Krones : Report for the second quarter 2021

Krones Group

Q2

Interim report for the period from 1 January to 30 June 2021

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2

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To our shareholders

INTERIM CONSOLIDATED

MANAGEMENT REPORT

Interim consolidated financial

statements for the period ended 30 JUNE 2021

4 Other information

	To our shareholders
	Highlights and key figures . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . .4. . . . . . . . . . . . . . . . . .
1	Letter from the Executive Board .. .. .. .. .. .. .. .. .. .. .. ..	.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 5
	The Krones share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . 6. . . . . . . . . . . . . . . . . . . .

1 | 4 Highlights and key figures

After a strong second quarter, Krones raises full-year guidance for 2021

The upward trend in Krones' order intake continued in the second quarter.. In total between January and June 2021, the volume of orders increased by 40..3% to €2,044..3 million..

Krones increased revenue in the first half of 2021 by 1..3% to €1,720..1 mil- lion.. Second-quarter revenue was up 11..7% year on year, to €845..5 million..

The first half of 2021 saw Krones significantly improve profitability..Earnings before interest, taxes, depreciation and amortisation (EBITDA) went up 16..2% to €137..7 million.. The EBITDA margin was 8..0% in the reporting period (previous year: 7..0%)..

Based on the positive first-half trend, Krones is raising its full-year guidance for 2021.. The company now expects revenue growth of 7% to 9% (previously 2..5% to 3..5%) and an EBITDA margin of 7% to 8% (previously 6..5% to 7..5%)..

Key figures for H1 2021		1 Jan - 30 Jun	1 Jan - 30 Jun	Change
			2021	2020
Revenue	€ million	1,720..1	1..698..6	+ 1.3%
Order intake	€ million	2,044..3	1..457..3	+ 40.3%
Order backlog at 30 June	€ million	1,535..5	1..133..4	+ 35.5%
EBITDA	€ million	137..7	118..5	+ 16.2%
EBITDA margin	%	8..0	7..0	+ 1.0 PP*
EBIT	€ million	71..6	33..2	+ 115.7%
EBT	€ million	75..7	31..8	+ 138.1%
EBT margin	%	4..4	1..9	+ 2.5 PP*
Consolidated net income	€ million	56..9	21..5	+ 164.7%
Earnings per share	€	1..80	0..68	-
Capital expenditure for PP&E and
intangible assets	€ million	45..1	55..2	- €10.1 million
Free cash flow	€ million	35..4	- 64.8	+€100..2 million
Net cash and cash equivalents at 30 June**	€ million	203..7	- 77.9	+ €281.6 million
Working capital to revenue***	%	28..1	27..6	+ 0.5 PP*
Employees at 30 June
	Worldwide		16,232	16,906	-  674
	Germany		9,900	10,422	- 522
	Outside Germany		6,332	6,484	- 152
Key figures for Q2 2021
	1 Apr - 30 Jun	1 Apr - 30 Jun	Change
			2021	2020
	€ million
Revenue	845..5	756..6	+ 11.7%
Order intake	€ million	975..5	616..2	+ 58.3%
	€ million
EBITDA	61..2	29..0	+ 111.0%
EBITDA margin	%	7..2	3..8	+ 3.4 PP*
EBIT	€ million	28..6	- 20.5	-
EBT	€ million	31..1	- 21.2	-
EBT margin	%	3..7	- 2.8	+ 6.5 PP*
Consolidated net income	€ million	24..1	- 17.6	-
Earnings per share	€	0..76	- 0.56	-

* PP = percentage points  ** Cash and cash equivalents less debt  *** Average of last 4 quarters

1 | To our shareholders	2 | INTERIM CONSOLIDATED	3 | Interim consolidated financial	4 | other Information
Letter from the	MANAGEMENT REPORT	statements
Executive Board

1 | 5	Letter from the Executive Board
	Dear shareholders and friends of Krones,
	The economic recovery continued in the second quarter of 2021. An easing of
	the corona pandemic in industrialised countries contributed here, as well as
	major­	government support programmes in the USA, Europe and Asia. The Inter-
	national Monetary Fund (IMF) projects 6.0% growth for the world economy in
	2021. This estimate had stood at 5.5% at the beginning of the year. In June, the
	German Mechanical Engineering Industry Association (VDMA) raised its forecast
	for the total value of plant and machinery produced in 2021. This is now ex-
	pected to increase by 10% compared with the previous year rather than 7%.
	Customers in the food and beverage sector, too, are once again more willing to
	invest. That is reflected in Krones' rapidly growing order intake. At €2.04 billion
	in the first half of the year, this was around 40% higher than in the prior-year
	period. It should be noted with regard to the revenue performance that revenue
	in the first quarter of 2020 was hardly affected by the pandemic. As a result, rev-
	enue in the first half of 2021 was up only slightly year on year, gaining 1.3% to
	€1.72 billion. In the second quarter of 2021, revenue went up relative to the pri-
	or-year quarter by almost 12% to €846 million. Because the cost-cutting meas-
	ures continue to take effect, Krones­	also improved profitability between January
	and June. As a result, the EBITDA margin increased from 7.0% in the previous
	year to 8.0% in the first half of 2021.

For the second half of the year, Krones likewise expects strong demand and stable production capacity utilisation. In view of this, we are raising our full-year guidance for 2021. For the Krones Group, based on current estimates, the Execu-

tive Board now expects full-year revenue growth of 7% to 9% in 2021 (previously 2.5% to 3.5%). Krones ­anticipates an EBITDA margin of 7% to 8% (previously 6.5% to 7.5%).

Despite the positive overall outlook, the entire Krones team will continue to systematically implement the measures taken in order to overcome the challenges ahead. In the short term, the main priority is to process the large order intake on

time and to our customers' satisfaction. Krones­ is also affected by international shortages in its supply chains. This is ­reflected in rising material and freight costs. As an internationally operating group, Krones is dependent on the global path of the Covid-19 pandemic. It should be noted here that there are regions where the Covid situation remains challenging.

In order not to undermine the positive­ effects we have gained through the cost-cutting measures, Krones will increase the prices of all bottling and packaging equipment and for process technology by 6% with effect from 1 August 2021.

The Executive Board is confident that the measures taken will enable Krones to strengthen its leading market position in the filling and packaging sector. That is the basis for us to use the growth opportunities that our market holds ­after the Covid era.

CEO