Kion Group GmbH, the forklift maker owned by KKR & Co. and Goldman Sachs Group Inc. (GS), plans expansion including services in Asia and a debt reduction before staging a share sale that may exceed 3 billion euros ($4.25 billion).
Kion’s initial public offering is still open, and won’t take place this year, while private-equity owners usually hold investments for six to eight years, Chief Executive Officer Gordon Riske told journalists in Frankfurt late yesterday. KKR and Goldman bought Kion in 2006, meaning a sale may come as early as next year.
“Our priority is the operating business,” said Riske, whose contract was extended by four years in March. “In 2011 and 2012 we need to position the company properly and make the investments necessary for that. Then will come debt reduction.”
Kion, which plans to overtake Toyota Motor Corp. as the world’s largest maker of industrial trucks by 2015, is seeking to expand in Asia and the U.S. A global rebound in logistics is boosting demand and the CEO said he was pleased with development in the first quarter. The company, which reports earnings on June 8, has such a “high” order backlog that it’s struggling to keep abreast on timely delivery, Riske said.
Riske, who wouldn’t comment on how much Kion is worth, said companies in the industry have been valued at seven times earnings before interest, tax, depreciation and amortization or more. The Wiesbaden, Germany-based forklift manufacturer reported Ebitda of 462 million euros in 2010, suggesting a value of at least 3.23 billion euros.
An investment-grade credit rating isn’t a prerequisite for in IPO, Riske said. Kion is rated B3 at Moody’s Investors Service, six steps below investment grade, and B at Standard & Poor’s, five notches below. The manufacturer aims to reduce net debt to less than 2 billion euros from 2.6 billion euros at the end of 2010, the CEO said.
Kion, a former unit of German industrial-gas maker Linde AG (LIN), plans to increase its share of new business from emerging markets to about 40 percent from a current 25 percent, the CEO said. About 52 percent of the manufacturer’s workforce is involved in sales or service, and Kion wants to add to its service operations in Asia, Riske said.
The company set up a joint venture in India with Voltas Ltd. (VOLT) that started operations last month. The partnership, called Voltas Material Handling, develops, builds and markets vehicles through 25 branches and dealerships throughout the country.
Kion is adding a second factory in Brazil. Work started this year on building a manufacturing plant for the Linde and Still brands in Sao Paulo while the existing plant in Rio de Janeiro makes warehouse equipment.
The U.S. is the only major market where Kion doesn’t have a leading position, Riske said. The company aims to increase its market share there to 4 percent or 5 percent from a 2 percent now, he said.
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