Source: Knorr-Bremse announcement
MUNICH – Knorr-Bremse AG, the global market leader for braking systems and a leading supplier of other safety-critical rail and commercial vehicle systems, reported virtually stable profit margins despite the impact of the global pandemic during the first half of 2020.
According to Frank Markus Weber, chief financial officer of Knorr-Bremse AG, “The Covid-19 pandemic hit Knorr-Bremse in all markets during the first half of 2020. Our top priority was keeping our employees healthy. We lost no time in swiftly implementing an action program to stabilize income and cash flows in response to the drop in demand; this enabled us to significantly mitigate the effects on our net income in the first half of 2020. Our strong aftermarket business in both divisions helped to keep our profit margins stable. We observed a perceptible recovery in the second quarter, particularly in China, though this will not continue in the same measure. The global situation continues to be subject to high levels of uncertainty.”
Resilient business model thanks to stable aftermarket
The market environment in which the Knorr-Bremse Group operates was dominated by the Covid-19 pandemic in the first six months of the 2020 fiscal year.
Knorr-Bremse Response to Economic Downturn
In the rail vehicle market, China and Europe began to recover from the large-scale restrictions imposed during the initial months of the year towards the end of the first half, while countries such as India and the regions of North and South America continued to feel the full force of the pandemic.
The global commercial vehicle market was impacted in the first six months of 2020 by the effects of the Covid-19 pandemic in most parts of the world, shrinking by 16% compared with the prior-year period. Only the Chinese market saw a rapid recovery, even outperforming the first half of 2019 by 21%.
Order intake of the Knorr-Bremse Group in the first half of 2020 consequently fell 23.8 percent short of the previous year, amounting to €2,727.1 million (H1 2019: €3,581.2 million). At €4,363.3 million, the order book as of June 30, 2020 remained very solid, down just 3.9 percent on the comparable year figure of €4,542.3 million.
Revenues of the Knorr-Bremse Group declined by 15.2 percent in the first half of 2020, decreasing to €3,055.8 million (H1 2019: €3,601.5 million). While total revenues in the RVS division were down only by 7.2 percent year-on-year as a result of falling original-equipment revenues worldwide, revenues in the CVS division dropped by 23.9 percent due to plummeting commercial vehicle production worldwide and temporarily closures of customers’ manufacturing plants especially in Europe and the USA, particularly in the second quarter. The RVS division’s share of total revenues therefore rose to 57 percent (H1 2019: 52 percent).
The share of total revenues of the Group’s aftermarket business climbed noticeably to 37.7 percent (H1 2019: 31.7 percent). In absolute terms aftermarket revenues rose by 1.0 percent reflecting the robust business model of the Knorr-Bremse Group.
Regional contributions to revenue showed the favorable development of the market in the Asia-Pacific region, in which revenues rose by 2.2% in absolute terms. Revenues in the other regions of Europe/Africa and North and South America declined in the first half of 2020. The regional breakdown of revenues as of the end of the first half of 2020 was as follows:
– Europe/Africa 45 percent (H1 2019: 47 percent)
– Asia-Pacific 34 percent (H1 2019: 28 percent)
– North America 20 percent (H1 2019: 23 percent)
– South America 1 percent (H1 2019: 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.
To view the entire announcement and supporting figures, click HERE.