Slide 1: Q4 and Full-Year Results 2023
Q4 AND FULL-YEAR RESULTS 2023 Q4 AND FULL-YEAR RESULTS 2023 Amsterdam, 28 February 2024 Amsterdam, 28 February 2023
Slide 2: Agenda
AGENDA 1. Introduction 2. Strategic progress 3. Financial review and dividend proposal 4. Operational update 5. Outlook 6. Q&A 2
Slide 3: Cautionary Note Regarding Forward Looking Statements
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS Certain statements contained in this presentation constitute forward-looking statements. These statements may include, without limitation, statements concerning future results of operations, the Company's share of new and existing markets, general
Slide 4: 2. Strategic progress
KENDRION PRECISION. SAFETY. MOTION. 2. Strategic progress
Slide 5: Kendrion Strategic House
KENDRION STRATEGIC HOUSE STRATEGIC INTENT AUTO BRAKES IAC Growth Cash engine ‘E’ ‘Core’ Growth Cash cow ROBOTS CONTROLS WINDPOWER ENERGY 'ACES' LOGISTICS TRANSPORT CHINA CHINA Growth CHINA KENDRION GLOBAL ORGANIZATION 5
Slide 6: Kendrion China Factory
KENDRION CHINA FACTORY Suzhou Industrial Park 6 [Internal]
Slide 7: 3. Financial review and dividend proposal
3. Financial review and dividend proposal
Slide 8: Financial Highlights
FINANCIAL HIGHLIGHTS Q4 and FY 2023 Key figures - fourth quarter Q4 2023 Q4 2022 delta ▪ Organic revenue decrease of 6% in Q4, due to market weakness in IB Revenue 120,3 129,6 -7% ▪ Stable added value margin as sales price increases in Automotive offset negative mix Normalized EBITDA 1) 10,3 12,0 -1
Slide 9: Industrial
INDUSTRIAL IAC IB Industrial Industrial - fourth quarter Q4 23 Q4 22 Q4 23 Q4 22 Q4 23 Q4 22 ▪ 17% organic revenue decrease in Q4 driven by market weakness in IB Revenue 29,6 30,5 26,3 37,5 55,9 68,0 ▪ Continuing weak markets for capital goods in Germany and China, medical, aviation and electrical a
Slide 10: Automotive
AUTOMOTIVE E Core Automotive Automotive - fourth quarter Q4 23 Q4 22 Q4 23 Q4 22 Q4 23 Q4 22 ▪ Revenue growth Automotive E driven by start of production of new projects Revenue 20,4 17,6 44,1 44,0 64,5 61,6 and increased volumes existing sound and suspension programs. ▪ Stable revenue in Core, infla
Slide 11: Cash Flow and Net Debt
CASH FLOW AND NET DEBT ▪ Normalized net cash from operations of EUR 40.5 million (2022: EUR 40,9 million), include EUR 6,1 million higher payments for tax and interest ▪ Strong Q4 free cash flow of EUR 16.3 million (Q4 22: 16,7 million) leads to EUR 11,3 million normalized free cash for the year (FY
Slide 12: Dividend and Cash Return
DIVIDEND AND CASH RETURN 2017 2018 2019 2020 2021 2022 2023 ▪ Kendrion strives to distribute annual dividend between 35% and Actual Actual Actual actual actual actual proposal 50% of normalized net profit before amortization, giving Dividend per share 0,87 0,87 - 0,40 0,69 0,72 0,45 Pay-out 50% 52%
Slide 13: 4. Operational update
KENDRION PRECISION. SAFETY. MOTION.
Slide 14: IAC
IAC FY 2023 Actuators Controls ▪ New international business acquired – locks ▪ 3 new FIO controllers developed, each addressing and valves, mainly for medical devices and functional safety, low cost or high end washing machines ▪ Inductive heating – first 20 kW solution running ▪ Locking solutions -
Slide 15: IAC - 3T
IAC - 3T FY2023 ▪ Strong revenue growth in 2023 of 23% ▪ More growth in the pipeline: ability to recruit Software and Electronics engineers the gating factor ▪ New office in Drachten, the Netherlands officially open on April 11, 2024 (initially 3 engineers) Key market segments High complex machinery
Slide 16: Industrial Brakes
INDUSTRIAL BRAKES FY 2023 Short term ▪ Sudden, severe market slowdown in H2 2023 ▪ 2021 plus 21%, ▪ 2022 plus 19% ▪ H1 2023 + 1% ▪ H2 2023 –30% ▪ Deployment of Kurzarbeit to protect short term profitability while maintaining growth capacity ▪ Drastic reduction of inventory levels Longer term ▪ Overh
Slide 17: Electrification Continues
ELECTRIFICATION CONTINUES Million units of production CAGR Total 2% BEV 23% PHEV 11% ICE -5% Source: S&P Global Jan 2024 17
Slide 18: China Leads Electrification
CHINA LEADS ELECTRIFICATION BEV and PHEV: million units of production 60 50 50 CAGR 46 41 Total 21% 40 37 China 16% 30 31 Europe 23% 24 22 N.A. 30% 21 20 20 19 19 16 ROW 32% 14 14 12 11 11 11 9 9 9 10 8 8 7 6 7 6 7 5 6 5 4 5 4 3 3 2 3 2 1 1 2 2 1 1 - 2022 2023 2024 2025 2026 2027 2028 2029 2030 Chin
Slide 19: Automotive
AUTOMOTIVE Split in Core and E successful ▪ Split in sales responsibility between Core and E improved ability to raise prices ▪ Better visibility into Core and E R&D investment increased R&D effectiveness ▪ Focus on operational performance of our factories reduced cost of quality and improved direct
Slide 20: Automotive Nominations 2019 - 2023
AUTOMOTIVE NOMINATIONS 2019 - 2023 EUR 1.8 billion business wins since 2019* 350 305 305 300 260 20 * Adjusted for net effect of cancellations and extensions of legacy revenue
Slide 21: Automotive Nominations 2019 - 2023 (2)
AUTOMOTIVE NOMINATIONS 2019 - 2023 (2) Automotive nominations 2019 - 2023 Total Average per Revenue 2023 Book/bill avg Book/bill 2023 year 2019-2023 E 838 168 71 2.3 3.2 Core* 682 136 190 0.7 0.4 Total 1363 273 261 1.0 1.2 * Adjusted for net effect of cancellations and extensions of legacy revenue 2
Slide 22: Commercial Momentum Automotive E
COMMERCIAL MOMENTUM AUTOMOTIVE E FY 2024 AVAS Sound Phantone® product line: new generation ▪ Nomination for new generation interior sound system for a leading European OEM received ▪ Phantone SOPs released in China and Europe for major OEM brands ▪ Proof of Concept started for Active Noise Cancellat
Slide 23: China - Automotive
CHINA - AUTOMOTIVE FY2023 eCD Anticipated fast Growth in China - EV market iCD V V Active ▪ China has become largest and fast-growing EV Damping market in the world. ▪ Already nominated by leading tier1 players in Air Spring suspension system in EV market, including Air ASV Spring and Active Damping
Slide 24: China - Industrial
CHINA - INDUSTRIAL FY2023 IB IAC Wind Power: wind turbines Energy Technology: circuit breaker Commercial focus ▪ Prioritize existing large markets like Wind Power, Robotics, Energy Distribution ▪ Many of these segments are actively stimulated by the government’s 14th 5-year plan EV: electric powered
Slide 25: Progressing on Sustainability
PROGRESSING ON SUSTAINABILITY Concluding 2019-2023 target framework Target Achieved 2023 Accelerating ambitions beyond 2023 Relative reduction of energy consumption 15% 15.3% Relative reduction of CO2 emission 15% 22.9% 25
Slide 26: Outlines 2024-2028 ESG Plan
OUTLINES 2024-2028 ESG PLAN • Achieve a further 70% reduction in CO2 emissions • Establish reporting frameworks for Scope 1, 2 & 3 reporting Natural Capital • Implement gender a diversity ambition at Business Group level for indirect staff, aiming for a 25% improvement over time with a minimum thres
Slide 27: Reduction CO2 Emissions
REDUCTION CO2 EMISSIONS CO2 emission in tons 14000 Energy consumption in CO2 emission in 12000 Year Reduction % kWh tons 10000 2015 39.968.632 12.321 Baseline 8000 2018 36.607.830 7.322 40,6% 6000 2023 34.255.036 6.231 14,9% Target 2028 4000 2028 Estimate 10.276.511 Estimate 1.869 Target 70% 2000 0
Slide 28: Preliminary Overview – Scope 1, 2, 3
PRELIMINARY OVERVIEW – SCOPE 1, 2, 3 28
Slide 29: Gender Diversity 2023
GENDER DIVERSITY 2023 Kendrion total Indirect staff Top-50 Men Women Men Women Men Women 2023 54% 46% 69% 31% 81% 19% 2028 Ambition 67% 33% 67% 33% Kendrion total Indirect staff Top-50 19% 31% Men Men Men 46% 54% Women Women Women 69% 81% 29
Slide 30: Sustainable Sourcing
SUSTAINABLE SOURCING Responsible Business Conduct • Enhance supplier selection and screening • Transitioning from basic risk assessment to integrating ESG metrics into sourcing process • All key suppliers invited to fill out a questionnaire covering the main areas that determine the degree of sustai
Slide 31: 5. Outlook
KENDRION PRECISION. SAFETY. MOTION.
Slide 32: Outlook 2024
OUTLOOK 2024 ▪ Anticipating current economic environment to continue in first half of 2024, inflation expected to decline, timing uncertain ▪ Automotive market stable, expect to benefit from price increases and ramping projects in Automotive E ▪ IB back to healthy profitability as cost base has been
Slide 33: 2025 Targets
2025 TARGETS Revenue EBITDA margin Average organic growth at least 5% At least15% in 2025 per year * ROIC Dividend At least 25% in 2025 Between 35% - 50% of normalized net profit * Invested capital excluding goodwill and intangibles arising from acquisitions 33
Slide 34: Kendrion
KENDRION PRECISION. SAFETY. MOTION.
Slide 35: Kendrion
KENDRION PRECISION. SAFETY. MOTION. }