• Significantly improved profitability in Industrial Brakes compared to H2 2023, despite ongoing market weakness in Industrial Brakes
• Normalized EBITDA increased by 3% to EUR 16.1 million, up from EUR 15.7 million in Q1 2023
• With a strong emphasis on cashflow management, the leverage ratio remained stable at 2.7, unchanged from Q4 2023 (Q1 2023: 2.6)
• Kendrion to become a pure play Industrial company following the sale of the Automotive business in Europe and United States to Solero Technologies; closing expected in Q3 2024
• Reported net profit from continued operations of EUR 4.2 million, down from EUR 5.3 million in Q1 2023
• Loss from discontinued operations totaled EUR 1.5 million (compared to EUR 0.4 million loss in Q1 2023), which includes EUR 3.8 million measurement to fair value less expected transaction costs
Joep van Beurden, Kendrion CEO:
"We had a strong first quarter, particularly considering the continued challenging market circumstances. Although our revenues were down slightly from a record Q1 last year, our added value margin saw a 70-bps increase, with all Groups contributing to this improvement. We implemented strict cost control measures, particularly in Industrial Brakes, which continues to be impacted by the market slowdown. As a result, we achieved a healthy normalized EBITDA of 16.1 million or 12.1% of revenue, slightly higher than Q1 2023. We continued our emphasis on cashflow management and kept both the net debt and our leverage ratio at the same level as year-end 2023.
Revenues in Industrial Brakes significantly declined year-over-year, even though the negative effect of destocking is behind us. To address this, we have implemented various measures to ensure that IB remains prepared for higher revenue levels in the longer term while aligning our cost base with the current lower activity levels. The measures include the introduction of short-time work in Germany and a thorough review of our business processes to identify opportunities for efficiency gains. As a result, we witnessed a significant increase in profitability in Q1 2024 compared to the second half of 2023.
Industrial Actuators and Controls demonstrated more revenue stability, and Automotive continued its upward trajectory driven by increased volumes and improved margins attributed to continued price increases. Profitability further increased in Automotive Core, and in Automotive E, we benefitted from robust growth on the back of ramping projects especially in smart suspension and in China.
On April 12, we announced an important strategic decision to put our focus exclusively on opportunities within our Industrial Brakes and Industrial Actuators and Controls business groups in Europe, China, and the US as we entered into an agreement to sell our electromechanical Automotive business in Europe and the United States to Solero Technologies LLC ("Solero Technologies") and affiliates. At the same time, we announced to stop all investments in product development for Automotive Sound. We expect that our shift towards a pure Industrial company will enable us to strengthen our position in driving the global transition to electrification and sustainable energy. Over the coming months, we will focus our efforts on the carve-out of our Automotive business and the associated restructuring. We expect to close the transaction in Q3 2024.
For the near term, we expect a comparable economic environment to that of H2 2023 and Q1 2024. We will continue our strict cost measures in IB. With our China factory fully operational, we are prepared for the ramp up of our China based automotive business from Q2 onwards.
Looking ahead we maintain a positive outlook on our long-term prospects as a pure-play Industrial company focused on the global shift towards cleaner energy. We look forward to the opportunity to share our plans and to outline our medium- and long-term ambitions at our Capital Markets Day of September 5 of this year."
Download press release:
https://www.kendrion.com/fileadmin/user_upload/Downloads/Press_releases/PR_2024/FINAL_Press_Release_Q1_2024_results_v9.pdf
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