Kuka : Interim report on the first half-year 2017

KUKA Group continues to grow and increases guidance

02 August 2017

• Orders received in the second quarter reach record level, increasing 12.8% to €1,007.5 million (Q2/16: €893.4 million)
• Sales revenues in the second quarter rise by 43.1% to a record value of €1,007.7 million (Q2/16: €704.1 million)
• EBIT margin reaches 5.4% (Q2/17) before purchase price allocation for Swisslog and before growth investments (Q2/16: 5.5%*)
• Earnings after taxes stand at €33.6 million in Q2/17 after €9.5 million (Q2/16)
• Guidance for 2017 increased: sales revenues of about €3.3 billion and EBIT margin of more than 5.5% before purchase price allocation for Swisslog and before growth investments

*Before purchase price allocation for Swisslog and before extraordinary expenses related to Midea

Augsburg, August 2, 2017 - KUKA Group looks back on a successful second quarter, having posted record orders received totaling slightly over 1 billion euro

We have continued on our growth course

"The worldwide demand for automation solutions 'made by KUKA' is high. We have therefore increased our guidance for the full year 2017. We are expecting sales revenues of around 3.3 billion euro and an EBIT margin of more than 5.5%. In order to boost our innovative strength, we shall continue to invest in key technologies for Industrie 4.0, such as human-robot collaboration, mobility and smart platforms."

In the second quarter of 2017, KUKA Group generated orders received worth €1,007.5 million - the highest quarterly result in the company's history. Compared with the same quarter last year (Q2/16: €893.4 million), this represents growth of 12.8%. All three divisions made a significant contribution to this new record value - Robotics and Swisslog even contributed with double-digit growth rates. In the first half of 2017, KUKA posted orders received totaling €1,974.8 million. This corresponds to a 20.4% increase on the result for the first half-year 2016 (H1/16: €1,639.9 million).

In the second quarter, the Robotics division reported orders received totaling €350.0 million, thus surpassing the 300-million-euro-mark for the third time in a row. Compared with the value for the previous year (Q2/16: €252.2 million), this represents an increase of 38.8%. The General Industry customer segment was the primary driver of this development, but the Automotive and Service segments also contributed to the growth. From a regional perspective, China and North America have driven the positive performance. Orders received were up from €493.9 million (H1/16) to €657.4 million in the first half of 2017 - an increase of 33.1%.

The Systems division achieved orders received of €438.6 million in the second quarter of 2017, falling just short of the figure for the prior-year quarter (Q2/16: €440.0 million). In the first half of 2017, the total volume of orders received was €884.2 million (H1/16: €825.5 million), corresponding to a rise of 7.1%.

At Swisslog, orders received rose 11.7% to a total of €234.7 million (Q2/16: €210.1 million). Drivers behind this positive development were the important growth industry Logistics and the good performance in North America. In the first half-year 2017, orders received at Swisslog climbed 38.4% to €464.9 million compared with the same period of the previous year (H1/16: €335.8 million).

In KUKA Group, sales revenues were up in the second quarter of 2017 from €704.1 million (Q2/16) to the record level of €1,007.7 million. This represents a gain of 43.1% compared with the prior-year quarter. The result reflects the high levels of orders received in the preceding quarters. In the first half-year 2017, KUKA Group generated sales revenues of €1,798.5 million. Compared with the same period last year (H1/16: €1,333.2 million), this represents growth of 34.9%.

In the second quarter, sales revenues at Robotics totaled €349.7 million (Q2/16: €248.3 million). This was the highest value ever achieved in any quarter and constituted a rise of 40.8%. It was mainly the Automotive and General Industry segments which had a positive impact on this result. In the first half of 2017, Robotics generated sales revenues of €621.8 million. Compared with the same period last year (H1/16: €458.7 million), this signifies an increase of 35.6%.

In the second quarter of 2017, sales revenues in the Systems division reached €481.0 million. Compared with the prior-year quarter (Q2/16: €313.9 million), this is a gain of 53.2%. Sales revenues climbed 40.3% to €849.8 million in the first half of 2017 (H1/16: €605.8 million).

Swisslog generated sales revenues of €193.3 million in the second quarter. This is an increase of 30.3% on the previous year's result for the same quarter (Q2/16: €148.4 million). Sales revenues in the first half of 2017 totaled €352.7 million. Compared with the same period last year, the figure rose by 24.0% (H1/16: €284.5 million).

The book-to-bill ratio, i.e. orders received in relation to sales revenues, fell slightly as compared with both the prior-year quarter and half-year, although the figure was well above 1 in the first half-year (Q2/17: 1.00 and H1/17: 1.10).

The order backlog grew by 16.3% to €2,237.4 million on June 30, 2017 (June 30, 2016: €1,923.0 million).

Earnings before interest and taxes (EBIT) totaled €45.5 million in the second quarter after €15.3 million in Q2/16. The EBIT margin stood at 5.4% before purchase price allocation for Swisslog and before growth investments (Q2/16: 5.5% before purchase price allocation for Swisslog and before extraordinary expenses related to Midea). In the first half of 2017, EBIT increased by 76.4% to €82.4 million (H1/16: €46.7 million). The margin stood at 5.2% before purchase price allocation for Swisslog and before growth investments (H1/16: 5.5% before purchase price allocation for Swisslog and before extraordinary expenses related to Midea).

In the second quarter, the Robotics division achieved an EBIT of €37.8 million (Q2/16: €25.5 million). The EBIT margin of 10.8% surpassed the previous year's level in the same quarter (Q2/16: 10.3%).

In the second quarter of 2017, EBIT at Systems increased by 14.2% to €22.5 million (Q2/16: €19.7 million). The EBIT margin decreased from 6.3% (Q2/16) to 4.7%. This was mainly attributable to delays and additional costs that have been encountered in two projects in Europe due to capacity bottlenecks.

EBIT at Swisslog grew in the second quarter to €1.1 million (Q2/16: €0.4 million). The EBIT margin stood at 0.6% (Q2/16: 0.3%). The margin before purchase price allocation for Swisslog was 1.7% compared with 2.1% in Q2/16. Due to seasonal factors, completion of customer projects is concentrated more on the second half-year, so an improvement of the EBIT margin is expected towards the end of the year.

The number of employees in KUKA Group grew by 8.5% from 12,675 (June 30, 2016) to 13,755 (June 30, 2017).

Based on current general conditions, KUKA expects sales revenues of around €3.3 billion for the full year 2017, up approximately 12% on last year. If the figure for the previous year is adjusted by the contribution to sales revenues of the divested US Aero division, this signifies an increase in sales revenues of approximately 16%. Both customer segments - General Industry and Automotive - and from a regional viewpoint, China and North America, should make a positive contribution to sales revenue development. Given the current economic environment and anticipated sales revenue development, KUKA Group expects to achieve an EBIT margin of more than 5.5% before purchase price allocation for Swisslog and before growth investments. The expenditure for purchase price allocation at Swisslog should amount to about €8.8 million in 2017 and thus be slightly below the level of the previous year.

This document contains forecasts based on assumptions and estimates by the management of KUKA Aktiengesellschaft. Even if the company management is of the opinion that these assumptions and estimates are valid, the actual future development and the actual future results may vary considerably from these assumptions and estimates due to numerous factors. These factors may include, for example, changes in the overall economic situation, exchange rates and interest rates, and changes affecting individual markets. KUKA Aktiengesellschaft provides no guarantee that the future development and the future results actually achieved will correspond to the assumptions and estimates stated in this document and accepts no liability if they should fail to do so.