“A few jitters are always to be expected”

Interview with KION’s Chief Financial Officer Thomas Toepfer about the Group’s financial journey.

2017-03-01

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Mr Toepfer, the KION Group’s financial journey is something that the company can certainly be proud of. Where was the company at the beginning of this journey?

If we go back ten years to 2006 when the company was sold by Linde to Goldman Sachs and KKR, we see that it started off with a huge financial burden after being saddled with around €2.6 billion of debt. We were in the throes of a financial crisis and it was a fundamental challenge that we had to overcome. But, on the positive side, it has to be said that our investors, Goldman Sachs and KKR, were very active in their support of the company at this time and invested in its future. And the management was, of course, largely focused on pushing ahead with deleveraging the company to create the strategic scope to move KION’s development forward.

"The focus during the last four years has been largely geared towards optimising our financing structure"


Thomas Toepfer

Chief Financial Officer (CFO) of the KION Group

What was the next major step in this financial journey and what was the mood like around the time of the IPO?

The next key achievement for us was, of course, the IPO in 2013, which for KION meant taking a step into a whole new world. And the entire team definitely sensed that this was a genuine milestone that we had been looking to achieve. You mustn’t forget that, in 2013, we were operating in a difficult climate as far as the stock market was concerned. But, thanks to the commitment of everyone concerned, we managed to overcome the crisis very successfully. This was also due to the fact that Weichai Power had come on board as an anchor investor a year earlier, in 2012, which meant that we had taken the first step towards having a stable new investor base.

Were you nervous at any point or did you have any reservations that things might not work out?

I think a few jitters are always to be expected. But the whole time I felt sure that we would make it and I’m fairly certain that the team did too.


What shape did the journey take from the IPO to the situation today?

The focus during the last four years has been largely geared towards optimising our financing structure. A key milestone here was definitely the early repayment of the bond that dated from the time before the flotation. That was in February 2016. And at the same time we refinanced the company at much improved conditions and with much greater flexibility. The kind that is the norm for established blue-chip companies.


The purchase of Dematic was the largest acquisition in the history of the KION Group. How did this work in terms of the funding arrangements? What funding needed to be raised?

Our ability to conclude an acquisition of €3 billion was built on the foundations of all the developments I have already mentioned – securing Weichai Power as an anchor investor, successfully floating the company on the stock market, and the financing measures – which gave us the flexibility we needed.


What were the vital elements that made this possible in such a short time?

It is certainly important not to lose your focus and to make sure that you are constantly moving forward on this journey every year. At the end of the day, this is, of course, the success of the whole team and not only the finance department. Ultimately, all 23,000 employees played their part in getting the company to where it is today by achieving successes in their individual units.

"At the end of the day, this is, of course, the success of the whole team and not only the finance department."


Thomas Toepfer

Chief Financial Officer (CFO) of the KION Group

And finally, Mr Toepfer, looking ahead, what is next for the company? How are you positioning yourselves and what are the prospects?

With the acquisition of Dematic and the two core segments Industrial Trucks & Services and Supply Chain Solutions, we really are perfectly positioned to fully capitalize on the key trends – Industry 4.0, the digital revolution and the boom in e-commerce – and to offer our customers integrated solutions to match. In that sense, we have made a very significant step with Dematic. On the other hand, we are, of course, adhering to our tried-and-tested, conservative financing policy and we want to remain in the stable crossover segment. For us, this means following the same pattern: once we have made an acquisition, we must focus our attention on repaying our debts quickly and consolidating our finances.

And then there was the icing on the cake with the credit rating?

That’s right. In January 2017 we were given an investment grade credit rating from Fitch for the first time. That’s certainly nice to have, but it’s not the crowning achievement. It’s simply an external confirmation of how far KION has progressed in recent years.