Kendrion N.v. · EURONEXT:KENDR
Kendrion — Investor Day (September 2024)
69 slides from Kendrion's investor day presentation, Sep 5, 2024
Slide 1: The New Kendrion: Profitability Leads Growth
THE NEW KENDRION: THE NEW KENDRION: PROFITABILITY LEADS GROWTH Full focus on profitability Capital CAPITAL Markets MARKETSDay DAY 5 September 2024 5 September 2024 Amsterdam - the Netherlands Amsterdam - The Netherlands
Slide 2: Agenda
AGENDA ▪ Introduction ▪ The new Kendrion: Full focus on profitability ▪ Business pillars ▪ Industrial Brakes ▪ Industrial Actuators & Controls ▪ China ▪ ESG ▪ Financial targets ▪ Q&A 2 Capital Markets Day | 5 September
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: Light Vehicles in 2014
LIGHT VEHICLES IN 2014 Market volume in million units 4 Source: Roland Berger Component Model Capital Markets Day | 5 September
Slide 5: Light Vehicles in 2024
LIGHT VEHICLES IN 2024 Market volume in million units 5 Source: IHS Markit May 2024 Capital Markets Day | 5 September
Slide 6: Composition of Group Revenue
COMPOSITION OF GROUP REVENUE Actual 2016 Actual 2023 EUR 443.4M EUR 518.5M 6 Capital Markets Day | 5 September
Slide 7: Divesting Automotive: Strategic Rationale
DIVESTING AUTOMOTIVE: STRATEGIC RATIONALE ▪ The automotive industry requires substantial investments in R&D and capex, while offering lower margins compared to industrial markets ▪ There are limited growth opportunities in the US and Europe for an automotive Tier 1- 2 supplier of Kendrion’s scale ▪
Slide 8: Solero Technologies LLC to Purchase Kendrion's Automotive Business
SOLERO TECHNOLOGIES LLC TO PURCHASE KENDRION’S AUTOMOTIVE BUSINESS Key terms of the agreement ▪ Enterprise value of EUR 65M, to be paid fully in cash ▪ The automotive business will be merged with Solero, a Tier 1-2 existing portfolio company of Atar ▪ Cash generation until the closing date will accr
Slide 9: Indicative Revenue Mix Impact
INDICATIVE REVENUE MIX IMPACT Kendrion pre-transaction Kendrion post-transaction Automotive divested: IB IAC addition 40% 25% 17% IB 42% Reported Pro forma revenue mix revenue mix FY 2023 FY 2023 IAC today 25% IAC today Sound & Electronics 41% 8% Automotive China 2% 9 Capital Markets Day | 5 Septemb
Slide 10: Remaining Automotive Activities to Be Integrated into IAC
REMAINING AUTOMOTIVE ACTIVITIES TO BE INTEGRATED INTO IAC Suspension Electronics Sound Existing IAC IAC Pro forma China Revenue (2023) EUR 9.5M EUR 22.3M EUR 20M EUR 127.5M EUR EUR 179.3MM Existing contracts Fully honoured Fully honoured Fully honoured Continued investment Future R&D investments wit
Slide 11: Transaction to Reduce EBITDA by ~EUR 11M
TRANSACTION TO REDUCE EBITDA BY ~EUR 11M Indicative EBITDA impact based on FY 2023 ▪ The transaction values the sold automotive activities at an (Amounts in EUR million) Implied EV / EBITDA enterprise value of EUR 65M 6.5x ▪ Assets included in the transaction scope have a ~19 ~9 combined reported EB
Slide 12: Significant Improvement of Financial Profile
SIGNIFICANT IMPROVEMENT OF FINANCIAL PROFILE Key financials Kendrion ▪ The transaction will structurally improve Kendrion’s margin profile FY 2023 FY 2023 Metric (EUR M) Reported Pro forma ▪ Overhead resources to be aligned with remaining activities. Combined with the discontinuation Revenue 518.5 ~
Slide 13: Agenda
AGENDA ▪ Introduction ▪ The new Kendrion: Full focus on profitability ▪ Business pillars ▪ Industrial Brakes ▪ Industrial Actuators & Controls ▪ China ▪ ESG ▪ Financial targets ▪ Q&A 13 Capital Markets Day | 5 September
Slide 14: Kendrion Strategic House - 2020
KENDRION STRATEGIC HOUSE − 2020 Majority of the business focused on growth Strategic intent: Growth leads profitability Auto IB IAC Growth Growth Cash engine 50% of 25% of 25% of revenue revenue revenue China China China Growth Kendrion global organisation 14 Capital Markets Day | 5 September
Slide 15: Kendrion Strategic House - Oct 2024
KENDRION STRATEGIC HOUSE − 10 OCT 2024 100% of the business focused on profitability Strategic intent: Profitability leads growth AUTO IB IAC Robots Actuators Wind power Control tech Logistics Valves Fluid control CHINA China China Kendrion global organisation 15 Capital Markets Day | 5 September
Slide 16: Strategic Intent
STRATEGIC INTENT To become a global niche leader in selected industrial market segments, with a focus on sustainably growing revenues and achieving a profitability target of at least 15% EBITDA. Characteristics of market segments identified: ▪ A product opportunity with a clear USP, based on our dee
Slide 17: Market Segments in Focus
MARKET SEGMENTS IN FOCUS The new Kendrion: Profitability leads growth Focus Avoid ▪ Niches with underlying growth drivers ▪ Large, commoditised, volume-driven e.g.: segments e.g.: ▪ Energy transition ▪ Automotive* ▪ Medical devices ▪ Consumer products ▪ Automation ▪ Markets overly dependent on ▪ Log
Slide 18: Financial Criteria
FINANCIAL CRITERIA The new Kendrion: Profitability leads growth ▪ New business investment decisions are made per project based on a set of financial criteria: ▪ Added value margin of at least 50% ▪ Steady-state, fully costed EBITDA margin >15% ▪ Lifetime ROI >25% ▪ Minimum lifetime revenue and EBITD
Slide 19: Mergers & Acquisitions
MERGERS & ACQUISITIONS ▪ Reintroduced as a strategic tool ▪ Clear acquisition criteria, disciplined approach: ▪ Targeting industrial companies closely aligned with either IB or IAC areas of focus ▪ Clear strategic fit, directly supporting Kendrion’s strategic objective of profitability-led growth ▪
Slide 20: Kendrion Organisation - Oct 2024
KENDRION ORGANISATION − 10 OCT 2024 Executive Board General Counsel Group IT President Kendrion BG Manager Industrial BG Manager Industrial Asia Brakes Actuators & Controls 20 Capital Markets Day | 5 September
Slide 21: Agenda
AGENDA ▪ Introduction ▪ The new Kendrion: Full focus on profitability ▪ Business pillars ▪ Industrial Brakes ▪ Industrial Actuators & Controls ▪ China ▪ ESG ▪ Financial targets ▪ Q&A 21 Capital Markets Day | 5 September
Slide 22: Facts & Figures: Industrial Brakes
FACTS & FIGURES Industrial Brakes (2023) Employees 2023: 531 (direct: 278 / indirect: 253) Europe 2023: 73% Revenue 2023: EUR 129.7M 5 Production locations The Americas Asia 2023: 7% 2023: 20% >60 Sales partners worldwide Kendrion Industrial Brakes locations Distributors & partners (+ >20 Lenze loca
Slide 23: Estimated Market Sizes for Industrial Brakes
ESTIMATED MARKET SIZES FOR INDUSTRIAL BRAKES Projected market growth 2023-2029 Market Total market size 2023 CAGR** 2023-2029 (EUR M) (estimated) Industrial robots 100–110 ~7% Industrial trucks & AGVs 90–100 ~8% Wind power 30–40 ~9% Electric motors* 290–300 ~5% Distributors & partners 90–100 ~1% Add
Slide 24: Future Revenues in Our Focus Markets
FUTURE REVENUES IN OUR FOCUS MARKETS Based on revenue projections − forecast until 2029 Industrial robots: A steadily growing market for industrial robots. We are further expanding our competencies and supplying high-performance brakes locally from Germany and China Industrial trucks & AGVs: Strong
Slide 25: Industrial Robots
Cobot (7 axes) INDUSTRIAL ROBOTS* Million Euro CAGR ~7% 180-190 100-110 Market size 2023* Installed 6-axis & 7-axis robots: 2023 2029F ~420,000 robots, each with 6 to 7 brakes Global market for brakes: ~2.5 million brakes USPs / Challenges / Next steps: ▪ Brake portfolio adapted for the new generati
Slide 26: Industrial Trucks >2.5T
INDUSTRIAL TRUCKS >2.5T* Million Euro CAGR ~8% 110-120 70-85 Market size 2023* Industrial trucks (Class 1-3): 1,091,000 trucks, each with 1 to 2 brakes 2023 2029F Global market for brakes: ~1.46 million brakes (average) USPs / Challenges / Next steps: Market size 2029 – estimated ▪ Solutions availab
Slide 27: AGV / AMR <2.5T
AGV / AMR <2.5T* Million Euro CAGR ~13% 40-45 20-25 Market size 2023* AGV/AMR with a payload of <2.5t: 325,000 units, each with 1 to 2 brakes 2023 2029F Global market for brakes: ~585,000 brakes USPs / Challenges / Next steps: ▪ Compact brake design combined with low energy consumption Market size 2
Slide 28: Wind Power Market Data
WIND POWER MARKET DATA Electromagnetic brake volume CAGR ~9% 50-55 Market size 2023 30-40 Global installed wind power capacity: 116 GW (all wind turbines) Installed wind turbines with Ø4.5 MW: ~26,000 turbines Global market for brakes: 2023 2029F ~206,000 brakes USPs / Challenges / Next steps: Marke
Slide 29: Electric Motors
ELECTRIC MOTORS* Million Euro Geared motors (Externally mounted brake) CAGR ~5% 400-410 Market size 2023* 290-300 Geared motors: ~26 million motors (~25% with brakes) Servo motors: ~1.8 million motors (~30% with brakes) Global market for brakes: ~7 million brakes 2023 2029F Servo motors (Integrated
Slide 30: Summary: Sales Strategy & Focus Markets
SUMMARY Sales strategy & focus markets ▪ Excellent outlook for further innovations and growth in our focus markets, which are expected to grow by more than 5% per year ▪ Customer-oriented product portfolio development ▪ Invest in products with a clear USP, based on our strong expertise in brakes, an
Slide 31: Agenda
AGENDA ▪ Introduction ▪ The new Kendrion: Full focus on profitability ▪ Business pillars ▪ Industrial Brakes ▪ Industrial Actuators & Controls ▪ China ▪ ESG ▪ Financial targets ▪ Q&A 31 Capital Markets Day | 5 September
Slide 32: IAC Facts & Figures
IAC FACTS & FIGURES Pro forma including retained automotive activities Employees 2023: 992 (direct: 637 / indirect: 355) Revenue Europe 2023: EUR 179.3M 2023: 80% 6 Production locations The Americas Asia 2023: 6% 2023: 14% >12,000 Customers 32 Capital Markets Day | 5 September
Slide 33: Estimated Market Sizes for Industrial Actuators & Controls
ESTIMATED MARKET SIZES FOR INDUSTRIAL ACTUATORS & CONTROLS Market growth projection: 2023-2029 Market Total market size CAGR** 2023-2029 2023 (EUR M) (estimated) Healthcare / Medical • Fluid technology >500 ~5% equipment • Locks & solenoids Sustainability / energy • Inductive heating systems >250 ~9
Slide 34: Healthcare / Medical Equipment
HEALTHCARE / MEDICAL EQUIPMENT ▪ The market is growing steadily at approximately 5% ▪ We develop fluid control products for dialysis, dental, anaesthesia, and laboratory devices ▪ Requirements are constantly increasing due to Medical Device Regulation (MDR): ▪ Traceability, bio-compatibility (cleanl
Slide 35: Energy / Energy Efficiency
ENERGY / ENERGY EFFICIENCY ▪ The market is expected to grow by approximately 9% ▪ Inductive heating can reduce energy consumption by up to 50%: ▪ There is no competition at our efficiency level ▪ The effort required for costumers to change the heating process in their machines is relatively high ▪ T
Slide 36: Manufacturing Automation
MANUFACTURING AUTOMATION ▪ The market is growing with around 6% as the automation of machines continues ▪ Kendrion has a broad and innovative portfolio for AGVs and RGVs: ▪ IB’s slim line brakes, shuttle finger solenoids, drive control, SIL2 safety solution, etc. ▪ 3T’s semiconductor machine service
Slide 37: Smart & Remote Operated Locking
SMART & REMOTE OPERATED LOCKING ▪ Market size exceeds EUR 100M and is growing at approximately 7% ▪ Kendrion is the market leader for professional washing machine locks in Europe ▪ Kendrion offers an extensive product portfolio for solenoids and locks, including motor- and solenoid- driven solutions
Slide 38: Flow Control for Convenient Stores & Beverage Dispensers
FLOW CONTROL FOR COVENIENT STORES & BEVERAGE DISPENSERS Newton ▪ The market is growing at approximately 6% ▪ The beverage dispenser valve market is predominantly US-based ▪ Middleby is a major player in beverage and food service equipment ▪ We have successfully entered the market with Newton CFV ▪ R
Slide 39: 3T Status & Strategy
3T STATUS & STRATEGY ▪ Kendrion 3T offers electronic and embedded controls co-development services ▪ Strategy sharpened, with revenue growth of around 10% per year 100+ innovators 40+ years ▪ Profitability as expected Enschede, Eindhoven, Drachten ▪ High demand in the Netherlands for critical and co
Slide 40: Kendrion Electronics Business
KENDRION ELECTRONICS BUSINESS Sibiu plant ▪ Malente Automotive site to be discontinued from 1 January 2025: ▪ Relocation to Sibiu for a better cost structure ▪ Synergy effects with existing sound production in Sibiu ▪ Existing production will be managed separately and in accordance with IAC standard
Slide 41: Strategic Summary
STRATEGIC SUMMARY ▪ Solid business with significant ongoing innovation, strong intellectual property, pricing power, and top customers ▪ Crucial to identify the right product/market mix in a fragmented market environment ▪ Growth potential has improved across all three technology segments: actuators
Slide 42: Agenda
AGENDA ▪ Introduction ▪ The new Kendrion: Full focus on profitability ▪ Business pillars ▪ Industrial Brakes ▪ Industrial Actuators & Controls ▪ China ▪ ESG ▪ Financial targets ▪ Q&A 42 Capital Markets Day | 5 September
Slide 43: Facts & Figures: China
FACTS & FIGURES China (year-end 2023) Employees 2023: 196 (direct: 67 / indirect: 129) Revenue 2023: EUR 43.5M China (Suzhou) One Kendrion The entire organisation is located at one site ~300 Customers 43 Capital Markets Day | 5 September [Strictly Confidential]
Slide 44: Focused Markets China
FOCUSED MARKETS CHINA Projected market growth 2023−2029 Market Total market size CAGR** 2023- 2023 (EURO M) 2029 (estimated) Industrial robots 50-60 5~7% Robotics & automation Wind power Electric motors * 180-220 3~5% Wind power 20 3~5% Energy 40 ~10% Power transmission Railway Railway 10 ~5% Medica
Slide 45: China: The Largest EV Market
CHINA: THE LARGEST EV MARKET *Data source: Global EV Sales for 2023 - EV Volumes (ev-volumes.com) 45 Capital Markets Day | 5 September [Strictly Confidential]
Slide 46: Winning Localisation Strategy in China
WINNING LOCALISATION STRATEGY IN CHINA ▪ Local for local: ▪ China can achieve independence in business execution and profitability, despite occasional geopolitical risks ▪ Enhance competitiveness in the China market: ▪ Design products to meet local market requirements ▪ Provide fast response and ser
Slide 47: R&D Localisation Progress
R&D LOCALISATION PROGRESS Existing product platform Automotive IAC IB (smart actuators) Linear Valves and solenoid solenoids* Finished 95% 20% 80% 70% ▪ IE ▪ Testing ▪ IE ▪ IE ▪ Testing ▪ Testing ▪ Testing ▪ Design ▪ Design ▪ Design To be completed 5% 80% 20% 30% ▪ R&D: Optimise ▪ R&D: Localise ▪ PM
Slide 48: Innovative Integration - IB
INNOVATIVE INTEGRATION − IB Successful design-in of industrial brakes into electrical power door for EVs in China 2019 2020 2021 2023 2024 2025 Enquiry Prototyping Validation Production Business expansion to Launch 2nd gen more EV models design Direct customer ▪ So far, 8 vehicle models have incorpo
Slide 49: Energy - Power Transmission & Distribution (PTD)
ENERGY − POWER TRANSMISSION & DISTRIBUTION (PTD) Million Euro CAGR ~10% Market size 2023 Investment in power transmission and 30 distribution (PTD) in China: €65,900 million ~20 Demand for isolation switches, circuit breakers, and combined appliances: ~150,000 sets China market for solenoids: ~600,0
Slide 50: Market Focus: Suspension Market in China
MARKET FOCUS Attractive suspension market in China for our smart actuators I II III Air 2028 market potential suspension ASV EV: 23M X 30% X 4 ≈ 28M pcs Non-EV: 8M X 2% X 4 ≈ 0.6M pcs 28.6 X 10-12€ ≈Total EUR 300M 1. Air spring Qty. of car Estimated 4 valves Estimated Average Market produced % of ca
Slide 51: Strategic Summary
STRATEGIC SUMMARY ▪ All China-based business is ‘local for local’: design, sales, engineering support, production, and supply chain ▪ Focus on profitability: EBITDA and ROIC targets in China are aligned with Group goals ▪ One site serving China ensures efficiency and effectiveness EV Railway Medical
Slide 52: Agenda
AGENDA ▪ Introduction ▪ The new Kendrion: Full focus on profitability ▪ Business pillars ▪ Industrial Brakes ▪ Industrial Actuators and Controls ▪ China ▪ ESG ▪ Financial targets ▪ Q&A 52 Capital Markets Day | 5 September
Slide 53: Outline 2024-2028 ESG Plan
OUTLINE 2024-2028 ESG PLAN ▪ Achieve a further 70% reduction in CO2 emissions ▪ Establish reporting frameworks for Scope 1, 2 and 3 reporting Natural Capital ▪ Implement gender and diversity ambition at Business Group level for indirect staff, aiming for a 25% improvement over time with a minimum th
Slide 54: Emissions Scope 1 & 2
EMISSIONS SCOPE 1 & 2 Year CO2 emission in t Emission CO2 emissions in t reduction % 14000 2015 12.321 12000 2018 7.322 40.6% 10000 2023 6.231 14.9% 8000 2023 (pro forma continued 2.186 6000 Target 2028 operations) 2028 656 70.0% 4000 2000 0 2015 2018 2023 2028 54 Capital Markets Day | 5 September
Slide 55: 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% 55 Capital Markets Day | 5 September
Slide 56: EcoVadis Sustainability Rating 2024
ECOVADIS SUSTAINABILITY RATING 2024 Kendrion top 15% of rated companies Year-over-year improvement ▪ 2023: top 19% of rated companies (61/100) ▪ 2022: top 22% of rated companies (58/100) 56 Capital Markets Day | 5 September
Slide 57: Agenda
AGENDA ▪ Introduction ▪ The new Kendrion: Full focus on profitability ▪ Business pillars ▪ Industrial Brakes ▪ Industrial Actuators & Controls ▪ China ▪ ESG ▪ Financial targets ▪ Q&A 57 Capital Markets Day | 5 September
Slide 58: Revenue Development
REVENUE DEVELOPMENT Delivered 2019 − HY1 2024 − Million Euro Growth drivers ▪ Strong 7% CAGR until 2022, followed by decrease in 2023 due to a sharp market decline in industrial manufacturing markets 324 309 271 ▪ Organic revenue grew at 4% CAGR 200 213 228 193 195 209 168 since 2019, excluding disc
Slide 59: EBITDA Development
EBITDA DEVELOPMENT Delivered 2019 − HY1 2024 − Million Euro Industrial drives profitability 16.0% 70 13.9% 14.3% ▪ Industrial margin increased from 14.0% 12.0% 11.1% 60 11.3% 12.1% in 2019 to 17.2% in 2022 and 12.0% 10.6% 11.5% 50 14.1% in 2023 10.0% 10.3% 40 8.0% ▪ Automotive margin decreased from
Slide 60: ROI Development
ROI DEVELOPMENT Delivered 2019 − HY1 2024 Continued operations ROI accretive 20.0% 17.8% 18.0% 15.6% 15.6% ▪ Pro forma ROI from continued operations of 16.0% 14.8% 17.3% in 2023, compared with 13.5% before the 14.0% 13.5% divestment 12.0% 11.7% 10.8% 12.9% 10.0% ▪ ROI HY1 2024 affected by seasonal e
Slide 61: The New Kendrion: Target Financial Model
THE NEW KENDRION: TARGET FINANCIAL MODEL pro forma 2023 2027 Drivers Revenue EUR 309.1 M EUR 360 - 390 M Revenue growth expectation 5-8% CAGR Added value margin 51.0% 50%-52% Margin evolution driven by positive pricing and negative mix effects Staff costs 30.5% 27% - 29% Productivity improvement; le
Slide 62: The New Kendrion Target Financial Model
THE NEW KENDRION TARGET FINANCIAL MODEL Focus on cost flexibility to deal with industry cyclicality Direct / indirect Product costs Flexible workforce employees Majority of costs base Hour bank and Revenue is outsourced material variable pay provides additional flexibility 17% 10% 10% EBITDA margin
Slide 63: Revenue
REVENUE Growth projection underpinned by a tangible project pipeline 2023 (EUR M) CAGR '23-27 Growth drivers Machine building 50 3-5% Industrial automation, electrification Electric motors 45 3-5% Industrial automation, electrification Robotics 10 >10% Industrial automation, collaborative robots Ene
Slide 64: Kendrion Capital Allocation
KENDRION CAPITAL ALLOCATION Shareholder distributions • At least 50% of profit 1) • Share buybacks on the agenda 1) Disciplined capex Targeted M&A • 25% IRR hurdle rates • Clear strategic fit • Capex ~ to depreciation Capital allocation • Tangible synergies to up to 2027 justify premium Strong balan
Slide 65: Kendrion Capital Allocation
KENDRION CAPITAL ALLOCATION 2016 2017 2018 2019 2020 2021 2022 2023 ▪ Consistent payout of approximately Actual Actual Actual Actual actual actual actual actual 50% of normalised net profit; the Dividend per share 0,78 0,87 0,87 - 0,40 0,69 0,72 0,45 2019 dividend was not paid due to Pay-out 53% 50%
Slide 66: 2027 Target Framework
2027 TARGET FRAMEWORK The new Kendrion financial targets Existing 2020−2025 New 2025−2027 Target: 5% annual organic Expectation: 5-8% annual Revenue growth (2019-2025) growth (2024-2027) EBITDA margin At least 15% from 2025 15%-18% from 2025 ROI* At least 25% from 2025 23%-27% from 2027 30%-50% of A
Slide 67: Agenda
AGENDA ▪ Introduction ▪ The new Kendrion: Full focus on profitability ▪ Business pillars ▪ Industrial Brakes ▪ Industrial Actuators & Controls ▪ China ▪ ESG ▪ Financial targets ▪ Q&A 67 Capital Markets Day | 5 September
Slide 68: Kendrion: Precision. Safety. Motion.
KENDRION PRECISION. SAFETY. MOTION.
Slide 69: Thank You
KENDRION J JB 2 ee Sp PRECISION. SAFETY. MOTION.