Kendrion (KENDR) CMD 2024 summary

Strategic transformation and business focus

• Transitioning to a pure-play industrial company by divesting most automotive activities to Solero for €65 million, with closing expected October 10, 2024; retained automotive activities integrated into IAC and subject to industrial profitability standards.

• Shifting from a growth-led to a profitability-led strategy, with 100% of the business now focused on profitability, targeting high-margin industrial segments in Europe, China, and the U.S.

• IB and IAC will represent a combined 83% of revenue post-divestment, focusing on robotics, wind power, logistics, healthcare, automation, and energy efficiency.

• Annual cost savings of €9 million expected from R&D termination and organizational rightsizing, with a one-off restructuring charge of €9 million in H2 2024.

• M&A reintroduced as a strategic tool, with disciplined criteria focused on strategic fit, profitability-led growth, and tangible synergies.

Financial guidance and capital allocation

• Pro forma 2023 revenue as a pure-play industrial company would have been €309 million with a 13.9% EBITDA margin; 2027 revenue expected between €360-390 million.

• New financial targets: 5%-8% annual revenue growth, EBITDA margin of 15%-18% from 2025, and ROI of 23%-27% by 2027.

• Dividend policy increased to at least 50% of normalized net profit from 2025, with share buybacks considered depending on leverage and M&A pipeline.

• CapEx and R&D spending to remain stable and aligned with depreciation, supporting growth with existing production footprint and capital efficiency.

• Net debt/EBITDA reduced to ~2.2x, maintaining a strong balance sheet.

Market opportunities and operational highlights

• IB leverages a global footprint, focusing on robotics, wind power, logistics, and medical markets, with strong positions in niche segments and a modular product approach.

• IAC targets healthcare, energy efficiency, automation, remote locking, and beverage dispensing, emphasizing high-value, long-term customer relationships and innovation.

• China operations consolidate all product lines in a single site, enabling one-stop solutions and local-for-local strategy, with double-digit growth expected in key markets like EV substations and medical.

• R&D localization in China to be completed by 2026, supporting faster and more competitive product development.

• New business investments require at least 50% added value margin, 15% EBITDA, 25% ROI, and risk-sharing with customers; volume-based pricing and co-investment are standard.