Kendrion (KENDR) Q3 2024 earnings summary

Executive summary

• Completed sale of automotive franchise to Solero, marking a strategic shift to focus solely on industrial operations in Europe, China, and the U.S., with Q3 2024 as the last quarter reporting both activities.

• Rightsizing measures underway, targeting EUR 13.5 million in annual cost reductions and a workforce reduction of approximately 70 FTEs, with cost reductions and workforce adjustments to align with new business focus.

• Net debt reduced significantly to EUR 101.1 million from EUR 160.2 million year-over-year, strengthening the balance sheet.

Financial highlights

• Q3 2024 revenue from continuing operations was EUR 72.7 million, up 1% year-over-year; normalized EBITDA was EUR 8.9 million, and normalized EBITA was EUR 4.8 million.

• Net profit from continuing operations rose to EUR 1.9 million from EUR 1.6 million year-over-year; discontinued operations posted a net loss of EUR 9.0 million, mainly due to the automotive transaction.

• YTD 2024 revenue from continuing operations declined 5% to EUR 225.5 million; normalized EBITDA margin fell to 12.2% from 14.0% year-over-year.

• Net finance costs for YTD 2024 were EUR 4.2 million; effective tax rate decreased to 19.1%.

Outlook and guidance

• Economic environment expected to remain stable in the U.S. but weak in Europe and China through H1 2025.

• Full-year cost savings of EUR 9 million expected by January 2025; new financial targets: EBITDA margin of 15%-18% from 2025, ROIC of 23%-27% by 2027, and annual dividends of at least 50% of normalized net profit starting next year.

• No significant improvement in order book expected in the near term; rebound anticipated in the second half of 2025.