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Investing.com - Jefferies has initiated coverage on Krones AG (ETR:KRN) with a Buy rating and a price target of EUR175.00, citing the company’s position at the intersection of structural beverage growth, sustainability-driven investment, and automation.
The research firm highlighted Krones’ clear strategy, strong execution, and robust financial profile, which it believes positions the company to grow ahead of the market. Jefferies expects a rerating underpinned by solid earnings growth and new product launches at the company’s CMD in September.
Krones has delivered strong financial results over the past five years, generating EUR1.1 billion in pre-M&A free cash flow and EUR800 million post-M&A, despite higher capital expenditures. The company maintains EUR440 million in net cash and approximately EUR850 million in unused credit lines.
The packaging and bottling technology leader achieved a record return on capital employed (ROCE) of 18.2% in fiscal year 2024, with aims to exceed 20% through EBIT growth and disciplined capital use. Working capital intensity dropped to a historical low of 17% in 2024 and is expected to remain below 20%.
Jefferies anticipates free cash flow conversion of approximately 70% from 2026, despite continued increased capital expenditures targeting capacity, modernization, and service expansion, which are expected to represent 3.5-4% of revenue.
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