Outlook

Forward-looking statements

The forward-looking statements and information given below are based on the KION Group’s current expectations and assessments up to the time of preparation of this combined management report. Consequently, they involve a number of risks and uncertainties. Many factors, some of which are beyond the control of the management, affect the Group’s business activities and business performance as well as the earnings of the strategic management holding company, KION GROUP AG. Any unexpected changes, particularly in macroeconomic or industry-specific conditions, may lead to the results of the KION Group and its operating segments differing significantly from those forecast below.

The outlook for 2025 is subject to uncertainty in view of the still fraught macroeconomic and geopolitical climate at the time that this combined management report was being prepared. The risk factors described below may also have an adverse impact on the KION Group’s procurement, production, and sales activities.

The KION Group does not undertake to update forward-looking statements to reflect subsequently occurring events or circumstances. Furthermore, the KION Group cannot guarantee that future performance and actual profits generated will be consistent with the stated assumptions and estimates and can accept no liability in this regard. Actual business performance may deviate from the KION Group’s forecasts due, among other factors, to the opportunities and risks described here.

Assumptions

The forecasts in this section are derived from the KION Group’s multi-year market, business, and financial planning, which is based on various assumptions. Market planning takes into account predicted macroeconomic and industry-specific performance, as described below. Business planning and financial planning are based on expected market performance but also draw on other assumptions, such as those relating to changes in the cost of materials and labor costs, the sale prices achievable, and movements in interest rates and exchange rates.

Expected macroeconomic conditions

The IMF expects global economic output to rise by 3.3 percent in 2025, which is marginally higher than the 2024 growth rate. However, the situation is likely to differ from region to region. The main factors affecting economic growth are predicted to be increased uncertainty surrounding trade policy and the anticipated ratcheting up of protectionist measures that could be detrimental to trade relations (IMF, January 2025).

Advanced economies are expected to expand by 1.9 percent overall (2024: 1.7 percent), with a small year-on-year rise in the eurozone’s growth rate to 1.0 percent but a marginal decrease in the US growth rate to 2.7 percent.

In emerging markets and developing economies, growth is anticipated to hold steady at its 2024 level of 4.2 percent. For China, the IMF predicts that the pace of growth will slow to 4.6 percent.

The IMF believes that the global inflation rate will fall sharply to 4.2 percent in 2025. In advanced economies, inflation is expected to slow to 2.1 percent. The rate of inflation in emerging markets and developing economies is also likely to drop significantly, falling to 5.6 percent.

Having risen substantially in 2024, the volume of global trade will – according to the IMF – increase by only 3.2 percent in 2025, which is marginally lower than in the prior year.

Nevertheless, the IMF does see significant risks within its macroeconomic outlook. The escalation of geopolitical tensions could lead to a renewed rise in commodity prices. Moreover, the intensification of protectionist policies could exacerbate trade tensions, distort trade flows, reduce capital expenditure, and thus again disrupt supply chains. There are also risks stemming from political uncertainty and problems with fiscal and structural adjustments in individual economies that could have an adverse effect on the global economy.

Expected sectoral conditions

Based on numbers of orders, the KION Group is predicting slight growth in the global market for new industrial trucks across all regions in 2025. It expects a slowdown in the growth of new business in the EMEA region, stable growth rates in the APAC region, and a significant market recovery in the Americas.

For the warehouse automation solutions market, the KION Group has decided that, starting in 2025, it will switch from revenue-based analysis to analysis based on order intake. Order intake provides a more accurate picture of current demand because the lengthy projects that are typical in this market generally mean that revenue is not recognized until a significant amount of time has elapsed since the start of the project.

According to the KION Group’s figures and backed by market research from Interact Analysis, the market for warehouse automation solutions is likely to see a slight increase in order intake for project business in 2025. The continuing trend toward automation and the anticipated further fall in the cost of capital over the course of the year are expected to make companies more likely to invest in warehouse automation solutions. Furthermore, growing demand for mobile automation is set to boost the overall market, slightly outweighing the generally muted demand for stationary solutions. This market growth will be predominantly in the Americas and EMEA regions, whereas a marginal contraction is predicted for the APAC region.

The KION Group believes that the positive medium- and long-term trends in the warehouse automation solutions market remain intact. Based on its own assessment and supported by data gathered by Interact Analysis, the KION Group anticipates that long-term market growth, as measured by order intake in the project business, will be in the high-single-digit percentage range (Interact Analysis, November 2024).

Expected business situation and financial performance of the KION Group

In 2024, the KION Group’s revenue held steady year on year, while earnings and profitability improved significantly.

In the Supply Chain Solutions segment, further revenue growth is projected for the service business in 2025 due to the increased number of solutions already installed for customers. Overall, the Supply Chain Solutions segment’s revenue is expected to be more or less unchanged year on year because the order book in the project business as at the end of 2024 was smaller than at the end of 2023 and contained a high proportion of long-term projects. The KION Group anticipates a further marked rise in the segment’s adjusted EBIT in 2025. This is based on the assumption of continued growth in the high-margin service business and increased profitability in the project business on the back of improved project execution, savings resulting from capacity adjustments already made, and the declining number of low-margin legacy projects.

The Industrial Trucks & Services segment is expected to see a small year-on-year decrease in revenue in 2025. This is due to the order book, which has normalized at a lower level, and the anticipated further shift in demand toward warehouse trucks, whose unit prices are lower than those of counterbalance trucks. The KION Group is also facing intensifying competition, especially in the main sales market, EMEA. This means that expected cost increases can only be passed on to customers to a limited extent, which will weigh heavily on adjusted EBIT in 2025.

In view of this situation in the Industrial Trucks & Services segment, the Executive Board of KION GROUP AG signed off an efficiency program on February 4, 2025 that is aimed at strengthening competitiveness and the capacity to carry out capital investment. By adjusting the organizational structures in the EMEA region and making work processes more efficient, the KION Group is targeting lasting cost savings in a range of €140 million to €160 million per year that should take full effect from 2026 onward. The KION Group anticipates that implementing the program will result in expenses of between €240 million and €260 million, which are not included in the predicted figure for adjusted EBIT as they are classified as non-recurring items.

Owing to these non-recurring expenses, most of which are likely to impact on cash flow in 2025, the Group’s free cash flow is forecast to be significantly lower than in 2024.

The Executive Board expects the core key performance indicators of the KION Group and its operating segments to be within the following ranges in 2025:

Overall statement on expected performance

For 2025, reflecting the midpoint of the performance range that has been projected, the Executive Board of KION GROUP AG expects the Group’s revenue to decrease slightly compared with 2024. However, a significant year-on-year reduction is predicted for adjusted EBIT and return on capital employed (ROCE). Free cash flow is projected to be significantly lower than in 2024 owing to non-recurring items in connection with the efficiency program aimed at strengthening competitiveness and the capacity to carry out capital investment.

Nevertheless, geopolitical and market-related uncertainties are creating risks regarding the expected business performance of the Group and its operating segments.