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 /  /  /  / Technology Business Unit

Performance and General Business Conditions of the Business Units

Technology Business Unit

Key data 2016 2015
Order intake € m 1,317 1,282
Order backlog as of 12/31 € m 668 718
Segment sales1) € m 1,300.7 1,310.0
Sales to other segments/Group companies € m -0.4 -0.6
External sales2) € m 1,300.3 1,309.4
Earnings before taxes (EBT) € m 28.4 24.6
EBIT before depreciation and amortization (EBITDA)3) € m 50.4 47.9
Earnings before interest and taxes (EBIT)3) € m 28.1 25.0

The Technology Business Unit comprises three well-established special machinery manufacturers each with a long tradition. KHS GmbH (KHSDE), a company holding a leading international position in filling and packaging technology, represents the mainstay of sales. The KHS Group is a full-line supplier, from intralogistics and processing through to the filling and packaging of beverages. Other companies within the business unit sell special machinery for the shoe industry or specialize in the manufacturing of rubber and silicon injection molding machinery.

On September 30, the following companies belonging to the business unit were newly admitted to the group of consolidated companies of Salzgitter AG (SZAG) with retrospective effect as of January 1, 2016:

  • KHS Schweiz GmbH, Wolfwil (KHSCH),
  • KHS Polska Sp. z.o.o. Warsaw (KHSPL),
  • KHS Andes S.A.S., Bogotá (KHSCO),
  • KHS East Africa Ltd., Nairobi (KHSEA) and
  • KHS Argentina S.A., Buenos Aires (KHSAR).

When drawing comparisons with the previous year, consideration must be given to the fact that the figures of these newly consolidated companies were not yet included in 2015.

Market development
According to German Engineering Federation (VDMA), new orders settled around the year-earlier level, demand stagnating and international demand in marginal decline. Sales of the sector dropped slightly. Orders placed in the market for food and packaging machinery developed well. Domestic order activity notably exceeded the previous year while international orders increased significantly. Sales rose accordingly, boosted in particular by strong international growth.

Business development
The order intake of the Technology Business Unit rose in 2016 compared with the previous year on the back of the higher order levels at both the KHS Group and Klöckner DESMA Elastomer Group (KDE Group). The segment’s orders on hand fell short of the very high year-earlier level.

Thanks to the growth of the KHS Group and of DESMA Schuhmaschinen GmbH (KDS), segment and external sales remained at the level achieved in 2015.

The Technology Business Unit delivered another increase in earnings before taxes that came in at € 28.4 million (2015: € 24.6 million). The result of the KHS Group rose by a third and also reflected the success of the measures introduced under the improvement program. Similarly, KDS also outperformed the year-earlier result, as opposed to the pre-tax profit of the KDE Group that was lower year on year.

The KHS Group continues to consistently pursue measures to develop its business. With this in mind, the “Fit4Future 2.0” program that comprises 14 different components was launched in 2015. The focus was placed on the topics of clarifying offers, 100 %-Time-In-Full (OTIF), and the preference portfolio in 2016.

Investments
In 2016, the Technology Business Unit continued to focus on replacement and streamlining measures geared to promoting its sustainable competitiveness. IT projects in Germany and in the international companies were carried out at the KHS Group to further optimize workflows. This also included a project, launched in 2014 and expedited in the reporting period with the aid of further measures, to standardize and update the global SAP system. Work on the extensive modernization of the Bad Kreuznach site to ensure lean manufacturing, initiated in 2015 for implementation over a number of years, is being rigorously implemented. The undertaking was supplemented by the construction of a logistics center. With a view to the sustained growth of the PET business, the Hamburg and Kleve sites were strengthened through the building of further assembly halls, and the blow mold production in Dortmund was extended.

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