Krones adjusts its earnings outlook for 2019
According to Krones, the uncertain macroeconomic developments, like the unsolved trade conflict between China and USA, as well as the discussion about the sustainability of PET-Packaging, negatively influence the customers and their willingness to invest. Based on the actual available figures, the manufacturer of filling and packaging technology adjusts its earnings outlook for the fiscal year 2019.
The group reportedly still expects an unchanged growth target of 3% in 2019. The EBT margin is planned around 3% (prior target: around 6%). For its third target, working capital to revenue, the company expects an unchanged figure of 26%. The board is said to have taken measures in order to counteract the earnings decline. This includes among others a hiring freeze and measures to reduce the material costs. The current global footprint is on track. For example, the new plant in Hungary reportedly is according to budget and time schedule.
Increased costs and unfavorable product mix
The profitability of the company is said to be influenced by high costs, in particular the material cost ratio remains on high level. The manufacturer expected, that the weaker economic outlook in other important industries in 2019 would have resulted in a small easing in the increasing of material costs. Also, the additional measures, which are implemented to reduce the material costs materialize with a delay. Furthermore, the product mix has an unfavorable effect on the earnings for the period January till June 2019.
Especially in the second quarter 2019 the sales of products with a high own value added, like machines and lines for the plastic technology, reportedly were lower than expected. Another important reason for the actual earnings development is the sales growth of the high-margin after sales business (LCS), which were in the first 6 months of 2019 below expectations. In the second half year this LCS business is expected to recover.
Incorporation of Syskron’s Intralogistics Division
Just a few days earlier, the group had announced the reorganization of its intralogistics business. Within the group, the planning and implementation of intralogistical solutions had hitherto been handled both in System Logistics S.p.A. in Fiorano, Italy and in Syskron GmbH in Wackersdorf, Germany. Effective 1 July, the Intralogistics Division of Syskron has been incorporated into System Logistics GmbH, with around 100 peopls headquartered in Wackersdorf, as a wholly owned subsidiary of the Krones Group. With this streamlining of its market presence, the latter is said to be uniting its entire intralogistics portfolio under the family brand of “System Logistics”.