Jungheinrich with Revenue Growth in the First Half of 2022

The Jungheinrich AG looks back on a solid first half of the fiscal year 2022. Despite the challenging conditions due to the Russia-Ukraine war, the ongoing Corona pandemic, and the resulting disruptions in supply chains, the intralogistics company was able to increase order intake and revenue.

(Hamburg) The value of order intake improved by 2 percent during the reporting period to 2,461 million euros (previous year: 2,419 million euros). The group revenue rose by 11 percent to 2,202 million euros (previous year: 1,988 million euros). Significantly increased material and logistics costs burdened the operating result; nevertheless, Jungheinrich achieved an EBIT of 162 million euros, only slightly below the previous year’s figure of 169 million euros. The EBIT margin was 7.4 percent, as expected, below the value of the previous year’s period (8.5 percent). “Jungheinrich generated a robust result in the first half of 2022 despite challenging market conditions,” explains Dr. Lars Brzoska, CEO of Jungheinrich AG. “The Russia-Ukraine war and the profound disruptions in global supply chains, with massive increases in material costs, have caused a high degree of uncertainty in the market; nevertheless, Jungheinrich was able to increase its order intake and achieve good revenue growth in this adverse environment. A key driver for the higher group revenue was the new business with very good gains, particularly in automation systems. Our rental and used equipment business, as well as the after-sales segment, also contributed significantly to the revenue increase,” says Dr. Brzoska.

Building Inventory for Supply Capability

To ensure its supply capability, Jungheinrich deliberately accelerated the buildup of inventory in the first half of the year. Due to the sharply increased working capital, the newly reported management metric Free Cashflow fell to minus 270 million euros (previous year: plus 84 million euros). As part of the 2025+ strategy, Jungheinrich is particularly advancing the development of energy storage systems based on lithium-ion technology. The company focuses on optimizing the design of new industrial trucks, as implemented in its lithium-ion integrated POWERLiNE vehicles. Digital products, the automation of industrial trucks, and the optimization of automated systems are further development priorities for Jungheinrich.

At the end of May, the company presented innovative mobile robot applications and the container compact storage system PowerCube at LogiMAT in Stuttgart, setting new standards in the field of automated storage systems. Jungheinrich significantly increased its research and development expenditures in the first half of 2022 by 27 percent to 61 million euros (previous year: 48 million euros). As part of the targeted expansion of its strategic fields of action, Jungheinrich further expanded its workforce as planned in the first half of 2022. The number of employees in the group increased by 297 full-time equivalents or 1.6 percent to 19,400. Despite high war-related economic uncertainties regarding the impacts on supply chains and energy, raw material, and material prices, Jungheinrich maintains its forecast for the entire fiscal year 2022.

Business Development from January to June 2022

The value of order intake, which includes all business areas – new business, rental and used equipment, and customer service – was 2,461 million euros during the reporting period, 2 percent above the previous year’s figure of 2,419 million euros. Immediately after Russia’s attack on Ukraine, Jungheinrich took action and decided to implement a comprehensive export stop for new and used machines as well as spare parts to Russia and Belarus effective March 2, 2022. The order intake for the first half of 2022 and the order backlog as of June 30 were adjusted to exclude orders from Russia.

The order backlog for new business reached 1,814 million euros at the end of the first half of 2022, which is 522 million euros or 40 percent higher than the previous year’s figure (1,292 million euros). Compared to the backlog value of 1,519 million euros at the end of 2021, this represents an increase of 295 million euros or 19 percent. The reason for the still very high order backlog was the continued limited availability of production materials for further processing.

Revenue Driver New Business

The group revenue reached 2,202 million euros in the first half of 2022, an increase of 11 percent compared to the previous year’s period (1,988 million euros). Revenues in the most important single market, Germany, rose by 7 percent during the reporting period to 514 million euros (previous year: 479 million euros). Foreign revenues increased more significantly by 12 percent to 1,688 million euros (previous year: 1,509 million euros). The share of foreign sales slightly increased to 77 percent (previous year: 76 percent). Outside of Europe, revenues reached 317 million euros (previous year: 248 million euros), accounting for 14 percent of group revenue (previous year: 12 percent).

A significant driver for the higher group revenue compared to the previous year was particularly the new business, including very good gains in the automation systems business. The customer service business and revenue from rental and used equipment also contributed significantly to the revenue increase. The challenges in the supply chains due to the Russia-Ukraine war and the ongoing Corona pandemic remained very high. Due to global interconnections, the effects of supply chain bottlenecks extended across the entire supplier and material portfolio as well as the associated logistics capacities.

EBIT fell by 7 million euros or 4 percent to 162 million euros (previous year: 169 million euros). The EBIT margin was significantly below the previous year’s value at 7.4 percent (8.5 percent). The result after taxes was 103 million euros (previous year: 121 million euros). The earnings per preferred share (based on the share of profits attributable to the shareholders of Jungheinrich AG) reached 1.02 euros (previous year: 1.19 euros).

The cash flow from operating activities amounted to minus 220 million euros for the period from January to June 2022, decreasing by 335 million euros compared to the previous year’s period (plus 115 million euros). The significant decline was primarily due to the strong increase in working capital, particularly in inventories to ensure supply capability and finished goods for distribution. This increase additionally burdened the cash flow from operating activities by 219 million euros compared to the previous year’s period. The free cash flow, as the sum of cash flows from operating activities and investing activities, fell significantly to minus 270 million euros (previous year: plus 84 million euros).

Expectations for 2022 Remain Unchanged

Despite the high economic uncertainties due to the Russia-Ukraine war, with increasingly severe impacts on supply chains and energy, raw material, and material prices, as well as the increased risk of a potential shortage of gas supplies from Russia, Jungheinrich’s expectations for the entire year 2022 have not changed since the reporting for the first quarter of 2022 in May 2022.

Currently, the group expects a slightly lower order intake than the previous year (2021: 4.9 billion euros). For the group revenue in 2022, Jungheinrich expects a value slightly above the previous year (2021: 4.2 billion euros) amid ongoing supply chain bottlenecks. EBIT and EBT are expected to reach values significantly below the previous year’s figures (2021: 360 million euros and 349 million euros, respectively). The company also anticipates significantly lower margins for EBIT and EBT compared to the previous year (2021: 8.5 percent and 8.2 percent, respectively).

Regarding the development of material costs, Jungheinrich expects the currently very high level to continue. For the implementation of the 2025+ strategy, the company plans to expand its personnel capacities for the remaining months of 2022, particularly in the strategic fields of automation, digitalization, energy systems, efficiency, global footprint, and sustainability.

The ROCE for the fiscal year 2022 is expected to be significantly below the previous year’s value (2021: 20.2 percent). Due to the current business development, the free cash flow, after a positive value in the previous year (89 million euros), is now expected to take on a significantly negative value in the reporting year.

Ensuring Supply Capability is a Priority

There are still significant uncertainties regarding the further developments of the Corona pandemic and the associated impacts on the business. The forecast is therefore based on the assumption that there will not be extensive production stoppages until the end of the year and that supply chains will remain largely intact. Jungheinrich continues to prioritize its measures to ensure supply capability.

Photo: © Jungheinrich