Release Date: March 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TKH Group NV (STU:TWSA, Financial) reported a record high order book, indicating strong demand and future revenue potential.
- The company achieved a 5.1% organic growth in turnover, showcasing its ability to expand its market presence.
- Significant investments in R&D, totaling over 80 million, are expected to maintain technology leadership and drive future growth.
- The Smart Vision division achieved a record high EBIT margin of 22%, reflecting strong operational efficiency.
- The company has a strategic focus on automation and electrification, aligning with global trends and positioning for future growth.
Negative Points
- The company faced challenges in the serial production at Aims Haven, with delays in achieving full operational efficiency.
- Working capital as a percentage of revenue increased to 17.9%, which is above the target range of 12-15%, indicating inefficiencies.
- Net debt increased by 30 million, raising concerns about the company's leverage and financial stability.
- The Smart Connectivity division experienced lower utilization, impacting return on sales and overall profitability.
- There are risks associated with the production of long-length cables, which could affect delivery timelines and operational efficiency.
Q & A Highlights
Q: Can you provide more details on the divestment strategy and its impact on profitability?
A: The divestment strategy focuses on digitalization activities, which are not at their optimum profitability. We are consolidating capacity, such as fiber optic cabling in Poland, to improve efficiency. The aim is to find a different structure for these activities to enhance their success. (Unidentified_2)
Q: What is the framework for defining excess cash and returning it to shareholders?
A: We aim to maintain a leverage range of around 2, with potential spikes. The framework for excess cash will be detailed further at the Capital Markets Day. (Unidentified_2)
Q: Will the reporting structure change to focus on automation, electrification, and non-core activities by 2026?
A: Details on the reporting structure will be provided at the Capital Markets Day on September 25th. (Unidentified_2)
Q: Is the guidance for sub-sea sales and margins still applicable despite Q1 results?
A: Yes, the guidance for sub-sea sales of 180 million and margins over 16% remains applicable, including one-off costs related to chem. (Unidentified_1)
Q: How is the inventory situation affecting the onshore energy cable business?
A: Inventory levels remain high, impacting 2025. However, we are in a stronger position for turnover outside the Netherlands, with available capacity and shorter lead times compared to competitors. (Unidentified_1)
Q: What are the risks associated with the connectivity business order book for this year?
A: The risks are mainly related to performance and self-help in realizing the order book. We have a plan to manage volumes, including utilizing the Lochum plant, to secure order book translation into turnover and profitability. (Unidentified_1)
Q: How is the machine vision business impacted by global trade shifts, particularly electronics companies moving production from China?
A: The impact is minimal as we have a small turnover in the US and can quickly move assembly capacity. We have expanded our presence in India to follow customers moving out of China. (Unidentified_1)
Q: Can you provide insights into the order book for offshore cabling and its client concentration?
A: The order book is diversified with more than a handful of clients, ranging from 25 million to 200 million in project size. We have flexibility in contracts to manage manufacturing timelines efficiently. (Unidentified_1)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
