FRANKFURT (Dow Jones) — The forklift manufacturer Kion expects a loss in the third quarter due to increased costs in the project business. As announced by Kion Group AG, increased supply chain bottlenecks and significantly higher material, energy and logistics costs have had a significant impact on earnings in recent months. Based on the latest estimates, the MDAX company now expects an adjusted EBIT of minus 100 to minus 140 million euros in the current quarter. In the same period of the previous year, Kion had earned 228.9 million euros.
The incoming orders are expected to be significantly below the level of the same quarter of the previous year of 3.107 billion euros, it said. Kion sees consolidated sales at the previous year’s level (EUR 2.566 billion), free cash flow significantly below the level of the second quarter (minus EUR 158.9 million).
According to Kion, a large part of this development can be attributed to the Supply Chain Solutions (SCS) segment. Adjusted EBIT there in the third quarter is expected to be between minus 160 and minus 190 million euros after plus 109.3 million a year ago. According to Kion, the material, component, labor and logistics costs for the multi-year projects at SCS have increased significantly and are expected to continue to increase. So far, SCS has only been able to pass on a small part of these cost increases to customers, since the contracts did not contain any corresponding clauses. In addition, disruptions in the supply chains continued to lead to project delays.
In the Industrial Trucks & Services (ITS) segment, Kion expects the adjusted EBIT in the third quarter to be around the level of the previous quarter of EUR 83.6 million. ITS anticipates ongoing bottlenecks in supplier parts and components, which were exacerbated by a cyber attack on one of the segment’s key electronics suppliers in the third quarter. At the same time, according to Kion, it has succeeded in reducing the number of so-called risk suppliers and reducing the stock of unfinished vehicles in the current quarter.
“The disruptive macroeconomic situation has revealed weaknesses in our internal processes, which we are thoroughly analyzing,” said CEO Rob Smith. “We are taking consistent measures to lead the company back to profitable growth.”
Kion also issued a new forecast for the full year 2022. Kion withdrew its previous forecast for the year at the beginning of April due to macroeconomic uncertainties. Kion is now planning for the current year with an order intake of 11.6 to 12.5 billion euros with sales of 10.45 to 11.25 billion. Kion sees the adjusted group EBIT at 200 to 310 million euros and the free cash flow between minus 700 and minus 950 million.
Kion confirmed the target of an EBIT margin of 10 to 12 percent with more than 10 percent in the Industrial Trucks & Services segment and 12 to 14 percent in the Supply Chain Solutions segment. According to Kion, the timeframe for target achievement will continue to be reviewed due to the volatile macroeconomic environment. “Our business model is intact. We are active in attractive market segments where we benefit from many megatrends such as automation, urbanization, sustainability and e-commerce,” said CEO Smith.
The final figures for the third quarter are to be published on October 27th.
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September 13, 2022 2:52 PM ET (6:52 PM GMT)
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