DGAP-News: Krones AG / Key word(s): Half Year Results/Quarter Results Krones AG: After a strong first half, Krones confirms growth and earnings targets for 2018 26.07.2018 / 07:30 The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- 26 July 2018 Corporate news release After a strong first half, Krones confirms growth and earnings targets for 2018 - At EUR1,790.8 million, revenue was up 0.9% from the prior-year figure, which had been quite high due to timing. - Order intake rose 13.2% to EUR2,014.8 million. Acquisitions had no significant impact on revenue or order intake in the first half. - EBT decreased 6.9% to EUR112.7 million due to a one-time effect within personnel expenses and rising expenditure for goods and services purchased. The EBT margin decreased from 6.8% to 6.3%. In the second quarter of 2018, the EBT margin was unchanged year-on-year at 6.3%. - Executive Board confirms revenue and earnings targets for 2018. Krones expects 6% revenue growth and a reported EBT margin of 7.0%. Krones, the world's leading manufacturer of filling and packaging technology, was able to offset the slight first-quarter decrease in revenue in the second quarter of 2018. Krones' revenue in the first six months of 2018 was up 0.9% from the high prior-year figure, from EUR1,775.2 million to EUR1,790.8 million. Sales were negatively affected by currency translation of a mid-double-digit million euro amount. Acquisitions had no significant influence on revenue. Overall, revenue is within our forecast range after the first six months of 2018. Growth is likely to accelerate in the third quarter. Krones' management is confident that the company will achieve its growth target of 6% for 2018. The company's high order intake and orders backlog provide a solid basis for that. Order intake was up 13.2% year-on-year to EUR2,014.8 million in the period from January to June 2018. It should be noted that the May1st price increase did not apply to quotations that were already being negotiated at that time. Thus, the price increase did not have a significant impact on orders in the reporting period. Acquisitions did not have a noticeable effect on order intake. At EUR1,464.1 million, orders on hand were up 27.4% at the end of June 2018 over the prior-year period (EUR1,148.8 million). The comfortable orders backlog enables Krones to compensate potential changes in order intake that might result from the price increases in the months ahead without jeopardising balanced capacity utilisation. Rising costs on goods and services purchased and personnel impacted profitability Krones was not able to turn the slight improvement in revenue into earnings growth in the first half of 2018. The main factor here was the continuing rise in costs for goods and services and for personnel. The increase in personnel expenses reflects pay increases that also resulted in a one-time increase in provisions in the first quarter of 2018. In the period from January to June, earnings before taxes (EBT) were down 6.9% year-on-year to EUR112.7 million. The EBT was negatively affected by currency translation of a mid-single-digit million euro amount. The EBT margin narrowed from 6.8% in the previous year to 6.3% in the first six months of 2018. In the second quarter of 2018, the EBT margin was unchanged year-on-year at 6.3%. Krones still expects to achieve an EBT margin of 7.0% for the year. After taxes, consolidated net income was down 6.7% to EUR76.9 million in the reporting period. Earnings per share for the period decreased from EUR2.64 in the previous year to EUR2.45. Krones' free cash flow improved by EUR103.3 million to -EUR56.2 million in the first six months of 2018. The ratio of average working capital for the past four quarters to revenue increased to 28.8% (previous year: 26.3%). As a result of lower earnings, Krones' return on capital employed (ROCE) dropped to 15.5% in the first half of 2018 (previous year: 16.3%). Krones confirms growth and earnings targets for 2018 Because of the strong results achieved in the first half and continued high demand for the company's products and services, Krones' forecast for growth and earnings for the year 2018 remains unchanged. Krones is targeting consolidated revenue growth of 6% in 2018. Krones intends to keep profitability stable despite investment in digitalisation and start-up costs associated with our global footprint, particularly the new site in Hungary. The company expects to post an EBT margin of 7.0% in 2018. Krones expects its third financial performance target, working capital to revenue, to improve slightly in the second half of 2018 compared with the first half. However, Krones will not meet the 26% forecast for the whole year 2018. The company's new target is 28%. Krones has published the complete Interim Report for the first half of 2018 online at https://www.krones.com/en/company/investors.php Key figures for H1 2018 1 Jan - 1 Jan - Change 30 Jun 30 Jun 2018 2017 Revenue EUR 1,790.8 1,775.2 + 0.9% mill- ion Order intake EUR 2,014.8 1,779.3 +13.2% mill- ion Orders on hand at 30 June EUR 1,464.1 1,148.8 + 27.4% mill- ion EBITDA EUR 157.3 164.4 - 4.3% mill- ion EBIT EUR 109.7 117.1 - 6.3% mill- ion EBT EUR 112.7 121.0 - 6.9% mill- ion EBT margin % 6.3 6.8 - 0.5 PP* Net income EUR 76.9 82.4 - 6.7% mill- ion Earnings per share EUR 2.45 2.64 - 7.2% Capital expenditure for PP&E and EUR 58.5 46.1 + intangible assets mill- EUR12.4 ion million Free cash flow EUR - 56.2 - 159.5 + EUR mill- 103.3 ion million Net cash and cash equivalents at 30 EUR 49.7 160.4 - EUR June** mill- 110.7 ion million Working capital to revenue *** % 28.8 26.3 + 2.5 PP* ROCE % 15.5 16.3 - 0.8 PP* Employees at 30 June Worldwide 15,568 14,794 + 774 Germany 10,376 10,106 + 270 Outside Germany 5,192 4,688 + 504 * Percentage points ** Cash and cash equivalents less debt *** Average of last 4 quarters Key figures for Q2 2018 1 Apr - 1 Apr - Change 30 Jun 30 Jun 2018 2017 Revenue EUR 899.1 875.8 + 2.7% mill- ion Order intake EUR 1,022.4 903.8 + 13.1% mill- ion EBITDA EUR 78.4 77.2 + 1.6% mill- ion EBIT EUR 54.2 53.1 + 2.1% mill- ion EBT EUR 56.5 55.0 + 2.7% mill- ion EBT margin % 6.3 6.3 ± 0 PP Net income EUR 38.2 38.7 - 1.3% mill- ion Earnings per share EUR 1.22 1.24 - 1.6% Contact: Olaf Scholz Leiter Investor Relations Krones AG Tel.: +49 (0) 9401 - 701169 E-Mail: [email protected] --------------------------------------------------------------------------- 26.07.2018 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de --------------------------------------------------------------------------- Language: English Company: Krones AG Böhmerwaldstraße 5 93073 Neutraubling Germany Phone: +49 (0)9401 701169 Fax: +49 (0)9401 709 1 1169 E-mail: [email protected] Internet: www.krones.com ISIN: DE0006335003 WKN: 633500 Indices: SDAX Listed: Regulated Market in Frankfurt (Prime Standard), Munich; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Stuttgart, Tradegate Exchange End of News DGAP News Service --------------------------------------------------------------------------- 707985 26.07.2018