High costs and an unfavourable product mix are weighing on Krones' profitability. Despite the difficult macroeconomic conditions, however, revenue picked up again in the third quarter of 2019.
Overall, the Turnover in dthe first three quarters of 2019 increased by 7.3 % compared to the previous year, from 2,692.8 million euros to 2,889.7 million euros. Adjusted for acquisition and currency effects, growth in the first nine months of 2019 totalled 2.7 %.
Following the loss in the second quarter of 2019, the Earnings situation eased slightly in the third quarter, the company has now announced. From July to September 2019, earnings before taxes (EBT) totalled €13.5 million. In the first nine months of 2019, Krones generated EBT of €61.4 million (previous year: €139.4 million).
Market relatively stable overall
Because of the temporarily low demand for plastics technology machinery and equipment production capacities in this area were poorly utilised in the second quarter. Krones generated consolidated net income of €40.3 million in the first nine months of 2019 (previous year: €99.4 million). Earnings per share fell from €3.16 to €1.28.
Krones' customers are also factoring the numerous macroeconomic uncertainties into their investment decisions. Overall, the Krones' market relatively stable. From July to September 2019, incoming orders decreased slightly by 0.6 % to EUR 919.3 million compared to the previous year. Temporary weaknesses in demand in some areas of the portfolio have been minimised due to the wide range of products and services can compensate for this.
Structural measures to sustainably improve profitability
The Executive Board has taken further measures to counteract the negative impact on earnings. In addition to short-term measures such as Savings on budgets Krones will significantly reduce its investments for the next one to two years. Acquisitions will also be postponed for the time being.
According to Krones, it is working sustainably on competitive cost structures in order to maintain and, in the best case, expand its market share. All Processes, organisational structures and resources are to be optimised. Overall, however, it is unavoidable that 300 to 500 jobs will be lost, mainly at the German sites.
Outlook 2019
Krones expects that the Production capacities well utilised in the fourth quarter are. The company is therefore maintaining its earnings forecast for 2019 as a whole and continues to anticipate growth in turnover of 3 %.
Source: Krones AG
