Krones: Revenue growth of 7.3% in first three quarters of 2019

Quaterly statement | From July to September, revenue was up 10.9% year-on-year to EUR 1,000.4 million, mainly related to the new and bought-in machinery business. In the first three quarters of 2019, revenue rose by 7.3% year-on-year, from EUR 2,692.8 million to EUR 2,889.7 million.

Adjusted for acquisitions and currency effects, growth in the first nine months of 2019 was 2.7%.

Order intake decreased slightly by 0.6% year-on-year from July to September 2019, to EUR 919.3 million. In the first three quarters of 2019, the contract value of orders increased slightly year-on-year to EUR 2,957.9 million (previous year: EUR 2,940.0 million).

From July to September 2019, earnings before taxes (EBT) came to EUR 13.5 million. The EBT margin went down from 3.0% to 1.4%. Krones generated EBT of EUR 61.4 million in the first nine months of 2019 (previous year: EUR 139.4 million). The EBT margin went down from 5.2% to 2.1% Profitability was impacted by high costs, mainly of materials and labour, and an unfavourable product mix. The company generated consolidated net income of EUR 40.3 million in the first nine months of 2019 (previous year: EUR 99.4 million). Earnings per share decreased from EUR 3.16 to EUR 1.28.

Free cash flow went down

The Neutraubling-based company reduced average working capital over the past four quarters as a percentage of revenue to 25.8% in the first nine months of 2019 (previous year: 28.8%). Free cash flow went down to –EUR 294.5 million (previous year: –EUR 140.0 million).

The Executive Board has taken further action to counter the negative impacts on earnings. In addition to short-term measures such as savings in budgets, the company will significantly cut capital expenditure for the next one to two years. Acquisitions will likewise be suspended for the time being.

The strategic measures launched so far, such as the price rises and the expansion of the company’s global footprint to date, are not enough for the medium-term earnings targets to be attained. There will therefore also be structural adjustments. All processes, organisational structures and resources are to be optimised. Portfolio streamlining will also contribute to improving the company’s efficiency. Overall, it cannot be avoided that 300 to 500 jobs, mainly at the German locations, will be eliminated.

For the full year 2019, Krones continues to expect revenue growth of 3% and an EBT margin of around 3%. The guidance for the EBT margin does not include any costs of structural measures. For its third performance target, working capital to revenue, Krones expects a figure of 26%.