Krones Group Annual Report 2024
Krones operates in markets that present major growth opportunities. As a global leader, we aim to use those opportunities. “Profitable growth” – the title of our Annual Report 2024 – is a key strategic group objective.
Our company is very well positioned and has set itself the target of increasing revenue to around €7.0 billion by 2028.
To achieve that, we are going to make substantial investment. Krones also continues to need a strong, motivated team.
We provide detailed information on these topics in the cover story to this Annual Report 2024. In addition, we describe how we will continuously increase profitability in the years ahead and keep Krones on track for profitable growth.
Profitable growth
»Krones will continue its established profitable growth path and contribute significantly to mitigating climate change.«, Christoph Klenk, CEO
Krones wants to continue its profitable growth and has set ambitious mid-term targets for 2028. What makes you so optimistic?
Christoph Klenk: “We operate in a long-term growth market that benefits from megatrends such as the growing world population. This gives us an advantage from the start.
Also, Krones itself has the best preconditions for above-average growth. We have an innovative portfolio of products and services and a dense international service network. On top of that, we are going to improve the efficiency of our production operations by investing heavily in more automation. And most important of all, Krones has a qualified and motivated workforce.
But we are not going to rest on our laurels. To achieve our growth targets and extend Krones’ market lead, we plan to continue our high levels of investment.”
Are you pursuing other aims with your investment besides profitable growth?
CK: “Krones’ ambitions are not all financial. In our 2030 sustainability strategy, we have also set ambitious non-financial targets. A key area here is reducing our greenhouse gas emissions. By 2040, we want to cut our carbon emissions to net zero along the entire value chain. These are major challenges that we can only meet by investing.
What sort of investment will this involve?
CK: “Krones will only achieve the 2040 net zero target if we drastically reduce our carbon emissions along the entire value chain.
We have direct influence over Scope 1 and 2 emissions, which are the greenhouse gas emissions from our own production operations. So we are investing heavily in modern infrastructure for generating renewable energy that we can use at our production sites. One major project here is the new central power plant that Krones is building in Neutraubling. A second example is our Debrecen plant. We are going to reduce operational greenhouse gas emissions there by 80% as soon as 2025 with a photovoltaic system and the plant’s own geothermal system. I could cite many other measures that will help make our sites sustainable for the future.
To reduce Scope 3 emissions, which are mainly generated by our products in use, we are investing heavily in the development and optimisation of resource-efficient machines and lines. All investment spending will also help us achieve our non-financial targets.”
Profitable growth
Krones operates in long-term growth markets. Their growth is driven by megatrends. Global demand for packaged beverages continues to increase, fuelled by a rising global population, an expanding middle class and urbanisation. Up to 2028, global beverage consumption is forecast to grow by an average of around 3% per year. As demand for packaged beverages increases, so does the need for innovative filling and packaging technology and for process technology and intralogistics solutions.
Sustainability is another megatrend that benefits Krones. Our customers need resource-efficient machines and lines to reduce their carbon footprint, meet their climate targets and lower costs.
Full-system solutions: single-source provider
Krones has long developed from a machinery manufacturer into a full-range provider to the food and beverage industry. The result is a solution portfolio that covers the entire value chain of a beverage or liquid food producer, from the inbound delivery of raw materials to shipment of the packaged product.
Before pallets of beverages leave the factory, the product undergoes numerous different production stages – and Krones has the engineering solution for each and every stage. Our Process Technology segment provides the full portfolio of products and services for the production of beverages and liquid foods.
Using innovative machines and lines from Krones’ core Filling and Packaging Technology segment, customers can fill, label, package and transport their products in PET bottles, glass bottles and cans. Following the acquisition of Netstal Maschinen AG, the segment also offers innovative solutions for the production of PET preforms).
Fully automated material flow, warehousing and order picking systems from the Intralogistics segment make for efficient internal material supply and problem-free shipping of packaged products.
Global footprint: competitive advantage from proximity to customers
Our dense global network of service companies is a key investment criterion for customers. Krones can provide them with products, service personnel, spare parts and digital services quickly and in top quality. That saves customers time and money.
The Krones network ensures customer proximity around the globe:
- Around 3,000 service engineers globally
- Over 100 subsidiaries and locations across the globe
- Global spare parts availability
- 6 international digital service centres
- 27 production sites worldwide
Growth through innovation
Innovations secure the company’s future and are a major driver of Krones’ long-term growth. We base all product developments and improvements on customer needs.
The best example is the filling and packaging line of the future. We collected wishes and suggestions from customers at drinktec 2022 and have since been incorporating them in the development of our innovative lines.
Krones will be presenting the first line of the future for the filling and packaging of PET water bottles at the upcoming drinktec in September 2025. With the line of the future, Krones sets new standards in terms of efficiency, sustainability and digitalisation.
Leading position in growth market of sustainable technology
The primary innovation and growth driver is sustainability. Conserving resources and reducing emissions are top priorities for our customers because of their ambitious climate targets.
As a pioneer in the industry, Krones introduced the enviro sustainability programme back in 2008 and has been developing it dynamically ever since. Our enviro machines and lines save valuable resources, such as energy and water, and therefore also costs. What’s more, Krones boasts the unique selling point of being able to provide all technologies for closed-loop PET recycling solutions from a single source.
Krones is confident that it can drive further growth with innovative sustainability solutions.
Balanced global revenue split
Krones serves all regions of the world, in some 150 countries. The company generates around half of its consolidated revenue in emerging and developing economies. Furthermore, the company has an excellent reputation in large established markets such as North America and Western Europe.
The balanced global revenue split evens out demand fluctuations in individual countries and regions and is one of the company’s strategic strengths.
Acquisitions strengthen the product portfolio
Acquisitions are targeted in order to improve Krones’ technological or regional market position. The company continued to successfully pursue this acquisition strategy in 2024. Through the acquisition of Netstal Maschinen AG, a leading provider of injection moulding machines for the beverage market (PET preforms and closures), we now offer all technologies required for closed-loop PET solutions – a strategically significant unique selling point.
Furthermore, Netstal has products and technologies that enable Krones to diversify into and exploit growth opportunities in new markets outside the beverage industry.
New employer brand boosts attractiveness
One of the major challenges for Krones is to recruit sufficient numbers of qualified employees to implement its growth strategy. Competition for young talent is intensive all over the world. In order to attract new employees and retain existing staff, we enhanced our employer brand in 2024 to highlight what makes Krones special. Derived directly from our vision, the employer brand conveys the company’s values and future direction.
In particular, Krones aims to continue expanding the service team. The company takes a global approach to recruiting, training and retaining skilled talent. In addition to training centres of its own in Germany and internationally, the company also collaborates with recognised independent training and continuing education centres in the rapidly expanding regions of Africa, Asia and South America.
Investment in home base increases efficiency
Krones is investing heavily in automating all German production sites in order to increase their efficiency.
A significant portion of this investment is for expanding and automating the LCS logistics centre in Neutraubling. Our headquarters warehouse supplies spare parts to customers in Europe and our global LCS centres. This investment will not only roughly double our warehouse capacity by 2030. With the aid of automated high-bay warehouses and improved material flows, we will also significantly reduce throughput times – the length of time between ordering and delivery – and so increase warehouse turnover rates and efficiency.
Krones will also continue to invest heavily in the Nittenau site. This investment will mainly go into new production machinery and automating assembly.
Expanding the global footprint: investment in worldwide locations
By globalising and broadening Krones’ procurement and production footprint, the company can respond flexibly to crisis scenarios such as
trade conflicts, regional supply chain problems or production stoppages. Expanding our global footprint thus increases the company’s resilience.
Regional proximity to customers not only reduces transportation costs, but also delivery times. This benefits customers and Krones alike.
In the next few years, the international focus will be on expanding capacity at the existing plant in Taicang, China, and establishing a second production site in India.
While the company is also investing heavily in its sites in Germany, we intend to expand the proportion of international value creation within the Krones Group over the coming years.
... sustainable price strategy
The foundation for improving Krones’ profitability consists of selling at prices that are based on the development of costs. To achieve this in a persistently highly competitive market, we have to win over customers with innovative products and services that add value. Furthermore, during recent crises such as Covid-19 and the supply chain disruptions, Krones has demonstrated that even in difficult circumstances, customers can continue to rely on Krones’ commitments and excellence in international project delivery.
... efficiency improvements
In addition to the ongoing automation of our production processes (see page 16), we are going to significantly improve efficiency by modernising our existing globally standardised IT systems across key areas of the company worldwide, including procurement, engineering, sales, production, after-sales and administration. This will enable us to accelerate order processing and increase output with the available resources while maintaining our consistently high quality standards.
... faster project execution and implementation
Alongside shorter throughput times, there is also potential for improvement regarding faster commissioning of machines and lines in customers’ facilities. This enhances customer satisfaction and saves Krones valuable working time and money. Remote digital technologies are one tool that can be used to speed up commissioning processes.
... expansion of profitable service business
Our high-quality after-sales service is not only important for customer loyalty, but also contributes significantly to profitable growth. Accordingly, Krones will continue to expand its Lifecycle Service (LCS) business. We operate here on the basis of individually tailored service packages known
as modular service agreements (MSAs).
The attractive LCS business benefits from our growing installed base of machines and lines. We also intend to further increase the proportion of Krones supplied managed lines.
... continuous cost-cutting measures
A key element in improving profitability is the continuous implementation of cost optimisation measures. The faster a business grows, the harder it is to keep costs under control. For this reason, Krones has for many years prioritised strict internal cost and spending discipline in all areas and across all cost types.
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