Despite challenging conditions, Krones substantially improved all financial key performance indicators in the first half of 2022 compared to the same period last year. Demand for the company’s products and services was very high in the reporting period. As a full-service supplier and the market leader in filling and packaging technology, Krones is benefiting from the strong investment propensity shown by companies in the international beverage industry.
Order intake from January to June 2022 was 52.0% higher than the previous year, rising from €2,044.3 million to €3,106.4 million. The order intake in the second quarter of 2022, at €1,552.6 million (previous year: €975.5 million), was only marginally below the record figure from the first quarter (€1,553.8 million). Due once again to a very large volume of customer orders in the second quarter, Krones’ order backlog has grown further. As of 30 June 2022, the company had an order backlog totalling €3,014.6 million (previous year: €1,535.5 million). The order backlog was thus 96.3% higher than in the previous year. Compared to the beginning of 2022, the increase is €1.12 billion, or 59.3%.
Krones’ revenue growth accelerated in the second quarter. Between April and June, revenue increased by 18.0% year-on-year. In the first half-year, revenue went up by a total of 15.4%, from €1,720.1 million in the previous year to €1,984.8 million.
Like revenue, earnings likewise benefited from the flexible management of production. Despite global material shortages and tight supply chains, Krones was able to keep production capacity utilisation stable in the reporting period, although not at full capacity. Higher material, freight and travel costs affected profitability. Due to the extensive efficiency improvement measures and initial effects from the price adjustments, earnings before interest, taxes, depreciation and amortisation (EBITDA) nevertheless rose in the first half-year by 27.2% year-on-year to €175.1 million (previous year: €137.7 million). The EBITDA margin improved to 8.8% (previous year: 8.0%).
Earnings before taxes (EBT) went up by 49.5%, from €75.7 million to €113.2 million. This corresponds to an EBT margin of 5.7% (previous year: 4.4%). In total, Krones generated consolidated net income of €83.2 million in the first half of 2022, an increase of 46.2% (previous year: €56.9 million). Earnings per share increased to €2.63 (previous year: €1.80).
In the second quarter of 2022, the rates of increase in earnings were even higher. EBITDA improved by 44.0% to €88.1 million, while the EBITDA margin rose from 7.2% in the previous year to 8.8%. On the bottom line, the second-quarter consolidated net income of €43.1 million was 78.8% higher than in the previous year.
Krones further strengthens financial and capital base
Krones significantly improved working capital relative to revenue in the first half of 2022 and generated a higher free cash flow than in the previous year. This is mainly due to the increased revenue and the rising advanced payments from customers. The ratio of average working capital for the past four quarters to revenue came to 21.6% (previous year: 28.1%). Free cash flow increased by €33.0 million, from €35.4 million in the previous year to €68.4 million in the reporting period. Krones’ net cash, meaning cash and cash equivalents less bank debt, amounted to €385.4 million at the end of June 2022 (previous year: €203.7 million). In addition, Krones had available just under €1 billion in free lines of credit as of 30 June 2022. Krones improved ROCE (return on capital employed) to 11.8% in the first half of 2022 (previous year: 8.3%).
Krones confirms full-year guidance for 2022
Krones’ business performed well in the first half of 2022 and the company has a very large order backlog. The company is consequently also confident for the full year. However, the business environment remains challenging. Uncertainties include material shortages and problems in global supply chains, rising material and energy procurement prices, political risks in Europe and other parts of the world, and also strong inflation in many countries. It is also uncertain how the Covid-19 pandemic will continue to play out around the world and how the impacts of the war in Ukraine will affect the growth of the global economy.