Krones specifies structural measures
The Executive Board of Krones AG has decided on additional structural efficiency measures. Furthermore, the Management has specified the expected expenses for all measures intended to substantially enhance the profitability of Krones. Measures initiated to cut personnel costs as well as specific portfolio optimisation measures lead to provisions and impairments of approximately €70 million in 2019. Thus, the resulting expenses will remain within the already communicated range of €60 to €80 million and affect the EBT margin already in 2019. The corresponding EBT margin for the year 2019 is expected to be around 1 per cent. Without one-time effects, the EBT margin for 2019 would be around 3 per cent as previously predicted.
“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 optimise 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 AG.
As part of the efficiency measures, Krones is already reducing jobs in the current fiscal year. This programme will be continued in 2020. In the coming year, 300 additional jobs in Germany and 200 additional jobs worldwide are to be cut in a socially responsible manner. The expenses and provisions required for this amount to approximately €30 million. The job reductions mainly concern administrative functions.
Progress has also been made in optimising 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 €20 million is incurred. Additionally, goodwill is impaired by approximately €20 million. 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 €150 million from the reduction of personnel costs, the optimised portfolio and further measures. The provisions and impairments for the structural measures will have no effect on the dividend for the fiscal year 2019. 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 per cent of the profit.
