Krones Group Annual Report 2022

How should Krones evolve in the future and in what direction? What are the key economic and social roles of our business? It is these fundamental questions which we answer with our vision:

Sustainable and affordable beverages, food and essentials for everyone and everywhere.

We develop solutions beyond expectations for our customers, humanity and our planet.

 

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Our mission describes the purpose of our company and the contribution it makes for customers, other stakeholders and the environment:

We lead with innovative solutions to empower our customers, meeting their goals and beyond, making them successful and sustainable.

We employ our creative power to preserve nature and safeguard society.

 

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We shape the future with passion and bold commitment.

As a diverse organisation, we are open to innovation and change, and work together in a spirit of trust and without barriers. This is how we attract and inspire people to achieve the most ambitious results. Together, we are creating a tremendous advantage and realising our vision.

 

 

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To turn the goals and visions in “Solutions beyond tomorrow” into reality, Krones has a clear strategic focus on sustainability, service quality and digitalisation. These three focuses also determine the strategic alignment of our business segments. In Process Technology, we drive food and beverage innovation. In the core segment, Filling and Packaging Technology, we focus on the implementation of integrated packaging solutions, resource efficiency and circularity. Key focuses in Intralogistics are fully automated and flexible solutions.

Sustainability is key 

Sustainable products will be the biggest innovation and growth driver in the next decade. Demand from our customers for machines, systems and entire lines that save valuable resources and reduce carbon emissions has surged dramatically in recent times. Krones is ideally positioned with its enviro sustainability program and will consolidate and extend its lead with innovative products in all three segments.

 

Digitalisation opens up huge opportunities 

Digitalisation is crucial for service quality and sustainable production. Krones has long been driving the digital transformation vigorously forward. Our digitally enabled machines and lines generate a constant stream of production data – the raw material for superior services. Using smart data analysis, we can help customers optimize their production and save valuable resources. 

Superior service 

Krones’ goal is to operate the entire life cycle of our machines and lines as a digital full-service centre. Our software tools continuously analyze production data. Based on this, Krones experts provide data-driven customer support. We offer this data-driven production optimisation on the basis of service-level agreements (SLAs), with continuously increasing levels of automation. In the future, Krones aims to help customers improve performance with a fully digitalised factory “managed by Krones”.

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Krones faces up to the global challenges

Krones provides customers with the means for climate-friendly, circularity-oriented food and beverage production.

Together with our customers, we tackle urgent global challenges:

• Climate change
  Our products enable customers to save energy, water and other resources and meet their climate targets.
   
• Plastic littering
  Krones technologies help reduce the need for plastic in packaging and recycle the plastic used.
   
• Feeding the world
  We provide innovative solutions for hygienic beverage filling and help customers produce alternative proteins

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Climate change agenda

As part of its 2030 sustainability targets, Krones has set ambitious emission reduction targets along the entire value chain. We aim for an 80% reduction in our own climate footprint (Scope 1 and Scope 2) by 2030, relative to the 2019 baseline. In the same period of time, we will reduce our far higher emissions from the upstream and downstream value chain by 25%.

Our commitment to credibility

Our climate targets have been endorsed as science-based by the Science Based Targets initiative. We committed to developing a net zero emissions target there in the 2022 financial year. We do not currently purchase carbon offsets and have no plans to do so in the coming years.  

 

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Saving resources and recycling plastics

Filling and Packaging Technology: key drivers

Energy savings and carbon footprint

• Strong demand for technologies to reduce energy and resource consumption

Water reduction

• Saving water is among top management priorities
• Tailor-made process and cleaning cycles for “necessary minimum” consumption

Plastic reduction

• Light-weighting of bottles and caps
• Elimination of plastics in secondary packaging

Circularity

• Functioning circular economy avoids plastic waste

PET recycling

• Prevents the loss of plastic as a valuable resource

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LitePac Top: simply sustainable

With LitePac Top, Krones offers a plastic-free, sustainable secondary packaging solution for non-returnable PET bottles and cans. LitePac Top uses recyclable cardboard for the secondary packaging instead of energy-intensive shrink wrapping for six-packs. This cuts carbon emissions by around 80%.
 
VarioPac Pro flexible packer 

The LitePac Top concept is implemented on Krones’ modular and highly flexible Variopac Pro packer. An automatic gripper places a cardboard clip below the neck of bottles grouped into a pack. On cans, the clip is placed below the lid seam. The clip holds the beverage containers securely together in the pack. LitePac Top packs are stackable for ease of transportation.

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Avoiding plastic waste with recycling

Implementing our mission to preserve nature means that we need to solve the problem of plastic littering. The key to success here lies in a functioning circular economy. Krones is committed to making this work with matching solutions. These range from material-saving packaging design to recycling used plastics.

 

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Shaping new technologies

Process Technology: key drivers

Alternative proteins

• Processing plant-based proteins into beverages
• Advanced fermentation for plant-based foods

Water technology

• Water treatment
• Water design

Sustainable energy solutions

• Improving energy efficiency
• Fossil fuel substitution

 

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Complete solutions for dairy alternatives

High-volume animal milk consumption has major long-term environmental impacts, including high levels of greenhouse gas emissions and severe water pollution. That is making plant-based dairy alternatives increasingly important. 

Krones leverages its existing dairy expertise and already provides the complete range of process technology for the production of dairy alternatives from various plant-based sources (soy, oats, nuts, etc.).

 

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Tackling climate change with alternative proteins

With a growing world population and increasing prosperity, meat consumption has risen sharply in recent decades – with negative climate impacts. Livestock farming consumes enormous amounts of feed and water and causes extremely high carbon emissions. Offering people high-quality vegetable proteins as an alternative to animal protein therefore represents a significant contribution by Krones to combating climate change. 

Krones opens up new markets with fermentation expertise 

In the production of alternative proteins, the company benefits from many years of high-level expertise in beverage and beer production. Alongside general process engineering know-how, the company is helped in particular here by its knowledge of how to control biological conversion processes such as fermentation. Purely plant-based proteins can thus be obtained by adding bacteria and yeasts.

 

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Brewnomic: the energy self-sufficient and climate-neutral brewery

Brewing beer is very energy-intensive. The individual machines and lines of Krones’ Brewnomic solution can significantly reduce energy consumption. The potential savings are so large that the brewery can even become energy self-sufficient by ­recycling residual materials from brewing. 

An ingenious solution – how does it work?

By using innovative Brewnomic modules such as the Equitherm energy recovery system, the Stromboli wort boiling system, the Dynafill bottle filler and the Linaflex pasteuriser, the average thermal energy requirement is significantly reduced from 14.5 kWh per hectolitre of beer to just 5.9 kWh per hectolitre. 

Brewer’s grains as an energy source 

Brewer’s grains, an important by-product of the brewing process, contain 6.5 kWh of energy per hl of beer, more than is needed for the entire brewing process. This energy is extracted from the brewer’s grains in a biogas plant. As brewer’s grains are of biological origin (cereals), a full-scale Brewnomic brewery is not only energy self-sufficient, but also carbon and climate neutral.

Valuable proteins as a “waste” product 

But that’s not all: brewer’s grains also ­contain valuable proteins, which can be extracted using Krones technology prior to energy recovery. The proteins extracted from the brewer’s grains are used as an input for producing foods such as vegan meat substitutes.

 

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Efficient and flexible solutions provide added value for customers

Intralogistics segment: key drivers

Energy efficiency improvements

• Up to 40% energy saving

Enhanced occupational safety and health

• Automation means up to 50% fewer workplace accidents

Smart logistics solutions

• Up to 20% saving on logistics costs

Handling increased complexity

• Rapid increase in number of different product types and forms of packaging

 

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Digitalisation for superior service

Service and digitalisation are a key part of Krones’ strategic focus across all three segments. 

Digitalisation enables even more efficient service and better performance

Digital services depend on digital line data. This is why all new Krones lines have been supplied as Connected Lines as a standard feature since 2020. This means that data generated by the machine can be accessed online and shared with us. Over 30% of our customers already make use of this, on a steeply rising trend. 

Data analysis for targeted customer support

In the future, we will be connected to our lines 24/7, enabling us to provide even more efficient service. We continuously monitor and analyse production data. This allows Krones experts to identify weak spots and blockages at an early stage, for example, and to provide the customer with specific support. Customers can then operate their lines even more efficiently and sustainably.

Service-based business models 

Krones’ goal is to evolve from a machine and line manufacturer to a manager of beverage plants – from “Built by Krones” to “Managed by Krones”. This more service-based business model will be implemented by means of service level agreements (SLAs). Under an SLA, Krones guarantees the customer a specific service level. At the highest level, we guarantee the customer an agreed performance level for the line, provided that our support recommendations are followed. In return, the customer pays Krones a regular service fee based on the service level.

 

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Global network for customer proximity

The travel restrictions during the Covid ­pandemic demonstrated the importance of our dense global network of production and service units. We were thus able to help our customers on the spot with service engineers and spare parts, even during this difficult time. 

The Krones network ensures customer proximity around the globe

• 24 international production sites 
• ~ 3.000 service engineers globally
• > 100 subsidiaries and locations across the globe
• Global spare parts availability
• Digitalised support solutions

 

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Leveraging the target picture for long-term profitable growth

Under the slogan “Solutions beyond tomorrow”, Krones has deliberately set itself ambitious goals. To implement the vision outlined in our target picture, Krones must have the financial resources to make the necessary investment. This is why profitable growth continues to be a core element of our corporate strategy. A company can only invest heavily in the future if it generates sufficient profits and cash flow. 

Sound finances and a strong equity ratio also give us the resilience to keep on implementing our strategy in times of crisis. A robust financial and capital structure also secures Krones’ independence. 

Krones consequently aims for above-average, profitable growth with innovative and future-ready products and services in our robust, growing markets. This will not only benefit our motivated employees, but also our shareholders in the form of commensurate dividends.

 

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