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.