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Investing.com -- Shares of Kontron fell by 4.5% following the release of their fourth-quarter results, which showed that sales missed consensus expectations by 13%.
The company reported 4Q24 sales of €477m, while EBITDA reached €50.4m, falling short of consensus by 14% with a margin of 10.6%. Despite these figures, net income was only 1% below the street’s expectations, as tax benefits and financial results helped mitigate operational shortfalls.
The backdrop for Kontron’s underperformance in the final quarter of 2024 was primarily due to a prolonged slowdown in the solar sector and delays in wall box deliveries. Nevertheless, the company’s backlog grew to €2,078m, a 1% quarter-over-quarter increase, with a book-to-bill ratio of 1.23x for the year.
This backlog is reportedly comprised of high-margin orders from the Software (ETR:SOWGn) and Solutions segment, which continues to be the company’s best-performing division.
Software & Solutions posted €152m in sales for the fourth quarter, an impressive 84% increase year-over-year (YoY), although its EBITDA margin contracted to 13.3% from 17.7% in 4Q23. The Europe segment also saw growth, with sales up 4% YoY and an improved EBITDA margin of 7.5%.
However, the global segment’s sales growth decelerated to 4%, a marked slowdown from its previous mid to high teens growth rate, even as it maintained a strong margin of 16.3%.
Looking ahead, Kontron reaffirmed its FY25 guidance, initially provided in January, projecting revenue in the range of €1.9-2.0bn, which would represent double-digit organic growth.
The anticipated EBITDA is set at a minimum of €220m, exceeding an 11% margin and aligning with expectations for improving macroeconomic conditions and growth driven by transportation projects, increased defense spending, and the ramp-up of wall boxes.
The proposed dividend has been increased by 20% YoY to €0.60 per share, signaling confidence in the company’s ability to generate cash flow despite the recent setbacks.
In a comment from Jefferies, analysts noted, "We expect a less active M&A year in 2025 as net debt stands at €163m (vs. €121m net cash in FY23)."
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