The 1H 2025 results of TKH group are out ($TKEWA.AS)
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Link to read an overview and analysis on the company:
Let's dig into the 1H 2025 results: Overall the results are weaker than 1H 2024. I am not a fan of adjusted profit lines so I will focus on the accounting numbers. We see 1% decline in sales with a lower gross margin which reduces the gross profit to 80 million euro from 95.8 million in 1H 2024. There is a line of 16.3 million euro presented as one-off which is the other main contributor to the weaker net profit.
source:https://storage.tkhgroup.com/cms/assets/TKH_H1_2025_Analyst_Presentation_035558b7cc.pdf
source:https://storage.tkhgroup.com/cms/assets/TKH_H1_2025_Analyst_Presentation_035558b7cc.pdf
Let's see how the different business lines are coping and what is the outlook for 2025. The three revenue streams are: 1. Smart vision systems 2. Smart manufacturing systems (85% of which is tire building systems) 3. Smart connectivity systems (55% energy; 25% digitalization)
Smart Vision Systems:
Very strong performance. This business is almost 30% of revenue in 1H 2025. And order book is growing strong.
source:https://storage.tkhgroup.com/cms/assets/TKH_H1_2025_Analyst_Presentation_035558b7cc.pdf
Smart Manufacturing Systems:
Given the weakness of the automotive sector it is understandable that Tier 1 tier producers are cutting on CAPEX. Order book is weak - but manageable. It is a light ray that the management expect a healthy order intake in H2 2025. Margins are staying attractive & healthy.
source:https://storage.tkhgroup.com/cms/assets/TKH_H1_2025_Analyst_Presentation_035558b7cc.pdf
Smart Manufacturing Systems:
In terms of revenue numbers look ok but in terms of profit it seems there is an issue. Main problem are production issues with the delay of ramping up serial production of offshore wind inter-array cables, affecting revenue in late 2024 and 1H 2025. Those are produced in Eemshaven plant. It is encouraging that the management is expecting a catch-up in H2 2025.
source:https://storage.tkhgroup.com/cms/assets/TKH_H1_2025_Analyst_Presentation_035558b7cc.pdf
Some more back history on the Eemshaven Production problems: 1. Ramp-up Challenges in Smart Connectivity TKH reported that serial production ramp-up of offshore‑wind inter-array cables at the new Eemshaven facility was postponed, which negatively impacted revenue recognition in the third quarter of 2024 and carried ramifications into early 2025. 2. Start-up and Underutilization Costs In its 2024 results, TKH highlighted that the Smart Connectivity segment’s EBITA dropped sharply (‑61.9%) due to a combination of: Start-up and ramp-up costs of the new Eemshaven factory, and Low utilization levels, particularly for inter-array and fiber‑optic cable production. 3. “Critical Production Process” Fixes In the Q1 2025 analyst presentation, TKH noted that it had resolved issues in a “critical production process”, allowing for shorter-length production in less complex stages to proceed successfully. Serial production was expected to ramp up “shortly.” 4. Progress by Q1 2025 By Q1 of 2025, TKH reported “good progress towards stable manufacturing” at Eemshaven. They successfully manufactured and delivered several longer-length inter‑array cables in April, signaling that earlier production constraints had been partly overcome. And as I mentioned above the management is expecting some catch-up to be done in 1H 2025.
Overall I think that the business is doing very good. Expectations are for smart connectivity systems to start overperforming in 2H 2025, smart vision to continue with its overperformance and for the smart manufacturing systems to have a weak 2025 but to start recovering in 2026.
source:https://storage.tkhgroup.com/cms/assets/TKH_H1_2025_Analyst_Presentation_035558b7cc.pdf
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Disclosure: The views expressed in this analysis are my own and are provided for informational purposes only. This content does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. I may have a financial interest in the companies discussed. Always conduct your own due diligence or consult a registered financial advisor before making investment decisions.