Krones Ag Adr

Let's start. So good afternoon and welcome to the conference call of Cronus. Cronus continues profitable growth path. This was the headline of our press release in the morning. Now we would like to present you the figures and give further details about the first quarter 2024. 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 works. Please send me a short email or use the function raise your hands in Teams and then I will hand over to you. So let's start with the presentation. So I hand over to Christoph Krenk. Christoph, the floor is yours.

Yeah, Olaf, thanks. Welcome everybody, ladies and gentlemen, to the Crohn's conference call for Q1. Uta and I will give you an overview where we are and why we are convinced to reach our guidance for 2024. I will skip the first slides, at least I try to, Now, good. Here's the summary, but since we are going in anything in detail, I don't think we need to talk about this one here. And I would say here are the highlights. I don't jump into that either. Why? Because we are jumping immediately to the real numbers and talk about that. If you look for order intake, I mean, we are down, that sounds in the beginning a bit strange, by 2% compared to Q1 last year. But nevertheless, we believe it's a very strong number, 1.5 billion roughly, so it's 1.48. But 1.5 billion was actually the result we were targeting for, and we believe it's a very strong signal that our markets are working. I'm happy with that. I would say if you look to a bit more in detail, I would say bottling and packaging was strong on new machine side as well as on the lifecycle side. Processing was a bit slow and was compensating by bottling and packaging, as I said. And even inter-logistics is on a good path in terms of auto intake. So all in all, I would say it's very nice. And if you compare to the last quarter, 2023 to Q1 this year, even a very nice increase. I don't have to repeat the numbers, so we are happy where we are for the time being. I come to order intake in a minute a bit more. Just before that, I want to reflect to order backlog. So even the order backlog has further risen, of course, with the good order intake we had. This gives us a pretty good visibility for 2024 and 2025 either. So we are, I would say in terms of production utilization already beyond the mid of the year in 2025 and have a good few on the second half of 2025. So very good one in terms of having security on what we say and that we believe that we can manage actually the revenue growth we are anticipating. There's one other important message into that that we decreased the delivery times, which we had, I would say, an average over the last couple of months at 70 weeks. We decreased to 60 weeks in the first quarter, which is a big step forward from our point of view. And that has mainly to do with material supply, which is now working quite well. And of course, with that, the productivity increase we have managed. If we look to the longer-term view on order intake, I mean, that shows, first of all, how robust our markets are with, I would say, the well-known dumps we had historically. And I want to reflect a bit on 2024, because having a first quarter at 1.5 billion, and what we said is that we do anticipate, even for 2024, a book-to-bill ratio bigger than one compared to 2023. And this is even without the acquisition of Netzteil. So if we add Netzteil and we are consolidating Netzteil from the 1st of April onwards, so nine months will be counted to that. So this comes even on top. And if you look to that, we estimate an order intake of 5.5 to 5.6 billion euro for 2024. And if you calculate that, In the first quarter, we had 1.5 billion roughly, so that would lead for the remaining quarters, at least as an average, to 1.35 billion per quarter order intake. Now, this would be not exactly on the level. You all know that we have stronger and weaker quarters, but nevertheless, we still believe with what we see in the pipeline that this can be achieved. So that's the major message we want to say and state for that we believe our markets are still quite stable and that the investment scheme for our customers is working. One word about NetStyle. First of all, we don't go in details even with the number today, but we are going to present on the Capital Markets Day on July 3rd. We are giving you more insights, in particular, even financial planning, short and midterm, that you are aware of where we are heading to. The message we want to send across here is that since we are now four weeks into, or let me say after closing, we had had very strong and positive intensive discussions, aligning the programs we had. We put that more or less in three categories, markets and product opportunities, what we call value capturing, and the financials. And let me just talk on the left-hand side. I mean, we have a couple of chances together with Crohn's and MedStar where we can address markets, where we can push with our sales force, ours is in that term Crohn's sales force. This we have aligned already and Second, we are going to hire more salespeople on the NetStyle side because they have been pretty short on sales for us. So that's one big thing we want to bring into the market. And we have defined the product categories which we are pushing. But nevertheless, that's anyway the portfolio NetStyle has. Then the most important one in the middle row is the value capturing. And there, the cost reduction focus on supply chain and procurement in combination with the Crohn's terms and conditions we have from our suppliers, plus, let me say, the procurement power Crohn's has is the biggest issue we are driving forward. Nevertheless, in addition to that, we have even aligned ourselves on how do we add digitalization to the next type products that we can bring them, let me say, on the level we have them at the Crohn's products. And last but not least, financials, of course, everything is translated into the P&L, the programs, And what I said earlier, we are going to present that translation then, of course, on the Capital Market Day. So that you have, by July 3rd, a good overview where we are with that acquisition. I can say on the people side, so we have aligned nicely and we were aware of that from day one, once we had the discussion that the cultures of the two companies are fitting nicely together. I think that's an important point. So there's a good alignment even on the cultural level. and on the mentality level. And we are quite happy that we believe that we have set up a good program. Then one word about sustainability. From next time onwards, we give you even a set of figures where you can follow up what we have achieved in comparison to our targets. We thought for today it would be too deep to go into it because it has to be justified and to some extent explained why we are in the certain categories at that particular point. But we are doing that as well on the capital market day that you get deep into that. And from that point onwards, we are going to report actually the progress we do in comparison to the year target and of course to the 2030 target we have set ourselves. I should not forget to mention what you see in the green area. We have committed to net zero until 2040. I think an important step for us with a big challenge. And this had a significant impact on upstream and downstream CO2 emissions in scope three, because we had before targets there at 25% reduction from the basic year 2019 until 2030. And we increased that now to 30%. Otherwise, the net zero in 2040 would be not possible. But more for that. as I said, on the capital market day. Last but not least, a short view into the markets. We have, I would say, no fundamental changes here. I mean, you see it's ups and downs, and I would say being in the first quarter, I would say it's not so relevant. All in all, we can discuss ups and downs. But nevertheless, a lot of things will be balanced. We do assume that North America, Central America will be a bit higher by mid-end of the year. So it will be quite balanced to the year 2023. And we are talking here about anyway about sales and the share, which we are going to deliver and install into North America with the strong order intake we had actually is then increasing the share in North America anyway. South America quite stable, don't see changes here. Europe a bit weaker, and this is in fact the reality we see that the investment scheme here in Europe was the lowest, and this is pretty much driven out of Germany. Then Africa, Middle East, a bit of a recovery. We see that continuing in the auto intake, so that's quite good, even with the, let me say, crisis we have in the regions, but nevertheless, the auto intake is good, and we assume that the business goes okay. Asia Pacific, quite stable. Even there, we will see a bit more of share in the future because the auto intake was good. China on a quite stable level between 7% and 8%, no changes there. And there's a bit of a peak in Eastern Europe, Central Asia. But even there, I would say this will be balanced out by the mid of the year or end of the year. Nevertheless, the markets are strong there, and it's all the states coming from Eastern Europe through Central Asia, which is Uzbekistan, Kazakhstan, et cetera, which is in that region as well. So quite good on that way. Maybe I should mention one investment we are doing. We are extending our facilities in India. We have just made a decision for it because the Indian market is working quite well. There is a strong demand from our customers that we have local presence there, and we have local value added. So that's the reason why I invested there. And it has, of course, as well, a geopolitical perspective, why we believe India would be a good spot to invest. So far, for me, for the beginning, and just overview where we are with order intake, the acquisition, where we are in terms of sustainability, and how we see the split at the moment across the world. And with that, I hand over to Uta.

Thank you, Christoph. Good afternoon also from my side. As usual, I will continue with earnings development as well as balanced equity position liquidity. Before I start on revenue, I want to add on what Christoph said in terms of net style. Just to clarify that one more time, there is no P&L effect of net style in the first quarter. It will be starting second quarter and then also full second quarter. But there are balance sheet effects, of course, because we have consolidated NetStyle. And if you look at our total assets and liabilities, which I will come to later as well, it's a mid-two-digit number which NetStyle added. But now let's have a look at revenue. Crohn's recognized 1.247 billion euro revenue. That's a 4% increase in comparison to last year. And also at that point, we already want to mention last year, first quarter was very strong. As you can also see, it was the second strongest in 2023. And the reason that we have, if you want to call it only a 4% increase, is in addition to that, that we had a lower number of working days compared to 2023, plus the fact that Easter was end of March, beginning of April, whereas last year it was a week later. On a more neutral side, we still have inefficiencies in the supply chain, which will be eased throughout the fiscal year. On the positive side, on the supply chain, we are getting all the material we need. But as said, there are still some inefficiencies, which also have some effect on revenue as an absolute number. Also, at this point, very important, we are confirming our guidance of 9 to 13%, and also for the second quarter, we already expect slightly higher than we have the first quarter. Continuing on with EBITDA, coins recognized in EBITDA of 125.4 million euro, which is a margin of 10.1%, and as you can see, quarter over quarter, 10.5 million in addition, plus 0.5 percentage points and 9.1%. And that's despite of the fact of higher new machine volume, which comes with a lower margin, and also despite of effects from quarter over quarter comparison, increased payroll, which is also an evidence of our good backlog quality and also the pricing discipline, which we continued throughout the quarters. As we have mentioned several times, overall cost increases are covered by price increases. And also at that point of time, I already want to confirm our guidance for the whole fiscal year, 9.8% to 10.3%, including net style. EBT, 89 million, 7.1%, quarter over quarter, 6 million in addition, 0.2%. Percentage points, the increase is slightly lower than we had for EBITDA, reason being that our financial income in 2024 quarter one was slightly lower than in quarter one 2023, but without any major significance and also no extraordinary effects included in here. It's just timing also of dividend incomes from non-consolidated entities. And I also want to mention at this point of time, that we also had no extraordinary effects coming from depreciation. So all in line with our expectations here as well. Personal and material expense, starting with personal costs, 384 million, 30 million in addition. We are above the 30%, 30.5%, but from our point of view, it's still in the range which is reasonable and necessary for us to achieve our targets. And the reasons for an increased payroll is, of course, merit increases as well as FTE increases, which we will see later. On the material side, 620 million, 31 million increase, 49.3%. As we have said several times, 50% is the threshold we are always looking at, which is important for us to achieve our targets. And also at this point of time, I want to confirm one more time that cost increases are covered by the price increases we have done. And I also want to add at this point of time, coming back to material cost, of course, one effect we also had because we have a higher new machine ratio than we had in previous quarters. coming to Kohn's employees. And here, NetStyle is already included in the 19,349 employees Kohn's is employing as of end of March. That's an 836 in addition to December 23, and approximately 550 coming from NetStyle. So without NetStyle, it's about 270, 280 increase. And that's across the board, actually, One major portion out of that is additional field service engineers, so service technicians. We have 50 more compared to end of 2023. And we also have an increase in our digital workflows and everything else, as mentioned, along the companies and along the functions. So far for the group. Coming now to our largest segment, filling and packaging technology, revenue of 1,043,003.8% increase. So the reasons I have mentioned for the group are very much the same as we have it also for filling and packaging technology. So a very high baseline for 2023, as well as a lower number of working days and still some inefficiencies in the supply chain. But overall, we are getting the material as mentioned. Looking at the margin, 10.2%, 107 million overall EBITDA, so slightly lower than last year, but within our expectations also. And also here important, we have a higher share of new machine business, which comes with a lower margin. But also here very important, we are confirming our targets here in terms of growth, 9% to 13%, as well as in terms of margin growth. 10.3 to 10.8%. POSAS technology 128 million Euro revenues, so 18 million in addition. First quarter of 2023 did not include AMCO yet. We only consolidated AMCO in the second quarter, and there was just one month. And so some portion out of the increase is coming from AMCO. Looking overall at the EBITDA, 14.8 million, 11.6%, a very strong start into the fiscal year. There is some effect quarter over quarter coming from AMCO, of course, but we also want to highlight at this point of time, also without AMCO, we had a very strong start into the fiscal year. Reason being here also that we had a good share of component business besides of AMCO, which comes with a good margin. And overall, I also want to confirm at this point of time, the guidance, 15% to 20% for the fiscal year. As mentioned before, AMCO only was not included in the first quarter. And also for the EBITDA, 8% to 9% we are confirming at this point of time. Intralogistics. 77 million Euro revenue for the first quarter, so lower than the first quarter for 2023, which actually was also strong in 2023 for Intralogistics. And we have already mentioned in the annual call for 2023 that we have more smaller business in terms also of size, that we had some delays in revenue recognition. But as also Christoph indicated, quarter one order intake was good for intra-logistics. That's why also at this point of time, we are confirming our guidance in terms of revenue growth of 5% to 10%. And looking at EBITDA, 4 million, 5.2%. So also an underproportionate start into the fiscal year, but also here we are confirming our guidance of 6 to 7% for the whole fiscal year. So far for the earnings, now let's have a look at the liquidity situation as well as equity. And as mentioned before, here net style is included. Let's first have a look at the liquidity situation of Kohns, a very strong first quarter in terms of free cash flow before M&A. You can see that we have a cash position of €442 million, and that is despite of the fact that we have paid out €180 million in total for M&A activities, the largest portion, of course, being NetStyle. including free credit lines and used ones. We come to liquidity reserves of 1.3 billion, so a very strong fundament for the execution for the backlog for pursuing our growth strategy, just to name two reasons. On the equity side, 1.776 billion euro equity. You see that we have added 61 million. On the equity ratio side, we have a decrease of 0.6 percentage points. Major reason being that we have added assets and liabilities from NetStyle in the mid two-digit range, which decreased the equity ratio. And apart from that, it would have been neutral. working capital as of end of march or as an average of the last four quarters 17.7 percent so lower than 23 and So we had a very good situation in terms of working capital stabilization or keeping it more or less on the level of 2023. Overall, it's an absolute number. We were holding a working capital of €742 million, whereas at the end of December, we had €766 million, and that's including NetStyle. And if we look on the right side into the composition of the working capital, you can see that it came again from received repayments, which were strong because of the high order intake in the fourth quarter, as well as in the second quarter. Looking at inventory, 15% as an average over the four quarters, so very similar as we had at the last reporting periods. The same is true for payables. And receivables POC remain to be high, below 40%, but also on the level as we had it the last reporting period. Working capital translates automatically into free cash flow. And I mean, looking at the free cash flow before M&A, 184 million. So very strong compared to minus 21 in the first quarter of 23. And it's all coming from cash flow from operating activities, because first of all, from the earnings, I mean, other non-cash changes were more or less similar to last year, but change in working capital was favorable, whereas in the first quarter of 23, it had been unfavorable. CapEx on the same level, and here the situation is as every year we are starting a little bit slower, but keeping up then throughout the fiscal year. And I already mentioned or talked about our M&A activities, the payout for Netstar on the one hand, but also for a deferred purchase price for Amco. And all in all, taking together a slight positive free cash flow and including payments for leases, we had a change in cash of 6 million, which we already saw before. Looking at the overall fiscal year for freakish law, I mean, we have said that we are expecting a positive 3 million digit, 150, 200 million, 200 million more for the whole fiscal year. So the message is in the next quarters, we're not at a free cash flow as an absolute number. Actually, for quarter two in particular, we expect a negative free cash flow because quarter two is always the quarter where we are having more payouts than in the other quarters. And overall, we are confirming what we have set for the overall fiscal year also in the annual call. We'll see as our last KPIs, 19% ROSI compared to 17.8 a year ago. The increase comes because we have an increased EBIT by 21%, whereas the average capital employed only increased by 13%. And of course, with that, this was the effect. And overall, we had said for 2024, 17 to 19%. This is our target, and that's what we are also confirming. Yeah, so far from my side.