- Revenue climbed 5.7% to €2,815.7 million in 2013.
- At 6.0%, the EBT margin reached the top end of the target corridor.?
- Krones plans to share the proceeds from the sale of treasury shares with shareholders, paying out a total of €2.00 per share for 2013.
- Revenue and earnings exceed year-earlier levels in the first quarter of 2014.
Krones, the world’s market leader for beverage filling and packaging technology, achieved its targets for key financial performance indicators and continued to grow profitably in 2013. Revenue rose 5.7% year-on-year, from €2,664.2 million to €2,815.7 million, thus exceeding the company’s growth target of +4%. Krones benefited from its strong market position, broad range of products and services, and an economic environment that was satisfactory overall last year. The company’s strong competitive position in the emerging markets had an especially positive impact. Krones generated around 58.2% of consolidated revenue in the emerging markets in 2013.
New orders improved by 3.2% year-on-year to €2,808.8 million in 2013. Customers’ capital spending was at a good level overall. Krones posted the highest percentage growth in new orders in the Africa/Middle East and Asia-Pacific sales regions.
Krones increases earnings performance
Despite continued price pressures, Krones improved earnings in 2013. Measures taken under the Value strategy programme to streamline cost structures companywide had a positive impact. Earnings before taxes (EBT) rose from €99.1 million in the previous year to €169.7 million. It should be noted that the year-earlier figure was affected by a one-time expense of €37.8 million (Le-Nature’s settlement). Krones generated an EBT margin (the ratio of EBT to revenue) of 6.0% in 2013. That puts the company at the upper end of its target corridor of 5.8% to 6.0%. In 2012, the EBT margin was 5.1% adjusted for the one-time expense relating to Le-Nature’s.
While the EBT margin for the company’s core segment, “machines and lines for product filling and decoration”, developed very favourably and reached 7.5%, the two smaller segments fell short of the prediction that they would break even in 2013. In the process technology segment, a one-time write-down of approximately €5 million pushed earnings down to –€2.5 million. At –€2.3 million, earnings at Kosme were also lower than expected in 2013 after a weak fourth quarter.
After taxes, Krones earned consolidated net income of €119.4 million for the reporting period (previous year: €68.3 million). That corresponds to earnings per share of €3.84 (previous year: €2.26).
Net cash and cash equivalents up considerably
Krones increased its return on capital employed (ROCE), that is the ratio of EBIT to average net tied-up capital, to 16.7% (previous year, adjusted for Le-Nature’s: 13.7%). With that, the company exceeded its ROCE target of 15.0% for 2013. Free cash flow improved from €30.6 million to €67.0 million. The company’s target had been to achieve a level of free cash flow comparable to the previous year. The sale of the company’s treasury shares also had a positive impact on Krones’ liquidity situation. In April 2013, the company sold around 1.4 million treasury shares to institutional investors at €52.55 per share. Krones had paid €25.93 per share on average to purchase the shares. The sale of the treasury shares yielded around €74 million for the company. Including these proceeds, KRONES’ cash and cash equivalents increased by €107.0 million to €239.9 million last year. Since the company had no bank debt at the end of 2013, this figure also represents to the company’s net cash and cash equivalents (previous year: €132.9 million). The positive net income figure and the proceeds from the sale of treasury stock brought the company’s equity ratio up considerably year-on-year, from 38.6% to 42.6% in 2013. Thus, Krones still has an extremely robust financial and capital structure overall.
Krones shareholders to receive a total of €2.00 per share for 2013
In November 2013, the company’s Executive Board and Supervisory Board amended Krones’ fundamental dividend policy. Instead of the previous 20% to 25%, the company now plans to pay out 25% to 30% of consolidated profit to shareholders. Krones shareholders are to receive a dividend of €1.00 per share for 2013 (previous year: €0.75). In addition, Krones wants to share the proceeds from the sale of the treasury shares with shareholders by paying out an additional €1.00 per share. The Executive Board and the Supervisory Board will propose to the annual shareholders’ meeting on 25 June 2014 that a total dividend of €2.00 per share be paid out for 2013.
Krones confirms growth and earnings targets for 2014 after strong first quarter
The company has got the financial year 2014 off to a good start. In the period from January to March, revenue improved 2.9% year-on-year to €703.0 million. That puts the revenue gain within the company’s seasonal expectations. After a slightly weaker orders intake in the fourth quarter of 2013, demand for Krones’ products and services was up again considerably in the first quarter of 2014. New orders were up 7.8% on the year-earlier quarter to €738.8 million. The company had orders on hand totalling €1,028.2 million at 31 March 2014 (previous year: €1,001.1 million).
Krones got no support from price levels in the first quarter. Nevertheless, the company was able to improve earnings as planned, thanks in part to achievements made under the “Value” programme. Earnings before taxes (EBT) rose 10.8% year-on-year, from €38.9 million to €43.1 million. Krones’ EBT margin for the period from January to March 2014 was 6.1% (previous year: 5.7%). Krones improved EBT in all three segments year-on-year in the first quarter of 2014. The EBT margin in the company’s core segment widened from 6.9% to 7.2%. The company was able to turn around its process technology segment and only narrowly missed getting the “Kosme” segment into the black in terms of EBT.
Net income improved 11.2% in the first quarter of 2014 to €29.9 million. That corresponds to earnings per share of €0.95 (previous year: €0.89). Free cash flow improved by €41.9 million year-on-year in the first quarter to –€40.2 million. In Krones’ business, it is not unusual for free cash flow to be negative at various points throughout the year. Krones increased its return on capital employed (ROCE), that is the ratio of earnings before taxes and interest (EBIT) to average net tied-up capital, to 15.4% (previous year: 15.1%) thanks in large part to higher earnings.
Outlook
Overall, based on the development of the markets relevant to Krones and the continuing uncertain economic outlook, the company expects revenue to grow by 4% in 2014. Krones expects only little support from price levels. Earnings performance should increase further. Krones expects the EBT margin (earnings before taxes to revenue) to be around 6.2%. The company intends to increase its third strategy target, ROCE, to more than 16% in 2014.
Krones published its Interim Report for the first quarter of 2014 and its Annual Report for 2013 online today at <ahref="http: www.krones.com="" de="" investor_relations="" finanzberichte.php"="">http://www.krones.com/de/investor_relations/finanzberichte.php. The audited figures for the year 2013 are unchanged from the preliminary figures that were reported on 19 March 2014.</ahref="http:>
