- Revenue up 7.4% from previous year
- Stronger earnings from operations
- Proposed dividend of €0.75 per share
- 2013 off to a good start
Krones, the world’s market leader for beverage filling and packaging technology, grew further in 2012 despite the challenging macroeconomic environment.
Consolidated revenue rose 7.4% from €2,480 million to €2,664 million. While the share of Krones’ consolidated revenue coming from Europe decreased, the share generated in Asia increased once again. Revenue development in Krones’ other sales regions was within the company’s expectations. In all, the company brought in 62% of its revenue on the emerging markets last year. In 2011, that figure was 60%.
New orders at Krones improved 8.2% year-on-year from €2,514.0 million to €2,721.1 million in 2012. The emerging markets contributed a significant portion of the higher orders intake. New orders from China, Asia, Africa, and Latin America were up year-on-year – in some places quite considerably. At 31 December 2012, the company had orders on hand totalling €999.3 million (previous year: €942.4 million).
Krones improves earnings and proposes record dividend payout
The out-of-court settlement of the legal disputes in the US (Le-Nature’s) had a significant impact on Krones’ earnings in 2012. It resulted in a €37.8 million charge against earnings before taxes (EBT) for 2012. The charge against earnings in the previous year was €36.7 million.
At €97.9 million, EBT was up 31.2% from the year-earlier figure of €74.6 million. Adjusted to exclude the one-time expense, Krones generated €135.7 million in earnings before taxes in 2012.
The resulting EBT margin – the ratio of EBT to sales revenue – was 5.1% (previous year: 4.5%). Thus, Krones achieved its 2012 target of an operating EBT margin of more than 5% in 2012.
Including the Le-Nature’s charge, net income was up 53.3%, from €43.7 million in the previous year to €67.0 million. Thus, earnings per share for the financial year 2012 amount to €2.22 (previous year: €1.45).
The increase in net income was far bigger than the increase in EBT because the company’s tax rate decreased from 41.5% in the previous year to 31.5%. In 2011, Krones had to pay back taxes for previous years following a tax audit.
Free cash flow also developed very well. Krones generated positive free cash flow of €30.6 million after capital expenditure in 2012 (previous year: –€7.4 million). It is important to note here that the €30.6 million figure already includes the Le-Nature’s settlement payments totalling around €70 million.
Krones still has an extremely robust financial and capital structure. The company had no bank debt at the end of the reporting period. Cash and cash equivalents were up from €125.5 million in the previous year to €132.9 million although the company paid out roughly €70 million to settle the legal proceedings in the US in the fourth quarter of 2012. The company's equity ratio was 40.4% at the end of 2012 (previous year: 38.5%).
Krones’ workforce grew further in the reporting period. At the end of 2012, the company employed 11,963 people, up from 11,389 in the previous year. By growing its team, Krones is making an ongoing investment within the framework of the “Value” strategy programme to secure the company’s future and lay the groundwork for future growth.
Given the positive operating trend in the financial year 2012, the Supervisory Board and the Executive Board will propose to the annual shareholders’ meeting on 19 June 2013 a dividend of €0.75 per share (previous year: €0.60 per share), which will make for a record dividend payout of €22.6 million.
2013 off to a good start at Krones
Krones has got the financial year 2013 off to a good start, continuing its growth trend. The macroeconomic situation remained difficult but had no significant impact on business in the first quarter. The company benefitted from its strong position on the emerging markets, which contributed a significant part of its growth. In all, revenue was up 5.4% year-on-year from €648.6 million to €683.4 million in the period from January to March 2013.
New orders were up 3.9% in the first quarter of 2013, from €659.8 million in the year-earlier period to €685.2 million.
In 2013, the focus of the “Value” strategy programme is on profitable growth. The results of the first quarter confirm that Krones is on the right track. At €38.9 million, earnings before taxes (EBT) in the reporting period were up 19.7% from the year-earlier period (€32.5 million). Krones’ process technology and Kosme segments contributed an important part of this improvement. Both segments posted only minimal losses in the first quarter of 2013 and are therefore well on track to break even in 2013.
The EBT margin – the ratio of earnings before taxes to sales – rose from 5.0% in the previous year to 5.7% in the first quarter of 2013. That margin was within the target range in the period from January to March 2013. Krones aims to achieve an EBT margin of more than 5.5% for the year 2013 as a whole.
Net income was up 20.6%, from €22.3 million in the previous year to €26.9 million in the first quarter of 2013. Excluding the approximately 1.4 million treasury shares, that corresponds to earnings per share of €0.89 (previous year: €0.74).
Krones intends to grow profitably in 2013
Based on the development of Krones’ markets and the continuing uncertain economic outlook, the Executive Board expects revenue to grow by 4% in 2013. Krones does not expect any support from price levels.
Earnings performance will increase further. Krones plans to improve its EBT margin to more than 5.5% in 2013. The company aims to increase its third strategy target, ROCE, to 15% this year. Krones also intends to improve free cash flow on higher earnings and lower working capital.
According to forecasts by leading economic research institutions, the overall economic picture should improve in 2014. With this in mind and from today’s perspective, Krones expects its key performance indicators to improve.
