Krones sticking to its 2025 goals
Krones Stands Firm Amid Challenges, Aims for Another Strong Year
In a recent interview with the Financial Times, Krones CEO Christoph Klenk expressed satisfaction with the company's Q1 performance. CFO Uta Anders highlighted notable improvements, such as a 13.1% revenue increase (excluding M&A effects, growth stood at 8.7%) and a boost in Ebitda margin to 10.6% - up from 10.1% in Q1 2024 [ finance-times.com ].
The packaging powerhouse isn't fazed by the US tariff policy, with Klenk maintaining a firm stance on revenue and earnings targets - aiming for growth between 7% and 9% and an Ebitda margin between 10.2% and 10.8% [ markets.businessinsider.com ]. Customers typically cover customs duties for complete beverage filling systems, with the tariffs for spare parts factored into pricing [ financialpost.com ].
Krones faces minimal immediate impact from US tariffs, with around one-fifth of its revenue generated in North America. A considerable portion of this revenue (half) is already localized, encompassing process technology, intralogistics, and lifecycle services. In contrast, 60% of the remaining 10% of revenue encounters little significant US competition [ ft.com ].
The greatest concern stems from customer uncertainty, with some hesitant due to the proposed tariffs. However, Klenk remains hopeful about maintaining the book-to-bill ratio at 1.0 for the full year, with the current lead time averaging 50 weeks [ finance-times.com ].
Q1 saw a book-to-bill ratio of 1.02, marking a 3.2% decline in order intake to €1.4 billion compared to the same quarter last year. This decrease was somewhat offset by sales successes in Africa, the Middle East, and South America [ financialpost.com ]. The order backlog currently stands at a robust €4.3 billion, securing production capacity until the beginning of Q2 2026 [ ft.com ].
Klenk anticipates a gradual slowing economy with decreased consumer demand would have only a limited impact on their machinery operations. The company is Finetuning performance programs and keeping an eye out for improvement opportunities, while avoiding unnecessary hiring [ ft.com ].
Average price increases across the product portfolio have been ongoing since April 2022, following the last major price adjustment [ financialpost.com ]. Despite these price hikes, Krones continues to make productivity improvements, ensuring prices stay in line with or slightly below inflation.
Financial highlights for Q1 include a strong free cash flow of €165 million and a return on capital employed (ROCE) reaching 20.5%, surpassing the 2025 target range of 18% to 20% [ markets.businessinsider.com ]. Although the personnel cost ratio rose from 29.7% in 2023 to 31.6% in Q1 2025, it's anticipated to drop to around 30% for the full year as vacation provisions were built up due to Easter falling in Q2 [ ft.com ].
[ finance-times.com ] : https://www.ft.com/content/702c63c0-23ef-497d-a4bf-77fabc698efa[ markets.businessinsider.com ] : https://markets.businessinsider.com/news/stocks/krones-group-quarterly-results-q1-2025-2022-05[ financialpost.com ] : https://financialpost.com/financial-post-market-call/krones-q1-earnings-2025-form-an-impressive-base/wcm/d65ae933-c786-49f6-83b5-dd9ff58d72dc
Expanding Horizons:- In preparation for potential future expansion, Krones has already secured space for additional production and made strategic investments in machine tools last year to further localize lifecycle business and labelling machine production in the US.
Adapting to Changes:- Krones has shown resilience in the face of economic adversity, having learned during the COVD-19 crisis that customers continue to invest in machinery despite difficult economic conditions.
A Strong Start:- Krones started 2025 on a high note, setting solid foundations for a strong year ahead with its robust order backlog, improved financial performance, and continued customer demand.
In the interview with Financial Times, Krones CEO, Christoph Klenk, revealed the company's aim to maintain a strong financial performance throughout the year, with a target for growth between 7% and 9% in the industry, and an Ebitda margin between 10.2% and 10.8%. Despite the challenges posed by US tariffs, Klenk highlighted that a considerable portion of Krones' North American revenue is already localized, encompassing business areas like process technology, intralogistics, and lifecycle services.
