2020 has not been a good year for the brewing and brewing supply industry. Krones AG, the leading manufacturer of filling and packaging technology, published today its preliminary figures for 2020 which painted a very gloomy picture of the company and - as a reflection – of the industry as a whole.
Due to the Covid-19 pandemic, revenue fell 16.1% year-on-year, from EUR 3,958.9 million to EUR 3,322.7 million. This is a slightly smaller revenue shortfall than the 17% decrease forecast in early November 2020.
The uncertain general economic situation in 2020 burdened investment confidence among Krones’ customers. This affected the company’s order intake, primarily in the first half of the year. The contract value of orders increased significantly in the third and especially in the fourth quarter. Over the full year 2020, order intake was down 19.0% year-on-year, from EUR 4,083.5 million to EUR 3,307.1 million. At the end of 2020, Krones had an order backlog of EUR 1.21 billion (previous year: EUR 1.39 billion).
The lower order intake meant that Krones could not make optimum use of its production capacity. This impacted profitability in 2020. Savings resulting from the structural measures adopted by the company in the second half of 2019 had a positive effect on earnings. In total, earnings before interest, taxes, depreciation and amortization (EBITDA) went down from EUR 227.3 million in the previous year to EUR 133.2 million in 2020. The EBITDA margin was 4.0% (previous year: 5.7%). It should be noted that EBITDA was impacted in 2020 by around EUR 72 million in expenses for personnel-related measures. Excluding these expenses for capacity adjustment, the EBITDA margin was 6.2% in 2020 (previous year: 6.6%). This slightly exceeded the Executive Board’s outlook of 5.5% to 6.0%.
Earnings before taxes (EBT) fell from EUR 41.7 million in the previous year to –EUR 36.6 million in 2020. In addition to the expenses for capacity adjustment, EBT was additionally reduced by goodwill impairments and value adjustments in the amount of approximately EUR 8 million. Excluding the one-off effects totaling around EUR 80 million, the EBT margin was 1.3%. Krones’ consolidated net income came to –EUR 79.7 million in 2020 (previous year: EUR 9.2 million). This corresponds to earnings per share of –EUR 2.52 (previous year: EUR 0.30).
Free cash flow developed positively in 2020. Krones improved free cash flow by EUR 315.7 million year-on-year to EUR 221.3 million. In addition to reduced capital expenditure, this also reflected lower working capital. However, due to the significant revenue shortfall, the working capital to revenue ratio increased to 28.3% (previous year: 26.9%). The equity ratio was 39.4% (previous year: 41.3%). Overall, Krones continues to possess a very robust financial and capital structure.
All stated figures are preliminary and are subject to change in the course of auditing by the independent auditors. Krones publishes its Annual Report for 2020 on 25 March 2021.
