Selected notes to the consolidated statement of financial position

Goodwill and other intangible assets

In the first six months of 2024, the carrying amount of goodwill increased by a total of €26.0 million to €3,584.0 million (December 31, 2023: €3,558.0 million), which mainly reflected positive currency effects (€48.4 million) and the impairment of the full goodwill of the KION ITS Americas Operating Unit (Industrial Trucks & Services segment).

Given the sustained weakness of the North American market for industrial trucks and in view of the latest market data (World Industrial Truck Statistics), the KION Group predicts a lower volume of orders in the Americas region than had been anticipated at the end of 2023. Taking account of the related updated information from the internal reporting and planning functions, there were indications at the end of the first half of 2024 that the goodwill assigned to the KION ITS Americas cash-generating unit (CGU) might be impaired. The ad hoc impairment test carried out as a result revealed that the recoverable amount of the CGU (€362.9 million) was lower than its carrying amount and that impairment needed to be recognized on the goodwill on the basis of the long-term growth outlook. This resulted in an impairment loss of €22.4 million, which was recognized in other operating expenses. The material measurement parameters for determining the recoverable amount (value in use) were the outlook for adjusted EBIT within the detailed planning period, the long-term growth rate for the extrapolation of cash flows beyond this planning period, and the cost of capital used to discount the cash flows. It was assumed in this context that, in the long term, adjusted EBIT would be at a lower level than had been assumed at the end of 2023. There was a countervailing impact from the cost of capital (weighted average cost of capital (WACC) after taxes), which fell from 9.4 percent at the end of 2023 to 9.1 percent, while the long-term growth rate remained unchanged at 1.0 percent.

As at June 30, 2024, the carrying amounts for brand names and for technology and development assets stood at €939.0 million and €702.9 million respectively (December 31, 2023: €938.9 million and €692.6 million respectively).

At €468.1 million, sundry other intangible assets were €7.3 million lower than their carrying amount as at December 31, 2023 (€475.4 million). Of this total, €361.2 million related to customer relationships (December 31, 2023: €376.7 million).

Other property, plant and equipment

Other property, plant and equipment totaled €1,813.1 million (December 31, 2023: €1,749.9 million) and included a figure of €629.5 million for right-of-use assets related to procurement leases (December 31, 2023: €589.2 million). Of this figure, €488.4 million was attributable to land and buildings (December 31, 2023: €470.7 million) and €141.1 million to plant & machinery and office furniture & equipment (December 31, 2023: €118.5 million).

Inventories

The reported inventories break down as follows:

Impairment losses of €9.8 million were recognized on inventories in the second quarter of 2024 (Q2 2023: €11.6 million) and impairment losses of €27.2 million in the first six months of 2024 (H1 2023: €27.6 million). Reversals of impairment losses were recognized in an amount of €4.6 million in the second quarter of 2024 (Q2 2023: €2.5 million) and in an amount of €8.5 million in the first six months of 2024 (H1 2023: €5.1 million) because the reasons for the impairment no longer applied.

Trade receivables

Trade receivables break down as follows:

The decline in receivables from third parties measured at fair value through profit or loss (FVPL) was due to the reduced use of factoring programs.

Assets classified as held for sale

In the first half of 2024, the Industrial Trucks & Services segment saw the completion of the sale of the two Russian subsidiaries OOO ‘Linde Material Handling Rus’ and OOO ‘STILL Forklifttrucks’, the Norwegian subsidiary STILL Norge AS, and the Finnish branch of STILL Sverige AB, all of whose assets and liabilities were classified as held for sale as at December 31, 2023. The net cash receipts from these disposals totaled €10.3 million.

Equity

As at June 30, 2024, the Company’s share capital amounted to €131.2 million, which was unchanged on December 31, 2023 and was fully paid up. It was divided into 131,198,647 no-par-value shares.

The total number of shares outstanding as at June 30, 2024 was 131,124,771 no-par-value shares (December 31, 2023: 131,124,771 no-par-value shares). KION GROUP AG had 73,876 treasury shares as at the reporting date (December 31, 2023: 73,876).

The distribution of a dividend of €0.70 per share (dividend distributed in H1 2023: €0.19 per share) to the shareholders of KION GROUP AG resulted in an outflow of funds of €91.8 million in the second quarter of 2024 (H1 2023: outflow of €24.9 million).

Retirement benefit obligation and similar obligations

Overall, the net obligation under defined benefit pension plans fell to €635.1 million (December 31, 2023: €674.8 million). This decrease compared with the end of 2023 was primarily attributable to a higher discount rate in the eurozone of 3.87 percent (December 31, 2023: 3.58 percent). The net obligation consisted of €734.2 million recognized under the retirement benefit obligation and similar obligations (December 31, 2023: €775.7 million) less a sum of €99.1 million (December 31, 2023: €100.9 million) recognized under other non-current assets. Changes to discount rates resulted in an increase in equity of €33.5 million (after deferred taxes) in the reporting period.

Financial liabilities

Non-current and current financial liabilities as at the reporting date break down as follows:

The decline in promissory notes was attributable to a budgeted repayment of €69.5 million made in the second quarter of 2024. The rise in other financial liabilities was mainly due to paper issued under the commercial paper program, which comprised liabilities of €104.5 million (December 31, 2023: €20.0 million).

Liabilities from lease business

Non-current and current liabilities from the lease business totaled €4,081.7 million (December 31, 2023: €3,756.2 million) and could be broken down into a sum of €3,956.0 million (December 31, 2023: €3,620.5 million) that related to the financing of the direct lease business and a sum of €125.7 million (December 31, 2023: €135.7 million) that related to repurchase obligations resulting from the indirect lease business.

Liabilities from short-term rental business

Non-current and current liabilities from the short-term rental business totaled €761.2 million (December 31, 2023: €716.6 million) and related to the financing of industrial trucks for the short-term rental fleet.

Contract balances

Contract assets decreased by €35.3 million to €368.0 million as at June 30, 2024 (December 31, 2023: €403.3 million). They mainly related to work under project business contracts that had not yet been invoiced.

Of the contract liabilities, €580.9 million was attributable to project business contracts with a net debit balance due to customers as at the reporting date (December 31, 2023: €582.7 million) and €180.2 million to prepayments received from customers (December 31, 2023: €190.6 million).

Other financial liabilities

Non-current and current other financial liabilities totaled €846.1 million (December 31, 2023: €884.5 million) and included an amount of €682.5 million for liabilities from procurement leases (December 31, 2023: €639.0 million).