The Bavarian mechanical engineering company got through the difficult year 2022 well.
(Photo: dpa)
Munich The world’s largest beverage bottling plant manufacturer, Krones, is considering setting up production in North America. “We too have to react to the geopolitical challenges,” CEO Christoph Klenk told the Handelsblatt on Thursday. In the USA there is currently “a huge demand”.
This could be the opportunity for the SDax group to better balance the manufacturing network. Actually, Krones should also expand capacities in China because of the demand. “We’re cautious there at the moment,” said Klenk. It is also conceivable to set up production in India, for example. Decisions should be made by the middle of the year.
The US market in particular is currently booming. Here, many beverage manufacturers still often have machines with older technology installed. That’s changing, said Klenk. “Corporations are massively investing in new technologies to improve efficiency and carbon footprint.”
Krones exceeds its own forecast in terms of sales
For example, energy drinks are often filled while still hot, which requires very thick and heavy bottles. However, the new generation of machines can fill the beverages aseptically at ambient temperature. “That saves 50 percent plastic and 20 percent energy,” said Klenk.
Business is currently going well at Krones. Last year, sales rose by almost 16 percent to 4.2 billion euros, as the company announced on Thursday. The forecast raised in October was thus exceeded once again.
The Krones boss sees great opportunities in the USA.
(Photo: Krones)
Now the group has to decide how to serve the increasing demand in the future. To date, Krones has not manufactured complete systems in the USA – but export is possible because no major competitor produces there. To date, Krones has mainly manufactured systems in Germany, but there are also locations in Hungary and China.
Many other German companies are also currently trying to make their supply chains and production structures more resilient. Siemens intends to increase production in the USA, where low energy prices and subsidies from the “Inflation Reduction Act” are tempting. The China euphoria at Siemens, however, is significantly dampened in view of the global risks.
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The strategic shift of the largest German technology group could have a signal effect. “The USA is particularly popular with industry,” said Marcus Berret, Global Managing Director at strategy consultancy Roland Berger. Against the background of the current crises, the companies are “trying to diversify more”.
At Krones, the prospects for the coming years are good. Digitalization enables new business models and even more effective production for customers, said Klenk. Incoming orders increased last year by more than a third to 5.8 billion euros and were thus higher than sales. This promises further growth. Specifically, Krones is now forecasting sales growth of eight to eleven percent for 2023.
The share price has increased significantly
Last year, the company originally announced an increase in sales of five to eight percent and then raised the forecast to ten to twelve percent. Krones was also able to significantly increase profits. The operating result improved by a good 19 percent to 373 million euros. The margin of 8.9 percent was at the upper end of the forecast. Nine to ten percent are expected in the current year.
The share price also benefited from the good development. In the past twelve months, the price has risen by more than a quarter to around 110 euros.
Other mechanical engineering companies have also come through the crisis well so far. Above all, the demand from abroad helped many providers. According to the industry association VDMA, exports in the industry rose by a nominal six percent last year to a record value of more than 192 billion euros. “The sharp decline feared by many did not materialize in 2022,” said VDMA chief economist Ralph Wiechers. In the fourth quarter, the increase was even nine percent.
The USA was once again the most important sales market abroad. Exports increased by 20 percent to almost 25 billion euros. After China, on the other hand, there was a slight decline to around 19 billion euros.
In December, VDMA President Karl Haeusgen forecast a production drop of two percent for the German mechanical and plant engineering sector for the current year. But he said: “That’s a long way from the setbacks of previous years and shows the robustness of our industry.” Since then, the economic environment has brightened up a bit.
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