• Revenue: Declined by EUR96 million to EUR788 million.
• EBIT: Improved to EUR18.7 million from negative EUR19.7 million in 2023.
• EBIT Margin: Increased to 2.4% from negative 2.2% in 2023.
• Fixed Cost Reduction: Lowered by more than EUR30 million.
• Return on Capital Employed: Improved from negative 5.9% in 2023 to 5.8% in 2024.
• Free Cash Flow: Positive EUR4.2 million in Q4; full year negative EUR20.3 million.
• Business Wins: EUR1526 million in lifetime revenues.
• Net Debt to EBITDA: 2.5%.
• Equity Ratio: Improved to 33.7% from 30.2% last year.
• Cash Balance: EUR84.3 million at year-end.
• Workforce Reduction: Reduced by 570 full-time employees, or 11% during 2024.
• Warranty Expenses: Higher by EUR6.5 million in Q4.

• Warning! GuruFocus has detected 5 Warning Signs with KGAUF.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Kongsberg Automotive Holdings ASA (KGAUF) improved its EBIT to EUR18.7 million from a negative EUR19.7 million in 2023, showcasing successful cost reduction measures.
• The company achieved a significant reduction in its fixed cost base by more than EUR30 million, laying a foundation for future profitable growth.
• Business wins amounted to EUR1526 million, indicating strong customer confidence and alignment with evolving market needs.
• Return on capital employed improved from negative 5.9% in 2023 to 5.8% in 2024, reflecting better operating results and reduced capital employed.
• Kongsberg Automotive Holdings ASA (KGAUF) joined the UN Global Compact and improved its Ecova score, demonstrating a commitment to sustainability.

Negative Points

• Revenues declined by EUR96 million to EUR788 million due to weakened demand across all customer markets.
• Free cash flow for the full year remained negative at EUR20.3 million, despite improvements from the previous year.
• Warranty expenses increased in 2024 compared to 2023, impacting year-to-year financial performance.
• The company faced challenges with declining sales in Europe and North America, particularly in the commercial vehicle and industrial applications sectors.
• The driveline business is being wound down, leading to expected revenue declines in this segment over time.

Q & A Highlights

Q: How do you see the market forecast for the commercial vehicle production? Do you believe that the market forecasts are realistic? A: Christian Johansson, President and CEO, stated that the market forecasts have been reasonably accurate, and they believe in them based on customer contacts and other information sources. There is a pent-up demand with aging truck fleets, and they expect strong market growth until 2028. However, for 2025, they anticipate the market to remain at the same level as 2024, despite increased market uncertainty.

Q: If all of Trump's tariffs are implemented, how will KA handle it? A: Christian Johansson explained that KA seeks full compensation for increased customs tariffs from customers to recover additional costs. Being locally present in North America is crucial, and depending on tariff regulations, they might adjust supply chains to optimize costs in the North American market.

Q: What was the warranty expense related to, and do you expect more in the next quarters? A: The warranty issue is related to a drive control system product produced between 2019 and 2022. The problem became visible only in late 2024. KA is taking costs to rectify the issue and has included provisions for 2025 based on current estimates.

Q: You are guiding for improved EBIT margin in 2025. What are the assumptions behind this? A: Christian Johansson mentioned that despite market uncertainties, KA has laid a foundation with a lower cost base and is working on improving product portfolio profitability. They expect a potential upside in revenues in the second half of 2025, in line with external forecasts and customer discussions.

Q: What is the status of the driveline business, and is KA considering a sale? A: The status of the driveline business has not changed. KA is not actively developing this business and will continue to wind it down as customer contracts end. This approach is considered financially best for KA, and revenues will decline over time.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.