Target Information

The KION Group is a prominent global leader in the production of industrial trucks and supply chain solutions, operating in over 100 countries. Known for its strong presence in Europe, KION is the largest manufacturer of industrial trucks in the region and the second-largest globally. The company has established a formidable reputation with its successful brands, including Linde, STILL, and Dematic, which provide a range of advanced logistics and automation solutions tailored to optimize material handling and information flow in various sectors.

During the first half of 2019, KION Group showcased remarkable growth, achieving consolidated revenues of EUR 4.364 billion, marking a significant increase of 12.6% compared to the previous year. This growth was largely driven by the robust performance of both its Industrial Trucks & Services and Supply Chain Solutions segments. Furthermore, the company's adjusted EBIT rose by 18.2% to EUR 407.6 million, underscoring its operational efficiency and strategic focus.

Industry Overview

The industrial truck market experienced mixed trends in 2019, influenced by global economic uncertainties and ongoing trade disputes. Despite facing a decline in new orders—down 5.2% year-on-year—some regions, such as APAC, reported slight increases in demand, while the Americas experienced a notable drop of 14.2%. The subdued market performance was attributed to external factors, such as rising debt levels in emerging economies and geopolitical tensions, including the potential for a no-deal Brexit.

However, a positive trajectory was observed within the warehouse automation and supply chain solutions sector, driven by increasing investments in e-commerce and multichannel distribution strategies. Companies are enhancing their logistics capabilities with automated systems to improve efficiency, indicating strong ongoing demand in this segment.

In Europe, the KION Group's key market, dynamics remain promising for warehouse systems due to the consistent growth in the online retail sector fueling the need for advanced logistics solutions. The emphasis on energy efficiency and sustainability in material handling is becoming a standard expectation, favoring the industry's shift toward electric and hybrid solutions.

Despite the challenges in the industrial truck market, the overall sector is anticipated to expand throughout 2019, supported by a sustained focus on innovations in automation and supply chain efficiencies. Analysts estimate that the market for intralogistics will continue to grow due to the pressing need for businesses to modernize their operations.

Rationale Behind the Deal

The establishment of KION Battery Systems GmbH—a joint venture with BMZ Holding GmbH—represents a strategic move aimed at enhancing the KION Group's capabilities in producing lithium-ion batteries for industrial applications. This initiative aligns with the KION Group's broader KION 2027 strategy, which prioritizes advancements in energy efficiency and innovative drive technologies. The joint venture aspires to meet the growing demand for lithium-ion battery systems essential for powering modern industrial trucks.

Moreover, through this collaboration, KION seeks to bolster its product range and production capacity, better positioning itself in the rapidly evolving intralogistics market. The increasing adoption of electric trucks further necessitates an expansion of battery manufacturing to support future demand.

Investor Information

The KION Group is publicly traded and serves a broad investor base, drawing interest due to its strong market position and steady revenue growth. With over 33,000 employees and a rich history of innovation in material handling solutions, KION is well-poised to capitalize on emerging market trends. In addition to its share performance, it emphasizes the importance of sustainability and technological advancements in its business model, appealing to investors focused on environmentally responsible growth.

In 2018, KION recorded revenues of EUR 8 billion, underscoring its robust financial health. The company adopts a forward-looking approach, continuously aligning its resources with market demands and technological advancements within the intralogistics sector.

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The KION Group's move to establish a joint venture focused on lithium-ion battery production is viewed as a strategic and timely investment. Given the imminent shift towards sustainable energy sources, this initiative positions KION favorably within the market. As electric vehicles, which are increasingly favored for their efficiency over traditional fuel-powered counterparts, continue to gain traction, KION's early commitment to battery technology aligns with global industry trends.

The partnership with BMZ Holding enhances KION's ability to meet the impending surge in demand for electric truck components and expands its technological capabilities. This venture not only strengthens KION’s existing product offerings but also expands its competitive edge in the growing electric truck market.

Despite current market challenges, including fluctuating demand and geopolitical tensions, the overall outlook remains positive. The KION Group's proactive strategies in addressing energy efficiency and sustainability in logistics reflect a thorough understanding of future trends, ensuring long-term profitability and growth potential. The anticipated rise in production capabilities, coupled with increased demand, makes this joint venture a compelling investment opportunity.

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