Krones, the world's leading manufacturer of filling and packaging technology, announced today that the efficiency measures, under which the company is already reducing jobs in the current fiscal year, will be continued in 2020.
Measures initiated to cut personnel costs as well as specific portfolio optimization measures lead to provisions and impairments of approximately EUR 70 million (USD 78m) and will remain within the already communicated range of EUR 60 (USD 67m) to EUR 80 million (USD 89m) in 2019. This program will be continued in 2020.
In the coming year, 300 additional jobs in Germany and 200 additional jobs worldwide mainly concerning administrative functions are to be cut in a socially responsible manner, said the company in a media statement. The expenses and provisions required for this amount to approximately another EUR 30 million (USD 33m).
Progress has been made in optimizing Krones’ portfolio. For many years, Krones has invested in different future technologies for direct ink printing. In the future, Krones will focus on the direct printing technology with the highest market acceptance. For direct printing technologies that are not further pursued, an impairment loss of around EUR 20 million (USD 22m) is incurred. Additionally, goodwill is impaired by approximately EUR 20 million (USD 22m). Both impairments do not affect liquidity and have no impact on Krones’ cash flow. The company will announce further portfolio optimization measures in March 2020.
For the years 2020 and 2021, Krones is expecting a positive EBT effect of a total of approximately EUR 150 million (USD 167m) from the reduction of personnel costs, the optimized portfolio and further measures. The provisions and impairments for the structural measures will have no effect on the dividend for the fiscal year 2019, Krones said. The dividend will be calculated based on the profit excluding those one-time effects and should be in the usual range of 25 to 30 percent of the profit.
“2019 is and will remain a very challenging year for Krones. Regarding the development of orders and sales, we are already back on the right track. Nevertheless, we need to further improve our cost structures and optimize our portfolio. While these measures will have an impact on our EBT margin of the current fiscal year, we are convinced that the positive effects will already offset the costs in two years from now”, says Christoph Klenk, CEO of Krones.
On January 1, 2020 Krones’ new CFO Norbert Broger will take office (inside.beer, 26.9.2019). He succeeds Michael Andersen who left the executive board of the company by “mutual agreement” in July (inside.beer, 25.7.2019).