Jungheinrich has decent start to first quarter of 2020 financial year despite difficult market conditions

Jungheinrich has performed well in a difficult market and has achieved a decent quarterly result in the first quarter of 2020. In the first three months of the year, incoming orders were at the same level of value as the previous year. Incoming orders by unit fell by 3 per cent compared to the same period last year, while the global market for material handling equipment fell by a significant 9 per cent. Revenue fell by 3 per cent.

Production at the Jungheinrich plants continued at an adjusted level and supply chains are largely intact. The only break in production was due to supply chain delays in the Moosburg plant, with production resumed immediately after Easter. Overseas Jungheinrich locations operated without greater restrictions even in the face of local governmental regulations. After-sales service technicians are active all over the world to the extend that this is possible under local conditions.

“Protecting the health of our employees and our customers as well as safeguarding our delivery capability are the top priorities for Jungheinrich. Our efforts last summer to make the company more weatherproof paid off and we were therefore able to react immediately to the first signs of crisis,” says Jungheinrich Chairman of the Board of Management Dr Lars Brzoska.

The uncertainty surrounding the future consequences of the COVID-19 pandemic on global economic development means reliable estimates cannot currently be made about the business development over the remainder of the year. In light of this, the Board of Management of Jungheinrich AG decided a few weeks ago to retract the forecast for the 2020 financial year published in the 2019 annual report. Since the beginning of April, all regions and product segments have seen significant decline in demand, which will lead to a significant drop in incoming orders and revenue. The forecast will be updated as soon as global containment efforts cause the pandemic to slow down and the impact on the further business development of Jungheinrich over the rest of 2020 becomes reliably quantifiable.

“Jungheinrich has a future-oriented business model, a solid liquidity reserve and a healthy statement of financial position. Through their dedicated work, our teams all over the world are successfully helping us to overcome challenges through our crisis management. I am firmly convinced that on this basis we will emerge from this crisis stronger.

I would like to thank all customers, partners and suppliers for their faithful cooperation in these difficult times. I would also like to thank all Jungheinrich employees, who are currently performing exceptionally. With their work they are ensuring that important supply chains of companies that are part of critical infrastructure in particular, such as food production and distribution, pharmaceuticals, medical technology, supermarkets and transport, can reliably function all over the world. We are proud of the special effort and solidarity of our team,” says Brzoska.

Development January to March 2020

Market development

The global market volume for material handling equipment declined 9 per cent year-on-year in the first quarter of 2020. The noticeable decline is largely a result of the sharply reduced demand in China: the COVID-19 pandemic had already reached its high point there in the first quarter of 2020. The IC engine-powered counterbalanced trucks product segment is most affected by the decline in demand. Around 70 per cent of the 36 thousand fewer trucks on order come from this product segment.

Business development of Jungheinrich

Incoming orders in the new truck business, based on units, which includes orders for both new forklifts and trucks for short-term rental, totalled 32.1 thousand units in the first quarter of 2020, equating to a decrease of 3 per cent compared to the previous year (33.2 thousand units). By value, incoming orders for all business fields – new truck business, short-term rental and used equipment, as well as after-sales services – in the reporting period remained at the previous year’s level with €1,016 million (€1,021 million). Orders on hand for new truck business came to €889 million as of the end of the quarter, which is €98 million or 10 per cent lower than the previous-year figure (€987 million). Compared with orders on hand of €787 million as of year-end 2019, this represents an increase of €102 million or 13 per cent.

Group revenue, which at €920 million is 3 per cent lower than the previous year’s figure (€948 million), was attributable in particular to the decline in new truck business.

The Jungheinrich Group ended the first quarter of 2020 with earnings before interest and taxes (EBIT) of €53.7 million (previous year: €59.6 million). EBIT return on sales (EBIT ROS) came to 5.8 per cent (previous year: 6.3 per cent). Earnings before taxes (EBT) for January to March 2020 amounted to €43.5 million (previous year: €56.5 million). EBT return on sales (EBT ROS) came to 4.7 per cent (previous year: 6.0 per cent).

As of 31 March 2020, net debt totalled €104 million (31 December 2019: €172 million).

Forecast

In light of the widespread uncertainty regarding the impact of the COVID-19 pandemic on global economic development, on 27 April 2020 the Board of Management of Jungheinrich AG retracted the forecast for the 2020 financial year that was published in the 2019 annual report. The current pace of the pandemic’s spread in all regions of the world as well as the containment measures implemented by many countries at present do not allow for any reliable assessment of the business development of Jungheinrich over the further course of the year. The forecast will be updated as soon as global containment efforts cause the pandemic to slow down and the impact on the further business development of Jungheinrich over the rest of 2020 becomes reliably quantifiable.

The Jungheinrich Group at a glance