Knorr-Bremse AG achieves outstanding results in the first quarter of 2021

Knorr-Bremse AG, the global market leader for braking systems and a leading supplier of other rail and commercial vehicle systems, today published its results for the first quarter of 2021.

Dr. Jan Mrosik, Chairman of the Executive Board of Knorr-Bremse AG: "Knorr-Bremse achieved outstanding results overall in the first quarter of 2021 despite the still volatile market environment. We’re maintaining our guidance for the rest of the year. However, we’re closely monitoring the continuing challenges worldwide as a result of the Covid-19 pandemic, increasing bottlenecks in the supply of semiconductors and other critical components from suppliers, and in global logistics systems."

Frank Markus Weber, Chief Financial Officer of Knorr-Bremse AG: "A new record order book in the company’s history, revenue growth of 3.9% compared to the previous year, and an improvement in the EBITDA margin to 18.9% and the EBIT margin (ROS) to 14.9% – each increasing by 110 basis points – mean we’ve made a very good start to the year. In addition, we’ve further advanced our focus on ESG principles and implemented a number of further sustainability measures at Knorr-Bremse."

Order intake grows by 13.3% despite volatile market environment

In the first quarter of 2021, the Knorr-Bremse Group’s order intake was higher than in the same quarter of the previous year for the third time in a row, improving by 13.3% to EUR 1,799 million (previous year: EUR 1,588 million). The order book grew significantly to a new high of EUR 5,084 million, which represents an increase of 9.3% compared to the previous year (previous year: EUR 4,652 million). This is an excellent basis for good capacity utilization in the coming quarters and the positive full-year guidance.

Revenue improved in the first quarter of 2021 to EUR 1,692 million, an increase of 3.9% (previous year: EUR 1,627 million). Excluding currency and M&A effects, growth was in fact 5.9%. This growth primarily reflects the high demand in the commercial vehicle systems segment, which continued globally in the quarter just ended.

The largest growth in revenues was in the Asia/Pacific region, which saw an increase of 9.2%. The business also grew in Europe (+3.3%) and South America (+1.6%), whereas revenues were down still by -1.7% in North America as a result of the pandemic.

High and improved profitability and improved cash flow

In Q1 2021, EBIT increased by 12.3% compared to the same quarter of the previous year, rising to EUR 252 million (previous year: EUR 224 million). Thanks to the action programs and stronger OE revenues, the EBIT margin (ROS) improved again, rising from 13.8% in the first quarter of 2020 to 14.9% in the first quarter of 2021.

The EBITDA margin of 18.9% (previous year: 17.8%) likewise improved by 110 basis points.

Free cash flow improved by EUR 38 million compared to the previous year to EUR -23 million in the first quarter of 2021 (previous year: EUR -61 million).

Rail Vehicle Systems (RVS) sees slightly improved margins despite expected decrease in quarterly revenues In the first quarter of 2021, the RVS division’s order book grew by 2.1% to EUR 3,630 million (previous year: EUR 3,555 million), underlining the segment’s stability. In the first quarter of 2021, the division’s order intake of EUR 714 million was around -18.3% lower than in the same quarter of the previous year (EUR 874 million) due to Covid-19 impacts, postponements of projects as well as a very strong previous quarter in 2020 (Q4 2020: EUR 1,095 million). The aftermarket business in China and the OE business in India should, however, improve in the next few quarters.

As expected, the RVS division’s revenues of EUR 805 million in Q1 2021 were around 9.7% lower than the same quarter of the previous year (EUR 892 million). This effect is primarily due to lower passenger numbers during the Covid-19 pandemic, which were reflected in the extended overhaul cycles for trains and thus lower service business in Asia and North America in particular.

EBITDA decreased by -5.9% in absolute terms to EUR 175 million (previous year: EUR 186 million) while the EBITDA margin improved to 21.7% (previous year: 20.9%). EBIT decreased by -7.3% compared to the same quarter of the previous year to EUR 145 million (previous year: EUR 157 million), whereas the EBIT margin (ROS) improved to 18.0% (previous year: 17.5%).

Commercial Vehicle Systems (CVS) performed very well in all KPIs

The Commercial Vehicle Systems division (CVS) saw order intake growth of +51.9% to EUR 1,085 million in the first quarter of 2021 (previous year: EUR 715 million). This reflects the continuing market recovery worldwide. In China, commercial vehicle production reached a new record level in March 2021. At EUR 1,468 million, the order book was 31.9% higher than the first quarter of 2020 (EUR 1,113 million) thanks to the strong demand situation.

The CVS division’s revenues reached an all-time high in the first quarter of 2021, climbing 20.5% from EUR 736 million in the first quarter of 2020 to EUR 886 million in the first quarter of 2021. Both the latest acquisition of R.H. Sheppard in the USA at EUR 26 million and dynamic demand in the core markets of Europe, North America, and Asia – in particular China – contributed to this.

The CVS division’s EBITDA grew strongly by 38.2% to EUR 149 million (previous year: EUR 108 million). The EBITDA margin increased to 16.8% (previous year: 14.6%). At EUR 116 million (previous year: EUR 77 million), EBIT increased by 51.0% and generated a significant improvement in the margin to 13.1% (previous year: 10.4%).

Group confirms positive full-year guidance for 2021

The Knorr-Bremse Group’s guidance for fiscal 2021 assumes that the global economy and the political environment will remain stable and there will be no further restrictions due to the Covid-19 pandemic. Furthermore, from today’s perspective, we assume it will be possible to largely compensate for decreases in revenues in the CVS division resulting from current supply bottlenecks for electronic components of the semiconductor industry in the course of 2021, but are continuously monitoring the situation.

On this basis, Knorr-Bremse expects revenues of between EUR 6,500 million and EUR 6,900 million, an operating EBITDA margin of between 17.5% and 19.0% and an operating EBIT margin of 13.0% to 14.5% for fiscal 2021.

The full quarterly statement is available on the website www.knorr-bremse.com.

Explanations and reconciliations to the financial KPIs used can be found in particular on pp. 73 ff. and 201 of the 2020 Annual Report of Knorr-Bremse AG (available at Investor Relations (knorr-bremse.com)).

DISCLAIMER
This publication has been independently prepared by Knorr-Bremse AG (“Knorr-Bremse”). It may contain forward-looking statements which address key issues such as strategy, future financial results, events, competitive positions and product developments. Such forward-looking statements are subject to a number of risks, uncertainties and other factors, including, but not limited to, those described in Knorr-Bremse’s disclosures. Should one or more of these risks, uncertainties or other factors materialize, or should underlying expectations not occur or shall assumptions prove incorrect, the actual results, performances or achievements of Knorr-Bremse may vary materially from those described in the relevant forward-looking statements. Such forward-looking statements may be identified by words such as “expect,” “want,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project” or words of similar meaning. Knorr-Bremse does not intend, nor does it assume any obligation, to update or revise its forward-looking statements regularly in light of developments which differ from those anticipated.

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