Morningstar | Jungheinrich's 1Q Reflects Solid Demand for Its Forklifts; Shares Attractive
Jungheinrich's first-quarter forklift orders outpaced the broader market, and while margins were weak year over year, we expect improvements as the company has passed through a second price increase in six months to combat raw material price inflation. We are maintaining our EUR 36 fair value estimate and narrow moat rating. The shares look attractively valued.Orders in units grew 2% in the quarter for the company, outperforming the broader market, which declined 3%. We attribute the difference to product mix, with Jungheinrich selling proportionately more warehouse forklift trucks and fewer construction and outdoor trucks. The first has a structural demand driver from e-commerce-led logistics space expansion, and the second has more short-cycle exposure.
Revenue increased 9%, well above our 5% estimate for the year, but we think revenue growth will slow as the company works through the unusually high order book growth of last year.
The EBIT margin declined 30 basis points year over year to 6.3%, but the prospect for margin expansion for the remainder of the year looks good. The company raised prices by 3% in May, the second price increase in six months. Both should come through to margin expansion in the third quarter and onward as orders booked in May and June convert into truck deliveries.
Jungheinrich is engaged in the development of new trucks and logistics solutions. Co.'s operating activities are divided into two segments: Intralogistics, which is engaged in the development, production and sale of new trucks including logistics systems as well as the mail-order business, short-term hire which include the rental of new and used material handling equipment, reconditioning and sale of used equipment and the provision of after-sales services including the maintenance, repair and spare parts businesses; and Financial Services, which encompasses the usage transfer and sales financing of material handling equipment and warehousing technology products.
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