Krones confirms its targets for 2016
- evenue increased 4.8% in the first three quarters of 2016 to €2.38 billion.
- New orders rose 6.1% to €2.45 billion.
- The EBT margin was stable at 6.9% after nine months.
- Krones confirms its revenue and earnings forecast for 2016 as a whole and has set medium-term targets of 7/8/20 for 2020.
Krones, the world’s leading manufacturer of filling and packaging technology, continued its stable growth in the first three quarters of 2016. Despite economic uncertainties and intense competition, revenue improved 4.8% year-on-year from €2,270.7 million to €2,380.1 million. From a regional perspective, revenue developed best in China, the Middle East/Africa, and Central and Eastern Europe in the first three quarters of 2016.
New orders at Krones rose 6.1% year-on-year to €2,452.5 million in the first nine months of 2016. At €1,167.0 million, Krones’ orders backlog at 30 September 2016 was up 4.2% on the previous year.
EBT margin stable at 6.9% after the first three quarters
Krones improved earnings before taxes (EBT) by 4.8% to €163.6 million in the reporting period. Prices continued to provide no support. The increase in earnings can be attributed to positive effects from the Value strategy programme as well as additional short-term cost savings. At 6.9%, the EBT margin was stable year-on-year in the first three quarters. Because the tax rate was somewhat lower, consolidated net income improved 5.5% to €114.3 million, a bit more than EBT. Earnings per share advanced from €3.45 in the previous year to €3.65 in the first nine months of 2016. The return on capital employed (ROCE) declined to 15.5% (previous year: 17.0%).
Krones confirms its forecast for 2016 as a whole
Krones is confident that consolidated revenue growth of 3% and an EBT margin of 7.0% for the year 2016 will be achieved as forecast despite the many economic and political uncertainties. All three segments will contribute by achieving their own growth and earnings targets. The company continues to aim for an ROCE of 18%.
New medium-term target through 2020: 7/8/20
To keep moving the company forward for the long term, Krones has set a new medium-term target of 7/8/20. By 2020, Krones intends to increase revenue by 7% on average each year, improve the EBT margin to 8%, and bring ROCE (return on capital employed) up to 20%. To grow by 7% each year, Krones intends to pick up market shares in regions where beverage consumption is growing faster than average. The rapidly growing diversity of products and packaging is another growth driver. Acquisitions and the expansion of the company’s own product range will also contribute a large part to the forecast growth.
Because no support can be expected from prices, even in the medium term, Krones will have to work hard to achieve its EBT margin target of 8%. Growing Krones’ global footprint will be an important factor. To this end, the company plans to shift a large part of procurement and engineering as well as parts of production to the regions in which its customers operate their plants. In addition, Krones will continue to advance the modularisation of its machines and lines and expand its highly profitable service business. To achieve the ROCE target of 20%, Krones will sharpen its focus on working capital.
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