“A few jitters are always to be expected”
Interview with KION’s Chief Financial Officer Thomas Toepfer about the Group’s financial journey.
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.
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.
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.