Jungheinrich share & KION share: only low-flyers on the stock exchange

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by Florian Hielscher, Euro on Sunday

ALars Brzoska described the figures for the first half of the year as a “robust result”. The CEO of Jungheinrich, the Hamburg specialist for intralogistics, was able to report gains in revenue and order intake despite a challenging market environment, thereby confirming the trends at the competitor KION Group. Jungheinrich offers, among other things, forklifts, industrial trucks and warehouse management software. MDAX competitor KION, around 40 percent owned by a major Chinese investor, presented figures at the end of July and also offers automation technologies and software solutions for optimizing supply chains.

Both companies had benefited greatly during the pandemic, and share prices had risen to new heights. The calculus: Corona boomed online trade, companies expanded warehouse infrastructures to serve the immense demand. Among other things, Jungheinrich supplies the warehouses of the online giant Amazon in Germany and the recipe box mail-order company HelloFresh in Australia.

With decreasing corona worries, the papers of both companies returned to normal, the MDAX values ​​​​lost massively. There were also concerns about an economic downturn. A bottom is now emerging.

Market environment burdened

Operationally, both companies were able to assert themselves despite the current market challenges. In the first half of the year, incoming orders at Jungheinrich rose by two percent and sales increased by eleven percent. “Jungheinrich generated robust earnings in the first half of 2022 despite challenging market conditions,” said boss Brzoska about the figures. The Frankfurt-based KION Group also reported a double-digit increase in revenue at the end of June and even achieved a 13.1 per cent increase in order intake. In order to be able to work through this, companies have been relying on increased stock levels for some time in order to avoid a complete interruption to production. In addition, supplier networks are to be expanded. The high level of tied-up funds also puts pressure on liquidity: after a positive free cash flow in the previous year, both companies turned out to be clearly negative this time.

Accordingly, the increased burdens put pressure on the operating result (Ebitda). Both companies reported a decline for the first six months, but at over 30 percent this was significantly more pronounced for KION than for its Hamburg competitor. The MDAX companies attribute the weakness primarily to disrupted supply chains and increased costs for energy, raw materials and logistics.

More cautious in the short term

The ongoing uncertainties surrounding the pandemic, war and supply chains are making Jungheinrich and KION more cautious. The Hamburg confirmed their forecast for the year. Despite the slight increase in sales, Jungheinrich expects a significant decline in the operating result compared to the previous year. Some analysts think the earnings estimates are too low. The outlook is based on the assumption that there will be no extensive production shutdowns and that supply chains will largely remain in place. In contrast to the previous year, however, Jungheinrich expects a negative free cash flow. Nevertheless, Bankhaus Berenberg sees the group as well positioned to benefit from structural growth trends in the industrial truck and warehouse automation sectors.

KION, on the other hand, had already rejected its outlook for the year at the beginning of April. The uncertainties were too great. As part of the figures for the second quarter, the Frankfurters failed to adjust their targets. A new forecast is expected later this year.

Nevertheless, the logistics specialists offer opportunities at the current level, especially due to the growing e-commerce. The majority of analysts surveyed by Bloomberg recommend buying both stocks.

INVESTOR INFO

The Hamburg company offers a wide range, from devices to automatic storage systems to suitable software solutions. Despite challenges, an increase in sales and orders was achieved. If the global economy does not slow down further, Jungheinrich can benefit from the growing need for warehouse logistics. A lot should be priced in with the forecast. Analysts are mostly optimistic about the paper, and there is also a dividend.

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