Krones Ag Adr

Ladies and gentlemen, welcome to the conference call of Crohn's. Crohn's significantly increases revenue and profitability in 2023 and predicts a profitable growth path will continue in 2024. That was the headline of our press release this morning. We would like to present to you now the preliminary figures for the full year 2023 and provide additional explanations. Additional short information about the acquisition of NETSTAL, which has not been fully finalized. After the presentation by Christoph Klink and Uta Anders, you will have the opportunity to ask questions. I think you also know how the question and answer session will work, so send me just a quick email and I will hand over to you. So let's start with the presentation. We are all interested in the details and explanations of the numbers. So, I hand over to Christoph Kleink. Christoph, the floor is yours.

Yeah. Well, thank you. Good afternoon, ladies and gentlemen. Welcome to our conference call today. Very happy to have you with us. Before I jump to the numbers, we are, of course, very happy about the 2020 three figures we have, the numbers we have achieved, and we are particularly proud of our team since we have achieved an order intake higher than we have planned, which is good. We have realized revenues under difficult conditions. You all know that we had, during the year, significant supply chain issues. Nevertheless, we were able to speed up at the end of the year. We brought our projects in time and in schedule to our customers, which is even more important because I would say the reputation of Crowns has increased in 2023 further. So that's, in a nutshell, my remarks in the beginning, and I'm jumping now directly into the presentation. I skipped that slide because that's a summary, and you see all the details later on. Even this one here, I do not stay too much on it. because we are coming to all the numbers later. So I start with the order intake, and order intake is, if you look to it, first looks a bit puzzling, 7% down, but if you look the comparison between 2021 and 2023, then it's a significant growth over the two years. And it's an average 12% per year. So I would say if you look to that, it's a very stable development, which we have seen. You see that later on in a different slide in addition. With the 5.4 billion on auto intake, I think that was a very good development in the market since even pricing was playing a significant role in 2023. It has not the impact as it has the years before, but nevertheless, we used our pricing power even for smaller adjustments. And the important message from my point of view is that pricing came deeper and deeper into the DNA of Crohn's. Since that, if those joining long term have the historical background of how we deal with pricing was all the time a bit weak, but this is really one of the special things I would highlight here in the order intake. And Q4 of 2022 was lower then 2023, which is very important for us because we see that even the market is stable and developing. I would say that's one important message I want to highlight. It's up by 7%, which is an important point. Now you might ask, What is the outlook? And I think we come to that later, certainly, in more detail for 2024 in terms of Q1. I mean, we see it somewhere on the level of Q1 of 2023. I come to that later on, and certainly the question is this will be a bigger point, so I don't stay too much on it. If we look to the order backlog, that has further increased with the high order intake. Of course, that's the difference between revenue and order intake, so very strong fundament on which we are standing. At the moment, for us, it's, of course, still a problem that we have 70 weeks delivery time. Nevertheless, since competition went to comparable numbers, I would say it's not anymore such a big issue. But long-term, we can't stay on the 70 weeks, so we need to go down, and our target is to be somewhere at 40 to 45 weeks in the future. We are developing suppliers. This is our most important target at the moment because we don't want to invest all in our own infrastructure once growing, and we want to keep flexibility. That's the reason why we are working significantly on suppliers globally, that we get that in the right direction. Down here is confirmed. This is the long-term order intake, and this confirms what I just said. It's a consistent growth. When you look all over the periods, then you see that's a 7% growth, which I would say is the reflection of how we see the market based on the big drivers of our markets, where population is growing, all the things you know. I don't want to go in detail here. And it's actually a reflection of a very stable market and a very stable business model. So that's what we want to highlight here on that page. Now, coming a bit to the distribution, and be careful, this is revenue. This is not order intake. When you look to that, I mean, the highlight is certainly North America, which is now at 25 percent. And if you look to that map here, it reflects a bit what you see in world economy. And again, this says something about how close we are to the consumer and to the big development in the individual countries. So if we look to North America, that reflects, of course, the huge investments we see almost in any industry. Here it's in particular modernization and cost-cutting at our customers. And second, it's sustainability, because if we look to the historical installed base we have there, it's by far the oldest, and I would say the efforts they need to do in order to get their CO2 targets done is the biggest. If we look to Europe, I would say it looks like it reflects a bit the mood in which we are in Europe economically. But nevertheless, there are significant investments which have happened and which will happen. So we are even on Europe with, let me say, 28 percent, something around 30, quite satisfied how the market has developed. And again, we see some significant investments which will be remarkable once you see them becoming public. South America has been quite stable. I wouldn't see the 2022 downswing as too critical, but nevertheless, we see it quite stable. It's a good market. It has a bit of a shift from Mexico to Brazil, but all in all, I would say that's in line. Middle East, Africa, I would say that's a bit of a critical aspect for us because For those of you joining us longer, we had even above 17% of our revenues in Africa and Middle East. And there are a couple of things. In particular, the biggest hurdle is availability of FX. So foreign currencies is a big problem for many of the African countries. And second is, of course, the conflicts we see in the region. It's not so much what we see in the Middle East. It's more what we see in Africa itself. I would say that's not so much on the highlights since other conflicts are stronger here, at least in Europe, as in the recognition. But nevertheless, Africa has some conflicts which is influencing the business. Asia was a strong growth. I mean, this is in line with the predictions we have made because we said they are coming out late, out of COVID, and the countries which are strong all in front is India, which has been developing very good, but even Japan, Vietnam, Thailand, Philippines, Malaysia, and Australia had good order intake. China, we take separate in Asia, and it looks like from, let me say, from the to see that it's a bit of a bounce swing. Nevertheless, we see quite stable because it's 1% less in terms of the share of the revenues. But if you look to the order intake, that's quite good. And we are investing further into our facilities in China, extending the business there since the local production is a big help to maintain the market share there. And finally, Eastern Europe and Central Asia are quite stable. Here you see reflected that we have around 1.5% loss of revenue in Russia. This is exactly in line what you see here. So that was the number we all the time said. But nevertheless, the Central Asian states and Eastern Europe are working quite well. So that's in a nutshell where we are on the markets. And with that, I head over to Uta to give you further insights in revenue and in particular in profitability.

Good afternoon also from my side. Yeah, as usual, I will continue with revenue development throughout the fiscal year. First of all, let's look at the overall number, 4.7 to 1 billion euro revenue, 12.2% increase. And with that, we are well in line with the guidance we had given, 11 to 13%. And also to mention that at this point, as we said, the other quarters, about approximately a quarter of the growth is coming from price. Looking at the fourth quarter, 1.235 billion euro revenue. So above 1.2 billion shows first of all that the bottlenecks we had in the supply chain decreased further, but shows secondly also an indication into what to expect for 2024. Continuing on with EBITDE, 457.3 million. With that, we have an increase compared to 2022 of 22.5. And overall, we achieved a margin of 9.7%. And also with that, we are in line with the guidance we had given, rather on the upper end of the guidance between 9 and 10. And looking at the fourth quarter, 125 million, we achieved a margin of 10.1% in the fourth quarter, so well above 2022, but also 2023 quarters. And with the numbers we have achieved in 2023, we are well on track also to reach our mid-term profitability targets of 10% to 13% by 2025. Continuing on with EBT, we achieved an EBT of 310 million euros, 6.6%, an increase by 28.3%. Also with that, we are in line with our expectations. As we had it already, year-to-date quarter three, also year-to-date quarter four, we have both in depreciation but also in interest extraordinary effects, equaling out each other in EBITDA and EBT. but having an impact on EBIT. But other than that, all in line with our expectations. Continuing on with personal and material expenses as the main components of our profit and loss statement. First of all, personal costs. Close to 1.4 billion, an increase of approximately 10% compared to 2022, and the 10% increase is well distributed between increase in headcount, which we will see on the next page, but also increase in overall tariffs and overall personal expense per person, approximately 5% to 6%, as we had indicated also in the other calls. For us, it's important that personnel cost remains below 30%, and with the 29.5%, we have achieved that. Material cost, 2.4 billion, close to that, 50.4%. of total performance slightly above last year, reason being the higher share of new machine business in overall revenue, which comes with a higher share of material cost. And as we have also indicated in the other course already, further cost increases in all categories are included in our expectations and in our forecast. employees, Crohn's employed as of end of December 23, 18,513 employees, which is 1,300 approximately more than end of 2022. That's 8%, so below the revenue increase we had by 12.2%. And if we look at the composition between Germany and the rest of the world, it's more or less as we had it in 22 already. So no major change. And looking into the increase of employees, very similar to what we had said in the other quarters already. AMCO, of course, 140 service technicians. a change of temporary labor to own employees, but also increase in the digital community, just to name a few of them. So far, four cones in total for P&L. Now, let's come to the three segments. First of all, to start with filling and packaging technology. So as you can see, €3.925 billion revenue, with quarter four being above €1 billion. And with that, we have achieved a growth of 12.2%, and we are slightly above the guidance we had given between 10% to 12%. And looking at the EBITDA and the margin, $402 million, 10.3%. So we are in line with our expectations here as well, 9% to 11%, and have been also consistent over the quarters in 10.2% to 10.3%. Process technology. 453 million Euro revenue we have achieved, which is an increase by 23 percent, also in line with the guidance we had given, 20 to 25 percent. I want to state that the impact of AMCO is not major here, it's low to middle 2 million digits. And looking at the EBITDA, 34.7, 7.7%. So here we are above our guidance because we had a very, very strong fourth quarter, also partly due to mixed issues. And also here, the AMCO effect is still minimal as further AMCO effect will come in 2024. Last but not least, intralogistics, revenue of 343 million, so approximately as we had it in 2022, so no growth, and here we are also not meeting our expectations, the guidance we had given, because we had some delays in revenue recognition here, rather smaller projects than bigger ones, and the smaller projects also led to the reason that we are, despite of the Lower revenue, we are more or less in line with the guidance in EBITDA margin, 5.9 percent, so very close to the six to seven which we had as a guidance. So far for P&L, Now, equity and liquidity reserves. Let's start with equity. You see that we have increased our equity by $117 million. This is 7.3%. The same was true for our balance sheet total, which leads to exactly the same equity ratio of 38.3%. And looking at liquidity, here comes maybe a first positive, very positive news is that we had a much better cash position that we had anticipated with $448 million due to several reasons. First of all, maybe a certain conservatism in our assumption, but secondly, also very strong cash generation efforts into four. I will come to cash flow later. So $448 million. free credit lines and used ones and taking together with the cash coming to 1.3 billion liquidity reserves. So very strong and a very resilient capital position of Crohn's. Working capital. 17.8% as an average working capital in relation to average revenue of the last four quarters. So also here, a little bit better than we had expected. And if you look at the right portion of the chart, you can also see where it's coming from. I mean, received prepayments remain very high and are even higher than end of 2022. And that's because of strong down payment recognition in the fourth quarter, also due to very high or high order intake we have generated. I also want to highlight receiver with POC with 39.3%, very high as well. So that's something that's the reason for that being that very high order backlog, long lead times, And that is something we will look even more into in 2024. Overall working capital, 766 million as of end of December 23. We had started with 594. So we have increased working capital by 172. But as I already said, much lower than we had originally estimated. which also leads to the fact that our free cash flow before M&A with plus 30 million is much better than we had estimated with the minus 100 we had given as an indication, reasons I already mentioned, very strong cash generation in Q4 and a certain conservatism as well. Looking at the cash flow statement, we can see that the main reason Change also in comparison to 2022 is coming from change in working capital, which I already highlighted. I also want to highlight capex, 163 million. So above what we had, 22, and it's also a little bit above our 2.5 to 3%, just because we have invested into some extraordinary, not extraordinary, but we have heavily invested. M&A activities, $150 million, you know about AMCO, so no news there. And financing activities, there is a combination of dividend payment, lease payment, but also foreign exchange changes in free cash flow. This chart is already familiar to you here. We want to put into perspective or into proportion our free cash flow generation before M&A of 2020. present and past. I mean, as we have said in last year already, you have to see that together 2021 and 22, because cash conversion ratio there was well above one in all years. So that's why 23 is much lower. But in 24, we will come back to a normal free cash flow for crones. Rosie? 17.3%, and the 17.3% is an increase compared to last year, mainly because of increase in EBIT, and looking at average capital employed, from approximately 1.6 billion average end of last year, so 22, we increased to approximately 1.8 billion, which is coming from average working capital, as I have already highlighted, but also higher fixed assets, and all in all coming to 17.3%. Good.