Knorr-Bremse AG, the global market leader for braking and other systems for rail and commercial vehicles, today presented its preliminary results for fiscal year 2020.
Dr. Jan Mrosik, CEO of Knorr-Bremse AG: “For Knorr-Bremse, as for all companies, 2020 was heavily influenced by the Corona pandemic. It was a challenging year for the Company, but above all for our employees, which we were nevertheless able to end with a strong fourth quarter. Once again we demonstrated Knorr-Bremse’s resilient business model: stronger growth than the market and resilient profitability. With an order book of around EUR 5 billion, we have reached a new record level and aim to continue the positive development in 2021.”
Frank Markus Weber, CFO of Knorr-Bremse AG: “Despite the significant impact of the Corona pandemic in 2020, we succeeded in achieving very good profitability with an EBITDA margin of 18.0% and also generated a strong free cash flow of 729 million euros. In the past fiscal year, we were able to ensure good liquidity at all times and have an excellent balance sheet overall.”
Successful countermeasures in turbulent market environment 2020
The Covid-19 pandemic impacted on overall economic development and also on the business performance of the Knorr-Bremse Group.
In 2020, the global market for rail vehicles was impacted above all in the first half of the year in Asia and especially China. In Europe, the USA and other countries, by contrast, renewed restrictions weighed on business development in the middle of the second half of 2020. Overall, transport volumes in 2020 are expected to decline by around 36% in passenger traffic and by around 7% in rail freight traffic. However, with supply chains largely maintained, operators took advantage of the reduced passenger and freight volumes for maintenance and overhaul work. As a result, the service business saw only minor declines last year.
The global commercial vehicle market also suffered massively from the effects of the pandemic in 2020. This was reflected above all in temporary plant closures by major customers in the second quarter of 2020. However, the extremely rapid recovery in the Asian market, driven primarily by pull-forward effects in China, largely compensated for this. The market also recovered surprisingly quickly in Europe and North America, with the result that overall global commercial vehicle production in 2020 was down by only one percent year-on-year.
At the beginning of 2020, Knorr-Bremse responded with a comprehensive program of measures. The aim was not only to protect the health of employees, but also to ensure the stability of the company. As well as drawing on additional credit lines to increase operational room for maneuver, these included strict measures to stabilize earnings and cash flow and safeguard supply capability.
Order book at a new record level – sales at the upper end of the forecast range
Despite the difficult market conditions, the Knorr-Bremse Group’s order intake was down -8.8% to EUR 6,441.8 million, not quite reaching the record level of the previous year. The order book as of December 31, 2020 reached a new record level of EUR 4,977.0 million (previous year: EUR 4,692.0 million), representing growth of 6.1%.
In a volatile market environment characterized by the effects of the Covid-19 pandemic, revenues for the Knorr-Bremse Group at both divisions were 2020 -11.2% down on the previous year to EUR 6,156.7 million (previous year: EUR 6,936.5 million), but nevertheless reached the forecast sales range of EUR 5,900 to EUR 6,200 million.
At Group level, this decline affected all regions except Asia. Here, sales increased by 1.8% to EUR 2,027.3 million (previous year: EUR 1,991.3 million).
In the aftermarket segment, sales fell by -5.2% in 2020, which was significantly less than business in the original equipment segment, which recorded losses of around -14.4%. The share of total sales thus rose from 34.3% in the previous year to 36.6%, demonstrating Knorr-Bremse’s robust business model.
Solid EBITDA and EBIT margin thanks
Thanks to the good product mix with a higher aftermarket share as well as quickly initiated countermeasures and strict cost discipline, EBITDA amounted to EUR 1,106.9 million in 2020 (previous year: EUR 1,328.7 million). The EBITDA margin was 18.0% (previous year: 19.2%) and exceeded the forecast margin corridor of 16.5-17.5%. Adjusted for restructuring expenses at the Wülfrath location (EUR 19.5 million) and a sale-and-lease-back transaction in Munich (EUR 45.1 million), the operating EBITDA margin in the previous year was 18.8%.
EBIT amounted to EUR 814.0 million (previous year: EUR 1,062.9 million) in 2020. At 13.2%, the EBIT margin was below the previous year’s figure of 15.3%. Adjusted for restructuring expenses at the Wülfrath site and the book gain realized as part of the sale-and-lease-back transaction in Munich, the operating EBIT margin in 2019 was 15.1%.
This resulted in a net income of EUR 532.2 million or 8.6% of sales. In the previous year, the book gain from a sale-and-lease-back transaction in Munich had a positive effect, resulting in earnings after taxes of EUR 632.0 million or 9.1%.
Earnings per share reached 2020 EUR 3.07, compared to EUR 3.65 in the previous year.
