Krones expecting increased revenue and profitability in 2021
Annual report | Krones, one of the world’s leading manufacturers of filling and packaging technology, published its 2020 Annual Report at the end of April. Titled “Focus on strengths”, the report highlights Krones’ medium and long-term growth opportunities.
The financial year 2020 was heavily affected by the Covid-19 pandemic. Revenue fell 16.1 % year-on-year, from EUR 3,958.9 million to EUR 3,322.7 million. Order intake was down 19.0 %, from EUR 4,083.5 million in the previous year to EUR 3,307.0 million. On a positive note, after a weak first half year in 2020, the contract value of orders picked up significantly in the third and especially the fourth quarter.
Profitability in both segments affected by corona and one-off effects
Earnings before interest, taxes, depreciation and amortisation (EBITDA) went down from EUR 227.3 million in the previous year to EUR 133.2 million in 2020. The EBITDA margin was 4.0 % (previous year: 5.7 %). It should be noted that EBITDA was impacted in 2020 by around EUR 72 million in expenses for personnel-related measures. Excluding these expenses for capacity adjustment, the EBITDA margin was 6.2 % (previous year: 6.6 %).
The effects of the corona crisis and one-off effects impacted profitability in both segments. In the core segment, Machines and Lines for Product Filling and Decoration, on the basis of 14.3% lower segment revenue (€2,797.3 million), EBITDA went down from €218.5 million in the previous year to €171.5 million. This corresponds to an EBITDA margin of 6.1% (previous year: 6.7%).
The Machines and Lines for Beverage Production/Process Technology segment was affected by the difficult situation faced by international breweries due to corona. At €525.4 million, revenue was 24.2% lower than in the previous year. EBITDA came to –€38.3 million (previous year: €8.8 million).
Krones cautiously optimistic for financial year 2021
For the financial year 2021, due to ongoing uncertainty about the path of the Covid-19 pandemic, Krones is forecasting revenue growth of 2.5 % to 3.5 %. Based on the slight recovery in revenue and the savings from the structural measures, the Executive Board expects profitability to be better than in 2020. Krones anticipates an EBITDA margin of 6.5 % to 7.5 % in 2021. The third target, the working capital to revenue ratio, is expected to improve to between 26 % and 27 %.
The guidance for 2021 is subject to the assumption that there will be no severe impacts from the Covid-19 pandemic such as harmful virus mutations or vaccination difficulties. This would hit the economy and hence also Krones harder than currently expected and could lead to negative revenue and earnings effects.
The full annual report is available from www.krones.com.