Krones : Non-financial Report 2020

krones Group

Non-financial Report 2020

1	our	2	our	3	our
	basis		sustainability		report

Letter from the Chairmen Our business model

Sustainable value creation at Krones

Our approach

Our sustainability topics Our goals

Our influence on SDGs Our network

Market

Product sustainability Innovation Customer matters

Environment Decarbonisation Resource conservation

Society

Community engagement Data protection

Employees

Employee satisfaction Health and safety Diversity

Ethics Compliance Human rights Sustainable supply chain

About this report and Key Facts

Independent auditor's report

Publishing information

Contact

our basis

1	Letter from the Chairmen . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . .	. . . . . . .	. . .4. . . . . . .	. . . . . . . . . .
Our business model. . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . 5. . . . . . . . . . . . . . . . . . . .
	Sustainable value creation at Krones .. .. .. .. ..	.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..	.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..	.. .. .. 6
	Our approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . 7. . . . . . . . . . . . . . . . . . . . . . .
	Our sustainability topics. . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . .	. . . . . . . . . 8. . . . . . . . . . . . . . . . . .
	Our goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . 9. . . . . . . . . . . . . . . . . . . . . . . .
	Our influence on SDGs . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . .	. . . . . . . .	.10. . . . . . . . . . . . . . . . . . . . .
	Our network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	. . . . . .	.11. . . . . . . . . . . . . . . . . . . . . . . . .

1 | our BASIS

2 | our sustainability

3 | our report

Letter from the Chairmen

1 | 4

Volker Kronseder

Chairman of the Supervisory

Board

Christoph Klenk

Chairman of the Executive

Board

Letter from the Chairmen

Dear Readers,

Without a doubt, 2020 was an exceptional year. The COVID-19 pandemic and the resulting economic crisis have kept global value creation processes in their grip. Like so many other companies, Krones, too, finds itself in an economically challenging situation since we rely heavily on exports of our products and services.

Despite all of the difficulties, Krones remains committed to stability and

­continuity. Our company will master this crisis, even if painful measures such as staff reductions and cost-cutting programs were and are necessary to keep us competitive.

If the crisis has made one thing clear, it is the vital importance of business

­continuity: Our customers in the beverage and food industry want dependable partners on whom they can rely in difficult times and who, through good

management,­can guarantee operational continuity for years and decades to come. We as Krones AG can do this because we have worked prudently, ­profitably, and with an eye to the future over the past years and decades. For us, this is real, lived sustainability - in the truest sense of the word.

Despite - or perhaps because of - COVID-19, this is certain: There's only one direction for Krones to go and it is forward. Innovative technologies, digital

solutions,­ and environmentally and socially responsible products and value creation processes are the triad of the future, in industrial machinery and equipment manufacturing as well. For that reason, we have taken the opportunity in 2020 to draft new sustainability goals. These goals show what we will ­focus on in terms of sustainability in the next ten years. Two goals in particular deserve special mention here: product sustainability and decarbonisation.

Our products are at the heart of our sustainability activities. We are accelerating the development of even more energy and media-efficient machines and lines in order to conserve valuable resources like water, electricity, and heat. At the same time, it is essential to minimize the amount of waste generated in the production, filling, and packaging of beverages and liquid foods. That is why we are taking a proactive approach to tackling the issue of food waste. Sustainable packaging is a key area of activity, in which we are dedicated to the research, ­development, und implementation of more eco-friendly primary and secondary packaging and likewise to improving our PET recycling systems - and thus contributing significantly to a circular economy.

With our new climate strategy, we are also sending a clear signal for climate protection. We are intensifying our existing measures to reduce emissions by cutting 80 percent of our operational emissions (Scope 1 and Scope 2) and 25 percent of our product-related emissions (Scope 3) by 2030. Our long-term goal is to become climate neutral.

Sustainable products and value creation processes are on our agenda. In this ­report, you will learn about the progress we made in 2020.

Chairman of the Supervisory Board

Chairman of the Executive Board

1 | our BASIS

2 | our sustainability

3 | our report

Our business model

1 | 5Our business model

Business model, business areas, and organisational structure

KRONES offers machinery and systems for bottling and packaging and for beverage production. Innovative digitalisation and intralogistics solutions round out our portfolio. KRONES' customers include breweries, beverage producers, and companies from the food, chemical, pharmaceutical, and cosmetic indus- tries. Services are an important part of KRONES' business model. The company maintains service centres and offices around the world. More information about Krones' business model can be found in the group management report beginning on page 35 of the Annual Report.

Digitalisation

Process technology

Bottling and packaging equipment

Intralogistics

Major markets and competitive position

Customers in the beverage industry account for most of Krones' revenue. The remaining revenue comes from business in non-beverage sectors (food, dairy, chemicals, pharmaceuticals, and cosmetics). Krones is heavily export-oriented, generating almost 90% of revenue outside Germany. The regional breakdown of revenue is well balanced overall. Krones generates around 49.8% of its ­revenue in industrialised countries and around 50.2% in the rapidly growing emerging markets.

Besides a few large companies that are part of a corporate group, Krones

­competes with a number of companies that offer only individual bottling and packaging products. Most of our main competitors are based in the euro area. Chinese manufacturers have primarily competed with Krones for orders on their home market. With our global service portfolio, which enables us to provide fast service to customers on-site, Krones is truly a full-service supplier and thus in a very strong position competitively.

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