Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kitron ASA (FRA:KP5, Financial) reported a strong performance in the defence and aerospace sector, with a 22% year-over-year growth and a 23% increase in order backlog.
- The company secured several new contracts, including a NOK 15 million maritime IoT deal and a USD 5 million US Army defence contract, expanding its footprint in the US.
- Kitron ASA (FRA:KP5) is investing in new facilities in Norway and Sweden to accommodate growing demand, indicating confidence in future growth.
- The underlying EBIT margin improved to 8.4% when excluding one-time costs, showcasing strong operational control.
- The order backlog reached NOK 505 million by January 2025, the highest level since mid-2023, driven by defence aerospace and electrification sectors.
Negative Points
- Overall revenue declined by 16.5% year-over-year, with significant drops in key sectors such as connectivity and electrification.
- The company faced a 34% decline in the CE market, primarily due to weakened electrification demand.
- Kitron ASA (FRA:KP5) incurred NOK 4.8 million in one-time restructuring costs in early 2024.
- The electrification sector showed a 32% decline year-over-year, with consumer-driven electrification remaining uncertain due to economic pressures.
- Operating cash flow was below last year's level, and net income decreased to NOK 4.9 million from NOK 12.3 million the previous year.
Q & A Highlights
Q: You're expecting a material step up in electrification in 2026. What is driving this growth?
A: Peter Nilsson, CEO: We anticipate a return of segments like EV charging starting mid-year. This is expected to contribute significantly to the growth in electrification.
Q: What drove the sequential decline in connectivity in Q4?
A: Peter Nilsson, CEO: The decline was due to disengagement with a customer in maritime satellite communication and reduced volumes from a large customer in Denmark.
Q: Are you seeing signs of demand stabilization in electrification and industry?
A: Peter Nilsson, CEO: The latest order backlog indicates stability with minor fluctuations. Strong growth is observed in defense, with electrification also contributing to the increase.
Q: What caused the weaker margin in the Nordics and North America in Q4?
A: Peter Nilsson, CEO: Efficiency losses during ramp-up in Norway and material supply issues affected productivity, impacting margins.
Q: Could you comment on the decision to expand capacity and its relation to dividends?
A: Peter Nilsson, CEO: The expansion is driven by high demand, particularly in Norway and Sweden. The dividend decision is more about maintaining flexibility for M&A activities rather than being directly related to capacity expansion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
