Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Krones AG (KRNTY, Financial) reported a strong order intake of EUR 1.3 billion in Q3, aligning with expectations and maintaining a book-to-bill ratio above 1.
- The company achieved a revenue growth of 11.2% for the first nine months, with expectations to reach the upper end of their 9-13% growth guidance.
- Krones AG (KRNTY) reported a significant increase in EBITDA, with a margin improvement from 9.5% to 10.2% in Q3.
- The company has a robust order backlog, providing capacity utilization until the end of 2025, ensuring planning security for the future.
- Krones AG (KRNTY) maintained a strong cash position with EUR 305 million and a liquidity reserve of EUR 1.159 billion, indicating financial stability.
Negative Points
- The Intralogistics segment experienced a revenue decrease of EUR 46 million, with challenges in executing orders due to customer project delays.
- There is uncertainty regarding the impact of geopolitical events, such as the US elections and conflicts in the Middle East, on future order intake.
- The company faces competitive pressure, particularly from Chinese and Italian competitors, affecting pricing and order acquisition.
- Krones AG (KRNTY) has not yet achieved its target delivery times, currently at 50 weeks, with plans to reduce to 40-45 weeks.
- The Processing Technology segment showed flat growth in Q3, with challenges in the US market and a need for a stronger sales force.
Q & A Highlights
Q: Can you provide an update on the order intake guidance and whether the 5.6 billion target mentioned in Q2 is still achievable?
A: Christoph Klenk, CEO, stated that the order intake pipeline is robust enough to potentially reach the 5.6 billion target. However, achieving this depends on winning orders and customers not postponing them. The current estimate for Q4 is around 1.4 billion, which would lead to a book-to-bill ratio greater than one. External factors like the US elections and geopolitical tensions could impact this outcome.
Q: How do you see the growth outlook for the next year, especially considering the strong double-digit growth in recent quarters?
A: Christoph Klenk, CEO, mentioned that while they plan to grow next year, it is too early to specify the level. The company has a good order backlog and expects continued growth in aftermarket business. However, the exact growth rate will be detailed in the 2025 guidance.
Q: What is the current competitive landscape, particularly regarding pricing and competition from China?
A: Christoph Klenk, CEO, noted that while there is price pressure, it is more customer-driven than competition-driven. The competitive landscape has not changed significantly, and there is no unreasonable behavior from competitors. The company continues to face challenges from Chinese and Italian competitors but maintains its pricing strategy.
Q: How is the intralogistics segment performing, and what are the expectations for the future?
A: Christoph Klenk, CEO, explained that the intralogistics segment has a strong order intake and expects good growth in 2024. Some project executions were delayed due to customers not completing their facilities, but these are expected to resume, contributing to revenue growth next year.
Q: What is the impact of potential US import tariffs on Krones, and how is the company prepared for this?
A: Christoph Klenk, CEO, stated that Krones has assumed a potential 10% increase in import taxes regardless of the US election outcome. The company is well-positioned as its major competition is based in Europe, and it has localized production for processing and intralogistics in North America. This strategy helps mitigate the impact of potential tariffs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
