Marc Llistosella, Chief Executive Officer of Knorr-Bremse AG: “We have every reason to be proud as our excellent results for 2023 demonstrate the commitment of our workforce. The new records reached on our key financial performance indicators as well as the successful market launches and product developments also give us motivation for the upcoming challenges, given the excellent foundation that Knorr-Bremse has. With our ‘BOOST 2026’ strategy program, we are strengthening the company for the future. We are determinedly pushing ahead with measures such as the necessary portfolio optimization and Fix It program, paying strict attention to our cost control, and always keeping track of how our employee numbers are developing, too.
Frank Markus Weber, Chief Financial Officer of Knorr-Bremse AG: “We are very satisfied with the development of our financial performance indicators in the 2023 fiscal year. We have successfully managed to fully offset the inflation-driven cost increases of just under € 300 million. The cost control measures we implemented with discipline, the pricing negotiations we completed successfully, and the inventory and receivables management we optimized further all contributed to an improvement in profitability and excellent free cash flow. Our robust balance sheet puts us in a position where we can respond to the diverse macroeconomic challenges while simultaneously enjoying a great degree of financial flexibility to seize opportunities. The low net debt and our cash and cash equivalents of roughly € 1.4 billion underscore our company’s solid foundation.”
Profitability Up
The global economy continued to face pressure in the 2023 fiscal year, and inflation only went down slowly in many regions. Moreover, the negative impacts of Russia’s war on Ukraine remain a burden on the global markets. Knorr-Bremse was able to increase its consolidated revenues due to the sustained, pleasing customer demand and saw a 10.9% rise to € 7,925.6 million (previous year: € 7,149.7 million). Both divisions contributed equally to these positive developments. Profitability also improved through the cross-divisional Profit & Cash Protection Program (PCPP) in particular, with the operating EBIT margin reaching a value of 11.3% (previous year: 11.1%) and operating EBIT coming in at € 893.1 million (previous year: € 794.6 million). The free cash flow, which has risen to € 553.1 million (previous year: € 219.3 million), also demonstrates the positive effects of the active countermeasures. Thanks to a strong second half and a remarkable fourth quarter in particular, the cash conversion rate reached 93% and therefore slightly above the desired target range of 80% to 90%.
New Records for Order Intake and Order Book
Knorr-Bremse continued to record high customer demand in the previous fiscal year. At € 8,252.2 million (previous year: € 8,114.1 million), the order intake is approximately 1.7% higher than the previous year. The order book of roughly € 7,082.3 million as at December 31, 2023, saw a 2.5% increase year over year (previous year: € 6,907.5 million) and thus reached a new all-time high at year end.
Strong Revenue Development in Rail Vehicle Systems Division (RVS)
Demand in the rail vehicle market was robust in all regions. Europe and North America performed particularly positively, while China was assisted by a return to rising passenger numbers. During the 2023 fiscal year, the RVS division increased its revenues by 10.2% from 2022, bringing them to € 3,747.5 million (previous year: € 3,401.9 million). Due to economies of scale, the efficiency measures implemented, pricing measures on the part of customers, and an improved share of aftermarket revenue, the operating EBIT margin reached 14.3% (previous year: 14.9%). The division’s order intake of € 4,042.5 million represented a slight decline of 2.9% (previous year: € 4,161.9 million). The order book of € 5,132.3 million as at December 31, 2023 (previous year: € 4,918.9 million), had also grown.
Significant Revenue Increase and Record Order Book in Commercial Vehicle Systems Division (CVS)
Demand in the global commercial vehicle market was at a good level in the previous year. Truck production rates in Europe and North America developed positively year over year while China boasted an increase of more than 50%. With a significant 11.5% increase in revenue to € 4,180.2 million (previous year: € 3,750.0 million), the division achieved strong results in the 2023 fiscal year as well. The division’s profitability was exceedingly positive with an operating EBIT margin of 10.0% (previous year: 9.0%). Order intake was up 6.5% at € 4,212.2 million (previous year: € 3,954.3 million). The order book was valued at € 1,951.7 million at year end (previous year: € 1,989.8 million).
Guidance for 2024
Assuming that exchange rates remain stable and that the geopolitical and macroeconomic environments remain mostly stable, the company expects revenues between € 7,700 million and € 8,000 million (excluding Kiepe Electric revenues), an operating EBIT margin of 11.5% to 12.5%, and free cash flow between € 550 million and € 650 million for the 2024 fiscal year.
