After a surprisingly strong development in the first half of the year, management still sees good opportunities to increase sales by eight percent this year. That would be the upper end of the previous target range. With regard to the operating profit, the board around KRONES boss Christoph Klenk is even more optimistic, and the order book is getting thicker and thicker. The news was well received on the stock exchange.
Shortly after XETRA trading began, the KRONES share rose by more than four percent, but was unable to maintain this level. At times it is still 0.75 percent up at 86.85 euros. Since the turn of the year, she has lost around eight percent.
Bankhaus Metzler raised its recommendation for KRONES shares from “hold” to “buy” after the quarterly figures and raised its target price to EUR 105. The restructuring of the group is paying off, wrote analyst Stephan Bauer. Other banks and analysts reiterated their buy recommendations, but are already attributing prices of some EUR 120 and more to the paper.
In the second quarter, KRONES consistently performed better than analysts had expected on average. Sales grew by 18 percent year-on-year to almost 998 million euros, as the company announced in Neutraubling near Regensburg in the morning. Operating earnings before interest, taxes, depreciation and amortization (Ebitda) increased by 44 percent to a good 88 million euros. The bottom line was a profit of 43 million euros, an increase of around 79 percent.
Meanwhile, the company can hardly save itself from new orders. In the second quarter, KRONES brought in orders worth more than EUR 1.55 billion, only slightly missing the record value from the first quarter. By the end of June, the order backlog had risen to a good 3 billion euros, almost twice as high as a year earlier.
The Management Board was correspondingly more confident with regard to the year as a whole. Not only sales growth but also the operating margin should reach the upper end of the target ranges announced in the spring.
This should increase sales from last year’s EUR 3.6 billion to around EUR 3.9 billion. Nine percent of this should now remain as an operating profit. This would increase the operating result from EUR 313 million to around EUR 351 million. On average, analysts had already expected values of this magnitude.
Meanwhile, the increased material and freight costs are also making themselves felt at KRONES. The production capacities were stable, but not fully utilized, the company reported, referring to the global shortage of materials and tense supply chains. The fact that the operating result nevertheless rose is thanks to increased efficiency. In addition, the first price increases had had a positive effect.
In view of the rising purchase prices, the Ukraine war and the high inflation rates in many countries, the KRONES management also sees dangers for further business development. The further development of the corona pandemic is also still unclear. The forecasts are therefore subject to the condition that the war in Ukraine does not escalate further, that the corona situation does not worsen and that there are no significant energy shortages.
Warburg Research leaves Krones on ‘buy’ – target 120 euros
According to quarterly figures, the analysis company Warburg Research has left KRONES on “buy” with a price target of EUR 120. Analyst Stefan Augustin wrote in an initial reaction on Tuesday that the bottling and packaging plant manufacturer was clearly a positive surprise with another record high order intake. Krones has not raised its outlook for the year, but is now planning with the upper end of the target ranges for sales and the operating profit margin (Ebitda). In terms of sales, this looks very conservative.
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