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S&P Global downgrades KION to BB+ on profitability concerns

Published 27/06/2025, 17:42
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Investing.com -- S&P Global Ratings has downgraded KION GROUP AG from ’BBB-’ to ’BB+’ due to more volatile profitability and slower debt reduction, according to a statement released Friday.

The rating agency expects KION’s adjusted EBITDA margin to decline to about 13% in 2025 from 15.3% in 2024, as the company’s new efficiency program and challenging industry conditions impact operating performance.

S&P forecasts the company’s adjusted debt-to-EBITDA ratio will worsen to 5.0x-5.5x in 2025, up from 4.4x in 2024 and 4.6x in 2023.

The downgrade reflects S&P’s view that KION will not reduce its adjusted debt to EBITDA below 4.0x over the next 18 months, which is the threshold for an investment-grade rating.

KION’s revenue growth is expected to remain subdued in 2025, with S&P projecting a 3% decrease. The company’s order book totaled €4.4 billion in Q1 2025, down from €5.6 billion in Q1 2024, with declines in both industrial trucks and services (ITS) and supply chain solutions (SCS) segments.

The efficiency program targeting the ITS segment will significantly affect profitability in 2025, with KION expected to incur a €240 million-€260 million one-off charge. However, from 2026, the program is anticipated to deliver annual cost savings of €140 million-€160 million.

S&P expects KION’s revenues to rebound by 4%-6% in 2026 as the macroeconomic landscape stabilizes and the efficiency program improves competitiveness. The adjusted EBITDA margin is projected to recover to 15.6%-16.0% in 2026.

The stable outlook assigned by S&P reflects expectations that KION will benefit from cost-saving initiatives and maintain credit metrics in line with the new rating, specifically adjusted EBITDA margins exceeding 13% and an adjusted debt-to-EBITDA ratio sustainably below 4.5x.

S&P also lowered the issue rating on KION’s senior unsecured debt to ’BB+’ from ’BBB-’ and assigned a recovery rating of ’3’, representing an estimated 60% recovery.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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