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They are hardly the most glamorous vehicles, but forklift trucks are pivotal to contemporary economic life. Global trade, featuring fragmented supply chains and e-commerce, hinges on efficient logistics. Global demand for forklifters has grown 1.4 times faster than world GDP since 1980 and is expected to outpace economic activity in the future.

Kion Group, the second-largest maker of industrial trucks, is riding this trend. It spun out of gases group Linde in 2006, with KKR and Goldman Sachs taking ownership. The new owners streamlined production and cut costs. Simultaneously, Kion invested in China and India, where it acquired local competitors.

Now, Kion is preparing to raise €500-million ($678.8-million) in a Frankfurt listing. It also wants to collect around €500-million from existing owners, KKR, Goldman Sachs and Weichai Power , a Chinese engine maker which took a stake in 2012. The fresh cash will be used to reduce debt to 1.1 times EBITDA.

So far, the strategy seems to pay off. Good sales are coming from emerging markets, while a growing service business helps to improve margins. Services, a segment that is not just more profitable but also less volatile, already generate 40 per cent of revenue. Overall revenue has grown 50 per cent since 2009 while its operating profit margin has widened to 9.3 per cent.

Weichai bought 25 per cent of the company in a deal putting the enterprise value at €4.6-billion. At about 10 times future operating profit, this was in line with the European machinery sector. However, relative to Jungheinrich AG, the third-largest maker of forklift trucks, it is about 40 per cent dearer, partly because Jungheinrich is smaller, less profitable and less globalised.

Kion is a well-positioned company with decent growth prospects. But in the first quarter of 2013, year-on-year sales stagnated and the profit margin fell below the 2012 average. While gaining market share in Eastern Europe and Latin America, the company lost ground in the U.S, Western Europe and Asia. This may be no more than a blip. But it is a reminder that, for Kion, the heavy lifting will begin after the IPO. And that valuation ascribed by Weichai in 2012 still holds.

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