Financial position

Principles and objectives of financial management

The KION Group pursues a sound financial policy of maintaining a strong credit profile with reliable access to capital markets. By pursuing an appropriate financial management strategy, the KION Group makes sufficient cash and cash equivalents available at all times to meet the Group companies’ operational and strategic funding requirements. As part of its financial management activities, the KION Group aims to optimize the funding structure and conditions. In addition, the KION Group manages its financial relationships with customers and suppliers and mitigates the financial risk to its enterprise value and profitability, notably currency risk, interest-rate risk, price risk, counterparty risk, and country risk. In this way, the KION Group creates a stable funding position for profitable growth.

Within the Group, KION GROUP AG manages intercompany cash pooling centrally. KION GROUP AG pools the liquidity of the Group companies and covers their funding requirements. The vast majority of the Group companies participate in KION GROUP AG’s groupwide cash pool. This funding enables the KION Group to present a united front in the capital markets and strengthens its hand in negotiations with banks and other market participants. The Group occasionally arranges additional local credit lines for some Group companies with banks or leasing companies in order to comply with legal, tax, and other regulations.

The KION Group is a publicly listed corporate group and therefore ensures that its financial management takes into account the interests of shareholders, the banks providing its funding, and other lenders. For the sake of all stakeholders, the KION Group makes sure that it maintains an appropriate ratio of internal funding to borrowing. The KION Group’s borrowing currently has a maturity structure extending until 2030.

Depending on requirements and the market situation, the KION Group also avails itself of the funding facilities offered by the capital markets. The KION Group therefore seeks to implement proactive risk management by rigorously pursuing its corporate strategy and to maintain an investment-grade credit rating in the capital and funding markets by ensuring a solid funding structure.

The KION Group’s credit ratings remained unchanged in the year under review. Standard & Poor’s confirmed its rating of BBB– in February 2024. The outlook remains negative. In May 2024, Fitch Ratings awarded an unchanged long-term issuer default rating of BBB with a stable outlook and a short-term issuer default rating of F2.

KION GROUP AG generally issues guarantees to the banks for Group companies’ existing payment obligations.

The KION Group maintains a liquidity reserve in the form of cash and a revolving credit facility in order to ensure long-term financial flexibility and solvency.

In addition, the KION Group uses derivatives to hedge currency risk. Interest-rate swaps are entered into in order to hedge interest-rate risk.

The revolving credit facility and a number of promissory notes taken out by KION GROUP AG stipulate adherence to covenants. The agreed financial covenant involves ongoing testing of adherence to a maximum level of leverage (defined as the ratio of industrial net operating debt to adjusted EBITDA). As at December 31, 2024, the actual level of leverage was well below the limit of the financial covenant. As contractually agreed, this calculation is suspended in respect of the revolving credit facility because KION GROUP AG continues to have two investment-grade credit ratings.

Exceeding the agreed maximum level of leverage gives lenders a right of termination.

The contractually agreed interest terms for the revolving credit facility are linked not only to KION GROUP AG’s credit rating but also to compliance with the Group’s sustainability KPIs. The interest terms for a promissory note issued in October 2023 are also linked to the achievement of ESG targets.

Main corporate actions in the reporting period

KION GROUP AG took further steps to secure the necessary funding for the Group in 2024, responding to the persistent uncertainties in the capital markets.

In November 2024, KION GROUP AG placed a second unsecured bond with a nominal amount of €500.0 million, a maturity date in 2029, and a coupon of 4.0 percent on the capital markets under its established EMTN program. The proceeds from issuing the bond are to be used to refinance the financial liabilities maturing in 2025, thereby improving the maturity profile of KION GROUP AG’s borrowing even further.

Analysis of capital structure

Non-current and current liabilities amounted to €12,598.3 million as at December 31, 2024, which was €982.6 million higher than the figure as at December 31, 2023 of €11,615.7 million. The increase was partly driven by the rise in non-current and current liabilities from the lease and short-term rental business and by the overall growth of financial liabilities. Non-current liabilities included deferred tax liabilities of €446.7 million (December 31, 2023: €448.9 million).

Financial debt

Non-current and current financial liabilities advanced to a total of €1,700.3 million (December 31, 2023: €1,522.4 million). Non-current financial liabilities fell to €1,002.0 million (December 31, 2023: €1,306.6 million). They included the corporate bond issued in November 2024 with a carrying amount of €496.0 million, whereas the first corporate bond under the EMTN program, which is due to mature in September 2025, is now recognized under current financial liabilities. Furthermore, non-current promissory notes decreased to €449.1 million (December 31, 2023: €626.5 million) owing to the reclassification of two tranches in view of their maturity dates; the variable-rate tranche of €100.0 million was repaid ahead of schedule in the final quarter of 2024. Non-current financial liabilities also included liabilities to banks, which fell to €56.7 million at the end of 2024 (December 31, 2023: €164.2 million) due to the early repayment of a bilateral loan.

Current financial liabilities rose to €698.3 million as at December 31, 2024 (December 31, 2023: €215.8 million). In addition to the corporate bond with a carrying amount of €499.1 million, which is due to mature in September 2025, current financial liabilities also included the promissory note of €79.5 million that matures in June 2025 and current liabilities to banks of €90.2 million (December 31, 2023: €108.2 million). The syndicated revolving credit facility (RCF) was undrawn as at the reporting date (December 31, 2023: drawdown of €21.0 million).

Net financial debt (non-current and current financial liabilities less cash and cash equivalents) stood at €913.2 million as at the end of 2024, which was below the prior-year figure (December 31, 2023: €1,210.6 million). This equated to 0.5 times adjusted EBITDA on an annualized basis (December 31, 2023: 0.7 times). To reconcile the net financial debt with the industrial net operating debt (INOD) of €2,497.5 million as at December 31, 2024 (December 31, 2023: €2,566.2 million), the liabilities from the short-term rental business of €814.1 million (December 31, 2023: €716.6 million) and the liabilities from procurement leases of €770.1 million (December 31, 2023: €639.0 million) are added to net financial debt.

Retirement benefit obligation and similar obligations

The KION Group maintains pension plans in many countries. These plans comply with legal requirements applicable to standard local practice and thus the situation in the country in question. The plans comprise defined benefit pension plans, defined contribution pension plans, and plans covering multiple Group companies. As at December 31, 2024, the retirement benefit obligation and similar obligations under defined benefit pension plans amounted to a total of €747.5 million, a year-on-year decrease of €28.2 million that was due to an overall slight rise in the discount rates (December 31, 2023: €775.7 million). The net obligation under defined benefit pension plans, defined as the present value of the associated obligations after deduction of plan assets, came to €666.9 million (December 31, 2023: €674.8 million). Changes in estimates relating to defined benefit pension entitlements resulted in a decrease in equity of €15.3 million (after deferred taxes).

Contributions to pension plans that are entirely or partly funded via funds are paid in as necessary to ensure sufficient assets are available and to be able to make future pension payments to pension plan participants. These contributions are determined by factors such as the funded status, legal and tax considerations, and local practice. Payments totaling €84.5 million (2023: €85.9 million) were made in 2024 for the main pension entitlements in the KION Group. They mostly comprised pension benefits of €27.0 million (2023: €26.1 million) granted directly by the Company and employer contributions to plan assets amounting to €57.5 million (2023: €59.7 million). In 2023 and 2024, the employer contributions included a special funding of €50.0 million in order to increase the funding ratio of the pension plans in Germany.

Liabilities from lease and short-term rental business

The ongoing expansion of the lease business led to higher funding needs in the reporting year. Non-current and current liabilities from the lease business increased to €4,407.5 million as at December 31, 2024 (December 31, 2023: €3,756.2 million). Of this total, €4,280.5 million was attributable to financing of the direct lease business (December 31, 2023: €3,620.5 million) and €127.0 million to the repurchase obligations resulting from the indirect lease business (December 31, 2023: €135.7 million).

Non-current and current liabilities from the short-term rental business totaled €814.1 million (December 31, 2023: €716.6 million).

Other provisions

Non-current and current other provisions rose to €482.6 million as at December 31, 2024 (December 31, 2023: €452.3 million). In addition to provisions for product warranties and for personnel-related obligations, this includes provisions for onerous contracts mainly related to project business in the Supply Chain Solutions segment and other obligations.

Other financial liabilities

Non-current and current other financial liabilities came to €977.0 million as at December 31, 2024 (December 31, 2023: €884.5 million). This item predominantly included liabilities from procurement leases amounting to €770.1 million (December 31, 2023: €639.0 million), for which right-of-use assets were recorded.

Contract liabilities

Contract liabilities, which mainly relate to prepayments received from customers in connection with the long-term project business in the Supply Chain Solutions segment, stood at €778.6 million as at the reporting date (December 31, 2023: €773.3 million).

Equity

Consolidated equity went up by €434.4 million to €6,207.1 million as at December 31, 2024 (December 31, 2023: €5,772.7 million). The net income of €369.2 million earned in the year under review contributed to the rise in equity. The currency translation gains of €151.5 million, which were recognized in other comprehensive income, also had an impact on equity. The actuarial gains and losses arising from the measurement of pensions, which amounted to a net loss of €15.3 million (after deferred taxes), had an impact too. The dividend paid by KION GROUP AG in June 2024 reduced equity by €91.8 million. The equity ratio of 33.0 percent was slightly below the level as at the end of 2023 of 33.2 percent owing to the increase in total assets.

Analysis of capital expenditure

The KION Group’s capital expenditure on property, plant and equipment and on intangible assets in the reporting year (excluding right-of-use assets from procurement leases) gave rise to cash payments of €462.9 million (2023: €442.8 million). The focus in the Industrial Trucks & Services segment was on product development and the expansion and modernization of production and technology facilities. Capital expenditure in the Supply Chain Solutions segment predominantly related to development costs. Purchase commitments for capital expenditure on non-current assets amounted to €36.6 million as at the reporting date (December 31, 2023: €68.5 million).

Analysis of liquidity

Liquidity management is an important aspect of central financial management in the KION Group. The sources of liquidity are cash and cash equivalents, cash flow from operating activities, and amounts available under credit facilities. Using cash pools, liquidity is managed in such a way that the Group companies can always access the cash that they need.

Cash and cash equivalents increased to €787.0 million as at December 31, 2024 (December 31, 2023: €311.8 million).

Taking into account the credit facility of €1,385.7 million that was still freely available and was undrawn as at the reporting date (December 31, 2023: €1,364.7 million), the unrestricted cash and cash equivalents available to the KION Group as at the end of 2024 amounted to €2,172.2 million (December 31, 2023: €1,674.4 million).

In 2024, the KION Group’s cash flow from operating activities amounted to a net cash inflow of €1,170.6 million and was therefore even higher than in the previous year (2023: €1,144.0 million). This was primarily thanks to the significant improvement in operating profit and the substantial reduction in net working capital. Cash outflows encompassed the variable remuneration that was paid and the payments for income taxes, which were much higher than in the previous year due to the success of the 2023 financial year.

There was an increase in net cash used for investing activities to minus €468.6 million in 2024 (2023: minus €428.8 million). Within this total, cash payments in respect of capital expenditure came to minus €462.9 million (2023: minus €442.8 million). This figure included capitalized development costs, which rose year on year to €133.2 million (2023: €116.0 million). In 2024, there were also net payments totaling minus €36.7 million (2023: minus €2.8 million) for acquisitions of companies and equity investments, although these were partly offset by net inflows of €10.3 million (2023: €0.0 million) from the sale of business units.

Free cash flow – the sum of cash flow from operating activities and investing activities – amounted to €702.0 million in the reporting year, which was almost as high as in the previous year (2023: €715.2 million).

Net cash used for financing activities amounted to minus €224.7 million in 2024 (2023: minus €721.7 million). Additions to and repayments of financial debt mainly related to the issue of the corporate bond, additions and repayments under the commercial paper program and the syndicated revolving credit facility (RCF) during the year, and the repayment of promissory notes and bank loans. Payments made for interest portions and principal portions under procurement leases totaled €175.0 million (2023: €157.9 million). Current interest payments were on a par with the previous year at minus €69.1 million (2023: minus €69.7 million). Payments as a result of other financing activities, which mainly related to the repayment of factoring liabilities, totaled minus €61.7 million (2023: receipts of €4.2 million). The payment of a dividend to the shareholders of KION GROUP AG resulted in an outflow of funds of minus €91.8 million, which equates to €0.70 per share.