Source: Knorr-Bremse announcement excerpt
MUNICH – Knorr-Bremse AG, the global market leader for braking systems and other rail and commercial vehicle systems, has published its first quarter results for 2020.
“In the first quarter, our operations began to be impacted by Covid-19, especially in Asia. Our top priority was the health protection of our employees and then the stable supply of our customers. And yet this pandemic has shown Knorr-Bremse’s business model to be very resilient: With the aftermarket business accounting for a large share of revenues and thanks to the cost control measures we implemented early on, we have been able to cushion the effects of the market decline,” said Bernd Eulitz, CEO of Knorr-Bremse AG.
“In the European and North American markets, we expect the Covid-19 pandemic to have the greatest impact in the second quarter of 2020, while our Asian markets – particularly China – have already recovered. Overall, we see 2020 as an opportunity to demonstrate the robustness of our business model with solid figures.”
Resilient business model thanks to stable aftermarket
The market in which the Knorr-Bremse Group operates was weaker in the first three months of the 2020 fiscal year than in the months before and was impacted by the Covid-19 pandemic – particularly in Asia, and here especially in China. As expected, global commercial vehicle production recorded a palpable downturn, reflected in falling order volumes. Order intake of the Group in the first quarter of 2020 was down -16.1 percent on the year earlier period at €1,588 million (previous year:€1,893.2 million).
Thanks to solid business performance in the fourth quarter of 2019, the order book of Knorr-Bremse AG in the first quarter of 2020 came to €4,652.5 million, just 1.0% below the figure for the prior-year period (€4,700.5 million).
Overall, revenues of the Knorr-Bremse Group declined by -7.3 percent in the first quarter of 2020, sliding to €1,627.5 million (previous year: €1,755.3 million). While revenues in the
RVS division fell only marginally short of the prior-year level, the anticipated slowdown in truck production mainly in North and South America, but also in the European business and shuttered customer manufacturing facilities, particularly in China in the first half of the quarter, had a noticeable impact on revenues in the CVS division. As a result, RVS division’s share of total revenues rose to 55 percent (previous year: 52 percent).
The Knorr-Bremse Group aftermarket business’s share of total revenues climbed to 37 percent (previous year: 31.0%). In absolute terms, this rose by 11 percent, thus going a long way toward stabilizing revenues and earnings. This improvement can be attributed to the change in customer preferences resulting from Covid-19.
In spite of the initial effects of the Covid-19 pandemic in Asia-Pacific and a significant slowdown in business in Europe as well as in North and South America, regional contributions to revenue remained stable in the first quarter of 2020. The regional breakdown of revenues as of the end of Q1 2020 was as follows:
– Europe/Africa 48 percent (previous year: 48 percent)
– Asia/Pacific 29 percent (previous year: 27percent)
– North America 22 percent (previous year: 23 percent)
– South America 1 percent (previous year: 2 percent).
These trends show that Knorr-Bremse continues to clearly stand out from other industrial goods markets and from its competitors with its robust business model and its focus on rail and commercial vehicles plus a strong aftermarket business.
The entire announcement can be viewed by clicking HERE.