Quarterly statement Q3 2017
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Quarterly statement Q3 2017

    Highlights and key figures

    Krones confirms group targets for 2017

    • Order intake increased 10.0% to €2,696.8 million in the first three quarters and revenue grew 5.4% to €2,508.9 million. Adjusted for acquisitions, the increase was 5.9% and 3.1%, respectively.
    • The EBT increased to €168.0 million for the first three quarters and the EBT margin was 6.7% (previous year: 6.9%).
    • From July to September 2017, order intake improved 7.9%. Special items and seasonal factors affected Krones’ third-quarter results. Revenue was down 10.5% and the EBT margin declined from 6.9% to 6.4%. 
    • Krones expects a strong fourth quarter and confirms its targets for 2017. The company expects 4% revenue growth and an EBT margin of 7.0%, excluding effects from acquisitions.
    Key figures for Q1–Q3
        1 Jan – 30 Sep 2017 1 Jan – 30 Sep 2016 Change
    Revenue € million 2,508.9 2,380.1 +5.4%
    Order intake € million 2,696.8 2,452.5 +10.0%
    Orders on hand at 30 September € million 1,332.6 1,167.0 +14.2%
    EBITDA € million 233.7 224.2 +4.2%
    EBIT € million 163.1 158.4 +3.0%
    EBT € million 168.0 163.6 +2.7%
    EBT margin % 6.7 6.9 -0.2 PP*
    Net income € million 114.6 114.3 +0.3%
    Earnings per share 3.68 3.65 +0.8%
    Capital expenditure for PP&E and intangible assets € million 74.8 58.2 +16.6 Mio. €
    Free cash flow € million -242.0 -197.0 -45.0 Mio. €
    Net cash and cash equivalents 30 September** € million 77.9 121.8 -43.9 Mio. €
    Working capital to revenue *** % 26.5 26.3 +0.2 PP
    ROCE % 14.6 15.5 -0.9 PP
    Employees at 30 September        
    Worldwide   15,174 14,132 +1,024
    Germany   10,295 9,959 +336
    Outside Germany   4,879 4,173 +706

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

    Key figures for Q3
        1 Jul – 30 Sep 2017 1 Jul – 30 Sep 2016 Change
    Revenue € million 733.7 819.8 -10.5%
    Order intake € million 917.5 850.1 +7.9%
    EBITDA € million 69.3 77.0 -10.0%
    EBIT € million 46.0 55.1 -16.5%
    EBT € million 47.0 56.3 -16.5%
    EBT margin % 6.4 6.9 -0.5 PP
    Net income € million 32.2 39.9 -19.3%
    Earnings per share 1.04 1.27 -18.1%

    Letter from the Executive Board

    Dear shareholders and friends of Krones,

    The drinktec trade fair was a major force shaping the third quarter of 2017 for Krones. It is the most important trade fair for the international beverage and packaging industry and takes place only once every four years. The industry came together for the event from 11 to 15 September 2017 in Munich. And I can say with great pride that drinktec 2017 was a huge success for Krones thanks to the outstanding work of our entire team. Nearly all of the roughly 76,000 drinktec visitors from 170 countries, including many decision-makers from big multinational corporations as well as small and mid-sized companies, visited our booth to learn about our latest products. The visitors’ response to our innovations and our customers’ readiness to place orders were resoundingly positive.

    However, many of the machines and systems presented will not be sales blockbusters right away since they are completely new technologies that must first prove themselves in test runs at our customers’ plants. The positive feedback we have received on innovations like direct printing, our products for beverage plant digitalisation, and the Dynafill filler, which fills and crowns bottles in a single operation, have us feeling quite confident about the years ahead.

    Now, it is up to us to keep the momentum from drinktec going. We will not content ourselves with what we have achieved so far. drinktec also showed us just how dynamic and challenging the competition in our market is – and will remain for the foreseeable future. For this reason, we will keep up the pace of innovation, to create solutions with real added value for our customers. We will continue to systematically implement our Value strategy programme.

    Besides the milestone event that drinktec represents, we also had our usual day-to-day operations in the third quarter. Revenue and order intake for the first nine months were up 5.4% and 10.0% year-on-year, respectively. Earnings before taxes (EBT) increased 2.7% to €168.0 million. Our EBT margin was 6.7%. Our forecast for 4% revenue growth and an EBT margin of 7.0% in 2017 remains unchanged.


    Christoph Klenk

    Report on expected developments

    Executive Board affirms targets for 2017 as a whole

    Despite many political and economic uncertainties, Krones remains optimistic about the 2017 financial year. The packaging machinery market is growing at a relatively stable pace. Driving this growth are megatrends such as the steady growth of the middle class and increasing urbanisation in the emerging economies. Moreover, food and beverage producers increasingly must rely on innovative packaging solutions to distinguish themselves from the competition. 

    Targets for the three segments

    Given the competitive nature of our markets, Krones does not expect prices to improve this year. Launching new products and services and further reducing costs remain important factors in our effort to grow further and increase earnings ­before taxes within the group in 2017. Moreover, Krones intends to considerably increase its presence worldwide and move even closer to customers.

    In our core segment, machines and lines for product filling and decoration, Krones will press ahead with the modularisation of our products. We will expand our international service structures and Centers in the interest of further growth. We are also strengthening our mid-range business – that is, less complex lines with high performance. There is high demand for these lines in the emerging markets. Krones is projecting slightly lower-than-average revenue growth of 3% in 2017 for our core segment because we are intentionally forgoing low-margin orders. The EBT margin should be around 8%, as in the previous year.

    In our process technology segment, we will continue to implement the measures developed in 2015 and complete implementation of several parts in 2017. This year, we intend to seize upon the considerable growth opportunities in intralogistics, which are also part of the process technology segment. Based on the results for the first nine months, we expect to achieve revenue growth of at least 10% and break-even earnings (previous forecast: EBT margin of 2% to 3%).

    We expect the machines and lines for the compact class segment to achieve revenue growth of around 5% and an EBT margin of at least 5% in 2017.

    Forecast for 2017 as a whole unchanged

    Despite the somewhat weaker third quarter, Krones’ forecast for the year 2017 as a whole remains unchanged because we expect the fourth quarter to be strong. Based on the current macroeconomic prospects and development of the markets relevant to Krones, we are targeting consolidated revenue growth of 4% in 2017. The company’s EBT margin should be stable at 7.0% this year. Our forecast for our third financial performance target, working capital to revenue, is 27% for the current financial year. Acquisitions are not included in these forecasts.

      Forecast for 2017* Actual value
    9 month 2017
    Revenue growth +4% +5.4%
    EBT margin 7.0% 6.7%
    Working capital to revenue (%) (ltm) 27% 26.5%

    * Excluding acquisitions