The German manufacturer of warehousing equipment Kion Group AG (ETR:KGX) warned that it would suffer a sizable loss for the third quarter, causing its stock to drop by more than a fourth on Wednesday.
The company, citing supply chain constraints and a substantial increase in the cost of materials, energy, and logistics, stated that it anticipates reporting group-wide adjusted earnings before interest and tax for the three months of between -100M and -140M.
According to Kion Group, free cash flow will also remain negative and is anticipated to come in below the figure of -€158.9M recorded in the second quarter.
The supply chain solutions division of Kion Group expects a quarterly loss in pre-tax profits of as much as -€190M, making it clear that the division will be particularly badly hit. A “very volatile” macroeconomic environment and a steady stream of new business have exacerbated internal inefficiencies in the division, according to Kion Group. Only a “small amount” of growing input costs have been passed on to customers, and supply chain interruptions have made it harder to find essential components.
The supply chain solutions section is taking action to address these problems, according to Kion Group, but it will take some time before the changes have a significant impact.
As a result of the cancellation of its earlier forecast in April, the company also released a new annual outlook. Compared to the consensus median estimate of €647 million, Kion Group anticipates adjusted income before taxes and interest of €200 million to €310 million.
According to analysts at Baader, markets were surprised by the stark message of the profit warning, who also predicted that pressure from rising costs and supply chain delays would likely increase.