I think let's start, Christoph and Norbert. Yeah. Welcome to the conference call of Krones. We want to present you today the figures for the first nine months, 2021. With the presentation held by Christoph Klenk and Norbert Broger, you have the possibility to ask questions. In order to ask questions, please inform us just by sending a short email to olaf.scholz@krones.com. We will send over to you, and you can unmute your individual line. If you have not the possibility to send us a short information mail, we will ask at the end all participants for further questions. Let's start with the presentation. I will hand over to Mr. Klenk. Christoph, the floor is yours.
Olaf, thank you. Yeah, warm welcome, ladies and gentlemen, to the Krones Q3 call. We are very happy to have you here today, and I have to say even more happy than the recovery after the COVID-19 crisis is going ahead, and we see very substantial and sustainable recovery. However, I have to say in the beginning, Corona is not over and COVID-19, but it seems that our customers and our, in particular, the consumers are used to the new normal, and this is supporting the recovery we see right now. I would say we jump immediately into the presentation that will give you an overview where we are. Olaf, do you trigger forward? Okay, perfect. You see a very strong Q3 for us.
If you look at the numbers after nine months, you see that the order intake was very strong and was a plus of 38.8% up to EUR 3.2 billion. This is very remarkable and beyond what we had expected, of course. We will explain that later on. As I said already, the market development is very sustainable. If you look to the revenues at EUR 2.6 billion at the moment, and 8% roughly up compared to the last year figures. You even see there that there's a I would say, an offset in terms of the revenue recovery, but it's all going in the right direction. The revenue growth in the third quarter was 23% is pretty strong. Profitability significantly improved as well in the nine months.
The EBITDA went up by 44% and the margin is at 8%. Norbert will go deeper into that later on. Even the free cash flow has developed very nicely in the right direction, and is EUR 166 million higher than last year and was +EUR 108 million. We are confident to manage the year to match our forecast for 2021 with the numbers we have just given. That's the growth of 7%-9% and the EBITDA margin of 7%-8%. That's in a nutshell where we are. Here you see again the numbers repeatedly, very important ones, which we see as the key figures for today's presentation. I would continue with the order intake, and Norbert will then hand over.
We see a very nice growth. In particular, if you see the comparison with 2019, which is, from our point of view, the more important comparison rather than 2020, then you see that the order intake in all three quarters is actually on pre-crisis level and a bit beyond that. That's, I would say, the important message, and we see that things for the rest of the year going in the right direction. We keep path on the order intake. You might now ask why it's so different than we predicted in the beginning and why is the order intake so high? I would say the retail business is still very strong and growing, which is the one which survived the COVID-19 crisis the best.
Hotel, bars, and restaurants are recovering strongly. That's, in a nutshell, in combination, that's giving the boost to our order intake. When you would ask us, because we said last year that the order intake might be a bit lower, this has to do with again, and we said it already in Q2, that the key accounts have actually less invested than they had done in 2019. They sticked very much with the budgets they had. At the moment, they are increasing a bit their budgets that they can follow. We see in particular the private-owned companies and the private equity-driven companies being the aggressive one and investing. That's in a nutshell up to here for order intake, and I hand over with that to Norbert. Norbert, please.
Yeah. Thank you, Christoph, and also warm welcome to all participants today in our digital conference call. Our revenue development lags behind the order intake, which is quite normal. You know that from the past. Year to date, almost 8% above last year. When we look at the pre-COVID situation, 2019, then we are still about 8% behind. However, what's important is when you look quarter by quarter, first quarter we were lower than last year, second quarter already about 12% higher than last year, and now the third quarter, 23%, more revenues than last year, same quarter. We have a book-to-bill ratio year to date of 1.2, which is quite good.
As Christoph mentioned before, you see the difference in the increase of order backlog, the highest order backlog we ever had of more than EUR 1.7 billion. At the same time, this goes also together with the longer lead times. Our customers know that, same with our competitors. For example, in normal lead times for us from order intake to ex works is around three to five months, and it has more or less doubled to eight to 12 months. When we look at the different regions, very strong and you see always the share of the region compared to total sales of the group.
Very strong North America, 21.2% share in the first nine months of total revenues of Krones compared to 18.6% and 17.5% in the periods before. Europe also recovering above 31% again from 28.4% last year. Eastern Europe more or less same level and also China improved compared to last year. On the other hand, you see South America still lagging behind. Middle East, Africa with 12.9%, still below last year. Exclusively Africa, the African countries. Middle East itself is running strong. Asia Pacific still below the shares in the past.
Those are the regions we all know that are impacted most and still are impacted by this COVID situation, Asia Pacific, Africa and South America. I was personally traveling last week, it was a first overseas trip since a long time to U.S. and Brazil. The feedback I got there from firsthand from our sales organizations is that in both regions, the markets are still strong, also perceived for the future to come for the next quarters. They don't see any slowdown, neither in North America nor in South America. When we look at the results on the EBITDA level, year to date, we are at 8% margin versus 6% last year and 5.7% before Corona. The last quarter was remarkably strong for Q3.
Those of you who have followed Krones for a longer period of time, you are probably aware that usually Q1 and Q4 are the stronger ones in terms of profitability and sales. So the 8.1% for Q3 is a very good result for us at this point of time, which means 160% more compared to Q3 last year, and 68% more compared to Q3 2019. So I think this shows a clear recovery that we are on the right way, on the right track, to move forward and reach our midterm targets. We increased our guideline beginning of August to 7%-8% EBITDA margin.
We are quite confident that we will be in the upper corridor of this guidance at year-end. Similar deviation in EBT after nine months, 4.5% year to date. Also, a very strong increase compared to last year at this point of time, and also a strong increase compared to pre-corona 2019. However, we all know that 2019 was not a very good year and is not the benchmark for us. It clearly shows that we are recovering very strong and we see that we are on the right track. When we look at our two major cost blocks, personnel costs and material costs, you see an increase in personnel costs compared to last year.
Last year, we had short time in many areas and so on. We are out of that this year, but the ratio compared to sales dropped from 34.1% - 32.6%. On the other hand, material ratio, 49.7%. A slight increase compared to last year. This reflects on the one hand side that material prices have been increased almost everywhere, and it's still ongoing, as we all know, but also that we increased temporary labor, which is part of material costs in the P&L, in order to work off the heavy workload we have. On slide number 10, you see the headcount development of Krones.
End of September, we are at 16,118, which is almost 600 less than nine months ago at year-end, and almost 1,200 less than end of 2019, which means roughly - 7% compared to 2019, whereas Germany we reduced by 9% and outside Germany about 3%. Our restructuring program that we started in 2019 and then of course increased last year in the pandemic situation, this program is finished now. I told you already, we are hiring temporary labor to cover the higher workload here. On the other hand, we are hiring in certain specific areas, especially in software and automation and in some engineering areas. Okay.
The next slide, number 11, is development of working capital. Year-to-date, after nine months, 26.2% of sales. This is obviously lower than last year and slightly better than 2019. What helps, of course, is the prepayments that we are receiving now for the orders. That had the biggest positive impact. Yeah. You see on the right side, the development in a percentage of sales. Receivables are increasing a little bit, and this has to do something with the market environment with projects we took last year where we helped customers in financing. Payables are increasing a little bit, that's due to our supply chain financing program.
Inventory is increasing on the one hand side because we have more shop load, and on the other hand, because we're trying to put safety stock wherever we have a chance to do so. Now let's have a short look on our two segments that we report, Product Filling and Decoration, the main segment. From the revenue perspective, almost 6% increase compared to last year at this point of time, but still 8.4% below before corona time in 2019. On the positive side, profitability is increasing step by step from 7% EBITDA 2019 to 8.3% last year and 9.1% this year.
The second segment, Beverage Production and Process Technology, here you see a strong increase in revenue of about 20%, from EUR 365 million last year to EUR 427 million this year. Still around 10% below pre-corona, but a strong increase. This comes primarily from our intralogistics operation, especially from the Italian one, because as you might remember, Northern Italy was in a complete shutdown beginning of last year. That's why they suffered a lot last year in revenue. Now this year, it's almost back on normal, not quite. You see the recovery in profitability from -26.1% last year.
Of course, it was an exceptional negative year, but also from the -5.4% before Corona to year-to-date +2.4%. When we go a little bit deeper in this, let's say, segment where we have a lot of focus because the profitability has been very low in the past, one part of that segment is the Process Technology. Here you see more or less constant sales compared to last year, but a significant improvement in profitability to currently +2.3%, which shows that all the actions we did in Process Technology in Germany and North America show first results. You might also remember that we carved out one big portion, the beer part in Germany into a new legal entity.
We have now much better transparency and they have more room and freedom to do the internal processes the way they need it, also the IT system the way they need it. On the intralogistics side, as I mentioned already, a strong increase in revenues. By the way, also strong increase in order intake going forward and a significant profit improvement year-to-date to 2.5%, which is not sufficient. We know that, but we also know that what we have to do to make it a real good profitable segment, and we will tell you more about that in the Capital Market Day on November 16th. Now, slide number 14, the financial situation. That's not new for you.
Krones is a very solidly financed company it has ever been, and this will not change. We have almost EUR 1.3 billion liquidity reserve, around EUR 290 million in cash, and more than EUR 1 billion in the credit lines, and also EUR 1.3 billion in equity. Last but not least, for this quarter, looking at the free cash flow, when Christoph mentioned it already at the beginning, we have a positive free cash flow of EUR 108 million year-to-date, which is an improvement of around EUR 165 million compared to the same period last year. It's primarily coming out of three lines. One is, of course, the significantly better EBT, almost EUR 100 million.
The other one is the change in working capital, which is also around EUR 90 million + on free cash flow from -EUR 85 million to +EUR 7 million. The other one is reduction in liabilities. That's a negative one of around EUR 30 million, just because we reduced our tax liabilities. So far, Q3 and the whole period. Now our outlook unchanged, revenue 7%-9%. Now if you ask me today, this was beginning of August, today I would say 9% is pretty sure. Maybe it will become 10%, but it's definitely in the upper range of the guideline. EBITDA margin similar, we are at 8% and we also expect Q4 to have 8% margin definitely. This will be 8-point-something probably.
and 27%, closer to 26%. Key takeaways, record order intake and order backlog, which is a good base for next year. Revenue is recovering and capacity utilization is improving. We have a strong improvement in profitability due to our efficiency programs and also due to a good strong and continuing service business. Free cash flow generation is very good. We have, of course, supply chain challenges like everyone in the industry, and we are still able to manage this. The guidance, as I just said for this year, is confirmed. That concludes my presentation, and Christoph and myself are available for any questions you might have. Thank you very much.
Thanks a lot to Christoph and to Norbert. As mentioned before, if you want to ask questions, send me a very short email with the information, and then I will hand over to you. Email address is olaf.scholz@krones.com. I received already the first email. The first questions are coming from Sven Weier, UBS. Mr. Weier, you can unmute and ask your question, please.
We don't hear Mr. Weier.
Mr. Weier.
Can you hear me now?
Yes. Yes, now we can hear you.
Hello. Yeah.
Hello.
Sorry. The system has still had me muted. Thanks for taking my question and, good afternoon from my side. The first one is on the subject of the order intake, and I guess you also sounded relatively upbeat about the coming quarter. I was just wondering, I mean, your record order intake was in 2019, was almost EUR 4.1 billion. I guess to get there you would have to have another, let's say, EUR 900 million in Q4, which would actually be the lowest order intake this year. Should we assume you reach another record here on the order intake? And what is your view into 2022?
I mean, how much of this has been really at the expense of next year already? On the other hand, you said, you know, the big accounts haven't invested yet. You got drinktec next year, so I would suspect that maybe next year is not going to be a bad order intake year either. That's the first one. Thank you.
Okay. Thanks a lot, Mr. Weier, for the question. I would say the Q4 we see still positive. I would say we have a few of six to eight weeks for those projects being really finished and nailed down and where we have then at the end of the day, POs. We see that positive. On the other side, we have to say we are very selective and careful. Selective on one side because of pricing. I think we touch that later on, certainly. The essential thing for us is that in pricing, we reflect already material cost increases for next year, and that our gross margins are the way that we are able to achieve the profitability targets for next year. That's one limitation.
Second, of course, with, let me say, the very high order intake we had and the extended delivery times, that for some customers, the delivery time might be a bit of a hurdle because we are at the moment booked up to July ex works, and that means the customers goes in operation August, September at the earliest. That's, let me say, the second factor where we are a bit careful. All in all, we see the Q4 very positive. I have to say, even in intralogistics, which we should not forget because the mix has changed a bit in terms of order intake, looks very promising and we have good projects even progressing on hand, which are going to be materialized in order intake in Q4.
Let me say, while we are really then beyond 2019 and the record year before, let's see. I would say we are certainly in the range. Norbert would say it earlier, I would say we are well set for that we can go close to that or even beyond. To the question, is that going to the credit of 2022? I would put it this way, I mean, we have a visibility of, quotes being out and, the possibility to check whether they are substantial and customers are serious on that, I would say between four to six months, and this looks still very good.
We do not see that there is a decline and I would say except from the point that we do not all know how the supply chain issues are developing all over. Then in case they stay as they are, I would say it's a good fundament, what we see for next year. We still believe that things are going on a sustainable, stable way forward. I would put it this way. Order intake for next year, we do not believe at the moment is going to the detriment of 2022, and we see at least for the first six months, 2022 positive. Does that answer your question, Mr. Weier?
Yeah, absolutely. Thank you very much, Mr. Klenk.
Welcome.
you know, again, it's probably the drinktec year, so the second half might be quite interesting then.
Can I do one remark to drinktec, Mr. Weier?
Yeah.
I'm a bit careful with those big shows. I mean, I would say the COVID-19 crisis has certainly from our point of view put exhibitions on a lower level than they have been in the past. I would not expect, even in case it's an important show, that this would generate a lot of tailwind. I would say it's more important, let me say, the general environment, and I wouldn't, at least from my perspective, put any cards on the drinktec at the moment, again, because I don't believe it has that importance anymore as in the past.
Yeah. Fair enough. Any major innovations or is that also more smooth in terms of how you bring these things to the market and don't wait for such a show anymore?
Definitely. We don't wait. Why? Because actually, drinktec was scheduled for 2021 and a lot of innovations have been, let me say, brought to that point. However, on the other side, we do not develop any more in specific to a show because I would say it's more to the need of our customers and as fast as possible, of course. Even innovations are not timed to a show at all.
Understood. Thank you. The other question I had just was on the delivery of the backlog. I mean, if I understood you correctly, all of the backlog you have currently is due for delivery next year. I mean, would you still expect that to be the case when you end the year, that there would be some orders in the backlog that are actually go out to 2023 already, or is that still not the plan?
There are some orders definitely which are going to 2023, but they are not, let me say, in the core business of Krones. Most of those going into 2023 are either processing, but even more into logistics. There are only some very few projects in bottling and packaging, and they are related again, maybe to bigger projects in processing that they are going to 2023. At the moment, the majority is to be shipped in 2022. I would count for-
Okay. Thank you.
... 90, 95%-96% most probably.
Yeah. Thank you for that color. Finally, just, I mean, you said it already on pricing. I think last time we spoke, you already mentioned that Sidel had followed your pricing initiative. What about KHS? Yeah, just maybe the latest on pricing discipline in the industry and how customers are following it. Thank you.
Yeah. Again, Sidel, we follow and we see that clearly in the market from KHS. We have no indication, let me say, on a public base like we have it from Sidel. We have it from some Italian competitors. That was really interesting that they did follow. I haven't seen that in my career before, that Italian competitors announced as well price increases, so that's very good. I would assume that even KHS is handling pricing carefully in the market. That's what we see at least, and that the price discipline all over is increasing as everybody is in the same need of compensating for the high material costs.
Sounds good. Thank you very much.
Yeah.
Thank you.
Thanks, Mr. Weier. We got next one that's Daniel Gleim from Stifel. Mr. Gleim, your question please.
Hello, can you hear me well?
Yeah, we can hear you now, Daniel.
Excellent. Good afternoon. Thank you very much for taking my questions. Actually, three of them. I would start with the price increases that you just touched upon. Are there any additional price increases in the making for the coming months?
Of course we reflect that. I would say we are looking very carefully on our gross margins. I would say with the predictions we have material cost increases and forecasts for next year, we are considering that as well. Yes. It's not done yet, but we are considering, and we would act accordingly if needed. I would say with the things we see, that's not far away. Whether you see that then in a, let me say, a public statement, whether we are increasing our pricing, this is another question mark, but at least we will act accordingly internally in terms of how we set our quotes.
Maybe if I can add something, Mr. Gleim. When we calculate new projects, now as I said before, we have longer lead times, we anticipate price development in our precalculation. When we make a project now and we know delivery time is end of next year, then of course we factor in the expected material cost increases in our project costs, which automatically means a price increase. As Christoph said, whether we announce one officially or not, that's on a different page. In reality, this is factored in when we calculate projects.
Very clear. Thank you very much. You spoke about the order intake momentum into the next year. May I ask, do I understand correctly that you expect the mix of customer type to change then in H1 2022? More specifically, more larger customers that now have a new budget and are ordering, and less smaller customers that already ordered in this fiscal. Or is a large customer ordering even incrementable to the current momentum? Maybe you can put a little bit more color around your thinking.
Yeah. First of all, the assumption that the bigger customers, and let me call it the global ones and the key accounts, which usually work very strong and disciplined on budgets, because actually that was their limitation. They set their budgets in late 2020 for 2021, and that's the biggest limitation they have, and they stick pretty much to that. We do expect for those that they are going up in the budgets for 2022, and that we see a bigger contribution from those. Not necessarily we see declining, let me say, the private ones and the smaller ones, because I would say their appetite and the change in the market we see is still there.
When we see the quotes going out and how serious they are on further projects for next year, and I said it, we have, let me say a visibility of most probably six to eight months in how serious the projects are. I would say that this comes pretty much together in a combination, and we don't see a decline of the private owner or the smaller ones. The bigger ones give their contribution. This is why we believe that total intake might sustainably be for next year as well.
Very good. The last question is on the upcoming investor day or Capital Market Day. Would you mind sharing, you know, the key focal points with us? Specifically, should we expect new guard rails for the coming years, an update of the sales development and the margins that you have given previously, which I understand would deserve an update.
Yeah. Norbert, you would answer that question?
Yes. I mean, we have of course the update of our business and segments. What we are doing, we will be more precise about sustainability, what we are doing, what our customers are expecting, also about digitalization initiatives and the business we are planning to create with it. Of course, we will also discuss our midterm targets, and we want to be more precise and also give a commitment for 2025, in terms of sales, profitability and return on capital employed.
Very clear. Looking forward to that. Thank you both.
Yeah, thank you.
Welcome. Thank you.
Thanks to Mr. Gleim from Stifel. Perhaps once again, if you want to send questions, please send me a short email. I mentioned before, if you have not the possibility because you're on a phone line, then you can also now ask a question. Perhaps I have someone from the telephone community who wants to ask a question. Okay. Not at the moment. Perhaps additionally, send a short email. I think that presentation already answered all questions because I have seen now Mr. Stefan Augustin from M.M. Warburg. He wants to ask one question. Mr. Augustin, please unmute and ask the question.
Hello, can you hear me?
Yes.
Yeah, great. Just two housekeepings left. Could you update us on Hungary and, let's say, with more load, the possible savings that you could foresee for 2022 on the cost side here? Is there any larger chunk on cash-out from the restructuring still left for Q4?
No, I'm doing that one on Hungary and you are the second one. Mr. Augustin, first, Hungary, I would say, is proceeding now in the meantime, let me say, in a way that we are increasing production hours month by month. We are facing now different problems in Hungary, and those are the same as we faced them in Germany. That's mainly based on the supply chain issues we have there because we build out a supplier base, since we didn't want to do anything ourselves in Hungary. That's at the moment a bit of a momentum. I would say in the same scale as we have it for the German plants, but things are going well ahead.
I would say at the end of the year, we most probably heading then close to the planned production output we have. It might take a bit longer because of what I said, the supply chain issues we had. Hungary is, let me say, I wouldn't say out of the focus, but certainly out of the focus in the sense it's something serious which we have to fix and go on. Now it's more a continuous improvement program and get things from Germany over to Hungary. I would say if you look to the, let's say capacity hours we are using there and we are doing there, is around 70% of the overall capacity of the plant. I would say that gives you a bit of an impression where we are.
With any production hour being added, there's contribution to the margin. I would say with 2022, we see certainly some improvements, but this will be factored in into our overall profitability.
Okay. Understood.
Okay. The other question was about future cash out of the restructuring programs, correct?
Mm-hmm.
Year to date, we had roughly around EUR 30 million in the first nine months cash out. I expect another EUR 10 million for Q4. We have around EUR 15 million left, of which about EUR 10 million will be cashed out next year, and the remaining EUR 5 million in 2023 and some even later, but that's minor.
Okay. Thank you very much.
You're welcome.
Thanks, Mr. Augustin. The next questions are coming from Peter Rothenaicher from Baader Bank. Peter, may you get your questions, please?
Yeah. Thank you. Firstly, on capacity. Given this strong demand, do you see here any constraints in your capacities? Are you able to work down these order backlog? What is here the situation? Do you plan to expand outside Germany?
Yeah. Thanks, Mr. Rothenaicher, for the question, and a very important and serious one. Indeed, we have limitations in terms of getting all the orders we have on board done. I mean, that was quite clear, but we are planning and scheduling according to what we can achieve. One of the points why we have so long lead times, of course, and as I said, we are booked up to July. The capacities have not followed the same rate as order intake has happened. Since we are, let me say, doing the increased capacity different than in the past, because we don't want to take all the headcount again on board, which we have just laid off.
Our point is that we are building up a supplier base where we have more in the supplier base and more buy than make. This, I don't think I have to explain for you how difficult this is at the moment. We definitely want to stick to that path, and we don't want to answer that with significant increased headcount. That's where we are at the moment. This is one of the big challenges we have since we have to see how capacities have to be adapted for the future. On the other side, we are all aware of that we had years of overcapacities and pricing was suffering very much from that overcapacity.
That's the reason why we stick so much in terms of we are very careful in adding capacity, in particular, as I said, if it's own headcount, it should go more in a supplier network. Of course, it should go more for Krones into countries where they have more flexibility, like Hungary and China, where we have even in building up and reducing headcount, a bigger flexibility. I hope that answers your question. Again, it's a challenge for us, yes.
Yeah.
In particular on the commission side.
Okay. We have the situation that we have to expect that wages will increase definitely in the upcoming years again. I think for the first half next year, you're relatively safe. What is your expectation regarding wage increases, and to what extent are you considering this already in price negotiations with customers? Because you then have to fulfill these orders, I would say end of 2022 or even in 2023 then.
Yeah. Norbert, you want to answer because that follows your material question.
I mean, yes, we have wage increases around the world, very different. As I said, Germany for the first 10 months, we are fixed with around 2.3%. Then we have new union negotiations, which will probably come with a higher result if economic recovery continues. We have other countries, similar increases, but also significantly higher when you look at Turkey, for example, or other countries with high inflation. In general, a customer is not paying for wage increases, and this is our job to compensate with productivity increases internally. Here we have, like always, different programs.
What we have learned in many areas during the pandemic, that digitalization internally of course creates significant productivity increases in how we do business, I mean, just that we do conferences or Capital Market Days digital, that our technicians do not have to travel around the world all the time because local people can do it, and more and more can be done with remote support digitally. So yes, there will be increases like always in the past, but the clear task for us here is to make this up and even overcompensate with internal productivity increases.
The next point is with the topic supply chain challenges, and you have a huge record order book. Normally you would expect that in 2022, you should be able to reach the pre-crisis sales level of between EUR 3.9 billion-EUR 4 billion. How do you consider this? Do you think this might be possible in 2022?
We think it is possible. That also means that the order backlog from its value, not from its content of projects, will pretty much stay stable. If we get EUR 4 billion order intake next year, like this year, and we end up this year with EUR 1.7 billion order backlog, and we make sales of EUR 4 billion next year, then we will have the same order backlog level or similar order backlog level, but of course, with different projects in there.
I would like to reflect a bit more on that you have a background on that. I would say the one which has the biggest impact on supply chain issues is certainly our new machine business in our core. This is related to semiconductor issues, which everybody has. But we have the big advantage that the semiconductors are not directly used from us. Usually, they are used from our sub-suppliers like Siemens, B&R, named, and Allen-Bradley. And the good thing is that most of those components are sitting in our switch cabinets. This allows us for, let me say, a pre-commission at our facilities.
Even in case we are short, we take the components out and ship the machines and can put the components in at very few, let me say, additional working hours to do that, because this is still something which is hooked into the switch cabinet in and out. If you look to the schedule of the second quarter for next year, we have factored in that we might see some problems here in the supply chain. The capacity we plan for it is based on what we see right now from our suppliers. However, we see that that's quite manageable up to now. I have to say there are many measures taken and unconventional ones that we can continue with our production program, and we will face some challenges during installation commissioning on site at our customers.
Since we are learning at the moment and have good processes in place to overcome that, I would say the impact might be not as severe as in maybe in other industries. For life cycle, it's not harmed at all. I would say even for processing and intralogistics, we are pretty sure that the shortage we see right now, we can overcome and manage those projects with very less impact. Overall, I would say yes, we will see in the first half of the year a supply chain issue, and hopefully it's getting not worse than we see right now. I put a disclaimer on that, but up to now, it seems pretty handled.
Okay. My last question is on liquidity. Now you have a luxury situation with huge net liquidity, a huge level of unused credit facility. What do you intend to do with the money? Are there, on the one hand, consideration regarding increasing payout ratio or the situation regarding acquisitions?
Yeah.
Well, acquisitions of course is back on the agenda. We will talk a bit more on the Capital Market Day in two weeks that we share with you our thoughts. It's back on the agenda. Again, reasonable from our point of view. I would say that don't expect from us that we are going into acquisitions, which let me say are putting Krones at risk. On the other side, one learning out of the old acquisitions we had is, don't do it too small because it doesn't matter whether it's EUR 20 million or EUR 100 million, it's a huge efforts to do. I would say we have certainly a sweet spot, but for the sweet spot, you need opportunities. Again, it's back on the agenda.
We have some targets in mind, and talk about them, but it's in an early stage. Yes, it's back on the agenda.
Okay. Thank you.
Welcome.
Thanks to Peter Rothenaicher from Baader Bank. The next questions are coming from Thomas Effler from Deutsche Bank. Mr. Effler.
Can you hear me?
Yes, we can hear you, Mr. Effler.
Well, I just have a follow-up question regarding personnel costs, more in the direction of getting personnel, especially, I mean, Fachpersonal, how you handle that, and is that an issue for you?
Yes, of course, it's an issue for us. In particular, and Norbert said that earlier, that our target is that we get whatever is IT related, whether it's service technicians being on the IT side or whether it's people for the digitization program or automation program. Yes, that's an issue, and we can sell that only in case we are using our international hubs. One big activity goes on in India where we have already a good setup for IT. Second one is China, because we have to serve China a bit different. The activities are even related here to Germany to get those people on board. For the rest, let me say, if you talk about Facharbeiter, which is the German word, I would say that pretty much is online and enhanced.
I don't see that we have a big issue here because Krones is well known in that regard. We are doing a lot of apprenticeships. You know that we have around 500 people in that regard on board, and we maintain those programs. Even we didn't touch that at all with, let me say, the reduction of headcount we had over the last two years. People see, and young people see still a very good perspective for Krones. This we can handle. But IT is an issue, that's for sure.
Okay, thanks. The second question regarding new products, kind of, in the direction of environmentally friendly products, recyclability, new materials. Do we get probably more of an update also on the Capital Market Day or what is-
Yes, absolutely. I mean, a big proportion of that Capital Market Day is how do we address the challenges of our customers. Although, let me say two major points attached, sustainability and recycling will be in the core of what we are going to present. Yes.
Perfect. Thank you.
Welcome.
Thanks, Mr. Effler. I don't see any further questions on the email line. As last time I want to ask somebody from the direct telephone line, if you have questions. Doesn't look like. Okay.
All right. Thank you very much for spending the time with us and I would say, at the end of our conversation today, it's good that we hopefully see each other in 14 days again on the 16th of November, that we can share with you more insights, how we see the mid and long-term future, and how we'd want to drive that forward. Looking forward. I would say looking back, we have done a lot of things which we have promised and kept them, which is, I would say, the important factor, which you have seen today, even the results. We will continue this way. Thanks a lot and have a nice day and a good weekend.
Thank you. Bye-bye.
Bye.