Krones AG, based in Neutraubling, manufactures packaging systems.
Archive photo: Armin Weigel / dpa
For the second time, the nearly annual general meeting was held due to the Coronavirus pandemic. Supervisory Board Chairman Volker Kronseder looked back at the year that presented Kronz AG with “extraordinary challenges”. Sales and profits fell sharply. The decision to cut staff was very difficult for group management. Longtime member Norman Cronsider said goodbye to the supervisory board. His daughter, Nora Diebold, was elected to the committee on his behalf.
The recession in the past fiscal year was massive. Incoming applications decreased by 19 percent compared to the previous year. Sales were down 16 percent to 3.3 billion euros. For the first time since the financial crisis of 2008/09, Kronz had to report a loss of nearly € 80 million in the group result. The main reason given by Krones is that the uncertain macroeconomic environment during the pandemic slowed customers’ willingness to invest, so fewer systems were sold out.
Strong effects on beverage consumption
CEO Christophe Klink said that global consumption of bottled drinks decreased by 5.4 per cent in 2020. This has never happened before. The closings and restrictions have had a strong impact on beverage consumption in the hospitality sector. Klink assumes, however, that it is “merely an aura cavity.” In the medium term, he was optimistic about the future. The krone will continue to benefit from major trends such as a growing world population, a growing middle class, and urbanization. “This will mean that the demand for food and beverage filling machines will increase in the medium and long term.”
However, the cost saving process that started in 2019 is essential to maintain competitiveness. In 2020, Kronz cut 600 temporary workers. About 400 company employees took advantage of the voluntary offers to terminate their employment. And in December, it was decided to cut another 350 local jobs, which should be “as socially acceptable as possible”. It is now assumed that this volume arrangement will not be fully exploited, Klink said. Krones currently has 16,700 employees worldwide.
The distribution to shareholders is slim this year: They get six cents a share. Last year it was 75 cents a share. But Klink announces better times again. He said that this year – starting now – the basis for paying “appropriate” dividends would be established again in 2022.
The first quarter of 2021 was promising. Incoming applications increased by 27 percent compared to the previous year, to reach a volume of nearly one billion euros. “This means that the order value is almost back to its pre-crisis level,” said Chief Financial Officer Norbert Brueger. However, it is hard to say whether this exponential increase is a one-off knock-down effect or if it is sustainable.
Clinique CEO said that given the debate over climate and sustainability, Kronz feels more pressure to offer solutions for eco-friendly packaging. The primary component here is recycling the plastic into PET bottles. The proportion of recycled PET in the European Union should be at least 25 percent by 2025, and many of Kron’s big customers have set themselves more ambitious goals. Klink stressed that this is a wonderful opportunity for Kronis. The company has extensive knowledge of the manufacturing and processing processes for containers made of recycled plastic and will support its customers in transforming production lines for the necessary circular economy.
Was indirectly affected by the chip crisis
When asked by a shareholder, Klink replied that Kronz has been indirectly affected by the current chip crisis. Krones doesn’t buy the semiconductor itself, but suppliers’ production processes sometimes get stuck. Another contributor wanted to know how much travel costs could be saved in light of the pandemic. Staff travel expenses fell 40 per cent to 44 million euros, according to Kronz. One does not expect travel activity after the pandemic to increase again to the previous level, as more and more digital means are being used.
A – Relatively small – The savings resulted from the virtual convening of the general meeting, Klink explained when asked. Abolished costs from 30,000 to 50,000 euros. Hopefully, however, the shareholders will be able to meet again in reality in 2022.
- Krones AG recorded a loss of nearly € 80 million in 2020 – also due to special fees.
- The group is shrinking. Last year, 400 employees accepted voluntary offers to terminate their employment. Up to 350 employees should be going this year.
- The first quarter of 2021 was promising: Incoming orders rose 27 percent.
- Krones expects sales to grow 2 to 5 percent annually over the medium term.