Krones Ag Adr

Good afternoon, ladies and gentlemen, and welcome to the conference call of croons. In the morning, we published a very good first half year. And to make a long story short, we have significantly increased revenue and profit. Now we would like to present you all the figures. Thank you. Here are the details about the first six months, 2024. After the presentation by Christoph Klenk and Uta Anders, you will have the opportunity to ask questions. I think you also know the Q&A session, how it works. Please use the function Raise Your Hand in Teams or send me just a short email, and then I will hand over to you. Additionally, please be reminded that this meeting will not be recorded, and that it is also not allowed to record the meeting. Please also deactivate any functions of recording at Teams. So let's start with the presentation. I hand over to Christoph Kleng, CEO.

Christoph, the floor is yours. Thank you. A warm welcome from Uta and myself for today's conference call. Happy to have you here. And I can say in the beginning, there are no surprises. We are definitely confirming all our targets, and you will see the base in the presentation. Skip over that because we come to any detail anyway in the presentation, so it's just a summary on the first page, but let's move on. Even the numbers here, I would say you have read all of them by today, and we are coming to them in detail in the presentation. So first number, order intake, and let me say most probably one of the, let me say, Most challenge, not jealous thing, but I would say questionable things at the moment. If you look to the general economy, why Crohn's is working so well, because we are very pleased with the order intake number we have so far. Market has developed quite well over the last six months. And when you would ask us how we see the markets, we see them still robust. The pipelines are absolutely okay. What changes a bit is, I would say, a more reasonable decision-making. It's not so fast as we have seen it. And I would say customers are discussing more pricing. But on our side, I can say for us, it's in the focus we stay on the pricing we have. We don't do compromises on pricing. And this makes maybe things a little bit more complicated nevertheless. I come later to the outlook. We have an order intake. We see still our markets are robust, even under the given circumstances we have around the world. If we go to the next slide, and I don't want to go into details, I mean, what we said, we would need around $1.4 billion per quarter if we are going to the target which we have. We would assume that Q3 might be a bit slower. That has mainly to do with summer vacations. that we see a slower auto intake because people are not there and making decisions. And we see from the pipeline's perspective, again, a good Q4. And that makes us at least optimistic that we are going to get to our targets. Now, auto backlog, and this might be one other big point for us. I mean, this $4.5 billion and having the third increase of 5.7%, that's remarkable after six months where we have actually good growth in the organization. I can say that we have reduced for our machines and projects delivery times from 60 down to 50 weeks. Where is that coming from? In particular, it's coming from a supply chain where we have normalized the processes, in particular, once we are actually executing the orders internally. Because one of the biggest problems we had was the interrupted supply chains where we had a lot of workarounds and we are going back to the normalized. This meeting is being recorded. It's productivity that we were able to actually reduce delivery times. You will see that later on in the revenue Utah will present. Then on the other side was the order backlog we have on machines and projects. We have a, I would say, on a very high degree, planning security for the next 12 to 18 months. If We look to it, and we had just last week a few on 2025. Our point was that the 2025 year with the order backlog we have here is already pretty predictable. It's beyond mid of the year, so it's more towards the end of the year, and the order backlog gives us an excellent fundament even for the coming year where we have quite sound basis on where we are. I say that in particular because When you look back the last three years, we have been pretty good in predicting costs and anticipated pricing before. We have still those, let me say, mechanisms in place and keep them. So even with the backlog and what we see in terms of the cross margins we have in, we are, I would say, in a good situation. Last but not least, you see at the right hand of the charts, We anticipate still the 5.6 million order intake for the whole year. Again, it would take then an average 1.4 billion on a quarter to get that. Again, Q3 will be a bit slower. We anticipate a good Q4. And with that, just some more details on the order intake. Bottling and packaging for machines and projects is running good. Life cycle as well. Processing has a bit of a lag in terms of order intake. We are a bit behind plan, and indoor logistics is significantly above plan. So, in total, we are pleased. When I say we are in processing behind plan, again, a big point for us was maintaining pricing. and it has no impact on the growth scenarios we have set for 2024, and it will slightly impact only the growth in 2025. So that's what we can say, a bit more differentiated on the order intake. Overall, given the economic circumstances around us in the world, we are pretty happy how things are going. Last but not least, split over the regions. I would say there are fundamentally no significant changes. When you see, for example, in North America, things are going back, then I would say it has a bit to do with timing because North America has been very good in order intake recently over the last three years. We will see in total over the whole year, we will see more of an increase actually in revenue, so that looks good. Europe, no surprise. I mean, this is where we have, let me say, the biggest Hesitation on placing orders nevertheless has to do with other regions have developed quite well. Maybe one comment on Asia-Pacific looks like it's going down. If you look over the full year, I would say it's all on the way. So we are in good shape for that. And all the other markets are, if you look to it, working in accordance to what we have expected. If you look to Eastern Europe, Central Asia, I was at 7.6%. Don't overestimate it. It's in terms of proportion small compared to the others. And we have two projects in which are accounting for that pretty big ones, which have been materialized in the first half of the year. And I would say this is going to balance even out. Anyway, Eastern Europe and Central Asia is working quite well for the time being, and this will be reflected certainly in the future. in the percentage they take from our shares. All the rest looks okay, and it looks like, I mean, with the order backlog we have, we can predict actually the 2025 revenues in the regions. I would say there are no big surprises coming up. It's all balanced and continues on the way you see it. So far for order intake and where we are in general, and with that, I hand over to Uta. She's still on mute.

Sorry, I was still on mute. Good afternoon also from my side. Yeah, continuing on with revenue as usual. But before I do so, just a few remarks on NetStyle. I mean, first quarter we had said that NetStyle was only included in our balance sheet and not yet in our P&L because we only consolidated a starting P&L. end of March, and now we have the first quarter with full net star figures included, and net star revenue was approximately 50 million euro. But now coming to the overall numbers of coins, you can see that with our 1.309 in the quarter and then coming to the half year of 2.556, We actually fulfilled what we had said already in the first quarter, that we said that throughout 2024, we expect that the growth will actually increase throughout the fiscal year, whereas in 2023, it decreased. And with our 10.1% increase compared to 2023, we actually have materialized that. With the 10.1%, we are within our guidance, as we had also indicated on our CMD, that we come either close to it or come into our guidance of 9% to 13% growth. And, of course, with the numbers we have presented and with a general stronger second half of the fiscal year, and in particular the fourth quarter of the fiscal year, we expect to be well within our revenue guidance. Coming to EBITDA, we are also here. We are constant. We are stable. As you can see, we have delivered a good second quarter with 130.8 million euro EBITDA. Net style also is here included. It had a small diluting factor. 256.2 accumulated, 15.7% growth, and more important, 10.0% EBITDA margin. So also here we are well within our guidance, and all is true despite of the fact that we had higher new machine business share, which, as you know, in general comes with a lower margin margin. And having said that, this is also an evidence of our good backlog quality and of the fact what we have said all the times that the cost increases we see both for material more in the past and payroll are covered in the price increases we have done in 21 and 22. And yeah, of course, we are confirming our guidance of 9.8 to 10.3% for 2024. EBT development followed EBITDA development in general. You can see that we have an 185.7 million euro EBT with a margin of 7.3%. We want to mention here also that we had a small margin a positive extraordinary effect of €4.5 million in our financial income, so we cannot double it for the whole fiscal year, and that small extraordinary effect came from taking into income a delayed purchase price liability we had. And all in all, for EBT margin, also here we are in line with our expectation for 2024. Personal and material expense as the major components of our cost base. As you can see, 782 personal costs starting with that, 30.3%, so also a slight decrease compared to what we had in the first quarter, and an increase by 84. And if you look at the increase, it comes more or less proportionally on the one hand from the increase in in merit itself, so the 4% to 5% which we had communicated. And then on the other hand, the average FTE increase of an approximate over compared to last year, half year, 1,300 employees. Coming to material cost, 1,272, 49.2%. Also here, slightly lower ratio than we had in the first quarter. Also here, an evidence of our backlog quality. And also here, despite of the new machine business, of course, has also to do with the growth. And all in all, I already mentioned that cost increases are covered or have been covered by the price increases we have done. Employees, Kohn's employs, as of end of June, 19,534 employees. This is an approximate 1,000 more than end of the last year. And more than half of it is coming from NetStyle because we acquired it within 24, as you know. And then we have an approximate 100 additional field service engineer, approximate 40 additional digital community people. And then the remaining 300 is across all organizations and all functions. Yeah, so far for the group, for... for the earnings, revenue, and also employees. Now let's have a look at our three segments, starting with our biggest segment, filling and packaging technology. All I have said for the group applies to most extent also for filling and packaging. And looking at the overall revenue, 2.149, 11.5% growth. And also here, we had a significantly higher growth in the second quarter of the fiscal year than in the first. Also here, net style is going into that. And for EBITDA, 223 million, 10.4%. And also here, a slight increase compared to the first quarter and also an increase compared to last year, not only in absolute figures, 25, but also in terms of margin, 0.2 percentage points. And also here, I want to mention just a little, just the effect coming from higher new machine business. We confirm our guidance for fulfilling and packaging technology, which is revenue growth 9% to 13%. and EBITDA margin 10.3% to 10.8%. Now coming to POSIS technology, you can see POSIS technology also shows a significant growth of 18.6%, 40 million coming to 255 million. There is, of course, some effect coming from the AMCO acquisition, which was in the first half of 2023 only included with one month. But also without that, we would have shown a significant growth. And from our point of view, more remarkable actually is the EBITDA margin. If you look, we have increased it by more than 10 million compared to the first half of 2023. And looking at the margin, increased it by 3.2 percentage points. Yes, there is effect coming from AMCO. But also without AMCO, we would have been above our guidance. Revenue guidance or guidance in general, we are confirming our guidance, 15% to 20% revenue, and EBITDE, 8% to 9%. Last but not least, intra-logistics here, the development is a little bit different. As you can see, 152 million euro revenue. We have a decrease here by 27 million euro compared to last year. Here we have actually a different development than for the group. We expect due to the order intake in the first half of 2024 that the growth in the second half here also will be over-proportionate. And looking at the margin, EBITDA is 7.4 million, 4.9%. So in absolute, but also in relative terms, we are below last year and also below our guidance. But also here we are confirming our guidance of 5% to 10% revenue goals and 6% to 7% EBITDA margin. But we know that this is ambitious. So far for P&L. for the segment and for the group. Now let's have a look at liquidity and equity. Starting with liquidity, as you can see, as of end of June, Kohns is holding a cash position of 294 million euro. And this is despite of the fact that we have paid out 185 million for M&A transactions and that we have paid out dividends in the second quarter of 70 million. And taking all together used credit lines and free credit lines, as you can see them, we are holding a liquidity position of 1.144 billion euro, which is solid and which allows us our further goals and also our capital expenditure projects, which we have envisaged. Now looking at equity and equity ratio. You can see that we are holding an equity position of 1.772 billion euro. That's an increase by 57, and that increase, of course, is coming from net income, 135. We have paid our dividends, 70 million, reducing equity position, and with smaller other positions, we come to that 1.772 billion. And we also have a 38.5% small increase in our equity ratio, and that is because equity overall increased more than our balance sheet sum of total assets and liabilities. Working capital also here compared to the first half of 2023 is stable position, 17.4%. If we look at the overall working capital, this is as of end of June, 881 million. It's not a figure which you see on this chart, and it's an increase by 115 compared to last fiscal year, and you will see that also later in the cash flow statement. And if we look at the various parts of working capital, starting from the top receivables POC, you see that we had a slight decrease here which is because average revenue increased over-proportional to the total value of contract assets. Accounts payable, I mean, if we look at them on an absolute value, they are stable compared to last December. Their portion or proportion decreases, and this is because of the increase in average revenue. Looking at inventory, we have the opposite side development. Still a slight increase in absolute terms of inventory, partly also because of the acquisition of NetStyle. I'll come to that in a second. And so that's why we are holding 14.8% in inventory in relation to average revenue. Received prepayments, in absolute terms, they remain stable on slightly above 1 billion, but because overall average revenue increased, we have a small decrease here. I said that we have an 881 million euro working capital increase by 115, and 40 out of that is coming from NetStyle. Now let's look at free cash flow. When we stood here for quarter one, we have reported a quite high or very high first quarter free cash flow before M&A of 184. And we had already at that time said that for Q2 and also for Q3, we expect a negative free cash flow. And so we had a negative free cash flow in the second quarter, but more important, overall plus 127 for the half year of 2024. And if you look at it, how it developed starting from EBT, other non-cash changes, major portion in year depreciation of close to 80 million, change in working capital, I already talked about that. Other assets and liabilities, it's a composition of a lot of things, including some consolidation or some effects from the consolidation of net style. And then cash flow from operating activities, 185. If I may jump then to the comparison to 23%. a major increase to the most extent coming from change in working capital. And if I then may follow or may continue with our CapEx for 24, you can see 72 million. That's a 2.8% of revenue. Other insignificant, free cash flow before M&A, 127. And I already talked about the 185, which is a composition of The payment for net style, 170 plus delayed purchase price for AMCO and some minor stake in Parfinox. Free cash flow reported, minus 58. Financing activities, other. I already talked about the dividend, 70 million being included in here. And the remainder in that position is lease payments. And all in all, the net change in cash of 154 million. That chart is very familiar to you because we want to frame our overall free cash flow development into what we have recognized throughout the last fiscal years. You know that we have talked about the cash conversion rates well above 100 and partly 200 in the fiscal years 20 to 22, and that 23 was just a minor one, and we have told you that we expect for 24 a free cash flow of approximately And with our 127, cash conversion rate is 94. ROSI is a development or is a result of EBIT development on the one hand and average capital employed development on the other hand. And as EBIT increased over proportionally, over capital employed in average, we have an increase here. We are within our guidance of 17% to 19%. Actually, we are on the very upper end. But also here, I just want to mention there's only two data points effect of Netstar included, whereas going forward, it will be a higher one. So what I want to say was that 17% to 19% is our guidance and will be somewhere in the middle. Yeah, so far for the numbers.