KION : Transkript

KION GROUP AG

Q2 2021 Update Call

Conference Call Transcript

29.07.2021

15:00 CET

Speakers:	Gordon Riske (CEO)
	Anke Groth (CFO)

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These non-GAAP measures have been included because we believe that investors may find them helpful to measure our performance as reported under the relevant IFRS measures. However, these non-GAAP measures should be considered only in addition to, but not in isolation or as a substitute for, the information prepared in accordance with IFRS. Non-GAAP financial performance measures are not subject to IFRS or any other generally accepted accounting principles, and other companies that report similarly named non-GAAP measures may define or calculate these financial performance measures in different ways.

Page 2

KION GROUP AG Investor & Analyst Q2 2021 Update Call Transcription

Gordon Riske	Yes, thank you. Welcome to our update call for the second
	quarter of 2021. As a basis for this call, we will use our Q2 2021
	presentation. It's available on kiongroup.com under Investor
	Relations in the Publications section.
	We will be presenting as usual in four parts today and then open
	up the discussion with your questions. I will begin with our
	financial key figures for the first half year and then present
	selected business highlights from the past quarter. This will be
	followed by a market update. Anke Groth will then provide you
	with a financial update. And we'll close the call with a presentation
	of our outlook for the financial year 2021 before we turn it back
	over to you for the Q&A.
	So let's start with our key financial figures on Page 3. So overall,
	during the first half of the year, the KION Group continued its
	recovery after the pandemic year of 2020, and we did achieve
	significantly improved KPIs compared to the same period of the
	previous year.
	Supported by a very strong rebound within the ITS segment, our
	order intake for the group grew by 34% to €5.9 billion in the first
	half of 2021. Our revenue reached €5 billion, up 26%, driven by
	both operating segments, including a successful order book
	conversion in SCS.
	Even more pronounced was the increase in adjusted EBIT, which
	reached €462 million in the first half of the year, resulting in a
	great margin of 9.3%. Our free cash flow for the group improved
	further and came in at €301 million.

Page 3

KION GROUP AG Investor & Analyst Q2 2021 Update Call Transcription

So in a nutshell, we saw a significantly increased profitability as well as continued strong demand that provides us with a good basis for the remainder of the year. And that is now reflected in our raised guidance.

Moving onto Page 4, let me describe a few selected highlights in the past quarter. We continued to stringently implement our 2027 Strategy and further strengthened our position through new products and an expanded footprint.

Linde introduced the new line of the Linde X20 to X35 electric forklift models with load capacities from 2 to 3.5 tons. These are the first electric Linde trucks that are comparable with the performance and robustness of Linde's IC hydrostats, while offering additional environmental benefits. They represent a real alternative for our demanding customers with high-intensity applications.

Another feature is the full truck connectivity so that these trucks offer all advantages of a digitalized industrial truck. Dematic together with our ITS brands Linde and STILL and the Digital Campus have jointly developed the Dematic conveyor ConfiKIT, an app that makes configuring a conveyor line at the customer site much easier.

The app enables our brands to implement customer requirements even faster and in an even more personalized way in the future. As such, it supports our customers at the start of their automation journey.

Last but certainly not least, we have commenced production of our forklift trucks at our new Polish plant in Kołbaskowo. The new

Page 4

KION GROUP AG Investor & Analyst Q2 2021 Update Call Transcription

plant has the size of roughly 44,000 square meters. It produces counterbalance trucks that were relocated from Western Europe to Poland and, in the coming years, will produce products localized in Xiamen, China, to speed up delivery times. We expect to invest a total of around €80 million and expect to create up to 400 new jobs by the end of the year 2023.

So let's move on now to the market update on Page 6. The focus on industrial trucks shows the global market development by region in the second quarter of 2021. After an already very strong development in the first quarter of 2021, the momentum further increased in the second quarter and resulted in a unit order intake of almost 74% compared to the pandemic-induced weak Q2 2020.

This growth was predominantly driven by core markets within EMEA and Americas based on the strong carryover effects for counterbalance trucks combined with pull-forward orders of customers in anticipation of longer production lead times based on the tight supply situation around the globe.

While Western Europe was up by 117%, unit order intake in Eastern Europe increased even stronger at 134%. In North America, the market gained further momentum, almost doubling year-on-year, thereby expanding further from the very solid level seen in the first quarter of 2021. This was primarily driven by IC trucks.

Looking at South and Central America, the market more than tripled, not only due to the low comparison base of the last year, but also due to strong demand of IC trucks.

Page 5

KION GROUP AG Investor & Analyst Q2 2021 Update Call Transcription

In China, where the market was already experiencing significant postpandemic growth during Q2 2020, unit order intake showed a slowing momentum, however, still growing at a plus of 36%.

So overall, the global market for industrial trucks reached a new record order intake level of 625,500 trucks. So 625,000 trucks is an amazing number for the first half of the year.

Page 7 shows a breakdown of KION's unit growth by regions. KION's unit order intake showed an outstanding performance and reached also a new record level of 87,900 trucks globally.

In EMEA, we saw a strong growth driven by carryover effects, pull-forward effects, but also some prebuying ahead of the announced price increase, which started in effect for July.

In our most important end market Western Europe, unit order intakes more than doubled, while Eastern Europe recorded a growth rate of 80%. However, we were lagging behind the market based on some of the ongoing strong competition of Chinese players, nonetheless a very, very strong quarter.

Looking at China, we were even able to outperform the market with a plus of 82.6%, mainly driven by new product additions and further progress in expanding our sales and service network.

Likewise, in North America, KION's unit order intake increased by more than 300% compared to the prior year based on further successful implementation of our KION 2027 Strategy, including cross-selling new products and an improved footprint.