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      Strong market position

      As the market leader, Krones is in an excellent position to benefit from industry growth

      Krones operates worldwide, delivering leading technologies for filling and packaging, process engineering, and intralogistics as well as solutions for digitalisation for the food and beverage industries.

      In its core business area, bottling and packaging equipment, Krones is by far the world’s market leader. Besides the two major European competitors, KHS (a subsidiary of the Salzgitter Group) and Tetra-Pak subsidiary Sidel, there are also many smaller competitors. 

      In the process technology segment, Krones offers products for breweries and producers of soft drinks, milk and dairy drinks, and water (SDW). We are the world’s second-largest supplier of brewing technology. Krones’ market position is not quite as strong in SDW process technology. We aim to achieve better than average growth in this attractive market in the years ahead.

       

       

      Business model

      Krones has been expanding its intralogistics operations considerably since 2016. The acquisition of the Italian company System Logistics has made Krones an important player in the market for internal logistics for the food and beverage industry. As a result, Krones is now well represented for all stages of value creation in beverage production and able to deliver everything from a single source.

      Since Krones knows all of the processes involved in beverage production and bottling down to the smallest details, the company is in an excellent position to be part of the increasing digitalisation of beverage production. By intelligently connecting data, we are developing solutions that give our customers clear, comprehensive added value. We have bundled our digitalisation and IT expertise in Syskron.


      Stable growth

      Megatrends benefit Krones

      Many long-term global trends are supporting Krones’ growth. Steady global population growth, the rapid expansion of a consumption-driven middle class in the emerging markets, and urbanisation all serve to increase demand for packaged beverages. The digitalisation of the beverage and packaging industry also presents further growth opportunities for Krones.

       

       

      Megatrends

      Urbanisation

      Increasing urbanisation, the migration of people from rural areas to the cities, is promoting demand for packaged food and beverages. That is because city-dwellers generally tend to consume more packaged products.

      In Africa and Asia, most of the population still lives in the countryside. However, more and more people there will crowd into the cities in the years and decades ahead.

       

      Growth of the middle class

      More and more people in the emerging and developing countries are escaping poverty and rising into the middle class. The United Nations forecasts that the middle class will grow by about 1.4 billion persons from 2009 to 2020, to 3.2 billion. In the Asia-Pacific region alone, the middle class is likely to grow by around 1.2 billion persons in that period.

       

       

      Global population growth

      The world’s population will continue to grow in the coming years and decades. At the end of 2016, some 7.4 billion people inhabited the earth. That number is growing at a rate of more than 80 million each year. Population growth is especially strong in Africa and Asia. The world’s population is expected to reach about 8.5 billion by 2030. And all those people will need to eat and drink.

       

      Digitalisation

      The digitalisation of beverage plants is advancing at a rapid pace. New data and Internet-based business models are built on collecting and analysing data and using the results to derive benefits for customers. Krones intends to be a leader in this area for the beverage and packaging industry.

       

      Growth regions

      We are there, where ever there is a stark increase in beverage consumption

      Thanks to its strong global footprint, Krones is well positioned in those regions in which the consumption of packed beverages is expected to grow at an above-average rate during the coming years. The greatest increase is anticipated for China. According to a prognosis from Global Data, demand is expected to rise by an average of 2.5% per annum between 2020 and 2023. Market researchers are also forecasting above-average growth rates for the Africa/Middle East (+1.9% p.a.) and Asia Pacific regions (+1.8% p.a.) during this period.

       

       

      Revenue by region

      Balanced revenue worldwide

      Krones is represented in all regions of the world and occupies a strong market position. The company is in a position to even out fluctuations in individual regions. On the whole Krones has a well-balanced distribution of sales. In 2020, the company generated half of its consolidated turnover on the emerging market and half in mature industrial countries.

       

       

      Profitability

      Krones intends to increase profitability

      In 2020 Krones’ earning power was greatly impacted by Corona and an extraordinary burden incurred through personnel measures. The company has modified its capacities and taken additional measures to lay the foundation for increasing earning power. In order to consistently further develop the Group and finance growth – without any significant use of loan capital – Krones aims to increase its profitability. Profitable economic activity also frees up space for investments and dividends.

       
       

       

      Expanding our global footprint

      In order to improve profitability, Krones will strengthen its global presence. In the future, more procurement, engineering, and parts of production will take place in the regions in which our customers operate their plants. That will enable us to deliver regionally-adapted products to the emerging markets at competitive prices.


      Strong services business

      Being close to customers is critical

      Short response times are essential to the success of any service business. That is why we are continually moving closer to our customers and increasingly deploying local staff to carry out LCS projects. Key spare parts are kept on hand at regional warehouses. Fifteen Centers at strategically important locations serve as bases for our international service activities. Each of these service hubs is responsible for a set of countries and branch offices.

       

       

      Large installed base as the foundation for stable service revenue

      Krones has a broad installed base of beverage and packaging machinery worldwide. To ensure that these systems remain productive over their entire service lives, we offer our customers a wide range of services as well as replacement parts and upgrades. That makes for stable revenue growth overall.

       

      Long-term value creation

      Krones distributes 25 % to 30 % of its consolidated result to its shareholders

      Krones intends to pay appropriate interest on the assets that shareholders make available to the company. The equity yield before taxes is a key performance indicator with regard to this. It shows the earnings before tax in relation to the average equity capital. Irrespective of the Corona-related losses experienced in 2020, at Krones this figure is above the capital market interest rate plus a risk premium. Krones is thus generating a long-term additional value for its shareholders who are participating in the company’s success through dividends. The company generally distributes 25% to 30% of its consolidated result to its shareholders.

       

       

      The Krones share in a ten-year review

      Over the last ten years, meaning from 2011 to 2020, the value of our share has risen by 41%. The average annual gain of Krones bonds was 3.5% during this period and thus below the value appreciation of the SDAX price index (+ 8.7%), of the SDAX without dividends. Including the dividends and the assumption that the dividends were again invested in Krones shares, this results in an average annual yield of 5.1% for the last ten years. The comparable SDAX Performance Index increased by 11.0% annually.

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