Knorr-Bremse Positive Q1 Results

MUNICH — Knorr-Bremse AG, the global market leader for braking systems and a leading supplier of other safety-critical rail and commercial vehicle systems, yesterday published its results for the first quarter of 2023.

Marc Llistosella, Chief Executive Officer of Knorr-Bremse AG: “While the global economic environment has improved significantly, it is still very tense. We as a global market and technology leader are overcoming the crisis much better than many other comparable businesses and we successfully generated good results in the first three months of this year.

“We are not going to rest on these results, though, and are doing everything we can to increase our results and profitability. To this end, we are rigorously orienting our business activities toward performance and developing a long-term vision for the entire Group for further profitable and sustainable growth.

“This process is already under way and we will be presenting the initial results in July. There will be no taboos, and it is important that we even consider divesting operations that no longer fit our business and profitability strategies if this is the right choice.”

Frank Markus Weber, Chief Financial Officer of Knorr-Bremse AG: “We closed the first quarter of 2023 with strong revenue growth of roughly 14%, coming to €1.9 billion. Simultaneously, our order book of € 7.1 billion reached a new record. These are strong signs to start the year with. We are being confronted with a difficult economic environment in the current fiscal year, as with the previous year.

“Despite that, we successfully reached a very robust operating EBIT growth and a margin of 10% in the first quarter. This shows that we are on the right path with the comprehensive Profit and Cash Protection Program that we implemented early on to adapt our variable and overhead costs and adjust our pricing.”

Record Order Intake and Order Book, Sales up Strongly

Despite the inflation-related price rises, Knorr-Bremse is still seeing very good demand among customers in Asian and North American countries. Order intake in the first quarter of 2023 rose by 3.2% year over year to a new record of € 2,176 million (Q1/22: € 2,109 million). Knorr-Bremse also recorded a strong 18.6% increase in its order book, which grew to € 7,116 million (March 31, 2022: € 5,998 million). The Group’s sales were up 14.3% at € 1,908 million (Q1/22: € 1,669 million).

The operating EBIT margin reached 10.0%. Compared with the previous year, the inflationary pressure and decline in Russia had particularly negative effects. The initiated countermeasures were, however, successful and resulted in the year-over-year decline only being relatively small (Q1/22: 10.9%). Operating EBIT rose by 5.6% to € 192 million (Q1/22: € 182 million).

Free cash flow improved and ran at € 199 million in the first quarter of 2023 (Q1/22: € 231 million). Inventories remain relatively high as Knorr-Bremse considers it important to safeguard its delivery capability. At the same time, the positive sales performance and customers’ payment behaviors meant that receivables rose by a significant amount as well. The company is working on improving both line items tangibly over the coming quarters.

Rail Vehicle Systems (RVS) Division Expects Improved Profit as Fiscal Year Progresses

Order intake in the Rail Vehicle Systems (RVS) division in the first quarter of 2023 was recorded at € 1,000 million, a decline of 7.4% (Q1/22: € 1,081 million). The order book as of March 31 was valued at € 5,026 million (Q1/22: € 4,181 million). Revenue was up 10.3% at € 855 million (Q1/22: € 775 million).

Due in particular to the loss of Russia-based business, the operating EBIT for RVS was € 112 million in the first quarter of this year, a drop of 8.2% on the previous year’s quarter (Q1/22: € 122 million). This result also reflected the effects of inflation. Accordingly, the operating EBIT margin fell to 13.1% from the previous year’s level (Q1/22: 15.7%). For the following quarters in 2023, the division expects further success out of the Profit and Cash Protection Program (PCPP) and an improved margin due to increasing sales and the planned sale of Kiepe Electric respectively.

To view the entire announcement, click HERE.

Mike Geylin
Mike Geylin

Mike Geylin is the Editor-in-Chief at Hagman Media. Geylin has been in automotive communications for five decades working in all aspects of the industry from OEM to supplier to motorsports as well as reporting for both newspapers and magazines on the industry.