16.9% revenue drop in 2020 for Krones
Krones, the manufacturer of filling and packaging technology, revenue fell 16.1% year-on-year, from €3.958 billion to €3.32bn. This is a slightly smaller revenue shortfall than the 17% decrease forecast in early November 2020.
The uncertain general economic situation in 2020 burdened investment confidence among Krones’ customers. This affected the company’s order intake, primarily in the first half of the year. The contract value of orders increased significantly in the third and especially in the fourth quarter. Over the full year 2020, order intake was down 19.0% year-on-year. At the end of 2020, Krones had an order backlog of €1.21bn (previous year: €1.39bn).
Profitability affected by Covid-19 and one-off effects
The lower order intake meant that Krones could not make optimum use of its production capacity. This impacted profitability in 2020. Savings resulting from the structural measures adopted by the company in the second half of 2019 had a positive effect on earnings. In total, earnings before interest, taxes, depreciation and amortisation (EBITDA) went down from €227.3 million in the previous year to €133.2m in 2020.
For the 2021 financial year, due to ongoing uncertainty about the path of the Covid-19 pandemic, Krones is forecasting low revenue growth of 2.5% to 3.5%. Based on the slight recovery in revenue and the savings from the structural measures, the Executive Board expects profitability to be better than in 2020. Krones anticipates an EBITDA margin of 6.5% to 7.5% in 2021. The third key figure of the outlook, the working capital to revenue ratio, is expected to improve to between 26% and 27%.
The outlook for 2021 is subject to the assumption that there will be no severe impacts from the Covid-19 pandemic such as harmful virus mutations or vaccination difficulties. This would hit the economy and hence also Krones harder than currently expected and could lead to negative revenue and earnings effects.