Early measures reduce corona effects for Jungheinrich

Jungheinrich AG has published its result for the first half of 2020 today. The key figures have been heavily affected by the global market decline in material handling equipment that resulted from the coronavirus pandemic in the second quarter.

• Incoming orders by value: €1.81 billion (–12.3 per cent)
• Revenue: €1.80 billion (–7.9 per cent)
• EBIT: €95 million, EBIT return on sales of 5.3 per cent
• Cash flow from operating activities doubled to €201 million
• Net debt decreased significantly from €172 million to €36 million
• New forecast for 2020 published on 22 July 2020

Incoming orders were reduced by 12.3 per cent to €1,811 million in the first half of 2020. Revenue fell 7.9 per cent to €1,801 million. However, effective measures taken early on in the Group to reduce costs and secure liquidity successfully limited the impact of the crisis on Jungheinrich. The company doubled cash flow from operating activities, significantly reduced net debt and maintains a solid liquidity reserve.

Dr Lars Brzoska, Chairman of the Board of Management of Jungheinrich AG: “The COVID-19 pandemic affected the global economy to an unprecedented extent in the first half of 2020. Even the intralogistics sector could not come out of this global event unscathed. It really helps that we had already made Jungheinrich weatherproof last year in expectation of a global economic slowdown. Because of this, we were ready to react swiftly to the coronavirus pandemic in the spring of 2020 and take successful measures to reduce costs and secure liquidity to minimise the impact of the crisis on Jungheinrich. We have managed to double cash flow from operating activities compared to the previous year and at the same time significantly reduce net debt. Jungheinrich after-sales services also contributed to our ability to withstand the crisis with its high and stable share of revenue. Our expertise in lithium-ion technology makes Jungheinrich outstandingly well positioned for the coming decade of electric mobility. Our automation solutions guarantee a safe and efficient material flow that is stable even in times of crisis. On this basis I am absolutely positive that Jungheinrich will emerge from the coronavirus crisis strengthened.”

At 53.9 thousand units, orders for new trucks in the first half of 2020 were therefore significantly down on the previous year (67.0 thousand units). At €1.81 billion, the value of incoming orders of the Jungheinrich Group also remained below the previous year’s figures (€2.07 billion). Particularly in light of the good level of orders on hand as of the end of the first quarter of 2020, Group revenue amounted to €1.80 billion (previous year: €1.96 billion).

In the first half of 2020, EBIT reached €95 million (previous year: €125 million). EBIT came to €82 million (previous year: €117 million). Accordingly, EBIT return on sales was 5.3 per cent (previous year: 6.4 per cent) and EBT return on sales was 4.5 per cent (previous year: 6.0 per cent). The previous year's figures have been adjusted slightly and take into consideration the impacts on earnings reported in the interim statement as of 30 September 2019 and which almost balanced each other out.

As of the reporting date, net debt amounted to €36 million. The €136 million improvement against the end of 2019 (€172 million) resulted first and foremost from the measures taken to reduce working capital and the decreased supply of new trucks to the short-term rental fleet. Cash flow from operating activities came to around €201 million for the period of January to June 2020, doubling the figure from the previous-year period (€99 million). This significant increase was driven by the sharp year-on-year decline of €125 million in cash outflow for additions to trucks for short-term rental and lease and receivables from financial services.

Forecast

Taking into account the consequences of the COVID-19 crisis that are currently expected, the Board of Management of Jungheinrich AG published a new forecast for the 2020 financial year on 22 July 2020. According to this forecast, Jungheinrich expects incoming orders for 2020 of between €3.4 billion and €3.6 billion. Group revenue is also expected to range between €3.4 billion and €3.6 billion. According to current estimates, earnings before interest and taxes (EBIT) in 2020 should come to between €130 million to €180 million. EBIT return on sales is expected to be in a range of 3.8 per cent to 5.0 per cent. Earnings before taxes (EBT) should reach a value of between €105 million and €155 million. EBT return on sales should come to 3.1 per cent to 4.3 per cent.

Furthermore, net debt significantly below €50 million is expected by the end of 2020. The ROCE for the 2020 financial year should be between 8 per cent and 12 per cent.

Jungheinrich also aims to slightly increase its market share in Europe against the 2019 financial year (2019: 20.2 per cent).

Development January–June 2020

Market development by region

The global market volume for material handling equipment decreased by 7 per cent year-on-year in the first half of 2020. This corresponds to 52 thousand units. In light of the spread of COVID-19 through European member states, this negative market development was considerably more pronounced in the second quarter of 2020 (minus 28 per cent) than in the first quarter of 2020 (minus 5 per cent). Overall, this decline in the global market for material handling equipment in the reporting period to 80 per cent is due to the steep decline in orders from the European market.

Market development by product segment

The global market volume for the warehousing equipment product segment declined 5 per cent against the same period of the previous year. This was driven by the negative market development in Europe. 71 per cent of the 13 per cent lower global market volume for battery-powered counterbalanced trucks was also based on declining demand in Europe. The clear decline in demand of 7 per cent around the globe for IC engine-powered forklift trucks was due to a drop in orders from North America and Europe.

Business development of Jungheinrich

Due to the market developments in Europe in particular, incoming orders in the new truck business, based on units, which includes orders for both new forklifts and trucks for short-term rental, declined by 20 per cent in the first half of 2020 to 53.9 thousand units (previous year: 67.0 thousand units). In addition to the drop in demand, the lower figure also resulted from the clear reduction in orders for our own short-term rental fleet. By value, incoming orders for all business fields – new truck business, short-term rental and used equipment, and aftersales services – came to €1,811 million in the reporting period, which is 12 per cent below the previous year’s figure of €2,065 million.

Orders on hand for new truck business came to €824 million as of 30 June 2020, which is €191 million or 19 per cent lower than the previous-year figure (€1,015 million). Compared with orders on hand of €787 million as of year-end 2019, it nevertheless represents an increase of €37 million or 5 per cent.

Group revenue of €1,801 million in the first half of 2020 was 8 per cent lower than in the previous-year period (€1,956 million). Revenue in Germany, the largest single market, fell by 8 per cent in the reporting period to €429 million (previous year: €465 million). Foreign revenue also decreased by 8 per cent to €1,372 million (previous year: €1,491 million). The foreign ratio thus remained constant (previous year: 76 per cent). Revenue from outside Europe reached €232 million (previous year: €274 million). This represents 13 per cent of Group revenue (previous year: 14 per cent).

Key figures at a glance

1. ^{Property, plant and equipment and intangible assets without capitalised development expenditure and right-of-use assets}
2. ^{FTE = full-time equivalents}

Foto: In April, two Jungheinrich forklifts unload an Antonov 124 loaded with protective masks and other medical supplies. Fotocredit: ANDREAS HOFER / Jungheinrich 

Interim Report as of 30 June 2020

Jungheinrich Interim Report 2020