Kion Group Ag Unsp/Adr

Ladies and gentlemen, welcome to the QION Group Q1-2035 update call. I'm Moritz, your call-as-call operator. I would like to remind you that all participants will be in the listening mode and the conference is being recorded. The presentation will be followed by a question-and-answer session. If you would like to ask a question from the webinar, you may click the Q&A button on the left side of your screen and then click the raise your hand button. If you are connected by a phone, please press star followed by one on your telephone keypad. For operator assistance, please press the operator assistance button on the bottom left side of your screen or press star zero on your telephone. At this time, it's our pleasure to hand over to Rob Smith. Please go ahead, sir.

Thank you, Moritz. Good afternoon, ladies and gentlemen, and welcome to our update call for the first quarter Please refer to our update call presentation on the IRR website for continuity during this call. I'm going to start with a quick summary of our first quarter 2025 and share some key highlights of the quarter, especially coming from some trade fairs that we've done, some key trade fairs in Europe and the United States last month. Then Christian's going to take you through our detailed financials. He'll reiterate our guidance for 2025. And I'll be back with some key takeaways, and we'll go into questions and answers. Let's go together, please, to page three. Keyon had a solid start this year, in line with our expectations. Group order intake was 2.7 billion euros, an 11% increase compared to the prior year, and reflects high higher demand in both operating segments during the first quarter, despite the increasing geopolitical uncertainties surrounding tariffs and their impact or potential impact on economic developments around the globe. Revenue was down slightly at the key on level and in both segments due to the subdued demand in the new truck and project business in recent quarters. Adjusted EBIT decreased 14% and was 196 million euros, corresponding with an adjusted EBIT margin of 7%. While adjusted EBIT and supply chain solutions improved strongly, performance in ITS reflected the expected negative impact of lower volumes. Free cash flow was positive 30 million euros and earnings per share were minus 36 euro cents, reflecting 191 million euro expenses for the efficiency program recorded in the first quarter. Moving to page four. You will recall Consumer Electronics Show in Las Vegas in January this year. We announced the first results from our cooperation with NVIDIA and Accenture. We're the first industrial company to adopt NVIDIA's physical AI and are creating a vision for warehouses that are part of a smart, agile system that evolve with the world around them and can handle nearly any supply chain challenge. We've seen three developments in recent years. We've seen a huge rise of e-commerce and software centricity in the warehouse. We've seen a demand for speed in delivery, delivery overnight or same-day delivery is now the new normal worldwide. And supply chain resilience is a critical factor and is increasing in importance in all our customers' minds. Physical AI is an exciting part of Kion's supply chain solutions for our customers that address these important developments in our market. March was a busy month for Kion at key trade fairs in Europe and the U.S. At Logimat in Stuttgart, Linda Material Handling presented a physical AI-powered omniverse solution in the form of a fully integrated goods-in solution featuring an autonomous mobile robot, we call those AMRs, and an electric truck, both AI-powered and both digitally represented in NVIDIA's omniverse in real time. The onboard and stationary cameras in the solution run on NVIDIA hardware, capturing and processing live operational data, and they work in an ever-involving physical and digital environment, preparing to optimize vehicle coordination and route planning at scale. Our branch still also offered exciting insights into the entire spectrum of automation to LogiMAT visitors. demonstrating fully automated material flow using stationary solutions such as Stihl's pallet shuttle warehouse with Stihl's serial production automated trucks. Customers saw that with our smart software, our standardized series production trucks, and our consulting and service expertise, we can implement automation projects of all sizes. And at NVIDIA's GTC Technology Conference in San Jose, California in March, Domatic demonstrated its AI control tower, which represented in a digital twin built with NVIDIA Omniverse technologies and the Mega Omniverse Blueprint. This solution will give customers the ability to run an almost infinite number of scenarios of their supply chain, constantly optimizing their operations, and thus showcasing the capability of physical AI technology for applications to automated interlogistics. And at the PROMAT in Chicago, Illinois, DEMATIC reinforced its commitment to industry-wide innovation, demonstrating how our technology can advance and enhance operational efficiency, scalability, and adaptability in today's involving supply chain landscape. Customer interest and feedback on all of these events have been extremely positive, and we're following up on the many, many leads that we've got. We expect to provide you with the next update on innovations after we've attended the CMAT in Shanghai, China, in October of this year. I'll now hand over to Christian, and he'll take you through our detailed first quarter financials, and we'll reiterate our outlook for 2025.

Thank you, Rob. So let's go to slide six now for the key financials of the IDS segment. Order intake showed the usual sequential seasonal decline, but increased by 10% year over year to 65,200 units. New orders in money terms increased 9% year on year, driven by a 14% increase in the new truck business. The service business also showed continued growth at 4%. The order book reflects the ongoing lead time normalization and its margin quality is in line with our expectations as reflected in our outlook. The revenue declined by 2% year over year to 2.1 billion euros. The 4% growth in service almost made up for the expected 7% decline in the new truck business. Remember that in 2024, the new truck business revenue significantly benefited from the tailwind of a high order backlog. Adjusted EBIT at 186 million euros and the corresponding adjusted EBIT margin at 8.8% reflected the expected impact from the lower volumes resulting from reduced fixed cost absorption as well as lower gross margins due to the reduced pricing realized in 2024 in the new direct business as a result of the increased competition. I'll now continue on page seven on the summary of the key financials for the SDS segment. Order intake significantly benefited from the 47% growth in the service business driven by modernization and upgrade projects. Business solutions orders were down 2% year-on-year. Demand from the pure play e-commerce vertical increased, while the remaining verticals continued to be impacted by the customer's ongoing hesitancy to sign new contracts due to geopolitical uncertainties. The year-on-year decline in the order book reflects the subdued order intake of the past quarters, is starting to stabilize sequentially. Overall, revenue declined sequentially and year on year. The 14% growth in the service business partially made up for the 16% decline in the project business, which was impacted by the lower order intake in the past quarters. The adjusted EBIT improved strongly year on year to 36 million euros with a near doubling of the adjusted EBIT margin to 5.3%, mainly due to the growth in the service business and the solids project execution. Now let's quickly run the key financials for the group on page 8. Order intake benefited from the improvement in new drug demand and the continued growth in the service business in both segments. Continued lead time normalization in ITS, and subdued demand in past quarters in STS led to the decrease in the order book. Revenue benefited from the growth in the resilient service business in both segments, nearly compensating for the software ITS new drug business and lower STS business solutions revenue. Adjusted EBIT at 196 million Euro and the adjusted EBIT margin at 7% was impacted mainly by the lower fixed cost absorption in ITS, which was partially compensated by the strong earnings improvement in STS. Now, page nine actually shows the reconciliation from the adjusted EBITDA to group net income. Non-recurring items amounted to minus 194 million Euro, and this included 191 million Euro of expenses related to the efficiency program. You will recall that we expected total expenses for the efficiency program to be between 240 and 260 million euros. Therefore, you should expect some further expenses for the efficiency program in the following quarters. PPA items were at the usual quarterly levels. The net financial expenses improved year on year mainly due to FX as well as an improved interest result relating to the leasing of the short-term rental business. This resulted in earnings of minus 59 million euros in the quarter. As the majority of the expenses for the efficiency program is tax deductible, we had a tax income in the quarter. This resulted in a net loss attributable to shareholders of minus 48 million euro in the quarter, corresponding to earnings per share of minus 36 euro cents. On page 10, let's continue with the free cash flow statement. Free cash flow in the quarter reached positive 30 million euros. The development in the network and capital reflects the usual seasonality of the first quarter. The expenses relating to the efficiency program were not cash effective in the first quarter. They are expected to become cash effective in the second half of this year. And this is fully included in our full year 2025 free cash flow guidance. Page 10 then shows the development of net financial debt and our leverage ratios. We had a slight decrease in net debt at the end of the first quarter 2025, but continued to remain below 1 billion euros. This had no impact on the leverage ratio across both net debt definitions compared to the end of December to the end of December 2024. Our leverage ratios remain slightly lower than the level last seen post our December 2022 capital increase, but this time we achieved improvement entirely through self-help measures. We continue to remain committed to improve the leverage ratios matrix versa to defend our two investment grade ratings as we believe they are supportive to our business model. Now, moving on to page 13. We had a good start to the year with Q1 2025 performing in line with our expectations. Looking ahead, we cannot ignore that the economic environment is characterized by considerable uncertainty. Geopolitical risks and potential negative impact on our value chains and our markets could arise from the escalating trade conflict. Over the past years, we have invested in our production and R&D capacities and into our sales and service networks, particularly in the CAPEC and Americas regions, to prepare for shifting geopolitical scenarios. We therefore confirm our outlook for fiscal year 2025 for the group and our two operating segments as of today, subject to the condition that there is no significant deterioration of the overall economic environment. So consequently, slide 14 lays out our guidance as presented with the full year 2024 results. I provided a detailed walkthrough of our guidance at the end of the full year 2024 update call at the end of February. I will skip it here in the interest of time. For those of you who are interested in the explanation, please refer to the transcript, which is posted on our investor relations website. And as always, you will find a slide on the housekeeping items in the appendix of this presentation. I will now hand back to Rob for our key takeaways.