Kitron Asa · OSL:KIT
Kitron Asa — Investor Day (December 2024)
35 slides from Kitron Asa's investor day presentation, Dec 10, 2024
Slide 1: Thriving in Uncertainty: Growth and Agility in a Shifting Geopolitical Landscape
Thriving in Uncertainty: Growth and Agility in a Shifting Geopolitical Landscape Capital Markets Presentation Kitron Group, 10 December 2024
Slide 2: Agenda
AGENDA • Introduction to Kitron (Peter) • Geopolitics, Macro and sector outlook(Peter) • Sales Strategy and market sector outlook (Hasse) • Defence/Aerospace market sector (Hans Petter) • Capacity and regional growth (Kristoffer) • Finance and outlook 2025 (Cathrin) • Summary, Q&A and wrap up (Peter
Slide 3: Introduction to Kitron
Introduction to Kitron Peter Nilsson President & CEO
Slide 4: Our business
Our business PRODUCT SERVICES Development Industrialisation Sourcing and Manufacturing Logistics and Redesign and Procurement Distribution Repair Kitron is a leading Scandinavian Electronics Manufacturing Services (EMS) company, delivering improved flexibility, cost efficiency, and innovation power
Slide 5: Kitron Group
Kitron Group Nordics & N.A CEE Asia Pacific Norway Lithuania China Sweden Poland India Denmark Czech Republic Malaysia US Germany Headquarters in Norway 60 + 100 000 + 30 + 2500 + 11 300 + Years of sq. m of SMT Employees Countries Engineers experience manufacturing lines 5
Slide 6: Proven track record
Proven track record Revenue EBIT margin Revenue growth EUR million Percentage 648 • Annual growth ~10% (ex. M&A) over a business cycle 7.2% • Customer development • From 4 to 10 factories globally Margin improvement • World-class operations management • Proven economies of scale concept • Opex reduc
Slide 7: Geopolitics, Macro and sector outlook
Geopolitics, Macro and sector outlook Peter Nilsson President & CEO
Slide 8: Navigating Dynamic Markets
Navigating Dynamic Markets Growth Targets • Strength in Nordic and U.S markets 1 400 • Recovery in European markets 2026 1 200 • Geo-politics, Tariffs and localization 1 000 • Regional Opportunities • New Partnerships 800 • New Acquisitions 600 400 200 0 2024 2025 2026 2027 2028 2029 Timing dependen
Slide 9: Market sectors
Market sectors Connectivity: • Expect > 10% growth for 2025 and 20% 2026 as market broadly Connectivity Industry recovers • Sensor and tracking equipment performing well in 2024 and 2025 • We expect a broader strength returning to the sector beyond mid- 220 230 2025 200 190 210 165 182 170 124 138 1
Slide 10: Defence & Aerospace
Defence & Aerospace Beginning of investment cycle European Defence Sales (MEUR) • Nato countries gearing up defence budgets from below 1% to close to 3% or above by 2026 • Close to 80% of European equipment needs were purchased outside of the EU in 2023 • European defence companies outpace the U.S.
Slide 11: Sales growth
Sales growth Hasse Faxe Global Sales Director
Slide 12: Our unique selling points
Our unique selling points Financial strength Global footprint Market sectors with highly specialized requirements and certifications (i.e. defence, medical) Proven track record through excellent customer and project references Speed and agility Sustainability 12
Slide 13: Customers and positioning
Customers and positioning Kitron’s customers are often market leaders in their business. Our partnerships generally date back a decade or more. Sales is strongly characterized by repeat business, continuously renewed by new product generations. Long-term, repeat business Customers often market leade
Slide 14: Growth strategy in market sectors
Growth strategy in market sectors Connectivity: Medium-term 7-15% annual growth • Focus: IOT, sensors, optical networks, intelligent asset tracking • Drive for high utilization, high automation – economies of scale • Take advantage of application know-how and rapid time-to-market Electrification: Me
Slide 15: Medium-term ambition
Medium-term ambition Revenue EUR million 1000 Revenue Growth target 775 EUR 1 billion in revenue 641 648 9% EBIT margin 369 366 335 Timing dependent on market recovery and M&A 261 273 209 210 219 225 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 … Target 15
Slide 16: Defence & Aerospace market sector
Defence & Aerospace market sector H.P. Thomassen VP Nordics & N.A.
Slide 17: Kitron's strategic defence sector positioning
Kitron’s strategic defence sector positioning • Long-standing commitment to the defence sector 56% Spend growth 2022-2024 • Strategic vision that aligns with industry growth • Strong, sustainable partnerships with leading 40% 45% defence OEMs • Management protocols fully compliant with defence contr
Slide 18: Reindustrialization of European Defence Capabilities
Reindustrialization of European Defence Capabilities • Scaling up production capabilities and infrastructure • Qualify further European sites for defence manufacturing • Transfer of production from the Nordics to the US for Defence outlook Kitron US end-user products • Leverage growth opportunities
Slide 19: Reindustrialization of European Defence Capabilities
Reindustrialization of European Defence Capabilities • Focus efforts on systems where Kitron has strong application knowledge 2029 • Long range precision munitions 2028 • Weapon control systems 2027 • Communication equipment 2026 • Radar systems 2025 MEUR • Target companies with disruptive technolog
Slide 20: Capacity and regional growth
Capacity and regional growth Kristoffer Asklöv COO
Slide 21: Main short-term priorities
Main short-term priorities Growth Existing customers Focus on competitiveness to win new products & follow -on generations New customers New customer acquisition is key Acquisitions Actively pursuing value-creating M&A agenda Profitability “More with same” Utilization, capacity adjustments and progr
Slide 22: Global and local strategies
Global and local strategies Local ownership and Global synergies • Common operating model and performance metrics • Strong local management teams with full P&L responsibility • Common systems and a digital toolbox • Standardized equipment strategy gives global leverage • Strong group functions provi
Slide 23: Regional strategies
Regional strategies Regional operations • Nordics • North America • Leverage growth in Defence sector • “Made in America” • High complexity & tough regulatory • Defence and Electrification sector in focus requirements • Market sector diversification • Proximity & Best-in-class service • Asia • Europ
Slide 24: Strategic initiatives for expansion
Strategic initiatives for expansion Targeting 10% annual growth over a business cycle Capacity, capabilities & current facilities Acquisitions • 10 manufacturing sites in 9 countries • Seeking long-term growth through strategic • We will invest in competitive capabilities in acquisitions existing re
Slide 25: M&A strategy
M&A strategy What we look for: Parallel projects ongoing to identify • Geographical expansion acquisition targets: • Customer portfolio • Purchasing power Region Europe • Cost advantage • Europe, Dachs-region • Other synergies • Market sectors: Defence, Medical and • Ability to support existing cust
Slide 26: Expansion updates
Expansion updates Malaysia Norway We have just opened a new manufacturing plant in Malaysia to New site under construction in Longum, Norway. This site will support support our customers different needs in Asia. growth within the Defence & Aerospace sector. Key facts: Key facts: • Area: 3000 m² • Ar
Slide 27: Finance and outlook 2025
Finance and outlook 2025 Cathrin Nylander CFO
Slide 28: Setting the course for sustainable financial success
Setting the course for sustainable financial success CAGR % 5 year Five financial goals Development 2020-2024 20% 23% Revenue: ~10% organic growth 11% 14% 10% 10% Promoting enduring profitability and a robust Targeting 10% yearly organic revenue growth over a business cycle, with M&A adding upside b
Slide 29: Financial Strength
Financial Strength 118 MEUR Positioned for growth Net debt self funded organic expansion 1.5 Investments NIBD/EBITDA capabilities and efficiency 35% M&A Equity / Asset % attractive and growing sectors 29
Slide 30: Free cash flow development and outlook
Free cash flow development and outlook EUR Million EUR Million Free cash flow 70 60 50 42.9 40 30 20 17.1 10 0 2022 2023 2024 2025 2025 - Improved profitability - Reduced Working capital - CAPEX at 1.5% 30
Slide 31: Outlook 2025
Outlook 2025 • Revenue expected between EUR 600 and 700 million, 2024 GUIDANCE reflecting market risk and growth opportunities Revenue: • Operating profit (EBIT) expected between EUR 42 and EUR 63 million EUR 635M to 660M • Midpoint equals EBIT margin of 8.1% EBIT: EUR 44M to 50M • Defence/Aerospace
Slide 32: Summary
Summary Peter Nilsson President & CEO
Slide 33: Key take-aways
Key take-aways • Strong growth on and Defence & Aerospace for 2025 • Other market sectors to recover over 2025 and beginning of 2026 • Over mid to long term Kitron’s ambition is to achieve more than 10% organic growth each year from market sectors and product applications supported by strong megatre
Slide 34: Your ambition. Our passion. Q&A
Your ambition. Our passion. Q&A
Slide 35: Appendix: Definition of alternative performance measures
Appendix: Definition of alternative performance measures Order backlog Return on capital employed (ROCE) Cash conversion cycle (CCC) All firm orders and 4 months of committed customers forecast at revenue EBIT/(Total assets - short term debt) Days of inventory outstanding + Days of receivables outst