Highlights and key figures

• Revenue decreased due to the initial effects of the COVID-19 situation by 4.2% year-on-year to €942.0 million between January and March 2020.
• Overall economic uncertainties have significantly impacted customers’ investment confidence regarding new projects, especially since March 2020. Order intake in the first quarter decreased by 19.3% compared to the previous year.
• Structural measures are beginning to take effect. Earnings before interest, taxes, depreciation and amortisation (EBITDA) went up, despite the lower revenue, to €89.5 million. The EBITDA margin improved to 9.5% (previous year: 8.7%).
• Due to the global uncertainties in connection with the coronavirus, it is currently not possible to provide reliable indications and guidance for revenue and earnings in the 2020 financial year.

Dear shareholders and friends of Krones,

Almost the entire globe has been in the grip of the corona pandemic since February. The rapid worldwide spread of the virus has severe consequences both in terms of health and on the economy. Krones was comparatively well prepared for the coronavirus, as our subsidiaries in China and Italy were already severely affected by the pandemic before all other regions. We moved early by taking comprehensive internal precautions to protect our employees and customers from infection with the virus.

On the other hand, of course, we also have to take care of winning new orders and properly completing existing orders. This is no easy task in this environment. Uncertainty about the duration and impacts of the corona crisis is having a major impact on our customers’ investment confidence, although the long-term growth drivers remain intact. Order volumes in the new machinery business have gone down sharply since March. This can already be seen from the lower order intake for the first quarter, which is 19% below the previous year’s figure.

The service business is still relatively stable, as we have many of our service engineers and also spare parts on location close to our customers. As a result, the decrease in consolidated revenue between January and March is still relatively moderate at 4.2%. In the second quarter, when we will also start with short-time working in some areas, the reluctance of customers to place orders is likely to be reflected more strongly in the figures. But there is also positive news from the first quarter. The measures to improve profitability launched in the second half of 2019 are beginning to take effect. Despite lower revenue, earnings before interest, taxes, depreciation and amortisation (EBITDA) improved by 4.1% between January and March to €89.5 million and the EBITDA margin from 8.7% to 9.5%.

Regardless the current difficult situation, the Executive Board is confident that Krones will emerge from the crisis stronger than before. Firstly, Krones is very well positioned structurally and financially. And secondly, our market will stabilise again and return to the growth path in the medium to long term. But the most important reason for this confidence is our workforce. Team spirit and motivation have once again risen enormously in recent weeks. The Krones team is showing its full strength in the crisis. That is why I am sure we will surmount this crisis together.

Christoph Klenk
CEO

Extreme levels of uncertainty; reliable guidance for 2020 not currently possible

Macroeconomic forecasts for 2020 have deteriorated significantly worldwide since March. The spread of coronavirus and the resulting lockdowns are having massive negative impacts on the global economy. It is not yet possible to predict the duration of the crisis and of its consequences. These uncertainties are also affecting order placement by Krones customers.

Krones expects overall that the global market for bottling and packaging equipment will shrink in the short term. Nevertheless, the medium and long-term outlooks remain positive. Consumer demand for packaged beverages and liquid foods will continue to grow worldwide in the medium to long term.

Due to the global uncertainties surrounding the coronavirus, it is not currently possible to provide reliable indications and guidance for revenue and earnings in the 2020 financial year. The indications given by the Executive Board for the current year in the report on expected developments as part of the 2019 Annual Report (based on information as of the beginning of March 2020) no longer apply due to the subsequent dynamic negative impact of corona.

With regard to implementing the structural measures, the company is making good progress. The Executive Board is confident that the measures will have a positive impact on earnings in 2020.