prior-year period had not only been affected by the global supply chain disruptions and sharp increases in costs for materials, energy, and logistics but had also been squeezed by a rise in the overall project costs expected in the Supply Chain Solutions segment. The price rises introduced in 2022 in respect of sales to customers and, on the supply side, the general improvement in the availability of materials and the easing of material prices resulted in the normalization of financial performance during the reporting period.
EBIT included budgeted purchase price allocation effects amounting to an expense of €70.2 million in the first nine months of 2023 (Q1–Q3 2022: expense of €69.0 million). There were also non-recurring items amounting to a total expense of €10.8 million that primarily arose in connection with individual reorganization-related measures in the two operating segments. The expense of €38.3 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) also increased significantly in the reporting period to reach €571.9 million (Q1–Q3 2022: €210.6 million). The Group’s adjusted EBIT margin improved from 2.6 percent in the first nine months of 2022 to 6.9 percent in the period under review. In the third quarter of 2023, the adjusted EBIT margin of the Industrial Trucks & Services segment was in double digits at 11.6 percent (Q3 2022: 5.6 percent).
in € million |
Q3 |
Q3 |
Q1 – Q3 |
in % of revenue |
Q1 – Q3 |
in % of revenue |
|---|---|---|---|---|---|---|
EBIT |
196.9 |
–131.2 |
490.9 |
5.9% |
103.3 |
1.3% |
Adjustment by functional costs: |
|
|
|
|
|
|
+ Cost of sales |
11.2 |
16.2 |
33.3 |
0.4% |
44.7 |
0.5% |
+ Selling expenses and |
14.7 |
14.1 |
45.0 |
0.5% |
48.5 |
0.6% |
+ Research and development costs |
–0.4 |
0.1 |
0.2 |
0.0% |
0.1 |
0.0% |
+ Other costs |
1.3 |
–0.2 |
2.6 |
0.0% |
14.0 |
0.2% |
Adjusted EBIT |
223.6 |
–101.1 |
571.9 |
6.9% |
210.6 |
2.6% |
adjusted for non-recurring items |
4.3 |
6.2 |
10.8 |
0.1% |
38.3 |
0.5% |
adjusted for PPA items |
22.4 |
24.0 |
70.2 |
0.8% |
69.0 |
0.8% |
Earnings before interest, tax, depreciation, and amortization (EBITDA) rose to €1,275.6 million in the first three quarters of 2023 (Q1–Q3 2022: €867.9 million). Adjusted EBITDA increased to €1,289.1 million (Q1–Q3 2022: €893.8 million). The non-recurring items included in EBITDA primarily arose in connection with individual reorganization-related measures in the two operating segments. The non-recurring items reported in the prior-year period had predominantly related to impairment losses on current assets in connection with the business in Russia. The adjusted EBITDA margin for the reporting period stood at 15.4 percent (Q1–Q3 2022: 10.8 percent).
in € million |
Q3 |
Q3 |
Q1 – Q3 |
in % of revenue |
Q1 – Q3 |
in % of revenue |
|---|---|---|---|---|---|---|
EBITDA |
458.8 |
128.4 |
1,275.6 |
15.3% |
867.9 |
10.5% |
Adjustment by functional costs: |
|
|
|
|
|
|
+ Cost of sales |
0.9 |
5.4 |
5.5 |
0.1% |
13.8 |
0.2% |
+ Selling expenses and |
2.3 |
0.9 |
8.1 |
0.1% |
10.4 |
0.1% |
+ Research and development costs |
–0.4 |
0.1 |
0.1 |
0.0% |
0.1 |
0.0% |
+ Other costs |
1.3 |
–0.2 |
–0.3 |
–0.0% |
1.6 |
0.0% |
Adjusted EBITDA |
462.9 |
134.6 |
1,289.1 |
15.4% |
893.8 |
10.8% |
adjusted for non-recurring items |
4.1 |
6.2 |
13.5 |
0.2% |
25.9 |
0.3% |
adjusted for PPA items |
0.0 |
0.0 |
0.0 |
0.0% |
0.0 |
0.0% |
Key influencing factors for earnings
Despite the slightly higher level of revenue, the cost of sales fell sharply year on year to €6,305.0 million in the first nine months of 2023 (Q1–Q3 2022: €6,679.0 million). The gross margin improved to 24.5 percent (Q1–Q3 2022: 19.0 percent). The measures to enhance operational and commercial agility in the supply chain and in production in both operating segments played a significant part in this improvement. These measures have now largely been implemented. The accelerated processing of orders on hand, combined with the price rises that had been implemented in 2022 and the easing of purchase prices for materials had a beneficial effect in the Industrial Trucks & Services segment. The gross margin in the prior-year period had been influenced by supply chain disruptions and the resulting rise in costs as well as by sharp increases in costs for materials, energy, and logistics.
Selling and administrative expenses went up by a total of 6.8 percent compared with the prior-year period. This rise in costs was due not only to salary and wage increases but also to the intensification of sales activities and the KION Group’s strategic projects in procurement and IT. Research and development expenditure swelled by 14.2 percent as a result of implementation of the KION 2027 strategy in the ‘automation and software’ and ‘sustainability’ fields of action.
Purchase price allocation effects included in the cost of sales and in other functional costs were only slightly higher in the reporting period than in the first three quarters of 2022. The ‘other’ item amounted to income of €23.3 million (Q1–Q3 2022: €3.2 million). The figure for the prior-year period had primarily been squeezed by impairment losses on non-current assets in connection with the business in Russia. The share of profit (loss) of equity-accounted investments included in this item amounted to a profit of €11.6 million in the first three quarters of 2023 (Q1–Q3 2022: €12.6 million).
The change in the cost of sales and in other functional costs is shown in the following condensed income statement.
in € million |
Q3 |
Q3 |
Change |
Q1 – Q3 |
Q1 – Q3 |
Change |
|---|---|---|---|---|---|---|
Revenue |
2,729.9 |
2,706.4 |
0.9% |
8,347.3 |
8,243.0 |
1.3% |
Cost of sales |
–2,008.4 |
–2,332.4 |
13.9% |
–6,305.0 |
–6,679.0 |
5.6% |
Gross profit |
721.4 |
373.9 |
92.9% |
2,042.3 |
1,564.0 |
30.6% |
Selling expenses and administrative expenses |
–464.8 |
–452.4 |
–2.7% |
–1,407.5 |
–1,317.5 |
–6.8% |
Research and development costs |
–56.5 |
–50.0 |
–13.0% |
–167.1 |
–146.3 |
–14.2% |
Other |
–3.3 |
–2.8 |
–20.0% |
23.3 |
3.2 |
> 100% |
Earnings before interest and tax (EBIT) |
196.9 |
–131.2 |
> 100% |
490.9 |
103.3 |
> 100% |
Net financial expenses |
–55.3 |
–1.9 |
< –100% |
–131.8 |
–12.1 |
< –100% |
Earnings before tax |
141.6 |
–133.2 |
> 100% |
359.2 |
91.3 |
> 100% |
Income taxes |
–59.6 |
40.3 |
< –100% |
–130.8 |
–24.3 |
< –100% |
Net loss / income |
82.0 |
–92.9 |
> 100% |
228.3 |
66.9 |
> 100% |
Net financial expenses
Net financial expenses, representing the balance of financial income and financial expenses, deteriorated considerably in the reporting period and came to €131.8 million (Q1–Q3 2022: €12.1 million). Interest expense on financial debt rose markedly, swelling to €50.2 million on the back of higher interest rates and the increase in average debt (Q1–Q3 2022: €20.0 million). Net interest income/expense from the lease and short-term rental business deteriorated to a net expense of €40.3 million (Q1–Q3 2022: net income of €14.6 million); income of €28.0 million was realized on the interest-rate derivatives used for hedging purposes in the lease business during the reporting period (Q1–Q3 2022: expense of €2.7 million). In addition, changes in the fair values of interest-rate derivatives and adjustments to the valuation of lease receivables designated as part of a fair value hedge made a negative contribution of €3.4 million to net financial expenses (Q1–Q3 2022: positive contribution of €32.9 million).
Income taxes
Income tax expenses amounted to €130.8 million in the first nine months of 2023, reflecting the level of earnings (Q1–Q3 2022: €24.3 million). The effective tax rate in the reporting period was 36.4 percent and therefore higher than in the corresponding prior-year period (Q1–Q3 2022: 26.7 percent). This can be explained by an increase in non-tax-deductible operating expenses and by loss carryforwards that are unlikely to be usable.
Net income for the period
Net income for the period amounted to €228.3 million, which was up by €161.4 million on the figure of €66.9 million achieved in the first three quarters of 2022. In the prior-year period, there had been an expense of around €34 million for non-recurring items relating to business in Russia. Basic earnings per share attributable to the shareholders of KION GROUP AG came to €1.70 (Q1–Q3 2022: €0.48) based on a weighted average of 131.1 million no-par-value shares (Q1–Q3 2022: 131.1 million).