Krones AG

So, good afternoon and a warm welcome from my side. My name is Olaf Scholz, Head of Investor Relations here at Krones.

We have presented this morning our preliminary figures of the fiscal year '24. With the strong figures Krones improved all relevant key figures and we also published our targets for '25, which represents a profitable growth rate here of Krones.

Christoph Klenk and Uta Anders will give you more details about these '24 figures and in addition to further information they will show you the published guidance for '25. After the presentation you will have the opportunity to ask questions.

Additionally, I want to inform you that this meeting will not be recorded and it's also not allowed that you use the recording function in Teams. So I think we can start.

Yes. So I hand over to Christoph.

Christoph Klenk, the floor is yours.

Olaf, thank you. Good afternoon.

Pleasure to have you here all together to the presentation of our numbers. Uta will do as usual together in this audience, and I'll start immediately jumping in.

This is the summary. We don't want to go into that because we tell anything what we have here later on anyway, those are the numbers which you know, we'll come to that later on and I would say that chart is just saying we have achieved all the targets we have set and the governance is achieved.

We come to the details, and let's start with order intake and most probably one of the biggest questions everybody has, and I try to give some color on it, where we are with it and how we see the whole thing. I mean if we look to the last quarter we had €1.345 billion order intake which was, I would say to a certain extent maybe a bit lower than expectation.

However we have been already, let me say some kind of be cautious how the year-end would run because it was not about, let me say too much about the pipeline, it was even about timing since December as only, let me say 20 working day or 20 days where we can realize the order intake. So it was quite difficult to get the one or the other on Board.

Nevertheless, if we look to it, we are all-in-all very happy with what we have achieved in terms of order intake. We are above last year and of course we have some proportion of the net start acquisition in.

But we have communicated that all the time that this will be relevant for the order intake. If I look to - let me say a bit in the future, and I think we will in Q&A certainly go deeper into that, I would say our pipeline is robust as we have actually stated in our press release as well, we might talk about - a bit more about the next couple of minutes then how we see order intake in the first quarter and how we judge actually 2025.

But again, book-to-bill ratio in 2024 was above one. And again, this brings me to the next slide important one, the order backlog, which has been increasing once again, which is very good on one side and gives us a good visibility in terms of how we can do the planning of 2025.

But on the other side is a bit of, let me say, a burden on the shoulder because we have not decreased deliver time significantly. Yes, we have been going down from 70 to 50 weeks, but still there is a challenge on the market that we need a bit of a further decrease in delivery times.

But again, the good story is we have a fantastic order backlog. We are looking to 2025 is settled in the sense of how can we use our capacities and are pretty clear in terms of the planning.

And our statement is that we have even beginning of 2026 already some orders booked in. So I would say a very good planning horizon and a good stability in terms of our revenue and financial results.

If we go to the next slide, how the markets are distributed, I mean, we have to be careful once we see that this is revenue. And I would say there's a kind of a certain offset between revenue and order intake of 12 months, maybe a bit longer in some cases, maybe it's a bit short in other cases.

But I want to give you a bit of a reflection where we see the markets. I mean, North America you see in terms of revenue, it's a bit going down, no surprise this was for us expected.

The more important thing is that we see North America for the time being in terms of order intake on the planned level. So even with the - let me say, tariffs coming up, which brings unsecurity for the next couple of weeks until maybe it's more settled where the tariffs are, I would say then we have to have most probably a new look on it.

I would say when you look to it, how we see the markets and you see the distribution here. But I want to give a bit of a color on how we see the markets.

Europe is for the time being okay with what we see in terms of revenues and order intake. We see what we see Eastern Europe and Central Asia is on a good level.

We do expect the same one as we see in 2024, maybe for 2025. China is a kind of a problem.

I mean, we all know the economy doesn't work well. So this is one of the markets where we have some shortcomings.

And even Asia Pacific, which is a bit of a surprise because there is no economic reason why Asia Pacific should not work. But it's not yet on plan.

We come to that certainly later on as well. Middle East and Africa is working good, so a good recovery.

Those have been the latest coming out of COVID-19 and they are doing good. And South America is as well doing good.

So it's all on plan. So that's a first view on the world where we are.

And with that I would hand over to Uta that she runs you through the other numbers.

Yes, good afternoon. Nothing from my side.

I mean as always, first of all we talk about all P&L related topics, including segments and then come to balance sheet. Let's start with revenue.

One further remark in advance, I will not talk about guidance 2025, although you see it on the left side. We'll keep that for the end of the presentation.

I mean, as you can see, we have recognized the revenue of €5.294 billion, which is a 12.1% growth compared to 2023. And with that we are on the upper-end of the guidance as we had also communicated as our expectation in the last calls or in the last conferences.

I mean this is due also to the fact that we had a strong quarter four with €1.419 billion which was also a 14.9% growth compared to 2023. And yes, we have Netstal included here also as one of the effects why the revenue is increasing.

Netstal was approximately a little bit more than €150 million. But I mean you can do the math also without it we have been growing quite significantly.

And one of the reasons is also that and we'll talk about that probably later, supply chain shortages have eased further and efficiency in production has increased. EBITDA, yes, we have recognized or we have achieved an EBITDA of €537.1 million as you can see, 17.4% increase compared to last year in all or in absolute numbers more than €80 million.

And I mean looking at the margin 10.1% and we all remember 9.8% to 10.3% has been our guidance and as we had also communicated in the last month, we expect it to be somewhere in the middle as we also did. And this is despite of higher new machine business also something you hear from us quite regularly where we have some, if you want to call it diluting effect because it comes with a lower margin and which is on the other hand also, I mean evidence of backlog quality that we have achieved that despite of this and also what we have mentioned several times, we have a diluting effect of Netstal included in here, which is 0.2 percentage points.

Looking at Q4, €146 million, 10.3%. And that also here, despite of the diluting effect of Netstal.

Now coming to EBT also here, €381.6 million, quite a significant increase, €70 million compared to last year, 7.2% margin. I mean all has been said already on EBITDA in terms of development.

I mean what I want to mention here also is we had a financial income, as you can read on the left side of €13 million. Some extraordinary effects included in here under depreciation, as you can also read here, of close to €170 million.

But all in all also in line with our expectations and also with a margin of 7.2%. Yes, and that is because of a stable development of personal expense or personal cost and material cost of the major components of our cost base.

Starting with personal cost. I mean you can see €1.581 billion.

And you have heard from us several times, it's important to stay below that 30%. So with 29.7% we have achieved that.

And I mean looking at the increase of personal cost, yes, that is the result of on the one hand, which we will see on the next page, increase in FTE. But at the same time the merit increases as we have also communicated it.

Material cost. Also here you remember we had always said staying below the 50% is important for us.

49%, €2.603 million. So that is a good ratio.

And also here, despite of the effect or despite of the situation, the fact that we have higher new machine business in here. Now coming to employees, I mean we had already after nine months passed the threshold of 20,000 employees.

Now we are at 20,379. So it's close to 1,900 more than we had end of 2023.

And it's to one-third approximately it's the acquisition of Netstal. Another one-third approximately is increase in Germany, another one-third approximately outside of Germany.

And if we look where did we increase, I mean you remember that we had always said service technicians is important for us. So we have increased close to 200 service technicians and everything else actually is worldwide and it’s important for us to mention also in this conference, I mean, as you can also read in the headline, we have now close to 1,600 people in the United States.

So also a significant increase here. And I'm sure we'll talk about that also later.

Now coming to the segment, I mean filling and packaging technology. All I'm seeing refers very much to what I already said for the Group, and starting with revenue development, €4.454 billion.

So more of a €529 million increase. 13.5%.

So we are slightly above the guidance here, which was 9% to 13% also due to a strong quarter four. And now looking at the margin, €464.3 million, 10.4%.

So an absolute number €60 million increase. If you look at the margin, it seems little 10.4% compared to 10.3%.

But have in mind two effects diluting effect of Netstal but also all in all, high new machine share here. And also here we have confirmed or we have achieved our guidance we had given here for the EBITDA margin.

Now continuing on with Process Technology, €508 million revenues, 55 more than 2023, 12.0% increase. Our guidance had been 15% to 20%, so we are slightly below the guidance we had given because of less turnkey projects and PUC recognition coming from there.

Sure, we'll talk about that also later. But all in all still a significant growth.

And also if we took out Ampco, we also would have grown in the Process Technology segment, because Ampco in 2023 was not full year. I think more important is - or more significant is also looking at the margin €49.5 million EBITDA.

So it's a €15 million increase compared to last year. And if we look at the margin, 2.0 percentage points more so 9.7%.

And our guidance here had been 8% to 9%. So we are well above the guidance and actually continued also what was visible already in the first three quarters that we do well in terms of margin.

Intralogistics, €332 million revenue. I mean, as you can see, €11 million less than last year.

So we have not achieved the guidance, despite of the fact that we had a very strong quarter four, as we had also indicated to all of you, €112 million itself in quarter, quarter four. But despite of that we did not achieve that.

But I'm sure we'll talk also about the expectations later when we talk about the guidance for '25, because and you have heard that from us several times, order intake was good. Order backlog then also for '25 is good.

More important, also important here from our side is looking at the margin, 7% margin, EBITDA margin, a very strong quarter four with 9.6% itself in quarter four, coming then to the upper-end of the guidance which we had given with 6% to 7% for the Intralogistics segment. Yes, so far from my side with everything P&L related.

Now let's come to balance sheet and everything which is related to here. I mean, I think if we look at our overall numbers, maybe there's one surprise in the numbers which may be cash to all of you.

We had indicated already that there may be some upside potential. And we see that in cash flow also later we have close to €300 million cash flow and that brought us our cash position to €442 million as of end of December.

And with free credit lines used once we come to liquidity reserves, which are very close to €1.3 billion with €1,299 million and which gives us enough room for organic but also inorganic growth going forward. Now coming to the right side, equity.

We have grown in equity by €207 million, coming to €1.922 billion. And that €207 million is a result of €277 million net income.

And you already know the dividends we paid out in quarter two, €70 million. And the increase in equity itself was 12% and our balance sheet total grew by 6%.

And then applying math, we come to an equity ratio of 40.5% which is higher than last year and slightly higher also than we were end of September. Continuing on with working capital.

I mean, one of the reasons or the main reason why we have hold the cash position, we hold and have generated close to €300 million cash flows because of stability in working capital and also even a further reduction in working capital, as you can see, 17.0%. So also compared to the last year's steady decrease, I mean, you remember that we have always said the 20% is our threshold.

So we are well below here. And if I look at the individual components of working capital, starting with receivables PUC on the very right side on the upper end, 36.2%.

So I mean decreased by three percentage points, 3.1. And that's also a result of the faster delivery times we are having and also the increase in revenue because in absolute numbers, actually receivables PUC increased slightly.

Accounts payable more or less developed like revenue. I mean, you can see that also from the ratio we are holding 15.4%, €830 million as of end of December absolute value.

Inventory is quite a significant step down 12.9% compared to 14.5%. And you also remember that we had always said that we were holding safety stock, which we now want to stabilize.

Looking at absolute numbers, we kept inventory on the level we had December 2023 and received prepayments also that is a result of faster delivery that this is increased or decreased by 4.6 percentage points and also in absolute numbers to 927. All in all €856 million working capital, we had €766 million at the end of 2023 difference of €90 million.

You can see the €90 million on the third line of our cash flow statement but starting with a general overview of free cash flow, I mean I already teased it at close to 300, €292.5 million quarter for itself was €147 million. So we did in quarter four what we did the other three quarters and I mean we have mentioned that also in the individual talks with some of you.

I mean we always have a strong December and here in particular the last 10 days. So quite well here.

But if we look overall also on the development, I mean you can see from earnings - it comes from earnings it comes from other non-cash changes and I already talked about change in working capital. I want to mention CapEx because that also relates already a bit to the free cash flow expectation or orientation.

We're going to give 3.4%, a €180 million here and M&A activities, I mean you know what we have acquired in 2024 Netstal a major component and all in all net change in cash €6 million coming to the €442.5 million which I already mentioned earlier,. Free cash flow.

Here we give - you know we don't guide it but we give kind of an indication. Some of you may wonder why our indication now for 2025 is lower than what we have achieved in 2023 – 2024, sorry.

Yes, that is a number of different reasons. Yes.

First of all and you'll see that in the guidance we expect higher EBT. Yes, for sure.

But at the same time we also expect the working capital to increase and also I mentioned the 3.4% CapEx earlier. For 2025 we expect the 4% and here the 0.6 plus an increase in revenue actually mix that up that we have all in all the slightly lower number than we had for 2024 but still we believe it's a good cash flow generation we are showing here also for 2025.

ROCE 18.2% and I mean it's a result of EBT development which increased over proportionally over average capital employed increase and also here because that's our third number which we are guiding, we have some diluting effect from Netstal included here because their EBITDA and EBT respectively is not yet on the level of the Group. Yes, so far from my side.

Good. Then let's have a look into 2025 and first before we come to the revenue growth, our statement was all the time that we see for order intake a book-to-bill ratio in 2025 around 1 because we actually give no guidance on the order intake.

So that is a statement. And when you see the revenue growth of 7% to 9% that will give us again a significant growth, I would say in the magnitude as we have seen last year, quite significant one.

We are further increasing our profitability and given EBITDA range of 10.2% to 10.8% and the ROCE as a consequence out of that to 18% to 20%. So that's in terms of revenue and profitability and ROCE and a short look on the segments and I come to bit of a more underlying subjects.

If you look to the segments in filling and packaging, we expect to grow by 7% to 9% with an EBITDA margin of 10.5% to 11%. In processing and this is due to the order intake we had in 2024 we have a growth of 0% to 5% and we have an EBITDA margin of 9% to 10%.

In intralogistics we see a growth of 15% to 20% and EBITDA margin of 6.5% to 7.5%. For intralogistics I should say the order intake was €500 million.

So quite a number when you see the revenue we had in 2024 was around €340 million. So that's a good base to have the growth.

Now I would say with an order backlog which is manageable and have some security info 2025. How do we see things long term without going in detail.

We remain with our midterm target in 2028 having €7 billion of revenue and a profitability on EBITDA level of 11% to 13%. And I want to emphasize here why it's not higher and why do we not extend the EBITDA level at all.

That's just because we are investing a lot in - I would say the latest stage of technology in our IT infrastructure around the globe, which is taking some money and even some changes in our organization and our processes is aligned with that. So that's the reason why we said and we explained all of that on the Capital Market Day that we remain with the 11% to 13% until 2028 and ROCE should then go of course beyond 20%.

So, and now finally the key takeaways and I would like to do it a bit different like it's written here, just our statement and Uta and myself, we have given this morning some interviews to newspapers and how do you see us here? First of all, we are very happy and we are speaking for our team here in Krones that we have achieved the growth and the profitability in 2024.

And again, this is not us, this is all the 20,000 people we have in the company because we have a product and a service structure where everybody counts and only if everybody commits to what we have planned, I think we are able to achieve that. So we are happy here and we carry some optimism, which I would say it's a relative optimism for the time being because we see all the circumstances around the world and have of course as well those in few and in our planning.

But nevertheless, as you see, with the growth we are indicating for 2025, I think there is an optimism in. And I just want to repeat why we have a certain kind of - I would say justified optimism.

Number one, our markets are good, stable and less depending on the world economy. So the markets are okay.

And investment behavior of our customer, yes, there's the one or the other bump in it, but that's quite stable. We have a robust pipeline in terms of what we have out in the field and we have managed pricing and this is an important point quite well even in 2024.

And we are going to look into 2025 the same way in terms of the pricing. We have with the order intake we have.

We have an extremely good order backlog which allows us to manage 2025, I would say with a high security. And even if we continue the next two quarters, we are talking even about mid-2026 that we have actually our production capabilities, let me say in a plannable level if the order intake goes okay, which we expect for the next two quarters.

Furthermore, if you look to our cost structure and you have seen where we are with the personal costs, which is one of the most critical things we have our cost structures even in those times where labor costs have been rising significantly, good under control. We have fixed Intralogistics and Processing.

I can say if somebody would have told me we are talking about the EBITDA and even more about the EBT levels of - EBT level of 7% in processing. Those who know us long term, even four years ago, I would have said, that's a challenge.

We have achieved that and it looks like it's quite stable. Last week we have - and the week before we have made again good milestone on our global footprint.

We had a groundbreaking ceremony in China. Right now we have the groundbreaking ceremony in India, and we have signed three weeks ago an agreement extending our production capabilities for lifecycle in North America.

So even there we have made big steps forward. So we have a global footprint growing.

And with that I would say - if I sum that all up, this is why we are looking with a relative optimism into 2025 and have already a good base for 2026. That's all from us and now we are looking forward for your questions and hopefully we have then the answers to that.

Okay, thanks to Christoph and thanks to Uta for your questions. I think you're familiar with how we start this Q&A session.

[Operator Instructions] This was done by Benjamin Thielmann who is the first today from Berenberg. Benjamin, your questions please.

Yes, hi guys, can you hear me?

Yes.

Okay. Cool.

Yes. Hi from Frankfurt.

Good to see you. Two questions from my side.

First one on process technology revenues. So if I look at the 2025 targets it looks a little bit, that growth will be a bit limited in that division and I was wondering why.

It's probably because demand from breweries is not going to be that strong in 2025. But maybe you can give a little bit of color on that.

And a follow-up question would then basically how does it look like for the other end markets like liquid dairy, carbonated soft drinks, non-carbonated soft drinks. Maybe you can give us a little bit of color in terms of demand patterns we could expect in 2025?

Thank you.

Yes, yes, thanks for the question. First of all, yes, you are right.

The processing revenue is based on let me say the order intake we had in 2024, and we had indeed a lack of brewery order intake. And we have been, how to say, quite careful with that, because I mean there have been some orders out, but we have not taken them since price levels have been critical.

And one thing why we are in processing in the meantime going the right direction, is that we have been in the selection of the processes of the projects extremely careful. Now for 2025, we - I think there are some, a couple of more turnkeys out there for breweries.

But again we are careful. The one or the other looks not bad for us, even with I would say reasonable pricing which we, we might be able to achieve.

But the good message into that is, that we having processing technology even stable with the other products, which are more profitable than brewery. So how to say, I'm quite happy how the mix is moving at the moment, and that we can digest a relatively low order intake in breweries, and that the percentage is shrinking to the overall product mix.

Now how do we see the markets? And this is from the perspective of CSD, water, liquid dairy and of beer.

I mean, I would say beer is still on a stable level, because even 2024 beer was not on a high level. I would say CSD is around the world.

Carbonated soft drinks, quite reasonable. Water is still growing in some areas.

In particular when we talk about high speed water lines, and then we have, let me say those products. What we call aseptic products, which is fruit juices and second, which might be products like Gatorade, which is in the U.S.

predominantly filled in the meantime, not hot fills, it's filled aseptically. So this market is quite good.

It's most probably at the moment the most competitive one, because there's a bunch of competitors being in. But if you look to 2025 in the terms of how the markets.

In terms of the packaging, and the water looks like there is no fundamental change to 2024. So we had just this afternoon before this meeting we had a review from all the regions.

They don't see a change in the product mix. Water is still the one driving things forward.

But CSD within all its variants is stable and even the brewing business, I would say we do not see increase, or decline in the global overall picture. When I sum that up, is that okay for you in this way?

Yes, that's perfect. Thank you very much.

Maybe the next question would be on cash flow. Maybe you could guide us a little bit into 2025.

Are there any specific CapEx, or working capital swings we should be aware of?

I mean the CapEx shift is from the 3.4% to 4%, the 0.6 percentage points increase, and then at the same time increase in revenue. So that brings approximately €50 million in addition CapEx.

And then working capital. I mean it goes of course with the increase in revenue that we are seeing.

Their working capital increase which then all in all compensates in a, if you want to call it in a negative way, the EBIT increase or net income increase, which we also forecast. Does that answer your question, Benjamin or?

Yes, that's perfect. Thank you very much, both of you.

I'm going back into the queue. Thank you.

Thank you.

Thanks to you, Benjamin. The next one, I got also through the mails is Adrian Pehl from ODDO.

Adrian, your questions please.

Yes, thanks for having me. Actually, a couple of questions.

So first of all on the group order trends, and how they have unfolded in the fourth quarter in terms of the exit rate. So should we take that you have got more orders in December than in October, and maybe you could give us at least qualitatively some indications.

How January and February has evolved on that front. And the second question is on your strong guidance in Intralogistics revenues.

I was just - to understand that better what's going on actually if you could give us some examples of projects that you will be executing, throughout the year. And the third and last one is actually a little bit linked to how should, we see the phasing of your revenues in 2025.

Now, given that you said or understood, actually the reduction of the lead time has not progressed obviously in Q4 that much. But is that now accelerating significantly i.e.

that we see a stronger order conversion, and a stronger first half in terms of momentum, compared to the second, or how should we think of it? Thank you.

Yes. First to the order intake between October and December, has there been any change and have been one month stronger than the other?

No, it has been not the case. And it's worse.

It's all the time not possible. I would say if one big project is going to disappear in one month, and it appears in the other months, we don't see that as a big shift, or something where fundamental changes in it.

So if you look to Q4 that was an absolutely normal Q4, with absolute normal product mix. So nothing out of the row and quite stable.

And if you look to Q1 order intake, and estimations for it, I mean so far we, I mean we see some hesitation in some markets. I would say even as North America is still for Q1, we do expect it on the planned level.

But nevertheless there's I would say the biggest uncertainty at the moment in North America for some of our customers. Because they do not know where the tariffs are, and this is affecting even those countries dealing close with the U.S.

For example, we have a lot of breweries right on the border to Mexico shipping into North America. They have actually planned to invest in Q1, where we don't know how to continue for the time being.

And even there are some smaller investments in Canada, which are under the same. Let me say a few that they are uncertain, how the whole thing and the political game is continuing.

So this is how we see the critical. I would say if I could look to Q1, even China is low.

But I would say there are two factors. And of course the economy is not good.

And then we have Chinese New Year end, which is actually running down the country for a couple of weeks in terms of order intake, not in terms of production. But people are more hesitant ordering at that time.

It was just last week there, the whole week traveling and talking to the customers. I would say even there nothing surprising.

And if you look to Q1 all over, I would say it's still robust. And we did say we need to have for the whole year, a book-to-bill ratio around one.

And I would say we are in line with that in Q1. So that's where we are roughly.

We have not fully planned where we are in terms of revenue in Q1. But even for order intake we will be on a level close, or a bit above to the planning we have all over the year.

And for the Intralogistics sample. And why is the revenue coming?

I mean one limitation was not us in 2024. One limitation was that our customers didn't fix their.

I would say the necessary preparation that we can install, and commission our Intralogistics systems. So now we have already started some of the installations where we are going to take revenue in early 2025.

So that should be not too bad, and good and helping us. And second, we have built up capacities in terms of people, because our biggest limitation for the time being is people qualified people to execute.

And in addition 2024 had two orders in where customers postponed actually their installation, and commissioning date just, because of the economy situation. One of this is coming back in 2024.

And if you look to it, they are still carrying huge orders from Coca Cola, from Pepsi Cola and from Nestle. We are executing and if you look to North America, there's a perfect example.

We are executing at the moment an order picking system. So this is the customer puts in pellets, and dismantle it to crates.

And then the crates are coming automatically out in the way, it should be shipped to the root of the restaurants. So such an installation is between 30 million and 35 million.

And when you have two or three at the same time, then revenue is coming of course. If one of those is postponed, you have a bigger hit into the revenue situation at all.

So this looks quite good for 2025, and we are quite confident to the growth guidance we have given that this we can achieve. Hope this gives you a light on it.

And Uta, you're going to take that with the revenue, right.

Yes I mean, look, talking about seasonality, we expect some seasonality in Q2, because, I mean, that because of working days also. And Q2 will have much less than Q1 and Q3 and Q4.

And I mean on the other hand will happen, then also in the second half of the fiscal year. The positive effect also coming from further reduction of delivery times.

Yes, I mean, maybe we made one statement. We are at the moment around 50 weeks, and we do see that we are going down to, let me say between 45 and 48 weeks.

So that that's the reasonable range. We can expect maybe a week more.

But this is the planning for the time being. We're working hard on it to get that on a better ratio.

Is that okay for you?

That's pretty good actually. So the last statement you made, that was for Q1 or generally for…?

No, that's generally for the whole year.

Okay. Super.

Got it. Thank you.

Yes, thank you.

Thanks to Adrian for your questions. The next one I see have raised his hand.

So, Sebastian Growe from BNP Paribas. Sebastian, your questions please.

Hi everybody. Hope you can hear me well?

Yes start moving.

The first question. Hello.

First question would be around the '28 targets and then also comparing those two to the segment trajectory. It's basically follow-up on Benjamin's questions before.

The first one was around then the processed technology segment. So I understand that you have the current sort of won't call it issues necessarily, but that the brewery part, is more stagnant at this point.

At the same time, apparently if you are only guiding for the 0% to 5% in '25, you need about 10% growth in the outer years i.e. '26 to '28 in order to comply with the previous target.

That was more than €700 million revenues in that segment. So the question for me is really how you think more about the structural drivers here.

And the same would then also apply to Intralogistics, where apparently with the current guidance, it requires still about 20% growth than for the next four years. So between '25 and '28.

So has there been any change? So to zoom out a bit, to me currently it looks a bit like the core business is just doing better than what you have been putting forward in your updated '28 framework.

And the other two are trading little behind. And I just would like to have your words around what you see, and think is the most realistic outcome from today's perspective?

Yes, first to processing, I mean before I say something about growth, our focus is profitability. I have really to emphasize that and it's me pushing as hard as I can.

Because what is our sales colleague saying all the time volume is not a problem, but this keeps out pricing. And of course you know that our statement was all the time pricing needs to get into the DNA, and it is in his DNA and he's just joking with that.

Now, you're correct I mean breweries are down, the others have been picked up, and we are quite happy that we are harvesting on those things we have implemented, I would say over the last three years. So first of all, we have entities in Asia, which are doing in the meantime quite well.

And we have actually moved products to Asia, where we get better cost levels, where we are able to sell those in Asia and in Africa, which we have been not able to. We have made some smaller acquisitions, where we get technology on board, which we are harvesting around the globe.

So momentum will come 2026, 2027 to those smaller acquisitions we have made, where we are going to actually bring the technology in our global sales network. We have changed significantly in the U.S.

our sales team, even in combination with the acquisition of Ampco, where we are well positioned in certain areas with the Ampco pumps. So we are harvesting on that one.

And if I look to, I would say, I don't want to say too much, but we are looking optimistically in the growing order intake in 2025 in processing. This is a challenge since we do not expect tailwind from, let me say, larger brewing projects.

We still deal on smaller scale projects and with less risk. Yes, then the growth issue will be certainly a challenge.

But nevertheless, our point is with the measures implemented, just named some of them, we believe we can further growth. But even more important for us is maintain profitability on the planned level that, we are getting with the segment in the right direction.

Now Intralogistics, it's a totally different game Intralogistics, we have in some areas we could get order, but - we can't take them, because simply we have not the people to do so. And our point, is that we don't want to over promise, because the worst thing in Intralogistics is what you can do is you promise something, which you cannot keep at the end.

There's a lot of competition out there. We have an excellent reputation in terms of our projects.

I would say, as in Krones's DNA, if you buy something from us, then it's really going to happen in most of the cases in accordance to schedule and to the budget you had. And this we want to keep in particular in North America.

So the market is good we have huge commitments from, let me say the main players in the North American markets to get systems from them. And then we have, in addition to that, we have developed, I would say a new generation of Intralogistics systems.

And maybe we can show that one-time on our Capital Market Day, which is very competitive in terms of the grocery business, we are dealing with and in order picking. And in addition to, let me say the additional portfolio we have on board, those new things, which I would say are not fully established in the market.

Some customers are hesitating, because the references we have in the market are limited so far, but running very good, and we are putting a lot of hope on them. So if those things are going to harvest Intralogistics with, let me say the size of the orders is easier to grow than processing, where we are talking even about orders about €5,000 around the world.

So which we carry. This one having bigger projects, where I would say growth might be easier than maybe in processing.

And I would say in addition to that, the size of the companies we have in the meantime in North America, in Asia, in Europe for our Intra Logistics, we have just found a daughter company in India. We are starting to do the business in China in the sense of with - our own team, because we have already orders there.

I would say it gives us all fundament for the growth we are looking for. I hope, Mr.

Growe, that answers your question, at least in this short manner to a certain extent.

No, no, that's fine. It does.

All right then let me move on quickly, to my favorite part probably and always around mix for '25, but also beyond. So what I take from today's presentation, is that once again new equipment has continued to outgrow the aftermarket business.

And the question that I have, the growth is now sort of starting to normalize, at least if I compare to the 10% plus levels of the last four years. So question one is, when should really aftermarket and regional equipment growth start to converge?

I would assume it's in '25, but maybe you can just comment on this. And when should ultimately aftermarket eventually start to outgrow, the original equipment piece in order to have this kind of natural benefit, then when it comes to the margin trajectory going forward?

Yes, 2025 we still see that new machine business is growing faster than lifecycle. So 2025, there will be no conversion so far that it's swifting, and that things are more balanced.

For 2026, we see that, because I would say markets in terms of lifecycle are developing very, very nicely. And in particular when I look to the U.S., we just said it that we are investing there, because with the growing installed base there.

There's a lot of requirement to give good services, which is good for us. And I would say maybe an outgrowing, difficult to say, because we want to grow in the machine and line business as well.

So I'm not sure whether we once are going to outgrow with lifecycle. I would say it's more than on a balanced level, and I would see that in as I said in 2026, 2027, if we can manage to outgrow this might be not before end of 2026, 2027.

Okay. And a certain very last one from me then, just around free cash flow.

So once again I think you have been surprising to the upside when it comes to particularly the free cash flow generation part. And again, it's the working capital that is doing better with the 17% quota.

So the thing that I'm trying to get my head around, is really how the change in the overall lead times might impact working capital more structurally. So I would take, from this kind of reduction lead times there's less of a risk, sorry, less of a need for customers to place, or make a down payment with you guys.

At the same time you are probably less under pressure, to build up inventory in order to always be able to deliver stuff, or keep so to speak your promises with this very prepayment that comes along. So the question that I simply have.

Shouldn't we think of working capital, to be structurally just below the 20%, or is there any kind of break in the thoughts that, I'm bringing in here?

I mean all in all the logic you are applying is logically, let's put it this way. And I mean there is - I mean as you have seen also the last years, there's always some kind of cushion we also have in here, because we don't want to over promise.

And we also internally, I mean we are taking the measures to keep the, the working capital below the 20%. Of course, I mean coming from 17% to 20% is quite a jump with all what you have said.

So there is some cushion and yes.

All right then I look forward, to the next positive surprise hopefully. Thank you.

Thanks to Sebastian, for your questions. And I see also Sebastian Weier sorry it's Sven Weier, sorry from UBS.

Sven, your questions please.

No worries Olaf, thanks for having me. Good afternoon.

Hello Weier.

Hello, the first question is just in terms, I mean we talked a lot about tariffs, uncertainty and how that is on people's mind, especially in North America. Now obviously we all know that in the last couple of years.

ESG pressure on your clients has been quite an important investment driver and probably still is. I mean, how do you sense this narrative shift on the ESG side, especially also coming from North America that people walk away from certain commitments there?

Do you think this is also a reason, why your U.S. clients are starting to think twice, that they overhaul their ESG priorities, and with that maybe have less pressure to invest?

That's the first one? Thank you.

Yes, thanks. No, I wouldn't see that this way.

I mean, whatever we have applied on ESG has been anyway based on, let me say, economical drivers. So nobody has invested just for the sake of being good in ESG.

I mean, whatever investment has been made, it has been driving down costs in that regard. And this is still true.

I mean, there was one very famous statement. Coca Cola actually took back the targets they had for 2040 for Net Zero in North America, if some of you have read that.

But this has not changed at all their investment strategy, and that they are heading for reducing CO2 footprint, and water consumption in the manner they have actually planned. There was one other driver in.

I mean, as many of us recognize that Net Zero by 2040 might be very, very difficult to achieve. Since the curve, once you get the first CO2 reduction done and it's continuing further, it's becoming more and more difficult, as closer you come to the zero.

And I would say that was more based on that one. And I would say globally, if I look to that, we can't see a change in the behavior of our customers.

So the commitments have been strong. And since they are economically driven, I would say they continue.

And then there's one other subject I want to mention. Water consumption and reduction of that.

I mean, we have I would say cases, where breweries can only invest into a new brewery, Greenfield, when they can prove that they are beyond or below a certain consumption of water per liter of beer. And this is driving as well.

Innovation and even Greenfields are driven by that. We just see some projects in China, where our customers wanted to reduce so significantly the water consumption, because they are forced by government.

So I would say that's still intact that, we see that trend for ESG driven investments.

Sounds good. Thank you.

The second question is coming back on tariffs and more specifically for Netstal, I guess the most important competitor, Husky, is obviously based in Canada. I mean, can you just remind us of the relative production setup?

I guess Netstal is in Switzerland and Husky in Canada, right. So I haven't heard about tariffs on Switzerland yet, but maybe that's something that's still to come.

But are you seeing your clients maybe being more in favor of Netstal in terms, of being more sure about no tariffs in Switzerland than in Canada? Or is that a ridiculous thought?

No, it's not a ridiculous thought, because we had the same one, and we had been very deep in clarification of this sort, how actually Husky would do out of Canada. Because they have actually removed even their production from China to Canada, a couple of years ago.

And the main production place is Canada for them now. For the time being we do expect that a Swiss-based company might get the same tariffs, as Europe as long as we know.

So we don't see a too big advantage on Netstal, compared to European equipment. And we have not yet really seen what Husky, will have as applied tariffs.

But all in all, I would say Husky is a very strong competitor in, I would say the PET business. But nevertheless, where we are benefiting from is we have at Netstal a newly developed machine, latest state-of-the-art, and we see in North America a lot of customers being interested, to have a second source on injection molding.

So even in this critical times, I would say we are seeing a good progress, and I hope it turns out in good order intake. How we can penetrate the North American market.

But it has nothing, to do with terrorists for the time being, or that customers might move away from Husky, because of that. It's more than they want to have a second source, and want to try out how Netstal can actually help them at the moment.

Understood. And maybe the final question just on order intake, I mean, I guess what you just said on Q1, to me implies sort of flat order intake sequentially against Q4, and to get to one-time for the year, I guess we have to see an acceleration eventually.

I mean, is that more driven, by when you think there's maybe less tariff uncertainty, or are you already thinking about drinktec as a potential driver in the second half? What's your thought behind that, or do I do the Q1 calculation wrong maybe?

I mean, first of all we might see less seasonality over the quarters in 2025, than we have seen historically. Because Q1 was all the time quite strong, and then we had Q2, Q3 a bit less than, I would say it's better balanced.

And why do I say that? First of all, I see Q1 of 2025 above Q4 of 2024.

If we look to our projections and the pipeline we have, I would say it's difficult really to say, because we have some important decisions by the second half of March for larger projects, they could move easily into April. So that's the reason why I'm saying it.

But I would say we are kind of, positive in terms of order intake for Q1. And I said it earlier that we are close to, let me say book-to-bill ratio around one in terms of, let me say revenue versus order intake.

And I mean there is no doubt, we have a run rate of per quarter in order intake between €1.4 billion and €1.45 billion. Just roughly somewhere in between there.

And we might be in that range. It's still a challenge to go there, but this is where we believe we might be there.

And the point is that Q2 looks on the same level. That's what we see right now.

We can't say all the time are there customers postponing things, but at least what we see in the pipeline, this gives us some optimism that things are going in the right direction. If now, let me say, because of certain circumstances around the world, I mean, a sudden one, or the other customer might cancel his investment.

This we can't predict at the moment. We don't see it.

And we see customers in North America hesitating at the moment, but they have not given any indication when the hesitation might be over. That's the problem.

I mean, Mr. Trump said he will give indication on tariffs for the European Union on the 1st of April.

So let's see where this will be, and if this takes some of the, let me say, uncertainty out or not. And on the other side, I have to say some of our customers, are waiting now for maybe some of the tax reductions Mr.

Trump has been indicating, and some of them discussing even about economy booming in the U.S. So there are other factors in, which might offset that one as well.

So there's a lot of discussions right now in, how things are moving. And I would say we are still even with the U.S.

challenges, if tariffs are applied on the level - the indications are, I would say there's a good chance that, we get along with them in one way or the other. I said it earlier, we have a lot of production already in the U.S.

We have of course the core products here in Germany. But there is no significant competitor in the U.S.

So they wouldn't need to buy any way from Europe. I don't think they will buy from China.

That's not expected. So all in all, we still see a good chance, to be where we should be.

Now, thanks for the additional color. That also gives clearer picture than on Q1 revenue stance.

So thank you Mr. Klenk.

Yes, welcome.

Thank you. Thanks for your questions then.

So before start the second round, I think we also see a first question coming from Peter Rothenaicher from Baader Bank. Peter, your questions please.

Yes, hello, Christoph Uta.

Hello, Peter.

One question on competition. So how do you think about technological advance of Chinese customers?

Do you see here some, some impact? Are they particularly aggressive, and might this have some impact on pricing?

Yes, yes, of course. I mean Chinese competition is very much in the focus, and I just said it have been one week traveling in China.

And I would say the main focus was what do we need to do in order to be long-term competitive with our Chinese competitors. Number one in China and second, in case they go out like in Southeast Asia, how we have to deal with them.

We don't see a technology advantage so far. What we see is that they might have advantages, because they are moving faster on localized automation equipment, like a replacement of a Siemens PLC, with a local made one.

We see that they make higher promises in terms of lifecycle. We certainly are absolutely sure that there were no money on it, but they just make it for getting the customer on board, and making guarantees there.

So there is here and there some challenges. But on the other side, when I look to us we are further localizing our products there, I just said it with a groundbreaking ceremony for the new factory there.

So we are doubling the space, just to be more competitive in China, and we are localizing as the Chinese itself. So this helps all to keep them, let me say in distance.

And we are still significantly better in terms of reliability of the equipment, not in terms of pricing and in services. And this is even true in China.

We are still the number one in terms of the volume, we sell a new equipment in China. And I would exactly say the same in Southeast Asia, where there's a new tendency with our Chinese competitors that are buying.

Let me say local agencies, where they have service capabilities locally made up, or being agencies of European companies, and they're going to buy them just to have their that service approach. And we are going to counter that.

I said that as well. We have groundbreaking in India.

So same thing in India. We need to have an India footprint with more localized products, and in particular with a bigger service force to service our customers there.

So far yes, there is a, an issue with them and we are, I would say we have it, I wouldn't say we have it under control, but we are really aware of where they are. They are fighting hard, but we are fighting hard back.

I would call it this way.

Okay. And in terms of competition with your big competitors, KHS, do you see here some impact perhaps from the overall Salzgitter situation, or is this going as usual?

And another question on lifecycle services business, your target this year to increase business with customers. Is this working, or perhaps is even here coming up some additional competition?

KHS is going as usual. You don't see an impact on all the, let me say circumstances besides Salzgitter [ph] going on.

They are continuing I would say as a competitive where you can estimate how they act and react in the market. That's okay like we know it and that's.

I would call it a good competitor in case we can call it somebody a good competitor. In terms of lifecycle, I would say that's a bit up and down.

When you have customers might be going away from us, and trying out some local ones. But in most of the cases sooner, or later they are coming back.

And since we have driven our service force as local as possible, we can compete in most of the cases, with local competitors even in case there are smaller ones. So I mean this was all the time, our target to be on price levels as a local.

And we just have made for example even small acquisition here in Germany, a very small one. But just this is somebody being in a more remote area.

And just to make sure that we have in this area as well, a good service for us on levels that the customer can afford it. So from time-to-time it's an issue.

But if you look to the, let me say the performance packages we are offering them in terms of parts, change parts. I would say manpower know-how helping them out in emergencies, but even managing their line efficiency, I would say the business is going the right direction.

Yes, we see competition from several areas. But what we call our core competence in that, is so strong that we can in most of the cases outperform them.

Okay. Thanks.

And my last question is on Netstal. Can you comment here on the progress in terms of sales expansion?

So injection molding still in many areas not an easy market for the time being. But how is Netstal performing, and how are you progressing in improving profitability?

Yes, profitability. You are going to answer.

What we have done is since Netstal is on board, we have started to strengthen the sales and the service network, in particular the service network, because there have been a lot of unsatisfied customers in North America and in Asia, where many machines are operation and the service was not good enough. So with the power we have.

We supported that very strongly, and in some areas we even strengthened the sales team even to the extent that, we bought some of the agencies of Netstal that they are becoming really Netstal employees, and selling only Netstal equipment. This is going quite well.

And this has a concentration on number one, of course of the beverage industry, where we have a very strong link to our sales team. But don't forget they are as well in medical.

So they have medical equipment, where we are going to, or we have strengthened sales, and even what they do in packaging, thin wall packaging, some of the orders have been going quite well, even in that very, very challenging market of injection molding. I can say so.

This is going well and I would say we are going to see a good growth in 2025 with Netstal.

And if I may comment on the profitability. So first of all, Netstal had been already a couple of years ago on the profitability level.

We want them to be. So they have achieved that.

How are we doing now, or how are we progressing to. Yes, for them to go back, I mean different elements.

First of all material. I mean they had.

They are now on our frame agreements. And the second thing, is cost reductions also through assembly.

I mean, they have set up targets, or set up programs also to reduce their assembly times. And then they have other efficiency targets for themselves set up, throughout the last months.

And I mean, we are progressing as expected. And we had said that I mean not before 2026, they will be on the group margin level.

But it's going as plant. Yes.

And it also let me add to this, of course volume. There also is a factor, is a factor, because volume has been.

Volume has been low last year, the year before and with higher order intake it will come back, which is a factor also for higher profitability.

Right. And we are pushing service business, which helps all the time a lot with good margins.

Yes.

Okay. Thank you very much.

Yes. Welcome.

Thanks to Peter Rothenaicher from Baader Bank. The next questions, I think.

Benjamin, you have additional questions.

Yes, exactly. Thank you.

Olaf. Just one final one from my side on market share development.

I remember last year you mentioned that, you are losing a little bit of share because your lead times are higher, compared to your competitors. Maybe you could give an update on that.

Are your lead times still higher than competitors? Maybe what is the feedback you receive from your customers and if so, what is the delta between the lead times we're talking about here?

Thank you.

Yes, we are still higher on lead times. I would say an average day depends a bit on the product they are selling, or we are selling.

It's between zero months and two months difference what we have, because we have some, in some cases we can do something, in some cases we can't do something in terms of accelerating our orders. So it's between, I would say one and two months difference, between them and us.

And in terms of, let me say market share, I wouldn't see that there has been a significant change since the reason why we lose, because of delivery time is pretty low. I mean that's around 10% of the orders we might lose, because of delivery time.

Okay. Perfect.

That's it from my side.

Thank you.

Thank you, Mr. Klenk.

Yes thank you.

Thanks to Ben. And also Sebastian Growe has an additional question.

Yes, exactly. Hi, me again.

Just quickly on the pipeline from a different angle. So it goes back to the point around the prepayments, et cetera.

So has the pipeline visibility changed in the sense that with lower, or shorter lead times that customers are not giving away so much information as they probably had done before? So I just want to get a better understanding how many years, month you can look into the future now, and how really simply willing and transparent your customers, are with you at this point.

And if there has been any change. So that's the simple question?

I would put it in actually in two pockets. One pocket is, there is no change in, let me say how much in advance they start to go into a project and start an inquiry.

So I wouldn't see that there's a big change, once they clarify what the kind of next line they need, and the technical specification and so on. What is different and that makes, the predictability for us so problematic that decisions are most of the cases not made from those doing the inquiries.

So as in any big company, they do the inquiry, then everything is prepared and then usually a higher, I would say premium is deciding, whether they're going to place an order or not. And they might be more hesitating.

And this is difficult to find out for us how this hesitation has to be judged. And in some of the cases we had already, let me say verbal indication that it will be placed, and had already verbal agreements.

And then up in a sudden, they were saying no, we need to wait another four weeks. So this is something, where things getting more difficult, and this is the level we're dealing with.

It's not that they might shorten the inquiry time, and we have never had a problem with that one. I mean we have projects, where customers in a hurry, we give them in two weeks, a full quotation for everything.

And we have - and they are ready to negotiate, and we have others where you're dealing 12 months, before you get really to the shoot that you can actually close down the order.

Understood. But the decision making and the person starting the inquiry that has been always disconnected, or has there been a change at the customer?

No, there's no change. No, no, not at all.

I would say on different customers, different ways, but I can't see that there's any change at all.

All right. Okay.

Thank you.

Yes, welcome.

Thanks to Sebastian. Peter Rothenaicher, I also see that you have still raised your hands.

I'm not sure you are having a question or.

I'm fine, thank you.

Okay. Thanks.

So I check also my email very fast. No additional one here.

Also no one in the team's channel. I think we can come to an end.

Okay, Chris.

Yes, then I have to say thank you. And I'm just wondering, that I should reemphasize that in those difficult times, we are quite happy where we are.

We are humble to some extent, because we are aware of that. It's coming from robust markets.

But on the other side, we have done, I think, a good homework. We are in a good situation, to deal with what is going around.

I mean, it could be always a bit better. I know.

But I would say all in all, we are quite optimistic, and we are looking forward, to get our targets done for 2025. Thanks a lot with that and we see each other soon.

Thank you.

Thank you.