Struggling Times for Young Heinrich
Jungheinrich Adopts Transformation Program to Boost Competitiveness
German forklift manufacturer Jungheinrich has announced a comprehensive transformation program aimed at enhancing global competitiveness. The program, which focuses on optimizing production, management, and administrative structures, is expected to deliver sustainable cost savings of around €100 million in the medium term. However, it will incur one-off expenses of approximately €90 million in the 2025 financial year, with two-thirds of these expenses expected in Q3 and Q4.
The financial impact of the program has led to multiple forecast adjustments. The EBIT forecast for 2025 has been lowered significantly from an initial €430–500 million to €280–350 million, and further to €160–230 million after additional adjustments. The EBIT return on sales (ROS) dropped from an initial 7.8%–8.6% down to 3.1%–3.9%. Earnings before taxes (EBT) and return on capital employed (ROCE) forecasts were similarly reduced. Despite the cut in profit outlook, free cash flow is expected to remain above €250 million.
Regarding job reductions, the transformation program includes personnel-related measures, implying job cuts as part of cost-saving efforts. While the exact number of jobs impacted has not been disclosed, the program aims to streamline management and administrative staff alongside optimizing production locations.
In the second quarter, Jungheinrich's orders increased by approximately 4% to nearly €1.4 billion. However, the net profit decreased by around 7% to €70 million. Despite this, the share price of Jungheinrich's preferred stock listed in the MDAX has risen by around 30% this year.
The stock's poor performance on Friday follows recent profit warnings issued by Jungheinrich. Peter Rothenaicher of Baader Bank attributed the stock's poor performance to the weaker margin, despite expectations being more or less met with the increase in orders.
| Aspect | Details | |-----------------------------|-------------------------------------| | Savings program | Transformation program adopted | | Projected cost savings | ~€100 million (medium term) | | One-off costs | ~€90 million (2025 financial year) | | EBIT forecast 2025 | Adjusted from €430–500M to €160–230M | | Job reductions | Personnel and location-related cuts planned, exact numbers undisclosed | | Reason for program | Improve global competitiveness via optimization of production, management, and administration | | Second-quarter orders | Increased by approximately 4% to €1.4 billion | | Second-quarter net profit | Decreased by around 7% to €70 million | | Stock performance | Preferred stock in MDAX up by around 30% this year | | Recent performance | Stock declined following profit warnings |
Jungheinrich's stock was one of the worst performers in the MDAX on Friday morning, losing around 2%. The company's stock is currently valued at €3.4 billion. The cost-cutting measures form a key part of Jungheinrich’s response to sector pressures and a weaker business environment.
The cost-cutting measures, including personnel and location-related adjustments, form a significant aspect of Jungheinrich's response to sector pressures and a challenging business environment. The transformation program, aimed at improving global competitiveness, is projected to deliver approximately €100 million in savings in the medium term, despite incurring one-off expenses of around €90 million in the 2025 financial year.
