Krones Group Annual Report 2024

Global economy expected to grow 3.3% in 2025

In January 2025, the International Monetary Fund (IMF) projected global economic growth of 3.3% for 2025. This is once again below the recent long-term average of 3.7% (2000-2019). Military and trade policy conflicts and the ongoing relatively weak domestic economy in China continue to be negative factors in the current year. According to the IMF, the US economy will develop positively. The economy there is on a stable growth path thanks to a robust labour market and falling interest rates. 

IMF economists see downside risks to the forecast among other things in a further escalation of regional military conflicts. This would probably lead to a rise in commodity, food and energy prices, which would push inflation back up again and delay the expected interest rate cuts. A rise in protectionist policies would also have a negative impact on the global economy. New tariffs, for example, could increase trade tensions, reduce investment, distort trade flows and once again disrupt supply chains. However, the IMF experts believe the US economy could surprise on the upside, triggered by significant tax cuts to stimulate the economy. 

For industrialised economies overall, the IMF once again expects GDP growth to be below average in 2025, at 1.9%. As Europe is gradually recovering from the consequences of the Russia-Ukraine conflict, a slight increase in growth to 1.0% is forecast for the euro area. Germany continues to lag behind with projected growth of just 0.3%. The IMF expects the US economy to grow by a relatively strong 2.7% in 2025. In Japan, growth is likely to pick up again after a slight contraction in 2024. The forecast is for growth of 1.1% in the current year. 

In emerging and developing markets, the IMF predicts economic growth of 4.2% in 2025, as in the previous year. For China, the experts predict GDP growth to fall slightly, from 4.8% in the previous year to 4.6% in the current year. India, which is now the world’s fifth-largest economy after Germany, once again has the highest expected growth rate among the emerging and developing markets in 2025, at 6.5%. While Latin America is once again expected to grow at a below-average rate compared to the global economy in the current year, with an increase of 2.5%, the IMF is forecasting growth of 3.6% for the Middle East/Central Asia region and 4.2% for sub-Saharan Africa.

Geopolitical conflicts and economic and political uncertainties will restrain global economic growth in 2025. According to the IMF, the euro area economy will remain weak with growth of 1.0%, with the USA seeing growth of 2.7% and emerging and developing economies growing by 4.1%.

Machinery and mechanical engineering sector held back by weak economy and geopolitical uncertainties

The German Mechanical Engineering Industry Association (VDMA) expects that the relatively weak economy, increasing protectionism and military conflicts will continue to weigh on the sector as a whole. After a very substantial 8% fall in 2024, the VDMA expects output to decline by only 2% in 2025. The main reason cited for the slower decline is falling interest rates, which should benefit investment confidence globally and spark an economic recovery. It should be noted in general here that the various subsectors of the industry are developing at very different rates and that Krones, with an export ratio of around 90%, is hardly affected by the weak domestic economy.

Krones’ customers benefiting from rising beverage consumption

Consumer spending is a key determinant of Krones customers’ propensity to invest, and thus of demand for beverage filling and packaging machinery. Moderate inflation rates have a positive effect on consumer purchasing power. They support demand for packaged food and beverages and indirectly influence demand for our company’s products and services. With inflation once again on the way down, we expect end-consumer demand to be stable overall in 2025. Private consumption has also been a pillar of economic growth in many countries over recent years. According to GlobalData figures, global consumption of packaged beverages, which is important to our customers, is expected to grow by 3.1% year on year in 2025.

Krones expects positive business performance in 2025

In view of the difficult global economic situation, Krones started the 2025 ­financial year with realistic optimism. A large order backlog ensures production capacity utilisation through to early 2026. This assessment is also supported by the robust demand for Krones’ products and services. 

At the same time, the business environment remains challenging for Krones. Global economic growth remains subdued and there are risks for the global economy and thus also for Krones’ business performance. These include geopolitical tensions in Europe, the Middle East and other parts of the world. Another source of uncertainty is the tariff policy of the new US administration, which could lead to trade conflicts. Increasing protectionism, material shortages and global supply chain problems that could result from ­military action along important trade routes or from trade conflicts are other uncertainty factors.

Krones expects that the global market for filling and packaging technology will generally develop robustly in 2025 and that selling prices will remain at a reasonable level. However, competition in our markets and cost pressure will again remain high this year.

The medium and long-term outlook for Krones also remains positive. Consumer demand for packaged beverages and liquid foods is growing steadily, driven by megatrends such as the increasing world population and the growing middle class in emerging and developing markets. The focus on sustainability and digitalisation is likewise making for stable high demand for innovative beverage filling and packaging machinery.

Because they share comparable sales and procurement markets, the economic, sectoral and company-specific outlooks and risks essentially apply to all three segments of the Krones Group.

Segment guidance for 2025

In order to generate profitable growth, Krones will continue to adhere strictly to its pricing strategy in all three segments in the current year and will achieve appropriate sales prices in line with costs. The company also continues to implement cost optimisation programmes and increase efficiency by investing in the automation of its production facilities.

In addition, Krones aims to exploit growth opportunities in our market throughout the group with innovations and future-ready products and services. Our focus here is on the areas of sustainability, digitalisation and system solutions. 

With regard to funding future growth, we will continue to rely on our very solid capital structure with a high equity ratio, low financial debt and comfortable net cash.

In the core segment, Filling and Packaging Technology, Krones will invest heavily in automating its production facilities in the current year in order to further improve efficiency. Expansion of Krones’ international service units enhances customer proximity and loyalty. By increasingly digitalising beverage plants, we will take advantage of the opportunities presented by digital services and new business models.

Our customers’ ambitious sustainability goals will also support the growth of the core segment in the current financial year. By acquiring injection moulding machine manufacturer Netstal last year, we now have all of the main products and technologies to complete the PET recycling loop – a unique selling point compared to the competition. 

At drinktec 2025, we will be presenting the line of the future, a highly innovative PET filling and packaging line. With this system, we will set new standards of sustainability, digitalisation and efficiency while consolidating and extending our lead in PET filling and packaging lines.

For the core segment in 2025, Krones expects 7% to 9% revenue growth with an EBITDA margin of 10.5% to 11.0%.

Krones will continue to optimise and digitalise processes and structures in the Process Technology segment in 2025. By better networking among its global units, the company will be able to leverage additional cost and efficiency potential.

At the same time, Krones will continue to pursue the segment’s diversification strategy, and further strengthening its resilience, growth and profitability with solutions for water treatment, vegetable proteins and energy efficiency. Expansion of the after-sales and components business is expected to make an additional contribution to revenue and earnings.

Krones forecasts revenue growth of 0% to 5% for the Process Technology segment in 2025, with an EBITDA margin of 9.0% to 10.0%.

In 2025, the Process Technology segment is expected to increase revenue by between 0% and 5% year on year.

The Intralogistics segment benefits from rapidly growing demand for fast and efficient order processing. The automation solutions provided by Intralogistics subsidiary System Logistics save energy and costs, increase efficiency and reduce labour requirements, thus helping to counteract the labour shortage.

In order to grow in a competitive market, the segment will continue to internationalise its intralogistics business and increasingly extend it to customer groups outside of the beverage and liquid food market, such as food wholesalers. The expansion of business with automated picking systems and autonomous mobile robots is also expected to further improve profitability in Intra­logistics. 

Krones expects revenue growth of 15% to 20% in the Intralogistics segment in 2025. The EBITDA margin is expected to be between 6.5% and 7.5%.

Krones forecasts profitable growth for the Group in 2025

Based on the prevailing macroeconomic outlook and the current expected development of the markets relevant to Krones, the company expects consolidated revenue growth of 7% to 9% in 2025.

On the basis of increasing revenue, an ongoing disciplined price strategy and continued implementation of the cost optimisation measures, Krones aims to improve profitability again this year compared to 2024. For 2025, the company forecasts an EBITDA margin of 10.2% to 10.8% for the Group. 

For the third performance target, return on capital employed (ROCE), Krones expects 18% to 20% in the current year.

Krones will continue to share the company’s success with shareholders in the form of dividend payments. The company’s dividend strategy is to distribute 25% to 30% of consolidated net income to shareholders, although in recent years it has aimed for the upper end of this range.

Krones aims to further increase profitability in 2025.