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Kendrion N.V.
Vesta Building - 5th floor
Herikerbergweg 213
1101 CN Amsterdam
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Q2 and half year results 2021

Kendrion continues strong revenue and profitability growth as demand improves across all segments
  • Economic recovery boosts HY1 revenues by 21% to EUR 234.6 million compared with EUR 194.7 million in HY1 2020
  • Q2 revenue was EUR 119.3 million, 40% higher than Q2 2020 (EUR 85.1 million)
  • Normalized HY1 EBITDA increased by 46% to EUR 31.9 million (HY1 2020: EUR 21.8 million)
  • Q2 normalized EBITDA came in at EUR 15.8 million, almost double the EBITDA over the same period last year (EUR 8.1 million)
  • Normalized net profit before amortization more than doubled: EUR 12.5 million in HY1 2021 (HY1 2020: EUR 5.8 million)
  • Supply chain constraints, demand volatility and increasing raw material prices continued to affect business
  • Financial position remains strong and investments in growth opportunities continue

Key figures


Reported (in EUR million)Q2 2021Q2 2020delta HY1 2021HY1 2020delta
Revenue119,385,140% 234,6194,721%
EBITDA15,77,6107% 32,020,258%
EBITA9,71,2711% 19,77,4166%
Net profit5,40,0N/A 11,33,0277%
EBITDA as a % of revenue13,2%9,0%  13,6%10,4% 
EBITA as a % of revenue8,2%1,4%  8,4%3,8% 
Return on invested capital1 (12 months rolling)    14,0%4,6% 
Normalized (in EUR million)2Q2 2021Q2 2020delta HY1 2021HY1 2020delta
Revenue119,385,140% 234,6194,721%
EBITDA15,88,196% 31,921,846%
EBITA9,81,7478% 19,69,0118%
Net profit before amortization6,11,1455% 12,55,8116%
EBITDA as a % of revenue13,3%9,5%  13,6%11,2% 
EBITA as a % of revenue8,2%2,0%  8,4%4,6% 
Return on invested capital1 (12 months rolling)    15,5%8,5% 

1 Invested capital excluding intangibles arising from acquisitions.        
2 Normalized for one-off costs and benefits. The bridge from reported to normalized figures can be found on page 12.


Joep van Beurden, Kendrion CEO:

“We had a good first half of 2021 with revenues growing on the back of increased economic activity levels compared with those of 2020. In Q2, our EBITDA almost doubled, and over the first six months our EBITDA was significantly better than in 2020.  The COVID-19 pandemic continues to dominate the day-to-day reality of our customers, our suppliers, and our own operations. Navigating the ever-shifting environment of the global pandemic remains a priority.“We had a good first half of 2021 with revenues growing on the back of increased economic activity levels compared with those of 2020. In Q2, our EBITDA almost doubled, and over the first six months our EBITDA was significantly better than in 2020.  The COVID-19 pandemic continues to dominate the day-to-day reality of our customers, our suppliers, and our own operations. Navigating the ever-shifting environment of the global pandemic remains a priority.

Our industrial businesses continued their strong Q1 performance into Q2. Industrial Brakes benefits from a healthy trading environment, supported by the broad energy transition towards electrification. As a result, Industrial Brakes revenues are not only well ahead of last year, but also ahead of the levels we saw in 2019. Industrial Actuators and Controls is experiencing strong demand, stretching our supply chain and production capacity.           

In the automotive market, the internal combustion engine is being superseded as the beating heart of a car by the electronics that control safety and infotainment systems. This is a significant transition in which software and electronics are a major component of the vehicle. In short: car makers are becoming more like technology firms. Kendrion aims to be part of this change, as we continue to invest in actuators for Autonomous, Connected, Electric and Shared mobility (ACES). For HY1 2021, our Automotive performance showed a significant boost compared with the previous year, despite substantial swings in demand and the limited supply of semiconductors and various commodities including steel.

Our China operation is doing well and continues to grow its revenue and pipeline in both our industrial and automotive businesses. The construction of a new factory in Suzhou’s renowned Industrial Park, is progressing according to plan and we expect to move in during the second half of 2022.

Looking ahead we expect the current healthy economic activity levels to continue. However, we also anticipate the supply chain constraints and the volatile order patterns to continue for the remainder of 2021. Longer-term, we believe that the accelerating transition towards clean energy will benefit our three growth areas of Automotive, where we focus on ACES; Industrial Brakes as it boosts demand for wind power, robotics, and various other segments; and China.

We are confident that the global push for clean energy, combined with our strong position in our growth areas of Automotive, Industrial Brakes and China, will help achieve our medium-term financial targets of 5% organic growth between 2019 and 2025, an EBITDA of at least 15% in 2025, and an ROIC of at least 25% in 2025.

Progress on strategy
During the first half of 2021, economic activity has bounced back from the low levels caused by the COVID-19 pandemic. We see great opportunities for growth, as we are positioned in the heart of accelerating mega trends, such as the worldwide transition to renewable energy through the electrification of passenger cars and the increase in demand for wind power and robotics.

We operate in three Business Groups: Automotive Group (AG), Industrial Brakes (IB), and Industrial Actuators and Controls (IAC). AG and IB, as well as China, focus on organic growth. In IAC, the emphasis lies on profitability and cash generation. In China, we are on schedule to build our 28,000 m² manufacturing facility in Suzhou’s Industrial Park, a prime location for technology and advanced manufacturing companies.

The COVID-19 pandemic is still very much a reality. We maintain strict operating procedures in our factories around the world, as we do see occasional COVID-19 flare-ups. The supply and demand situation in especially the automotive market remains volatile. Demand for some of our products is so high that we have deployed additional shifts in the relevant factories. For other parts, constraints in the supply of semiconductors and other materials, limits the demand of our customers. We have managed to navigate the constraints in the supply chain successfully, both on the Industrial and Automotive side. We expect this demand and supply chain volatility to continue during the rest of the year.

The prospects for the longer term continue to be favorable as the world’s transition to clean forms of energy, such as the electrification of passenger cars and several important industrial segments, is accelerating. We expect this trend to offer us additional opportunities for organic growth.

Financial review

Q2 2021
Revenue in Q2 2021 came in at EUR 119.3 million, well above last year’s, when economic activity was at its lowest level, following the first COVID-19 lockdowns. Organic year-on-year revenue growth was 41%. The activity level in all Business Groups also further increased compared to Q1 2021 when EUR 115.3 million revenue was realized.

Revenue in Automotive increased for the fourth consecutive quarter, with a 67% year-on-year organic increase. The Automotive Group continues to experience volatility in demand due to disruptions in the supply chain. The underlying markets for passenger cars and trucks remain strong, while the market for long-haul coaches is weak.

The Industrial segment continued its strong performance in the second quarter of 2021. Industrial Brakes realized an 18% increase in revenue. Demand for Industrial Brakes is strong in all segments and geographies, partly driven by the acceleration in electrification across key segments such as wind power, internal logistics, and robotics. Revenue in Industrial Actuators and Controls increased by 24% compared with the same period in 2020. We continue to optimize production within Industrial Actuators and Controls based on its strong orderbook.

HY1 2021
Consolidated revenue for the first half of 2021 was EUR 234.6 million (HY1 2020: EUR 194.7 million), a 22% increase on an organic basis.  

Automotive realized 29% organic growth with revenue coming in at EUR 123.0 million (HY1 2020: EUR 97.0 million). Revenue for Industrial Brakes in the first half of 2021 grew organically by 15%, coming in at EUR 61.9 million (HY1 2020: EUR 54.1 million). With INTORQ included on a pro-forma basis, activity in Industrial Brakes significantly exceeds the pre-pandemic level. Revenue within Industrial Actuators and Controls increased by 14% to EUR 49.7 million from EUR 43.6 million in HY1 2020.

Comparable revenue in China is influenced by wind power subsidies that have boosted results since Q2 2020. Revenue in the wind power segment continued to be strong in HY1 2021, although at a lower level than last year. Overall revenue in China increased by 12% in the first half year.

Q2 2021
Normalized group operating result before depreciation and amortization (EBITDA) almost doubled compared with Q2 2020 (EUR 8.1 million) to EUR 15.8 million. The EBITDA margin of the Group increased from 9.5% in Q2 2020 to 13.3% in Q2 2021.

The increased normalized profitability compared to the second quarter of 2020 is the result of operating leverage from the higher revenue. Total staff and other operating costs as a percentage of revenue decreased to 35.5% compared with 38.8% in Q2 2020, when cost levels were reduced by temporary cost measures in response to the revenue decline that we experienced in Q2 2020.

Although we have managed to successfully navigate the supply chain constraints in both Industrial and Automotive, the demand volatility and increasing material prices affected our profitability. In particular the Automotive Group faces an imbalance in demand, with material shortages and order volatility leading to lower production efficiency in segments with strong demand, while the long-haul coach segment continues to face weak demand.

HY1 2021
Normalized EBITDA in HY1 2021 increased by 46% to EUR 31.9 million (HY1 2020: EUR 21.8 million). The operating leverage was 25%, despite the substantial temporary cost savings in HY1 2020 in response to the COVID-19 crisis. The normalized EBITDA margin increased to 13.6% (HY1 2020: 11.2%).

Our Automotive activities showed a strong increase in normalized EBITDA to EUR 12.8 million compared with EUR 7.6 million in HY1 2020. The EBITDA margin of Automotive improved to 10.4% (HY1 2020: 7.8%). Normalized EBITDA for the Industrial activities increased to EUR 19.1 million from EUR 14.2 million in the same period last year. The EBITDA margin of the Industrial activities came in at 17.1%, compared with 14.5% in the first six months of the previous year.

The added value margin decreased slightly to 48.6% (HY1 2020: 49.0%), mainly caused by the relatively higher share in Automotive revenue compared to the first half year of 2020. Increasing material prices affected the added value margin as well, mainly in Industrial Brakes, caused mainly by a lag between rising raw material prices and increased sales prices. Total staff and other operating costs increased by EUR 10.4 million due to the higher activity levels and the above-mentioned temporary cost reductions in HY1 2020. As a percentage of revenue, the operating expenses decreased to 35.8% (HY1 2020: 37.8%). Depreciation charges decreased by EUR 0.5 million to EUR 12.3 million.

Normalized net finance costs of EUR 2.0 million in the first six months of 2021 were higher than in the same period last year (HY1 2020: EUR 1.6 million), mainly due to a higher applicable interest rate mark-up. The normalized effective tax rate in the first six months of 2021 was 29.3% compared with 21.3% in HY1 2020, when the effective tax rate was positively affected by the recognition of tax losses.

Normalized net profit before amortization of intangibles arising on acquisitions in HY1 2021 was EUR 12.5 million (HY1 2020: EUR 5.8 million). Normalized earnings before amortization per share amounted to EUR 0.85 (HY1 2020: EUR 0.39).

Financial position
We continue to have a strong focus on cash flow generation. With our improved profitability we have ample room to invest in working capital and capital goods to facilitate further growth opportunities. The net debt position stood at EUR 112.7 million, which is slightly higher than the EUR 109.7 million at the end of Q1, but substantially below the EUR 130.5 million as on 30 June 2020. The increase from Q1 2021 was due to the EUR 4.3 million cash portion of the dividend.

Free cash flow before acquisitions came in at EUR 4.2 million negative in the first half year (HY1 2020: EUR 4.2 million negative). This was due to traditionally higher activity and corresponding working capital levels compared to year end. Free cash flow in Q2 came in at EUR 1.2 million compared with EUR 2.2 million in Q2 2020. The leverage ratio based on total net debt divided by 12 months rolling EBITDA reduced slightly to 2.1 at the end of Q2 2021, well below the covenant level of 4.75 and the long-term covenant of 3.25 which will be applicable from 30 September 2021 onwards. Based on its performance and financial position, Kendrion was able to terminate the covenant relief waiver it previously agreed on with the main banking syndicate to lift some restrictions and information undertakings early.

Capital expenditure is also affected by increasing lead times resulting from supply chain constraints. Investments in HY1 2021 totaled EUR 10.1 million, below the depreciation level of EUR 12.3 million. We expect investments to increase in the second half of 2021 and end up above depreciation in 2021, partly due to the construction of our new factory in China. Kendrion’s solvency ratio remains strong at 46.6% compared with 43.3% at the end of June 2020.

Number of employees
The number of employees at the end of the second quarter was 2,647, including 260 temporary employees (Q1 2021: 2,531 employees).

The global economy has recovered in the past few quarters and underlying demand is strong post COVID-19. However, we see a continuation of constraints in the supply chain, demand volatility and increased raw material prices. That said, the broad-based energy transition is advancing at an ever-increasing pace and longer-term, we expect demand for our products to grow in all three Business Groups.

We continue to see ample growth opportunities in our focus areas of Automotive, Industrial Brakes and China, and have a healthy product pipeline for future products. We remain positive about our business fundamentals, with our main objective being the delivery of sustainable profitable growth. We are well underway to achieve our medium-term targets.

Audio webcast interim results 2021
Kendrion CEO Joep van Beurden and CFO Jeroen Hemmen will present the interim results on Wednesday, 25 August 2021 at 11:00 a.m. CET. Click this link to view the webcast.

A live audio webcast will be available on https://www.kendrion.com with playback functionalities.


Amsterdam, 25 August 2021
The Executive Board

For more information, please contact:
Kendrion N.V.
Mr Joep van Beurden
Chief Executive Officer
Tel: +31 85 073 1504
Email: IR@kendrion.com