Earnings call transcript: Kion Group reports strong Q2 2025 earnings beat

Kion Group AG reported a robust second quarter for 2025, surpassing earnings expectations with an EPS of €0.72, beating the forecasted €0.6204 by approximately 16%. The company’s stock responded positively, rising 1.15% to €52.8. According to InvestingPro data, the stock has shown remarkable momentum with a 62.84% year-to-date return, though current valuations suggest the stock may be trading above its Fair Value. While revenue figures were not disclosed, the company’s significant order intake and strategic initiatives in AI and supply chain management have buoyed investor sentiment.

Key Takeaways

• Kion Group’s EPS of €0.72 exceeded forecasts by 16%, marking a 38% YoY increase.
• Stock price rose by 1.15% after the earnings announcement.
• Strong order intake growth, particularly in the e-commerce sector.
• Strategic partnership with NVIDIA for AI-driven supply chain solutions.
• Confirmed full-year 2025 guidance, targeting a 10% EBIT margin by 2027.

Company Performance

Kion Group demonstrated strong performance in Q2 2025, with a notable 38% increase in EPS year-over-year. The company’s strategic focus on innovation and partnerships, such as the collaboration with NVIDIA, positions it well in the competitive supply chain solutions market. Despite revenue declines in key segments, the company maintained a positive cash flow and improved its order intake by 33% YoY.

Financial Highlights

• Order intake: €3.5 billion, up 33% YoY.
• Adjusted EBIT: €189 million, with a 7% margin.
• Free cash flow: Positive €132 million.
• Earnings per share: €0.72, a 38% increase YoY.

Earnings vs. Forecast

Kion Group’s earnings per share of €0.72 exceeded the forecast of €0.6204, resulting in a 16% positive surprise. This beat underscores the company’s strong operational performance and effective cost management strategies.

Market Reaction

Following the earnings announcement, Kion Group’s stock price increased by 1.15%, reflecting investor confidence in the company’s performance and future prospects. The stock is trading closer to its 52-week high, indicating strong market sentiment.

Outlook & Guidance

Kion Group confirmed its full-year 2025 outlook, reiterating its target of achieving a 10% EBIT margin by 2027. The company anticipates market growth across all regions and is optimistic about potential tax gains in Q3 due to changes in German corporate tax rates.

Executive Commentary

Rob Smith, CEO of Kion Group, highlighted the company’s strategic positioning, stating, "We are the only western player in the China market at this point in time." He also emphasized the company’s long-term objectives: "Our objective is to have both of our segments and our group above 10% by 2027."

Risks and Challenges

• Revenue decline in key segments could impact future growth.
• Geopolitical uncertainties may affect customer investment decisions.
• Continued destocking in North America presents short-term challenges.
• Efficiency program expenses expected to impact cash flow in H2 2025.

Q&A

During the earnings call, analysts inquired about the strong e-commerce order pipeline and the company’s strategies to mitigate tariff uncertainties. Executives expressed optimism about market recovery and highlighted contractual protections in place to address potential risks.

Full transcript - Kion Group AG (KGX) Q2 2025:

Chorus Call Operator: Ladies and gentlemen, welcome to the Qiong Group’s Q two two thousand twenty five update call. Today’s presenters will be Rob Smith, CEO of Qiong Group and Christian Han, CFO of Qiong Group. I’m serving the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. If you would like to ask a question from the webinar, you may click the Q and A button on the left side of your screen and then click the raise your hand button.

If you are connected via phone, please press star followed by one on your telephone keypad. Also, please limit yourself to two questions only. For operator assistance, please press star and 0. The conference must not be recorded for publication or webcast. At this time, I must tell you to turn over to Rob Smith.

Please go ahead, sir. You, Sergey.

Rob Smith, CEO, Kion Group: Good afternoon, ladies and gentlemen, and welcome to our update call and webcast on our Q2 results. You can please see the update call presentation on the IR website as we go through the presentation together. I’m going to start with a summary of our second quarter twenty twenty five results, and then Christian will take you through our Q2 financials in detail and reiterate our outlook for 2025. I’ll come back, and we’ll be taking with some key takeaways. And then Christian and I look forward to your questions after that.

Let’s start together on Page three. Q2 was another solid quarter and in line with our expectations. Group order intake was €3,500,000,000, a 33% increase compared to the prior year and reflects a record quarter for order intake in Supply Chain Solutions. Revenue was down at the key on level and in both segments due to the subdued demand in new truck and new project business in prior quarters. Adjusted EBIT was a €189,000,000 corresponding to an adjusted EBIT margin of 7%.

While adjusted EBIT in Supply Chain Solutions continued to improve its profitability, Performance in ITS reflected the expected negative impact of lower volumes. Free cash flow was again positive at a €132,000,000. Earnings per share were €72 cents, an increase of 38% year on year. I turn you over to Christian now, and he’ll take you through the q two financials and reiterate our outlook for the full year.

Chorus Call Operator: Thank you, Rob. So please, everybody, let’s go to slide five for the key financials of the ITS segment. Mhmm. Order intake reached 70,000 units in the second quarter, and that is a sequential increase of 7%, a pretty normal seasonal development in the second quarter of the year. Year over year, the increase was 9%, meaning that the growth seen in the first quarter twenty five helped its pace.

New orders in money terms increased 5% year on year, driven by an 8% increase in the new track business and the service business also showed continued growth at 3%. The order book reflects now ongoing the lead time normalization and its margin quality is in line with our expectations as reflected in our outlook. With this development, the book to bill ratio was above one. Revenue declined by 6% year over year to slightly over €2,000,000,000. The 2% growth in service only slightly made up for the expected 13% decline in the new truck business.

Remember that in 2024, the new drug business revenue significantly benefited from the tailwind of a high order backlog. Adjusted EBIT at €173,000,000 and the corresponding adjusted EBIT margin at 8.6% reflect the expected impact from lower volumes resulting in reduced fixed cost absorption as well as lower gross margins due to the reduced pricing realized in the 2024 in the new drug business. On Page six, I will now continue with the summary of the key financials for SCS. We had a very strong quarter in order intake, in fact, a record level of more than €1,400,000,000 In contrast to recent quarters, this significant increase was primarily driven by Business Solutions, which more than doubled also thanks to the favorable timing of some order signings. The service business continued to grow.

This is a very good development, but I would ask you not to extrapolate the number for every quarter going forward. While we may have passed the trough, we are still in a lumpy recovery trajectory and we are likely to see the next quarters below the 1,000,000,000 mark again. You will note that the increase in demand was very much driven by the pure play e commerce vertical, while most of the remaining verticals continue to be impacted by customers’ ongoing hesitancy to sign new contracts due to the geopolitical uncertainties. As a result of the high order intake, the order book increased both sequentially and year over year. This year over year increase would have shown an even higher growth rate without the adverse FX translation effect of approximately €225,000,000 Overall, revenue increased slightly sequentially and declined year on year.

The 6% growth in the service business partially made up for the 12% decline in the project business, again, which was impacted by the lower order intake in the past quarters. The adjusted EBIT improved strongly year on year to €42,000,000 with a near doubling of the adjusted EBIT margin to 6%, and that’s mainly true to the growth in the service business and the solid project execution. Now let me quickly run through the key financials for the group on Page seven. Order intake benefited from the growth across all businesses, new trucks in ITS, new projects in SCS as well as the continued growth in the service business in both segments. The continued lead time normalization in ITS and the FX translation losses in SCS led to the year over year decline in the order book.

Revenue benefited from the growth in the resilient service business in both segments, nearly compensating for the lower ITS new truck and SCS Business Solutions revenue. And adjusted EBIT at €189,000,000 and the adjusted EBIT margin at 7% was mainly impacted from the lower fixed cost disruption in IGS, which was partially compensated by the strong earnings improvement in STS. Page eight then shows the reconciliation from the adjusted EBITDA to group net income. The nonrecurring items in the quarter did not include any material expenses for the efficiency program. With regards to PPA items, remember that the prior year quarter was impacted by the €22,000,000 goodwill impairment for KEON ITS Americas.

In the 2025, PBA items were back at the usual quarterly level. The net financial expenses improved year over year mainly due to positive currency effects. This resulted in pretax earnings of €131,000,000 in the quarter. The net loss attributable to shareholders increased by 38% to €94,000,000 and that’s corresponding to earnings per share of €72 cents. The tax expenses of €38,000,000 corresponded to a tax rate of 28%, significantly lower than in the prior year quarter.

The main driver for the lower tax expenses in the quarter resulted from a positive tax effect relating to prior years. In June 2025, so June, the German government resolved to cut the federal corporate income tax rate from the fiscal year 2028 onwards, and that’s leading to a revaluation of deferred tax assets. This is expected to lead to a tax gain in the low to middle double digit euro million million euro amount in the third quarter. This effect, together with the low effective tax rate in the first two quarters of this year, has led us to update our full year 2025 tax indication to between 2530% from previously 35% to 39%. You will find this information on the housekeeping slide in the appendix of this update call presentation.

Now page nine, let’s continue with the free cash flow. The free cash flow in the quarter reached positive €132,000,000 substantially driven by an improvement in the net working capital in both operating segments. In contrast to the prior two years, where we had a €50,000,000 cash out in the fourth quarter for additional pension funding, we are planning to spread the cash amount across three quarters this year. Euros 15,000,000 were funded in the second quarter and additional funding in similar magnitude are earmarked for the third and the fourth quarter. The expenses relating to the efficiency program were not cash effective in the second quarter.

They are expected to become cash effective in the second half of this year and this is included in our full year 2025 free cash flow guidance. Page 10 then shows the development of the net financial debt and our leverage ratios. We had a slight increase in the net debt at the end of the second quarter twenty twenty five, but continued to remain below €1,000,000,000 This has no impact on the leverage ratios to grow both net debt definitions compared to the March. Our leverage ratios remain slightly lower than the level last seen post our December 2020 capital increase. But again, this time, we achieved this improvement entirely through self help measures.

Let me quickly touch on the standard and poor global rating downgrade to BB plus stable outlook that was published at the June. While disappointing, our analysis shows very limited impact on our financing costs and our refinancing ability. The margins agreed with our banks under the revolving credit facilities are driven by margin grids and margins will rise by very low double digit number of basis points. As you can see the maturity profile included in the appendix of this presentation, our industrial indebtedness has virtually no maturities until 2028, following the early refinancing of the upcoming bond maturity in December in September for which we had issued a new bond back in November. Consequently, the impact on our industrial indebtedness is very limited.

Our net financial debt of less than 1,000,000,000 carries fixed coupons for a large part and the variable part is contracted with fixed margins, fluctuating only with Oribor. Only the currently undrawn revolving credit facility maturing in 2028 would be impacted by the margin increase in case of utilization and minimally with respect to the commitment fees. The leasing refinancing will be slightly impacted by the variable part of the existing portfolio financed via a revolving credit facility maturing in 2029. For future customer contracts, this likely increased refinancing costs will be included in our end customer offerings. Overall, we expect a very low single digit million euro impact on our interest results in 2025 and beyond.

We enjoy a very stable banking group and will continue to work very closely with the rating agencies to establish a path back to a consistent investment grade rating over time. Now I’m moving on to slide 12. We had a good start into the year with the Q1 as well as the Q2 performing in line with our expectations. Looking ahead, we know that the economic environment is still characterized by considerable uncertainty, geopolitical risks and potential negative impact on our value chains and our markets could materialize from the ongoing trade conflict. Over the past years, we have invested in our production and R and D capacities and into our sales and service networks, particularly in the APAC and Americas regions to prepare for shifting geopolitical scenarios.

We therefore confirm our outlook for fiscal year twenty twenty five for the group and our two operating segments as of today, subject to the condition that there’s no significant disruption to our supply chains as a result of trade barriers, especially tariffs and restrictions on access to critical commodities. Slide 13 lays out our guidance as presented with the full year 2024 results. Since I provided a detailed walkthrough of our guidance at the full year 2024 update call at the February, I will skip it here in the interest of time. For those of you who are interested in the explanation, please refer to the transcript, which is posted on our Investor Relations website. I know you are going to ask me anyway, so let me share with you how we are currently think about the phasing over the next two quarters.

As you know, q three is often a weaker margin quarter in ITS with July and August being holiday months with some seasonality due to summer factory shutdowns, especially in our key market EMEA. I don’t think this year will be any different. Q four is often a stronger margin quarter, and again, this should not be any different this year. But how much stronger is the discussion like to postpone then when we actually present our q three results? For SCS, as you know, in general, we’re looking for a margin improvement every quarter.

Since the margin improvement was quite pronounced from the first to the second quarter, maybe the next sequential improvement won’t be as strong and then maybe stronger again in the fourth quarter. Again, let’s discuss Q4 when we publish q three. Obviously, by then, we will have a much better visibility. And with that, Rob, I hand back to you for the key takeaways.

Rob Smith, CEO, Kion Group: Thank you, Christian. Our key takeaways, you’ll find on page 14. Kion had a solid start to this year with q one and q two twenty twenty five performing in line with our expectations. Looking ahead, the economic environment is characterized by considerable uncertainty. In particular in particular, the ongoing trade conflict could potentially have negative impacts on our value chains and or on our markets.

Over the last two and a half years, our supply chain solutions business at Domatic has been on a consistent and sustainable profitability improvement journey, And this has been based solely on self help measures such as the completion of legacy projects, improved project execution, and service growth. And with the order intake now beginning to recover, Supply Chain Solutions is well on the right track to deliver over 10% adjusted EBIT margin profitability in 2027. We confirm our outlook for the fiscal year 2025 for the group and both of our operating segments subject to no significant disruptions to supply chains. It was a result of trade barriers, especially tariffs and restriction on access to critical commodities. This does conclude our presentation.

Thank you for your interest so far. We’re looking forward to some great questions. Back to you, Sergeant. Let’s open the line. Thank you

Chorus Call Operator: very much, mister Smith. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question from the webinar may click the q and a button on the left side of the screen and then click the raise your hand button. If you are connected via phone, please press star four 51 on the telephone keypad keypad. You will hear a tone to confirm that you have entered the queue.

If you wish to move yourself from the question queue, you may press the lower your hand button on the webinar or press star and two on your telephone. In the interest of time, please limit yourself to two questions. Anyone with the question may queue up now. And we have the first question coming from the line of Akash Gupta from JPMorgan. Please go ahead.

Akash Gupta, Analyst, JPMorgan: Yes. Hi. Good afternoon, and thanks for your time. I I got two, and both are on supply chain solutions segment. So the first one I have is on the on the order pipeline.

You had a very strong q two, and I’m curious how does the pipeline look after such a strong quarter. Can you give us any insight on what you’ve seen out there and how does it compare at the same point in time last year? And and when we look at the prospect for second half orders, is there any room to grow orders in the second half or we should expect weaker orders? That’s the first one.

Rob Smith, CEO, Kion Group: Hey, Kash. Thank you for that question. I’ll take that one. Look, you know, orders moving between quarters, shifting between quarters is quite normal business in Supply Chain Solutions. And that’s why it’s important to look at the trend over over several quarters.

Q2 was a very strong quarter, and there was a convergence of several different elements within customer’s seasonal schedule and internal approval processes and overall strategy. And we took multiple large orders in this quarter, leading to some very, very strong performance in this quarter. We don’t see it at that level in the quarters to come. However, we do expect that the second half of this year is up versus the second half of last year. And I think, therefore, we’ll be showing the trend is continuing.

Chorus Call Operator: Thank you. And my second about the pipeline. Yes. We got

Rob Smith, CEO, Kion Group: the pipeline, Josh. Look. Our pipeline is strong. I’ve been telling you for many quarters, we’ve got very good visibility to the projects in the pipeline. We’ve got very good visibility to the pipe to the projects in the pipeline, and the pipeline is is a strong pipeline.

It’s looking good.

Akash Gupta, Analyst, JPMorgan: Thank you. And my second question is on pricing in FCS. Maybe you can comment on what are you seeing there in the market? And even if you look at your pricing in Q2 orders, can you comment if that is consistent with your 10% margin objective set for 2027? Thank you.

Rob Smith, CEO, Kion Group: Thanks, Kiyo. Thanks, Akash. Look, the pricing there is completely consistent with our 10% margin profitability and our plans to deliver that. Very consistent with that. And you’ll recall that we’ve been building protections into our contractual wording.

We’ve intensified that in 2025 by adding, obviously, tariff fluctuations to our general terms and conditions in those contracts as well.

Akash Gupta, Analyst, JPMorgan: Thank you.

Chorus Call Operator: The next question comes from the line of Caleb DeBraith from Deutsche Bank. Please go ahead. Oh, thanks.

Caleb DeBraith, Analyst, Deutsche Bank: Thank you very much for the time. Good good afternoon, everyone. Can I can I start maybe with the the slight miss this quarter in terms of sales and maybe at least, you know, relative to the consensus expectations and maybe relative to the expectations that had been set with the pre close call a few months ago? So I wonder if if June was perhaps a bit weaker than expected. I mean, that’d be great if you could talk a bit about the momentum throughout the quarter and and what you’ve seen also so far in in July.

So that that’s question number one.

Chorus Call Operator: You know, Kyle, this is Christian. Maybe I take the first one. Right? I mean, I I think you make a reference actually to pre close call, I guess. Right?

To the bridge, at that point, actually, you know, what we were looking at was the forecast. Right? Now we look at actuals. Right? And the the the main difference that we actually look at is from the corporate services consolidation line, right, in as a different way.

It’s not to make a reference back to the market and the development in the market.

Caleb DeBraith, Analyst, Deutsche Bank: Okay. And then the the the second question I have is around FCS. Firstly, whether you you expect the book to bill ratio to be clearly above one in the next couple of quarters. And secondly, trying to, you know, judge your level of confidence in reaching a margin of more than 10% for for SES because this is clearly an area where the the consensus is obviously slightly different. And looking into some of the details here, the gross margin for SCS is is up currently now nearly back to what it was pre COVID.

But as the NA expenses are still way above what they used to be as as a percentage of group revenue. Right? So what do you think needs to happen for the SG and A ratio to come down by four, five points, you know, for you to deliver the 10% margin objective? Is it just a function of, you know, growth coming back and and a better absorption through higher volumes? Or or is it is is there something else that you expect to do to to reduce the SG and A ratio?

Thank

Chorus Call Operator: So, again, again, I take this one. Right? So the first question that you had is do we now because this is the book to bill with the quality of the platform and SGS. Well, most likely not. Right?

If you pay I mean, I I said before, right, that there is a certain lumpiness in the order intake in in in the quarter. So while we are looking at the second half of the year that will have a growth against prior year in the in in the order intake, right, for the individual quarters, we might see a book to bill that has a different number there. Right? So again, to what it actually takes to get to double digit. Right?

I mean, it’s it’s the same elements that we make a reference to that holds that holds true. Right? So the one is, you know, we have we we are improving our project execution. Right? And I think the the continuous improvement that we are seeing in the in the margin profile of the assets business speaks to that actually.

Right? We have to get rid of our legacy projects. We are on a on a good path to that, but there’s some are still there. Right? And they have they have an impact and then then going out will actually help improve help us and will also help us on the on the on the gross margin.

It’s the service business. We have made repeatedly the reference to the good growth and the margin favorability of the service business. And then the rest is operating leverage in terms of, you know, the overall size of the business that then, know, will be on top of, you know, a s g and a setup that that we are that we are having. Right? And those four elements are still all true and they need to fall in place, right, in order to get us to 10% by 2027 that you always make a reference to.

Timothy Lee, Analyst, Barclays: Okay. Thanks thanks very much.

Chorus Call Operator: The next question comes from the line of Sven Baier from UBS. Please go ahead.

Sven Baier, Analyst, UBS: Good afternoon. Thanks for taking my questions. The first one is is just following up again on the, you know, FCS pipeline, Rob. I mean, we’ve been talking about a good pipeline for some time. But now with this big ecommerce client, obviously, moving ahead on a few things, they used to be the cannery in the coal mine in the past cycles, both on the way up and on the way down.

I mean, is that still the case that, you know, other ecommerce companies look what these guys do and and maybe speed things up? Or are they just stopping and looking at interest rates and tariffs? That’s not what

Chorus Call Operator: what these guys are doing.

Sven Baier, Analyst, UBS: That’s the first one. Thank you.

Rob Smith, CEO, Kion Group: Thanks for giving me a chance to talk on that some more, sir. Very nice question. Look, we do see the main key ecommerce player as a as a leading indicator. And you’re right. Early in going up and early in going down.

And that’s been our observation, and we think that continues to hold. What I would say is in addition to that, if you look at our modernization and upgrades line, the line item modernization upgrade, that’s up 57% year on year in the first half. And I think it’s another indicator of need for capacity in the market demand coming. I think both of those together give us a good indication that we should expect that the market is is in an upturn now or is is is going up. And the the observation on the modernization upgrades, I think, is also still consistent with people being hesitant to double down and and start brand new, very large big greenfield projects.

Why? Because it’s existing capacity. We’ve got a very interesting offering where we can, over a short period of time, up the capacity, up the throughput, sometimes over just a weekend, and give customers extended capacity on existing installations. And that’s a interesting offer for them. I think those two together is your is your leading indicator that you’re asking about,

Chorus Call Operator: That’s very clear.

Sven Baier, Analyst, UBS: Thank you, Rob. Second question I have was just also again on SPS. Promise next time I do more justice to ITS maybe. But it’s on NVIDIA. Just wondering what’s the latest there.

It’s now been, like, almost six months since you announced this. What kind of, you know, momentum are you seeing on on the back of this and and maybe kind of a more mid and longer term perspective? Thank you.

Rob Smith, CEO, Kion Group: You’re right. And we announced in January together with Jensen and Nvidia at the CES in Las Vegas that we’re the first industrial company worldwide to be bringing physical AI in the industry, physical AI into the supply chain. And that is a very exciting innovation, and it’s coming and developing well. The teams are working very strongly and very well together. We’ve been taking out a piece of the time at each of the trade shows.

We did that at Seamat. We did that at Comat. We did that at Logiemat. The both in The States and in Europe. The next one, the next big one is gonna be the CMAT in Shanghai, where you’ll see an integrated fleet of our own our own offerings as well as third party offerings being orchestrated.

The the the physical twin will be orchestrated by the digital twin in real life right there on the on the on the on the trade show. And we’ve been working with customers now who are quite interested in this to bring some lighthouse projects into into our pipeline and their pipeline. And I would say it’s progressing well, and it’s a very exciting innovation. Thank you for your interest in that, and thanks for calling that up.

Chorus Call Operator: Yeah. Thanks for the comment,

Sven Baier, Analyst, UBS: and I got back online. Thank you, Rob.

Chorus Call Operator: The next question comes from the line of Paul Fangmann from Bank of America. Please go ahead. Hi. Good afternoon. Thank you for taking my question.

Hi, Rob. Hi, Christian. Two questions from my side. I’ll take them one by one. First would be, and again, sorry for this on SCS.

Could you give us a bit of a flavor on how the discussions with the non ecommerce customers are right now? And do you expect ecommerce activity to also remain high in the quarters following q two? Appreciate maybe not on the level of of 1,000,000,000 up a quarter, but is it more like a one and done with one large order and then we have to wait for for new orders to come in? Or is it something where you will see more and more projects starting over the coming quarters already? I’ll take the second question after.

Thank you.

Rob Smith, CEO, Kion Group: Sure, Tore. Thanks for that. Look, first of all, it was not just one big project that made the second quarter. We had a multitude of very good sized projects, usually a handful between 100,000,000 and $200,000,000 in size. So multiple ones.

The pipeline continues to be strong. The hesitation by verticals outside of ecommerce continues to be the case. The trend I was just describing to send, though, if the ecommerce and the margin upgrade grades are the leading indicators that we anticipate that they are, we think the other verticals will be coming out of yeah. Coming from the pipeline into into starting those those projects. So I I point out to you as well.

Ecommerce was a vertical all by itself, before COVID. During COVID, it became so embedded in people’s expectations of the performance of the supply chain, real time transparency and visibility, and and very, very fast that they brought those expectations back to all their other verticals when they went back to the office. So lots of verticals have an element of ecommerce in it, And I think that you’ll continue to see ecommerce as we call it out every quarter, so you’ll be able to track it. But you’ll continue to see ecommerce as a part of the order intake on a go forward basis. What we’re looking for now is for the other verticals to get out of hesitation mode and get into a starting mode, and we think that we have some leading indicators that should indicate that that will be coming.

Chorus Call Operator: And and do your discussions with these other verticals also indicate this? Or is this rather your leading indicators?

Rob Smith, CEO, Kion Group: Well, I mean, we’re watching the market just like everybody else is, and that’s clearly a conversation you have with all customers. I think that there’s been quite a bit of robustness in the middle of all of the volatility these last months and quarters. And I think that as one trade deal gets done and another trade deal gets done, and I think they’re becoming a little bit more certainty out there, and that’s part of what’s giving customers the confidence we would if they will want to have when they make their their starting decisions.

Chorus Call Operator: Okay. Understood. Thank you. And just my second question would be, I’m trying to quantify the the benefits from your cost base adjustments in in SBS that already seem to pay off. Do you think you could achieve a double digit margin already before reaching an around 4,000,000,000 annual revenues?

Or does this volume that is needed for double digit margin still hold on? And if and when the volume in SES comes back, could you try and quantify for us a little bit, could margins be ahead or rather on the level where they used to be with the past foot manufacturing footprint that you had and let’s say pre COVID? Thank you. Yes. So Tore, I appreciate the question, right?

And so if you know, I think I described before the four lever that it takes, Right? And, you know, revenue line, the 4,000,000,000 that you also make a reference to, I think that’s not by accident because that’s basically always also the mark that we are using for for that one. I think that’s the area where we need to to get to. We should not expect now double digit before that. Right?

But I think the order intake that we have had so far, right, and how we look at the development now going forward is a solid step into into laying that foundation. You you know, let us reach the 10% double digit EBIT margin in STS in 2027. Right? We have that that has been up for a while our goal. So the the seven is yet to come.

Right? We are in a good progress in in that one. Once we are there, right, with the setup we have, we’ll then talk, you know, what’s been ahead of us. But so far, 10% in 2027 is ahead of us. Great.

Thank you. The next question comes from the line of Lukas Verhani from Jefferies. Please go ahead.

Akash Gupta, Analyst, JPMorgan: Good afternoon, and thanks for for taking my question. Just a follow-up on on n ICS and the the q two order intake. Is there anything to say on client concentration maybe in that quarter when you look at these orders? Was it maybe a couple of very large kind of customer coming in? And also regarding those orders, was there any change in the customer behavior potentially related to to tariffs, specifically kind of some prebuying thinking tariffs are coming, so potentially that would lead to to to price increases.

Do you get kind of any any sense related to that? And the the last one on on on that would be on in your contract signed during q two, did you kind of change anything in the setup to take into account the uncertainty on on the tariffs and what that might mean for kind of your own cost base and for pricing? Or is that kind of the usual and you expect that the change of law would kind of help you if they were kind of changing in in the costing of those order? Thank you.

Chorus Call Operator: May maybe, Lucas, I I start with sort of, you know, your questions on on on on tariffs and potential pull forwards, right, in in that context. So first of all, I mean, you know, in in in 2022, we have adapted our contractual language, you know, to deal with, you know, uncertainties that we get from external factors and bring that into our Beginning of the year with the trade conflict arising and now becoming specifically a topic also on tariffs, we have actually made our wording more precise to reflect tariffs there as well, make sure that, you know, we are covered from a from a contract terminology point of view. There is no pull forward for tariffs because, basically, you pay tariffs when you ship products. Right?

So, actually, ordering now would not help you in any respect for avoiding a tariff in that sense. So therefore, we don’t see pull forward effects to any extent from any of our customers in this context.

Rob Smith, CEO, Kion Group: Let me help you out with the first part of your question, Lucas. Our Dometic business is a key integrator for the ecommerce vertical, and our position in that market is a very strong and stable position. And it’s a it’s a direct result of very reliable execution or on time delivery or high quality standards and industry leading technologies. So it makes Dometic a very trusted partner in high performance fulfillment operations as you have in ecommerce. And if there’s a vertical concentration, yes, there was a vertical concentration in the second quarter.

You saw 87% of the order intake was from that vertical. We are real pleased to have those orders. They are good orders for us. We expect to execute them very well. And we’re looking forward to other verticals coming back to the table and starting the new projects with us that we see in the pipeline together.

Akash Gupta, Analyst, JPMorgan: Alright. Thank you. And just a second one on on ATS. Do you have any kind of change of your view for for the year? Obviously, you have a competitor that is pointing to maybe more weakness than than they expected.

And in the second half, obviously, you didn’t have as bullish of a guidance, so you already pointed to, you know, some some weakness before specific in the margins. But just wondering if what you’ve seen so far now kind of into July for ITS told that maybe there’s a bit more kind of competitive pressure or you have to deal with a bit more threats than you thought maybe at this at

Chorus Call Operator: the start of the year? Thank you. Well, I I Luca, thanks for the question on on on on the idea here. Right? I mean, basically, we don’t see a different dynamic.

Right? We had good order intake, good dynamic in the first quarter, good dynamic in the second quarter. We don’t see any indication of that changing. That’s all incorporated in our outlook for the full year. Right?

And as such, you know, that’s the basis why we have actually confirmed that.

Akash Gupta, Analyst, JPMorgan: Great. Thank you.

Chorus Call Operator: The next question comes from the line of Timothy Lee from Barclays. Please go ahead.

Timothy Lee, Analyst, Barclays: Hi. Thanks for taking my questions. So my first question is also on the SES segment. Can you please help quantify a little bit how much of the order in the second quarter was benefited from timing? And how big is the scale of the order from the pure play e commerce vertical?

I mean, probably any quant any numbers that you can quantify on, you know, the last scale orders from the vertical, that would be super helpful.

Rob Smith, CEO, Kion Group: Sure, Jim. Let me help you with that one. As I mentioned, usually a handful of orders between a 100 and 200,000,000 came into the second quarter. And what I said before at the beginning, you know, orders come in that business in kind of a lumpy fashion. And an order moving from one quarter to the next or or or coming forward, you know, shifting between quarters is very normal business.

So there’s no point in talking about which carry those came in the second quarter, and we’re looking to get more in the third and more in the fourth and converting the pipeline into into orders. So no particular timing issue there is beyond what we’ve discussed so far.

Timothy Lee, Analyst, Barclays: Understood. Can I follow-up a little bit on that? So how how should we think about the the timing of this order intake to flow into the revenue? So as long as you’re keeping your guidance unchanged for the full year in terms of the revenue for the SES segment, is that we should assume the revenue contribution should probably start, you know, in next year for this big orders.

Rob Smith, CEO, Kion Group: Sure. Also good question too. But look going back to your your your previous one. Yeah. You see in in our in our reporting, we call out the the pure play ecommerce percentage as a as a as a percentage of the total order intake, and that was 87% in the in the in the in the last quarter.

The three of those Yeah. No. On those ecommerce orders, the ecommerce orders convert a little faster than other orders. They convert over about eighteen to twenty four months usually. And the first six months is kind of the low part, and

Chorus Call Operator: then

Rob Smith, CEO, Kion Group: it’ll there there’s some conversion in the first six months. That’s what makes them interesting too. But the the six months are usually the first six are the lightest, and the last twelve to eighteen are where it picks up in terms of converting from order intake into revenue over time. So about eighteen to twenty four months for those kind of projects.

Timothy Lee, Analyst, Barclays: Understood. Very helpful. My second question is on forklift. So you also just mentioned you don’t see any change in terms of the dynamics of the overall industry. But how do you see the completion of the Chinese forklift?

As long as if you look at the the industry data, it seems like that there was a quite meaningful increase in the imports of the Chinese forklift, especially in the first quarter. So any change in terms of the competitive landscape that you can call out from the Chinese players in the industry?

Rob Smith, CEO, Kion Group: Sure, Tim. I mean, over time, the Chinese players have grown to be a larger influence in the industry. And as the market is getting tighter in in China, there’s more and more focus of those Chinese players, not just in our industry, but others as well on export into other regions. But having said that, let me just be very clear about this. Kion is extremely well positioned in China.

China is a home game. It’s a home market for us with our footprint, with our investment, with our capabilities there, just like the EMEA market and the Americas market are home games for us and home markets for us. We’re the, basically, the only western player in the China market at this point in time. The other ones have diminished or left, and we’re the third largest manufacturer of industrial trucks in the entire country. So that gives us a great capability in China.

And now with the introduction of some new global project products, the first one being the global counterbalanced truck, but we have others in the pipeline for our warehouse trucks too. We’re using China in China for China as well as China as an export base. So we see ourselves as quite well positioned, very well positioned to be meeting those challenges that you’re describing.

Timothy Lee, Analyst, Barclays: Sorry. Actually, I was I was actually focusing a little bit more on the import of Chinese products in the retail market. Sorry if I was not clear enough.

Rob Smith, CEO, Kion Group: No. As I covered it, Tim, the China is is focused the Chinese players are focusing on the China market and now intensively on export to all other regions. And we do too. We export from China to The Americas. We export from China into Europe.

We export from our China operation into Southeast Asia and are the third largest player in the entire market in industrial trucks in China.

Timothy Lee, Analyst, Barclays: Alright. Understood. Okay.

Chorus Call Operator: The next question comes from the line of Jorge Gonzalez from Hoch Okoda. Please go ahead. Hello. Hi. Good afternoon.

Thank you, Rob and Christian, for taking my questions. I I I would like to to go back also to ITS and very tired and and quick questions. It was very useful, your indication on STS, 10% margin for ’27. Would you say that with the current backlog for ITS and the and the if that’s the delivery of the cost synergies, you are in the in the in the position to recover 10% in ’26 for for ITS? That was, if I’m not wrong, the message that you sent with the full year ’24 results.

That will be my first question.

Rob Smith, CEO, Kion Group: Look. We’re still talking ’25. When we come back and talk to you in February for good results in 2025 and our outlook for 2026, we’ll be giving you the guidance on that. We have been explicit that we’re working very hard to deliver a look through year in the ITS segment. And in the SCS segment, a year of continued increases in profitability on a on a sequential and quarterly basis.

So that’s what we’re doing in 2025. Our objective is to have both of our segments and our group above 10% by 2027, and we feel that we’re well on track to be doing that.

Chorus Call Operator: Okay. So so my second question is is basically reading reading between lines on on on the on the message is that you have we we we have already seen the worst probably in in in the demand in Europe. And and then it’s more a question when when the the pickup month allows for better pricing. It it could be the the maybe, the the remaining activity to to know the profitability for next year, or do you think the the the cost savings that you are planning are going to basically be the most important factor or driver for your profitability next year?

Rob Smith, CEO, Kion Group: Let me pick you out the parts that I think are appropriate to be answered. I am not gonna be talking about ’26 explicitly until we come back in February year to give the 2026 outlook and ask you please respect the debt. The the part, however, about the increasing demand, we do see the market is growing. It happens to be growing in in most of the regions. And first quarter was quite was indeed that case.

The second quarter statistics will be coming out still a period of time from now. You know, they come out three months with a three month delay. But our business is, as Christian explained, is up 10% first half versus first half of last year. We see that as a very good performance. Our expectations is that the market is growing in all regions, and we’ll have that confirmed when the statistics come out.

But, clearly, that will be helpful. And I think that you’re asking, are we past the trough? We’ve got two quarters in a row where we see where we see good growth and we are expecting market growth. And so it takes two points to make a trend though, Jorge. So we’ll see how it goes.

But our expectation is that we passed the the trough is behind us and the markets are going.

Chorus Call Operator: Okay. Very useful. Thank you. I’ll go back to the line. The next question comes from the line of Lasser Stubin from Berenberg.

Please go ahead. Missus Lasser Stuben, your line is open. You can now ask your questions. Please unmute yourself from the webinar.

Timothy Lee, Analyst, Barclays: Hi. Good afternoon. Can you hear me?

Chorus Call Operator: Yes. We can.

Timothy Lee, Analyst, Barclays: Perfect. Apologies. Just to follow-up on the mix in ITS. You were very clear in the past, you know, when you were flagging the mix effects headed into 2025. So I’m just wondering if there’s any color you can give on on the mix of the new orders coming in.

You know, you showed the development of of the regions in the appendix, which looks like, you know, EMEA and Americas is is is performing better. So just wondering if you can flesh out any any color on mix headed into the second half and potentially into early parts of ’26. Thank you.

Chorus Call Operator: Yeah. So, Lars, thanks for the question. I mean, you you know, actually, there’s several mixed elements always, and and and you know that they need to be looked at in in in ideas. The one is the regional mix that you make a reference on and and rightly so. You you hint to the sort of page in the appendix that actually speaks to that.

Right? I think we had a a good mix from a regional perspective in the first quarter, and that also continues in the second quarter. Right? We had 1110% unit growth in in their region. Right?

And as everybody understands, that’s obviously helpful from a mix perspective from a from a regional mix perspective. Yeah? So in terms of the product mix, you know, we we had a very favorable development in the first quarter. I think it’s we still had a good development in the second quarter, although from a from a mix mix perspective, with sort of a good growth also coming from counterbalance trucks. Right?

And then sort of also growth obviously in the in the warehouse segment. So the mix, you know, actually, you know, in the first half of the year was supportive.

Timothy Lee, Analyst, Barclays: Right. If I could just ask a follow-up on on North America. Destocking has obviously been a topic in previous quarters as well. I’m just wondering what the tariff situation is doing in terms of the expected pace of that destocking. Has that slowed somewhat?

Or are you still kind of on track to see that, I guess, finish by the end of this year?

Chorus Call Operator: Yes. So in the market overall, there were some pull forward effects in the from from the tariff from yeah. When it’s sort of, you know, people try to get, you know, behind before, you know, expected further increases on on on the tariff. So that’s sort of if you will aggravating a bit the situation on the stocking in the market, right, because that’s an additional element that has now flown into into the market and therefore the destocking overall will probably take a few months longer. Right?

Because all of this sort of, you know, pull forward things in the market need now need to need need to flow to the end customer in in in a sense. So I guess for North America, The US in particular, will see that for for a while before it actually is normalizing again. This this, you know, fluctuating just with the order intake from end customers.

Timothy Lee, Analyst, Barclays: Understood. Thank you very much.

Chorus Call Operator: We have a follow-up question coming from the line of Lucas Rouhani from Jefferies. Please go ahead.

Akash Gupta, Analyst, JPMorgan: Thanks again. And just to remind you, I wanted to ask about your partnership with the the Chinese market manufacturer EP Equipment. I was signed kind of several years ago. Is this still kind of live? How is this kind of developing?

Is there, know, a decent amount of units that’s gonna pull the China market or more globally? Can you talk a bit more about about it if it’s still something that is active? Thank you.

Rob Smith, CEO, Kion Group: Sure, Lucas. Good question. Kian remains well invested in EP. EP completed its IPO at the 2024, and it’s now a listed company. And Keon remains invested indeed a very good partner.

We have other partners as well in different elements and different parts of the ITS as well as the SES segments. But you’re asking about EP specifically. We’re impressed with their performance, and they’re a good partner for us, and we remain invested.

Akash Gupta, Analyst, JPMorgan: Understood. Thank you.

Chorus Call Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Rob Smith for any closing remarks.

Rob Smith, CEO, Kion Group: Certainly, thank you, and thank each and all of you for your very good questions today. We appreciate them very much. We hope you have a very good summer. We’re looking forward to continuing the dialogue after the summertime and the multiple conferences in September, and we’ll be back at the October to give you our third quarter results and talk about how we expect the rest of the year to go. Looking forward to that, and thanks very much.

Have a good summer. Bye bye.

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