Kion Group Slumps After Warehouse Equipment Manufacturer Issues Q3 Profit Warning

By Scott Kanowsky 

Investing.com -- Shares in Kion Group AG (ETR:KGX) slid by more than a fourth on Wednesday after the German warehouse equipment maker warned that it would post a heavy third-quarter loss.

In a statement, the company said it expects to report group-wide adjusted earnings before interest and tax during the three-month period of between -€100M to -€140M, citing supply chain shortages and a sharp uptick in the cost of materials, energy and logistics.

Free cash flow will continue to be negative as well, Kion Group said, and is seen coming in under the mark of -€158.9M registered in the second quarter.

Kion Group's supply chain solutions business will be particularly hard hit, with the unit now predicting a quarterly decline in pre-tax income of as much as -€190M. Solid new business inflow, along with a "highly volatile" macro-economic environment, have intensified internal inefficiencies in the division, Kion Group said. Meanwhile, only a "minor portion" of rising input costs have been passed on to customers, while disruptions to the supply chain have reduced the availability of key parts.

Kion Group said the supply chain solutions unit is pursuing steps to deal with these issues, but flagged that it will be some time before the measures take their full effect.

The company also unveiled a new annual outlook after its previous guidance was scrapped in April. Kion Group now expects adjusted income before tax and interest of €200M to €310M, well below the consensus median of €647M.

Analysts at Baader said the profit warning's stark message shocked markets, adding that the pressures from higher costs and supply chain delays will likely grow.