Dear shareholders and friends of Krones,
The coronavirus continues to dominate global developments. While we have corona more or less under control after the first wave in Germany and the rest of western Europe, the pandemic has not yet peaked worldwide. The virus continues to spread rapidly in the USA, South America, Africa and India. In parallel with a health crisis, Covid-19 has also caused a global economic crisis. Many economists expect this to be deeper and longer-lasting than the 2008/09 financial crisis. The International Monetary Fund forecasts that the global economy will contract by 4.9% this year. And Covid-19 will continue to impact the global economy for several years to come.
Krones, too, is affected by the general uncertainty among customers. Investment is being postponed until certainty and confidence improve. As expected, the corona crisis had a massive impact on the figures for the second quarter – most of all on order intake, which was 38.2% down between April and June. Revenue fell by 16.5% year-on-year. Due to the comparatively good first quarter, the half-year figures do not show such a large decrease in order intake (down 28.5%) and revenue (down 10.1%), although there will be substantial impacts in the following quarters.
There is also positive news. The structural measures to improve profitability launched in the second half of 2019 are taking effect. Despite lower revenue, earnings before interest, taxes, depreciation and amortisation (EBITDA) improved by 1.4% between January and June to €118.5 million and the EBITDA margin from 6.2% to 7.0%. However, this was mainly due to the relatively good first quarter, which was scarcely affected by corona. Krones recorded earnings before taxes of −€21.2 million in the second quarter of 2020.
Although the impacts of the recession will certainly continue to be with us for several more quarters, Krones will master this difficult situation. Together, we will further strengthen Krones’ market position in the crisis. Key factors here are good service and on-time contract fulfilment, especially under the current worldwide travel restrictions due to corona. We are also increasing our focus on innovation. This will enable us to profit on a lasting basis from the mediumterm recovery of our markets. And that our market will grow in the medium and long term is beyond question. Moreover, Krones is very well positioned structurally and financially to emerge from the crisis stronger than before.