DGAP-News: Knorr-Bremse Aktiengesellschaft / Key word(s): Quarterly / 
Interim Statement 
Knorr-Bremse Aktiengesellschaft: ???????Knorr-Bremse AG sees revenues, 
profitability, and cash flow surge in the third quarter of 2020 
 
2020-11-19 / 06:59 
The issuer is solely responsible for the content of this announcement. 
 
*Knorr-Bremse AG sees revenues, profitability, and cash flow surge in the 
third quarter of 2020* 
 
- Business performance in the first nine months of 2020 very robust despite 
impact of the pandemic 
 
- Robust profitability levels: EBITDA margin in the first nine months of 
2020 of 17.5% compared with 18.5% in the prior-year period 
 
- Free cash flow in Q3 increases almost fourfold versus Q2 2020 to EUR 181.8 
million (EUR 47.5 million); at the same time, increased, selective 
investment in strategic, forward-looking innovation and technology projects 
 
- Order intake up 3.6% and order book up 1.2% on the prior-year level again 
in Q3 due to strong increase in demand for commercial vehicles 
 
- RVS division records 3.1% increase in the order book on the prior-year 
level in Q3 and widens EBITDA margin from 20.6% to 21.6% 
 
- CVS division grows much faster than the market in Q3 2020 with order 
intake up 45.2% on the prior-year level 
 
- Full-year guidance for 2020 confirmed: Revenues of EUR 5,900 million to 
EUR 6,200, operating EBITDA margin of 16.5% to 17.5% 
 
*Munich, November 19, 2020-*Knorr-Bremse AG, the global market leader for 
braking systems and a leading supplier of other rail and commercial vehicle 
subsystems, today published its results for the first nine months of 2020. 
 
Frank Markus Weber, Chief Financial Officer of Knorr-Bremse AG, commented on 
the publication of the business results as follows: "Knorr-Bremse achieved 
significant improvements in all key figures and margins compared to the 
second quarter, with EBIT alone rising by more than 12 percent. The Truck 
division in particular grew at a faster rate than the market, recording a 
significant increase in demand in Europe and North America since the summer, 
driven in part by extra shifts at commercial vehicle manufacturers. After a 
very strong second quarter of 2020, demand in China continued to develop 
very positively in the third quarter thanks to pull-forward effects. 
Overall, with stable profit levels, the Rail division is performing at a 
high level." 
 
"Due to the persistently volatile market, we will continue to focus our 
efforts in the coming months on consistently implementing measures to 
stabilize earnings and cash flow and to secure the supply chain for our 
customers. We are taking a very targeted approach in our cost control 
measures, which will allow us to continue making meaningful investments in 
the future. One good example of this is our very encouraging cash flow trend 
in the third quarter despite higher investments and an increased R&D ratio," 
Weber added. 
 
*Order book remains at high level despite volatile market environment* 
 
The market in which the Knorr-Bremse Group operates was influenced by the 
Covid-19 pandemic in the first nine months of the 2020 fiscal year. In the 
development during the year, a significant improvement of the third quarter 
compared to the second quarter can already be seen. In the rail vehicle 
segment, Europe, China, and India were the markets that saw the greatest 
erosion in demand. The global commercial vehicle market experienced a 
noticeable downturn, particularly in the second quarter of 2020, as a result 
of lockdowns around the world and the related shuttering of commercial 
vehicle manufacturing facilities. However, ever since the summer, the 
markets in Europe and North America have witnessed a renewed surge in 
demand. In Asia, revenues generated with Chinese commercial vehicle 
manufacturers in particular were significantly higher than in the previous 
year. 
 
Order intake of the Knorr-Bremse Group showed in the third quarter 2020 a 
significant recovery compared with the second quarter, and order intake in 
this period grew as well by over 3% year-on-year. The order book as of 
September 30, 2020, at EUR 4,457.7 million, was up 1.2% on the strong 
prior-year figure of EUR 4,402.9 million. In the first three quarters of 
2020 order intake was down 15.5% on the prior-year period, amounting to EUR 
4,355.0 million (9M 2019: EUR 5,153.0 million). 
 
In Q3 2020 Knorr-Bremse Group achieved revenues of EUR 1.533,5 million (Q3 
2019: EUR 1,428.3 million), a remarkable increase of 7.4 % compared to Q2 
2020. Overall, revenues between January and September 2020 were down 13.6% 
to EUR 4,589.3 million (9M 2019: EUR 5,312.7 million). At constant exchange 
rates, revenues decreased by 12.5%. 
 
The share of total revenues accounted for by the Group's aftermarket 
business increased perceptibly to 37.1% (9M 2019: 33.6%). 
 
Knorr-Bremse thus succeeded in demonstrating once again that it has a stable 
and resilient business model. 
 
*High level of profitability and strong cash flow despite Covid-19 pandemic* 
 
EBITDA of the third quarter 2020 increased by 9.5 % to EUR 268.7 million 
compared to the second quarter 2020. In the first nine months of the 2020 
fiscal year it came to EUR 804.2 million (9M 2019: EUR 982.2 million), a 
decrease of 18.1% on the prior year due mainly to volume factors. Thanks to 
the Covid-19 action programs swiftly implemented in both divisions and 
revenues from the aftermarket business making up an increased share of total 
revenues, the EBITDA margin of 17.5% maintained a very satisfactory level 
(9M 2019: 18.5%). 
 
Knorr-Bremse Group EBIT increased by 12.1 % to EUR 194.6 million compared to 
the second quarter. In the first nine months of 2020 it declined by 24.4% to 
EUR 592.1 million (9M 2019: EUR 783.0 million), giving an EBIT margin of 
12.9% (9M 2019: 14.7%). The change in this margin is higher than for EBITDA 
due to increased investment activity, which led to higher depreciation and 
amortization. 
 
Free cash flow in the first nine months amounted to EUR 168.5 million (9M 
2019: EUR 355.3 million). The pandemic-induced drop in revenues and higher 
cash outflows for capital expenditure impacted on cash flow in the second 
quarter in particular. In Q3 2020, the measures implemented to stabilize 
earnings and cash flows continued to take effect and a significantly higher 
free cash flow of EUR 181.8 million was recorded (Q2 2020: EUR 47.5 
million). Due to regular seasonal trends, a strong free cash flow is 
likewise expected in the fourth quarter of 2020. The cash conversion rate, 
in other words, free cash flow expressed as a percentage of net income, 
amounted to 129% in the third quarter, up from 90% (adjusted for 
extraordinary factors) in the third quarter of 2019 and from 41% in the 
second quarter of 2020. 
 
*Segments* 
 
Rail Vehicle Systems (RVS) with solid order book up 3.1% year-on-year in Q3 
2020 and with improved profitability 
 
In the third quarter of 2020, the order book of EUR 3,400.5 million (9M 
2019: EUR 3,296.9 million), which was 3.1% higher than in the previous year, 
demonstrated the strong resilience and stability of the RVS division. 
 
Over the entire nine months period between January and September 2020, 
revenues of the RVS division declined by 8.2% to EUR 2,562.5 million (9M 
2019: EUR 2,791.4 million) due to lower revenues generated with rail vehicle 
manufacturers. In Europe, this was mainly attributable to mass transit 
(light rail vehicles and metro cars), in North America to the freight 
business, and in Asia to the business for high-speed trains and locomotives. 
 
At EUR 568.1 million, EBITDA for the entire reporting period (9M 2019: EUR 
605.6 million) was down by 6.2% year-on-year, resulting in an improved 
EBITDA margin of 22.2% (9M 2019: 21.7%). The division benefited from 
positive mix effects in Europe and a steady improvement in profitability in 
Asia at a high level. In addition, the cost reduction program implemented to 
mitigate the effects of the Covid-19 pandemic had a favorable effect on 
profitability. 
 
Commercial Vehicle Systems (CVS) with a strong order intake of +45.2% and 
outperforming the markets in Q3 2020 compared with prior year 
 
The 45.2% increase in order intake of the CVS division in the third quarter 
of 2020 compared to the prior-year quarter is testament to the significantly 
improved market estimates in Europe and North America. 
 
For the first three quarters 2020 revenues as of the end of September 2020 
came in 19.7% short of the prior-year figure, amounting to EUR 2,026.3 
million (9M 2019: EUR 2,523.8 million). The decline in revenues was largely 
attributable to a decrease in truck production rates worldwide and related 
revenue shortfalls in the OE business, mainly in Europe and North America. 
Nevertheless, CVS managed to outperform the market, underpinned by growth in 
the content per vehicle and a stronger aftermarket business. The newly 
acquired steering systems company R.H. Sheppard added a further EUR 29.4 
million to revenues. In the Asia region, the strong momentum in OE revenue 
growth in China continued compared with the previous year. 
 
The aftermarket share of revenues rose year-on-year to 28.3% (9M 2019: 
24.8%). 
 
EBITDA fell by 34.0% on the prior-year figure to EUR 259.8 million (9M 2019: 
EUR 393.8 million) due to volume factors. At 12.8%, the EBITDA margin was 
lower year-on-year (9M 2019: 16.3%). The recovery in revenues in the core 
markets of Europe and North America in the third quarter, along with 
consistent continuation of the cost control measures implemented, brought 
about an improvement in profitability compared with the first half of 2020. 
 
*Regions* 
 
Regional contributions to revenues in the first nine months of the 2020 
fiscal year showed a significant increase in business in the Asia-Pacific 
region. This gives the following regional breakdown of revenues as of the 
end of September 2020: 
 
- Europe/Africa 45% (9M 2019: 47%) 
 
- Asia/Pacific 33% (9M 2019: 28%) 
 
- North America 20% (9M 2019: 24%) 
 
- South America 1% (9M 2019: 2%)

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November 19, 2020 00:59 ET (05:59 GMT)