Jungheinrich performs well under challenging market conditions in 2019

Mar 25, 2020 Warehousing Ireland Materials Handling Comments Off on Jungheinrich performs well under challenging market conditions in 2019

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Protecting employee health and safeguarding ability to deliver are the priorities for 2020

Revenue amounts to €4.07 billion
Incoming orders worth €3.92 billion
EBIT of €263 million euros achieved despite one-off negative impact on earnings
Clear increase in cash flow from operating activities to €345 million
Working capital ratio reduced to 20.8 per cent
Demand for lithium-ion technology remains high
2020 will be shaped by the impact of the coronavirus pandemic

At the end of the 2019 financial year, Jungheinrich had generated revenue of more than 4 billion euros. As a result, the company achieved its strategic growth target for 2020 a year earlier than planned. Incoming orders amounted to 3.92 billion euros. EBIT came to 263 million euros. EBIT return on sales amounted to 6.4 per cent. Demand for electric trucks remained high. At over 97 per cent of all trucks sold last year, Jungheinrich recorded the highest ratio of electric truck sales in the sector. Demand on the market for material handling equipment fitted with lithium-ion technology was especially strong. In the 2019 financial year the company sold more than 20,000 lithium-ion batteries through new truck business and retrofitting. Jungheinrich founded JT Energy Systems GmbH with its partner Triathlon Holding GmbH and launched the construction of Europe’s largest development, manufacturing and reconditioning centre for lithium-ion batteries in the industry in Freiberg, Germany.

Jungheinrich believes that the coronavirus pandemic will have major consequences for the global economy in the 2020 financial year. It is not yet clear what the full extent of these consequences will be. In the current situation, protecting our employees and safeguarding our ability to deliver are our top priorities. Jungheinrich has established a crisis team for this purpose, headed by the Board of Management, that makes daily decisions based on the current appraisal of the situation. A number of preventive measures have also been put into place to protect the workforce. Production at all plants is ongoing, and after-sales service technicians are deployed throughout the world. So far, we have been able to prevent the situation having a negative impact on Jungheinrich’s supply chain and production processes, and our ability to deliver is currently stable.

Dr Lars Brzoska, Chairman of the Board of Management of Jungheinrich AG:

“In light of the economic headwinds over the course of the 2019 financial year, I am pleased that we were able to achieve our revenue target of 4 billion euros for 2020 a year earlier than planned with the Jungheinrich team. Despite the challenging conditions and the one-off negative impact on earnings, we were able to achieve respectable earnings of 263 million euros. Incoming orders and production declined as a result of the increasingly challenging economic conditions.

We are all facing a great challenge, both professionally and in our private lives. I would like to extend my personal gratitude to all employees, who dedicate themselves fully to their work and take responsibility every day, particularly in the current situation. We are all taking the situation seriously and the necessary measures were put in place early on. I am certain that Jungheinrich will take this unusual situation in its stride. We will continue to rely on our integrated business model and will consistently invest in important future technologies.

We published our forecast for the 2020 financial year in December. According to this forecast, we expect incoming orders to range between 3.50 billion and 3.80 billion euros and revenue between 3.60 billion and 3.80 billion euros. EBIT should come in between 150 million and 200 million euros, with a corresponding EBIT return on sales figure of between 4.0 and 5.5 per cent. Possible influences from effects that could be traced back to the spreading of the new coronavirus have not been taken into account in the aforementioned forecast values.”

 

Market

In 2019, the global market for material handling equipment reported its first decline since 2012 of minus 2 per cent, or 31 thousand forklift trucks, compared to the previous year. This was due to a downturn in orders both in the European market and the North American market that was not fully compensated by growth in China. In Europe, demand in all three product segments (warehousing equipment, battery-powered counterbalanced trucks and IC engine-powered counterbalanced trucks) remained below the previous year’s figures. The largest share of the downturn was reported in the warehousing equipment product segment. Half of the 8 per cent decline in market volume in North America was also due to lower demand for IC engine-powered counterbalanced trucks.

Incoming orders and orders on hand

At 122 thousand units, incoming orders in the new truck business, based on units, which includes orders for both new forklifts and trucks for short-term rental, remained 7 per cent below the previous year’s incoming orders (131 thousand units). This was due to the sharp decline in demand in Europe and the reduction in orders for our own short-term rental fleet. By value, incoming orders for the business fields new truck business, short-term rental and used equipment, and after sales services came to €3,992 million, which is on a par with the previous year’s figure (€3,971 million). Orders on hand in the new truck business amounted to €787 million as of 31 December 2019 (previous year: €907 million). These orders account for almost four months of production.

Production

The production volume follows developments in incoming orders, with a delay. In light of the decline in incoming orders from the middle of 2019 including the reduction in trucks for the short-term rental fleet, production unit numbers for the reporting period came to 113 thousand units, down 7 per cent against the very positive prior-year figure (121 thousand units). The largest product segment is warehousing equipment with a share of 80 per cent of the total production volume. Almost all trucks produced (97 per cent) are battery powered.

Revenue

Group revenue exceeded the previous year’s figure (€3,796 million) by 7 per cent, or €277 million, and at €4,073 million, also exceeded the revenue target of €4 billion originally set for 2020. As in the previous year, Europe accounted for 87 per cent of revenue. Revenue growth was primarily driven by increases in Germany, Austria, Italy and – despite uncertainties surrounding Brexit – the UK. Foreign revenue increased by 7 per cent to €3,107 million (previous year: €2,896 million); accordingly, the foreign ratio stood at 76 per cent as in 2018.

Earnings

EBIT therefore decreased by €12 million, or 4 per cent, to €263 million (previous year: €275 million). At 6.4 per cent, EBIT ROS was less than the previous year’s level (7.2 per cent). At €242 million, EBT was accordingly down 3 per cent from the previous year (€249 million). EBT return on sales amounted to 5.9 per cent (previous year: 6.6 per cent). At €177 million, profit or loss remained stable (previous year: €176 million), and the earnings per preferred share (based on share of earnings attributable to the shareholders of Jungheinrich AG) accordingly came to €1.75 (previous year: €1.73).

Research and development

R&D expenditure consists primarily of internal services. At €86 million, this expenditure – which includes third party services – was on a par with the previous year’s (€84 million). This represents 5.4 per cent (previous year: 5.6 per cent) of the R&D-relevant revenue from new trucks.

Employees

In the year under review, Jungheinrich yet again increased its personnel capacities, with the primary focus on after-sales services. As of 31 December 2019, the Group had 18,381 (previous year: 17,877) employees (full-time equivalent) employed in the Group. In order to be able to react more flexibly to workload fluctuation, temporary workers are employed alongside the permanent workforce in production plants. In light of the decrease in the number of units produced in the year under review as of 31 December 2019, there were only 335 (previous year: 711) temporary workers.

Forecast

Group revenue in 2020 is expected to range between €3.60 billion and €3.80 billion (2019: €4.07 billion). We expect incoming orders to be worth between €3.50 billion and €3.80 billion (2019: €3.92 billion). EBIT should amount to a value between €150 million and €200 million (2019: €263 million) in the current financial year. We anticipate EBIT return on sales of between 4.0 per cent to 5.5 per cent (2019: 6.4 per cent). In light of the developments in the cost of materials, we anticipate costs will tend to fall slightly. EBT is expected to amount to between €125 million and €175 million (2019: €242 million). We currently anticipate EBT return on sales of between 3.5 per cent to 5.0 per cent (2019: 5.9 per cent). Possible influences from effects that could be traced back to the spreading of the new coronavirus have not been taken into account in the aforementioned forecast values.

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