Jungheinrich Earnings: Storage Solutions Group Acquisition Boosts Performance

Jungheinrich JUN3 completed its acquisition of Storage Solution Group, a platform it believes will help grow its racking systems and warehouse automation in the U.S., for approximately EUR 307 million, which provided a large boost to first-half performance. Jungheinrich’s revenue grew by 21% from the same period last year, largely driven by positive growth in new trucks in addition to new revenue from the acquisition. Organic revenue growth excluding acquisitions was 17%. Orders also exhibited steady growth, increasing 9% including Storage Solutions and 5.4% without.

EBIT margins also increased significantly from last year, growing 150 basis points to 8.9%. Free cash flow improved in the first half of the year but still saw a loss of EUR 182 million from a loss of EUR 270 the first half of last year. Without the acquisition, free cash flow would have been positive. Although management states free cash flow will likely be negative in the second half of 2023, we believe free cash flow will be positive shortly thereafter.

Management confirmed additional guidance anticipating orders between EUR 5.0 billion and EUR 5.4 billion and revenue within a range of EUR 5.1 billion to EUR 5.5 billion, both taking into account the acquisition of Storage Solutions.

All in all, the firm has rebounded strongly following the high inflationary and tight supply chain environment that led to a challenging first half of 2022. We maintain our narrow moat rating and EUR 30 fair value estimate.