Knorr Bremse : Q1 statement / Q1 financial report 2020

Quarterly Statement

January 1 to March 31, 2020

Q1

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Quarterly Statement

JANUARY 1 TO MARCH 31, 2020

KNORR-BREMSE AG

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K E Y F I G U R E S K N O R R - B R E M S E G R O U P ( I F R S )

				Q1/2020		Q1/2019
Revenues		million		1,627.5		1,755.3
EBITDA		million		290.2		333.7
EBITDA margin		%		17.8		19.0
Operating EBITDA margin		%		17.8		19.0
EBIT		million		224.0		274.6
EBIT margin		%		13.8		15.6
Operating EBIT margin		%		13.8		15.6
Net income		million		141.9		192.6
Earnings per share (undiluted)			0.83	1.13
Order intake		million		1,588.0		1,893.2
Order book (March 31)		million		4,652.5		4,700.5
Operating cash flow		million		3.5		89.1
Free cash flow		million		(60.8)		32.1
Cash conversion rate		%		(42.9)		16.7
Capital expenditure (before IFRS 16 and acquisitions as well as SLB)		million		81.0		62.2
Capital expenditure in % of revenues		%		5.0		3.5
R&D costs		million		100.1		105.2
R&D in % of revenues		%		6.2		6.0
				3/31/2020		12/31/2019
Total assets		million		7,136.9		6,846.8
Equity (incl. non-controlling interests)		million		1,986.3		1,901.5
Equity ratio		%		27.8		27.8
ROCE (annualized)		%		26.7		34.1
Net financial (debt) / cash		million		(36.0)		57.7
Net working capital		million		1,058.6		809.1
Employees (at reporting date incl. leased personnel)				28,663		28,905

F I R S T Q U A R T E R 2 0 2 0

Business performance in the first quarter of 2020 impacted by Covid-19 first in Asia, then in Europe and North America

Order book at 4,652.5 million nearly level with previous year despite challenging market conditions

Solid development: Revenues at 1,627.5 million down 7.3% year-on-year due to the declining OE business

Aftermarket revenues: Appreciable growth of 11.0% (+600 basis points) year-on-year had a stabilizing effect

Robust profitability levels: EBITDA margin at 17.8% of revenues (previous year: 19.0%)

2.0 billion ensure flexibility for operations

Operating cash flow: 3.5 million, down 96.1% year-on-year due mainly to lower earnings

Extensive action program to stabilize earnings and safeguard delivery capability has been implemented; higher liquidity through new lines of credit ensures flexibility for operations

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B U S I N E S S P E R F O R M A N C E I N T H E F I R S T T H R E E M O N T H S O F 2 0 2 0

Order intake down by 16.1% due in particular to Covid-19

Amid challenging market conditions, the order intake of the Knorr-Bremse Group was down by 305.2 million year-on- year at the end of March 2020, falling to 1,588.0 million. This trend was primarily attributable to softening demand dynamics for both rail and commercial vehicles due mainly to the effects of the Covid-19 pandemic. In the rail vehicles market, the decline was especially pronounced in Asia, where business in China took a particular hit. In the Commercial Vehicles Systems segment, global commercial vehicle production witnessed a perceptible downturn in Europe, North and South America, but also in Asia, reducing order volumes for Knorr-Bremse. The decrease in vehicle production is attributable in part to a market slowdown that had been anticipated even before the emergence of Covid-19. However, there have also been corrections in demand taking the form of cancellations of customer orders as a consequence of the lockdowns and the related shuttering of commercial vehicle manufacturing facilities.

This gives an order book of 4,652.5 million, which thanks to the positive order situation in the Rail Vehicle Systems segment in recent quarters is almost on a par with the high level of the previous year ( 4,700.5 million) ( 1.0%).

Revenues down by 7.3% in volatile market aftermarket has a stabilizing effect

In the first three months of the 2020 fiscal year, revenues of the Knorr-Bremse Group fell by 7.3% or 127.8 million to 1,627.5 million. After adjusting for currency effects (at 2019 exchange rates) as well as for disposal and acquisition effects, revenues were down 7.9%. On the whole, revenues in the Rail Vehicle Systems segment came in just slightly below the prior-year figure, with noticeable growth in the aftermarket business compensating to a large extent for the somewhat weaker OE business. In Europe, the OE business was impacted primarily by diminishing volumes of light rail vehicles and in North America by a weaker freight business than in the previous year. In the Asia region, a declining due to Covid-19 in the OE business for high-speed trains and locomotives was offset by growth in the business for railway carriages and metro cars. In the Commercial Vehicle Systems segment, the decline in revenues was largely attributable to a decrease in the number of trucks being produced worldwide and related revenue shortfalls in the OE business, mainly in Europe and North America. In the Asia region, Hitachi Automotive Sys- tems, Ltd., which had been acquired in the preceding fiscal year and was reported for the first time in the figures for the first six

22.6 million to revenues in the first three months of 2020. Furthermore, aftermarket revenues rose compared with the first quarter of 2019.

At Group level, the share of the aftermarket business accounted for 37.0% of total revenues (breakdown in accordance with management reporting). This represents a marked increase of 600 basis points compared with the same quarter of the previous year and also reflects the changes in customer preferences as a consequence of Covid-19. The growth in the aftermarket business went a long way toward stabilizing revenues and earnings in the first quarter and underlines the robustness of our business model.

EBITDA and EBIT margin moderately below prior-year level

In the first three months of 2020, EBITDA of 290.2 million was generated with an EBITDA margin of 17.8% (previous year: 19.0%). This is 43.4 million or 13.0% less than in the prior-year period and was mainly caused by volume effects from a declining OE business, which were offset by high-margin earnings contributions from growth in the aftermarket business. The positive trend

EBIT of 224.0 million also showed a volume-related decline of 50.6 million or 18.4%. At 13.8%, the EBIT margin fell short of the prior-year level of 15.6%. The higher deviation from EBITDA than in the same quarter of the previous year can be ascribed to higher depreciation and amortization resulting from increased investment activity.

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C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S ( C O N D E N S E D )

million		Q1/2020		Q1/2019
Revenues		1,627.5		1,755.3
Change in inventory of unfinished/finished products		(0.8)		21.7
Own work capitalized	18.8	15.4

Total operating performance		1,645.4		1,792.4
Cost of materials		(780.1)		(908.0)
Personnel expenses		(400.9)		(391.0)
Other operating income and expenses		(174.3)		(159.7)

EBITDA		290.2		333.7
Depreciation and amortization		(66.2)		(59.1)
EBIT		224.0		274.6
Financial result		(25.5)		(4.8)
Income before taxes		198.5		269.8
Taxes on income		(56.7)		(77.2)
Net income		141.9		192.6
thereof profit (loss) attributable to non-controlling interests		7.5		10.1

The cost of materials ratio improved by 380 basis points to 47.9% of revenues in the first three months of 2020, mainly on the strength of an improved sales mix and efficiency gains. However, this trend was offset by an increase in the personnel expenses ratio of 230 basis points from 22.3% to 24.6%. The total of other operating income and expenses increased by 160 basis points from 9.1% to 10.7% of revenues. Accounting for 4.1% of revenues, depreciation and amortization stood at 70 basis points above the prior-year level, largely due to the increase in investment activity. The financial result, which was impacted in particular by currency translation differences, reduced income before taxes by 25.5 million. The latter, at 12.2% of revenues, was 320 basis points below the corresponding prior-year level of 15.4%.

The tax rate fell slightly by 10 basis points to 28.5% from 28.6% in the first three months of 2019. As a result, net income as of the end of March 2020 accounted for 8.7% of revenues, a drop of 230 basis points year-on-year.

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F I N A N C I A L S I T U A T I O N

F R E E C A S H F L O W

million		Q1/2020		Q1/2019
Net income		141.9		192.6
Depreciation, amortization and impairment losses on intangible assets and property, plant and equipment		66.2		59.1
Non-cash changes in provisions		37.1		58.8
Non-cash changes in valuation of derivatives		44.2
Other non-cash expenses and income		25.9		36.0
Income tax expense		56.7		77.2
Income tax payments		(55.3)		(50.1)
Changes of provisions	(48.4)	(36.9)
Changes of inventories, trade accounts receivable as well as other assets which cannot be allocated to investing or fi-
nancing activities	(307.2)	(304.2)
Changes of trade accounts payable as well as other liabilities which cannot be allocated to investing or financing activi-
ties		29.9		48.7
Other	12.6	8.1

Cash flow from operating activities		3.5		89.1
Cash changes in intangible assets and property, plant and equipment		(64.3)		(57.0)
Free cash flow		(60.8)		32.1

The cash inflow from operating activities decreased in the first three months of the current fiscal year by 85.6 million year-on- year to 3.5 million. Alongside a drop in net income of 50.7 million, or 26.3%, to 141.9 million, this was primarily due to the

33.2 million year-on-year due in part to the payment of $ 12 million under an agreement to settle a class action lawsuit in the United States.

Free cash flow in the first three months of 2020 amounted to 60.8 million, down 92.9 million on the prior-year level ( 32.1 million). In addition to the significantly lower cash flow from operating activities, this is due to higher disbursements for investments in intangible assets and property, plant and equipment.

C U R R E N T A N D N O N - C U R R E N T A S S E T S

million

Intangible assets and goodwill

Property, plant and equipment

Other non-current assets

Non-current assets

Inventories

Trade accounts receivable

Other financial assets

Contract assets

Cash and cash equivalents

Other current assets

Current assets

3/31/2020 12/31/2019

858.8842.2

1,437.21,469.2

290.6312.2

2,586.72,623.6

865.4815.0

1,353.61,149.0

58.262.6

91.789.9

1,983.71,880.7

197.6226.0

4,550.24,223.2

A largely seasonal increase compared with December 31, 2019 was recorded in trade accounts receivable and inventories. In this regard as in previous years we expect a substantial improvement by year end. Furthermore, the trend in inventories reflects measures to preserve the global supply chains, particularly in the aftermarket business.

Overall, net working capital improved by 85.5 million to 1,058.6 million compared with the first three months of 2019 ( 1,144.1 million). This slightly reduced the commitment in dayssales to 58.5 days from the prior-year level (58.7 days).

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C A P I T A L E X P E N D I T U R E

				Q1/2020		Q1/2019
Capital expenditure (before IFRS 16 and acquisitions as well as SLB)		million		81.0		62.2
Capital expenditure in % of revenues		%		5.0		3.5

-term growth and innovation priorities. In addition to the ongoing expansion of production capacity at the North American sites in Huntington and Bowling Green, major investments were made especially in replacement and expansion projects for production facilities and their automation, as well as in supplier tools and IT projects. Moreover, strategic investments were made in continued software development in the steering systems business.

C O N S O L I D A T E D E Q U I T Y

million		3/31/2020		12/31/2019
Subscribed capital		161.2		161.2
Other equity		1,703.4		1,623.2
Equity attributable to the shareholders		1,864.6		1,784.4
Non-controlling interests		121.7		117.1
Total equity		1,986.3		1,901.5

As of March 31, 2020, the Knorr-Bremse Group had an equity ratio of 27.8% and is therefore flat on the level as of December 31, 2019 (27.8%).

C U R R E N T A N D N O N - C U R R E N T L I A B I L I T I E S

million

Provisions (incl. pensions)

Financial liabilities

Other non-current liabilities

Non-current liabilities

Trade accounts payable

Financial liabilities

Contract liabilities

Other liabilities

Current liabilities

Total liabilities

3/31/2020 12/31/2019

585.6636.0

1,663.11,658.2

142.6138.3

2,391.32,432.5

978.0967.4

1,170.8875.6

274.1277.4

336.3392.4

2,759.32,512.8

5,150.64,945.2

Significant changes compared to December 31, 2019 arose in the lease liabilities reported under financial liabilities as well as in higher bank liabilities resulting from the use of additional lines of credit to expand our financial flexibility as part of the Covid-19

action program. Overall205.4 million as of March 31, 2020. A decrease in provisions and other liabilities had an offsetting effect.

No financing transactions were conducted in the first three months of 2020. The following debt financing existed as of March 31, 2020:

Corporate bond of Knorr-	500.0 million (due in December 2021)
Corporate bond of Knorr-	750.0 million (due in June 2025)
Bank liabilities of Knorr-Bremse Group in the amount of	402.1 million
Leases liabilities in the amount of 365.4 million.
The Knorr-

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E M P L O Y E E S

A V E R A G E N U M B E R O F E M P L O Y E E S

		Q1/2020		Q1/2019
Wage earners		14,871		15,550
thereof leased personnel		2,529		2,532
Salaried employees		13,763		13,393
thereof leased personnel		224		258
Trainees		203		206
Total		28,838		29,149

As of the end of March 2020, the Group had an average of 28,838 employees (previous year: 29,149). The moderate decrease ( 1.1%) compared with the previous year was mostly seen in the Europe and North America regions in both divisions. In the Rail Vehicle Systems segment, the sale of the Powertech Group in 2019 contributed to the decline compared with Q1/2019. By con- trast, the average number of employees in the Asia-Pacific region increased as of March 2020, mostly in the Commercial Vehicle Systems segment due to the Hitachi acquisition in 2019.

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I N F O R M A T I O N O N R E P O R T A B L E S E G M E N T S

R E V E N U E S B Y S E G M E N T

million				Q1/2020		Q1/2019
Rail Vehicle Systems				891.2		903.6
Commercial Vehicle Systems				741.6		851.1
Total				1,632.8		1,754.7
Reconciliation to IFRS for Rail Vehicle Systems				1.0		7.8
Reconciliation to IFRS for Commercial Vehicle Systems				(5.8)		(5.0)
Other segments and consolidation				(0.5)		(2.2)
Group			1,627.5	1,755.3
E B T B Y S E G M E N T
million				Q1/2020		Q1/2019
Rail Vehicle Systems				147.5		143.4
Commercial Vehicle Systems				60.8		104.8
Total				208.2		248.2
Reconciliation to IFRS for Rail Vehicle Systems				3.0		32.9
Reconciliation to IFRS for Commercial Vehicle Systems				13.7		10.2
Other segments and consolidation				(26.5)		(21.5)
Group			198.5	269.8
R A I L V E H I C L E S Y S T E M S S E G M E N T
				Q1/2020		Q1/2019
Revenues		million		892.2		911.3
thereof aftermarket		%		44		38
EBITDA		million		186.1		199.5
EBITDA margin		%		20.9		21.9
Operating EBITDA margin		%		20.9		21.9
EBIT		million		156.5		171.0
EBIT margin		%		17.5		18.8
Operating EBIT margin		%		17.5		18.8
Order intake		million		874.2		1,035.0
Order book (March 31)		million		3,555.1		3,336.1

The order intake in the Rail Vehicle Systems segment as of the end of March 2020 decreased by 15.5% year-on-year. The Asian market, and here in particular the Chinese business, was the hardest hit. However, based on the positive order situation in recent quarters, the order book increased by 6.6% year-on-year.

Revenues in the Rail Vehicle Systems segment came to 892.2 million in the first three months, down by just 2.1% on the same quarter of the previous year. The OE business performed less robustly in Europe and North America than in the strong prior-year period. In the Asia region, a declining OE business for high-speed trains and locomotives was offset by growth in the business for railway carriages and metro cars. Overall, noticeable growth in the aftermarket business compensated to a large extent for the weakening OE business. The aftermarket share (service business) consequently was higher than in the previous year.

In absolute terms, EBITDA, which amounted to 186.1 million as of the end of March 2020, was down 6.7% on the high prior- year level, giving an EBITDA margin of 20.9% of revenues compared with 21.9% in the previous year. At 17.5%, the EBIT margin was also below the prior-year level of 18.8%.

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C O M M E R C I A L V E H I C L E S S Y S T E M S S E G M E N T

				Q1/2020		Q1/2019
Revenues		million		735.8		846.1
thereof aftermarket		%		29		23
EBITDA		million		107.6		140.7
EBITDA margin		%		14.6		16.6
Operating EBITDA margin		%		14.6		16.6
EBIT		million		76.8		114.1
EBIT margin		%		10.4		13.5
Operating EBIT margin		%		10.4		13.5
Order intake		million		714.7		859.4
Order book (March 31)		million		1,113.2		1,377.1

The order intake in the Commercial Vehicle Systems segment in the first three months was down 16.8% on the previous year. This was due to the expected perceptible downturn in global commercial vehicle production in Europe and North and South America, but also in Asia. In addition, initial corrections could be seen in the form of cancellations of customer orders as a consequence of the Covid-19 lockdowns and the related shuttering of commercial vehicle manufacturing facilities. Consequently, the order book also contracted significantly ( 19.2%) year-on-year as of March 31, 2020.

Revenues as of the end of March 2020, at 735.8 million, were down 13.0% on the prior-year period. This decrease was attributable to a drop in delivery requests by customers in the European and North American market, which reduced OE revenues. By contrast, the aftermarket recorded growth compared with the prior-year quarter. As a result, the aftermarket share rose perceptibly from 23% in the previous year to 29% of revenues.

In absolute terms, EBITDA decreased by 23.5% year-on-year, generating an EBITDA margin of 14.6% of revenues compared with 16.6% in the previous year. The Commercial Vehicle Systems segment also recorded a large drop in EBIT of 32.7% to 76.8 million as of the end of March 2020. This narrowed the EBIT margin by 310 basis points to 10.4% and is attributable to higher depreciation and amortization, principally as a result of increased investment activity.

R E V E N U E B Y C O U N T R Y O F K N O R R - B R E M S E C O M P A N Y

million		Q1/2020		Q1/2019
Europe/Africa		773.4		843.4
North America		352.9		406.5
South America		24.2		28.0
Asia-Pacific		476.9		477.4
		1,627.5		1,755.3

As of the end of March America (prior year: 23%), 1% to South America (prior year: 2%) and 29% to Asia-Pacific (prior year: 27%).

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S I G N I F I C A N T E V E N T S I N T H E R E P O R T I N G P E R I O D

Covid-19

Since late January 2020, the rapid spread of the coronavirus (Covid-19) worldwide has had a growing impact on public life, macroeconomic growth, and also the performance of Knorr-Bremse AG. Softening demand as a consequence of the temporary closure of customer operations is one of the main reasons for this. Knorr-Bremse responded swiftly with an extensive action program the amount of

and safeguard delivery capability.

Acquisition of R.H. Sheppard

On January 30, 2020, Knorr-Bremse signed an agreement to buy R.H. Sheppard Co., Inc., USA., a leading manufacturer of steering systems for commercial vehicles. Knorr-Bremse is acquiring Sheppard from WABCO Holdings Inc., USA, which is selling Sheppard rchase price is USD 149.5 million. Closing is expected

in the first half of 2020.

Change in Executive Board

On March 2, 2020, the Supervisory Board of Knorr-Bremse AG appointed Frank Markus Weber as a member of the Executive Board and as CFO of Knorr-Bremse AG with effect from July 1, 2020. During the period from May 1, 2020 until Mr. Weber takes office, Mr. Eul

E V E N T S A F T E R T H E R E P O R T I N G D A T E

Change in Executive Board

The CFO of Knorr-Bremse AG, Ralph Heuwing, voluntarily stepped down from the Executive Board with effect from April 30, 2020 to embark on a new career path.

O U T L O O K

As the economic impact of the Covid-19 crisis is extremely difficult to quantify, we are still unable to provide a reliable indication of how business will develop for the remainder of the year. In general, we estimate that the most important performance indicators will develop as outlined in the 2019 Annual Report.

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C O N S O L I D A T E D S T A T E M E N T O F I N C O M E

C O N S O L I D A T E D S T A T E M E N T O F I N C O M E

		Q1/2020		Q1/2019
Revenues		1,627,476		1,755,265
Change in inventory of unfinished/finished products		(838)		21,735
Own work capitalized		18,808		15,351
Total operating performance		1,645,446		1,792,351
Other operating income		29,644		18,944
Cost of materials		(780,054)		(907,998)
Personnel expenses		(400,852)		(391,000)
Other operating expenses		(203,945)		(178,621)
Earnings before interest, tax, depreciation and amortization (EBITDA)		290,238		333,674
Depreciation and amortization		(66,218)		(59,101)
Earnings before interests and taxes (EBIT)		224,021		274,573
Interest income		10,026		7,819
Interest expenses		(15,274)		(14,346)
Other financial result		(20,247)		1,717
Income before taxes		198,526		269,763
Taxes on income		(56,655)		(77,159)
Net Income	141,871	192,604
Thereof attributable to:
Profit (loss) attributable to non-controlling interests		7,468		10,112
Profit (loss) attributable to the shareholders of Knorr-Bremse AG	134,403	182,492
undiluted		0.83		1.13
diluted		0.83		1.13

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C O N S O L I D A T E D B A L A N C E S H E E T

C O N S O L I D A T E D B A L A N C E S H E E T

	3/31/2020	12/31/2019
Assets
Intangible assets and goodwill		858,838		842,180
Property, plant and equipment		1,437,242		1,469,212
Investments accounted for using the equity method		16,585		16,570
Other financial assets		52,460		63,471
Other assets		70,454		73,930
Income tax receivables		1,863
Assets from employee benefits		30,473		31,611
Deferred tax assets	118,774	126,598

Non-current assets

Inventories

Trade accounts receivable

Other financial assets

Other assets

Contract assets

Income tax receivables

Cash and cash equivalents

2,586,690 2,623,572

865,410815,011

1,353,581 1,148,999

58,20962,565

128,709152,088

91,68389,885

68,90073,900

1,983,674 1,880,738

Current assets	4,550,166	4,223,186
Balance sheet total		7,136,856		6,846,758

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C O N S O L I D A T E D B A L A N C E S H E E T

	3/31/2020	12/31/2019
Equity
Subscribed capital		161,200		161,200
Capital reserves		13,884		13,884
Retained earnings		34,156		34,156
Other components of equity		(233,519)		(179,311)
Profit carried forward		1,754,462		1,166,041
Profit attributable to the shareholders of Knorr-Bremse AG		134,403		588,423
Equity attributable to the shareholders of Knorr-Bremse AG		1,864,586		1,784,393
Equity attributable to non-controlling interests		121,711		117,121
thereof share of non-controlling interests in net income		7,468		43,595
Equity	1,986,297	1,901,514
Liabilities
Provisions for pensions		301,338		343,273
Provisions for other employee benefits		22,190		19,545
Other provisions		262,029		273,147
Financial liabilities		1,663,103		1,658,190
Other liabilities		5,119		5,627
Income tax liabilities		51,600		51,908
Deferred tax liabilities	85,926	80,789

Non-current liabilities

Provisions for other employee benefits

Other provisions

Trade accounts payable

Financial liabilities

Other liabilities

Contract liabilities

Income tax liabilities

2,391,307 2,432,480

22,35129,136

193,628197,585

978,038967,447

1,170,849875,567

91,184131,044

274,066277,351

29,13734,635

Current liabilities		2,759,252		2,512,764
Liabilities		5,150,559		4,945,244
Balance sheet total		7,136,856		6,846,758

K N O R R - B R E M S E Q U A R T E R L Y S T A T E M E N T

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C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S

C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S

		Q1/2020		Q1/2019
Net income (including earnings share of minority interests)	141,871	192,604
Adjustments for
Depreciation, amortization and impairment losses on intangible assets and property, plant and equipment		66,218		59,101
Change of impairment on inventories		7,783		2,489
Change of impairment on trade accounts receivable		4,865		2,474
Gain on the sale of property, plant, and equipment		(1,863)		(3,285)
Non-cash changes in provisions		37,110		58,771
Non-cash changes in valuation of derivatives		44,194
Other non-cash expenses and income		25,938		35,997
Interest result		1,781		6,527
Investment result				(116)
Income tax expense		56,655		77,159
Income tax payments	(55,275)	(50,134)
Changes of
inventories, trade accounts receivable as well as other assets, which cannot be allocated to investing or financing activ-
ities		(307,203)		(304,216)
Trade accounts payable trade as well as other assets which cannot be allocated to investing or financing activities		29,868		48,718
Provisions		(48,440)		(36,944)
Cash flow from operating activities	3,502	89,144
Proceeds from the sale of intangible assets		615
Disbursements for investments in intangible assets		(25,545)		(19,846)
Proceeds from the sale of property, plant and equipment		10,092		5,334
Disbursements for investments in property, plant and equipment		(49,479)		(42,497)
Disbursements from financial investments and from the sale of investments				(2,954)
Disbursements for financial investments				(12,906)
Disbursements for the acquisition of consolidated companies and other business units				(163,482)
Interest received		7,418		3,197
Disbursements for investments in plan assets (pensions)		(903)		(671)
Cash flow from investing activities	(57,802)	(233,825)
Proceeds from borrowings		214,273		10,114
Disbursements from the repayment of borrowings		(5,648)		(910)
Disbursements for lease liabilities		(14,412)		(13,822)
Interest paid		(4,294)		(2,681)
Dividends paid to non-controlling interests		(693)		(1,050)
Net payments from factoring		(17,547)		(18,881)
Cash flow from financing activities	171,680	(27,230)
Cash flow changes		117,380		(171,911)
Change in cash funds resulting from exchange rate and valuation-related movements		(11,916)		19,409
Change in cash funds resulting from changes to the group structure				(195)
Change of cash fund	105,464	(152,697)
Cash and cash equivalents at the beginning of the period		1,853,466		1,718,695
Cash and cash equivalents at the end of the period	1,958,930	1,565,998
Cash and cash equivalents		1,983,674		1,582,816
Short-term securities available for sale		2		51
Short-term liabilities to banks (less than 3 months)		(24,746)		(16,869)

K N O R R - B R E M S E Q U A R T E R L Y S T A T E M E N T

J A N U A R Y 1 T O M A R C H 3 1 , 2 0 2 0

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This interim report contains statements regarding future developments which can represent forward-looking statements. Such statements are to be recognized in terms, among others, such as "expect", "anticipate" and their negation and similar variations or comparable terminology. These statements just as every business activity in a global environment are always associated with uncertainty. These statements are based on convictions and assumptions of the management board of Knorr-Bremse AG, which in turn are based on currently-available information. The following factors could affect the success of our strategic and operational measures: macroeconomic or regional developments, changes in the general economic conditions, especially a continuing economic recession, changes in exchange rates and interest rates, changes in energy prices and material costs, insufficient customer acceptance of new Knorr-Bremse products or services, including growing competitive pressure. Should these factors or other uncertainties arise, or the assumptions underlying the statements turn out to be incorrect, the actual results can vary from the forecast results. Knorr-Bremse assumes no obligation and does not intend to continually update or correct forward- looking statements and information. They relate to the conditions as of the date of their publication.

This document contains supplementary financial figures not precisely defined in the relevant financial reporting framework which represent or could represent so-called alternative performance indicators. For the assessment of the net assets, financial position and results of operations of Knorr-Bremse, these supplementary financial figures should not be used in isolation or as alternatives to the financial figures presented in the consolidated financial statements and determined in accordance with the relevant financial reporting framework. Other companies which present or report performance figures with similar designations may calculate these differently. Due to rounding, it is possible that individual figures in this and other documents do not add up exactly to the reported total and that reported percentages do not reflect the absolute values to which they relate.

This document is a quarterly report pursuant to Section 53 of the Stock Exchange Regulations issued by the Frankfurt Stock Exchange.