Krones remains confident about the year 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.
Krones intends to improve revenue and earnings in all 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 in all three segments 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 reduce costs in 2017. We will expand our international service structures and LCS Centres 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 late 2015. This year, we intend to seize upon the considerable growth opportunities in intralogistics, which are also part of the process technology segment. In all, we expect the process technology segment to achieve revenue growth of around 10% and an EBT margin of 2% to 3% this year.
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.
Outlook for 2017 as a whole affirmed
Because of the strong results achieved in the first half, Krones’ forecast for the year 2017 as a whole remains unchanged. Based on the current macroeconomic prospects and development of the markets relevant to Krones, we are still targeting consolidated revenue growth of 4% (excluding acquisitions) in 2017. The company’s profitability should be stable this year. Krones expects to achieve an EBT margin of 7.0% in 2017. Our forecast for our third financial performance target, working capital to revenue, is 27% for the current financial year.