Knorr-Bremse Group reached an order book of around EUR 5 billion as of December 31, 2020, representing growth of 6.1% compared to the previous year when recorded a EUR 4.7 billion order book, reaching a “new record level and aim to continue the positive development in 2021. 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,” Jan Mrosik, CEO of Knorr-Bremse AG said at the presentation on the preliminary results for fiscal year 2020.
The Covid-19 pandemic impacted on overall economic development and also on the business performance of the Knorr-Bremse Group.
At the beginning of 2020, Knorr-Bremse Group responded with a comprehensive programme 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.
Despite the difficult market conditions, the Knorr-Bremse Group’s order intake was down -8.8% to EUR 6.44 billion, ‘not quite reaching the record level of the previous year’ the company says. The order book as of December 31, 2020 reached a new record level of EUR 4,977 million.
The group’s revenue both divisions were down by 11.2% on the previous year to EUR 6.15 billion , compared to the previous year when the sum reached EUR 6.93 billion, but nevertheless reached the forecast sales range of EUR 5.9 – 6.2 billion.
At group level, this decline affected all regions except Asia where the sales increased by 1.8% to more than EUR 2 billion compared to previous year (EUR 1,991 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 Group ‘s robust business model.
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 1.1 billion in 2020 against previous year (EUR 1,328 million). The EBITDA margin was 18% (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 million in 2020 compared to EUR 1 billion in the previous year. 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 million or 9.1%.
Rail Vehicle Systems division (RVS)
Order intake in the RVS division decreased 2020 by -13.2% to EUR 3.48 billion as a result of the Covid-19 pandemic. In contrast, the order backlog as of December 31, 2020, increased to EUR 3,7 billion (previous year: EUR 3,57 billion) due to the positive order situation, especially in the second half of 2020.
Revenue of the RVS division was -8.7% lower year-on-year at EUR 3.33 billion (previous year: EUR 3.65 billion) and thus within the forecast. At EUR 764.2 million, EBITDA was down a comparatively moderate -6.2% on the prior-year figure (previous year: EUR 814.9 million) due to volume-related factors. This led to a pleasing development of the EBITDA margin, which was 22.9% (previous year: 22.3%).
Commercial Vehicle Systems division (CVS)
The CVS division recorded a decline in order intake of -3.2% to EUR 2.95 billion in 2020. Order book as of December 31, 2020 was significantly up on previous year by 11.9% to EUR 1.27 billion compared to previous year (EUR 1.13 billion). Correspondingly, revenue of the CVS division decreased significantly by -14.0% to EUR 2.82 billion in 2020 compared to EUR 3.28 billion in the previous year.
EBITDA decreased in 2020 by -24.3% to EUR 381.2 million (previous year: EUR 503.7 million). At 13.5%, the EBITDA margin was -1.9 percentage points below that of the previous year (15.4%). The operating EBITDA margin in the previous year was 16%.
The research and development expenses amounted to EUR 396.4 million in 2020 and were thus almost at the previous year’s level (EUR 396.9 million). As a result of declined revenues, the ratio of R&D expenses to group revenues increased from 5.7% in 2019 to 6.4% in 2020.
The company expects sales of between EUR 6.5 billion and EUR 6.9 billion, an operating EBITDA margin of between 17.5% and 19.0% and an operating EBIT margin of between 13.0% and 14.5% for fiscal year 2021.
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.
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