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The Netherlands
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Kendrion contact
Head Office
Kendrion N.V.
Vesta Building - 5th floor
Herikerbergweg 213
1101 CN Amsterdam
The Netherlands
Contact now

Q2 and half year results 2020

Kendrion shows resilience and consolidates financial position on the back of strong performance in Industrial and China despite COVID-19 related downturn
  • Strict operating procedures implemented to continue safe and responsible production in all factories around the world
  • HY1 revenue of EUR 194.7 million 10% lower than HY1 2019 (EUR 217.3 million)
  • Normalised HY1 EBITDA of EUR 21.8 million (HY1 2019: EUR 25.4 million)
  • Q2 revenue at EUR 85.1 million, 22% lower than Q2 2019, and 34% lower excluding INTORQ
  • Q2 normalised EBITDA of EUR 8.1 million, or 9.5% of revenue compared to EUR 12.7 million or 11.7% in Q2 2019
  • Normalised net profit before amortisation of EUR 5.8 million in HY1 2020 (HY1 2019: EUR 9.1 million)
  • Industrial EBITDA of EUR 14.2 million in HY1 up 32% compared to HY1 2019
  • INTORQ fully integrated, contributing significantly to the Group’s profitability and cashflow
  • Strong liquidity position with EUR 54.3 million availability in cash and undrawn facilities
  • Agreement in principle on financial covenant relief with banks which substantially increases headroom


Key figures

Reported (in EUR million)Q2 2020Q2 2019delta HY1 2020HY1 2019delta
Revenue85.1109.0-22% 194.7217.3-10%
EBITDA7.611.1-31% 20.223.8-15%
EBITA1.25.1-76% 7.411.8-37%
Net profit0.04.5-100% 3.08.8-66%
EBITDA as a % of revenue9.0%10.2%  10.4%11.0% 
EBITA as a % of revenue1.4%4.6%  3.8%5.4% 
Return on invested capital (12 months rolling)    2.6%7.2% 
Normalised (in EUR million)Q2 2020Q2 2019delta HY1 2020HY1 2019delta
Revenue85.1109.0-22% 194.7217.3-10%
EBITDA8.112.7-36% 21.825.4-14%
EBITA1.76.7-75% 9.013.4-33%
Net profit before amortisation 1.14.4-75% 5.89.1-36%
EBITDA as a % of revenue9.5%11.7%  11.2%11.7% 
EBITA as a % of revenue2.0%6.1%  4.6%6.2% 
Return on invested capital (12 months rolling)    4.7%8.7% 


Normalised in Q2 2020: EUR 0.5 million (EUR 0.4 million after tax) restructuring costs
Normalised in Q2 2019: EUR 1.6 million (EUR 1.2 million after tax) claim settlement, EUR 2.0 million positive release currency translation reserve, EUR 0.3 million income tax expense related to tax audit
Normalised in HY1 2020: EUR 1.1 million (EUR 0.8 million after tax) restructuring costs, EUR 0.5 million (EUR 0.4 million after tax) acquisition costs 
Normalised in HY1 2019: EUR 1.6 million (EUR 1.2 million after tax) claim settlement, EUR 2.0 million positive release currency translation reserve and EUR 0.3 million income tax expense related to tax audit
Normalised Return on invested capital (12 months rolling) includes 12 months profitability of INTORQ on a pro-forma basis

Joep van Beurden, Kendrion CEO:
“Almost half a year into the global COVID-19 pandemic, the world we live in has changed in an unprecedented way. As our priority, we have implemented strict measures to protect the health and safety of our employees. We have had nine infected colleagues, seven have fully recovered and two are recovering. In no instance has a Kendrion employee infected another employee. We have been able to continue production in all our factories in a safe and responsible way and we continue to deliver to our customers around the world.

Although the global economic activity level is increasing, we are still substantially below pre-COVID-19 levels with most advanced economies shrinking by around 10% year-on-year in Q2. In Europe and in the US, passenger car purchases were severely impacted in April and May. The Industrial segment was impacted to a lesser extent and, including the contribution of INTORQ, we were able to grow our Industrial revenue and its profitability in Q1 and Q2. INTORQ, now an integral part of our Industrial Brakes business unit, performed ahead of expectations. China – affected heavily in Q1 by COVID-19 – is another highlight, as the strong recovery in Q2 compensated for the weaker Q1, both in terms of revenue growth and profitability. In addition to the voluntary and temporary salary reduction of senior management, throughout Q2 we have applied strict cost control measures and have made full use of available support packages from governments in countries in which we operate.

With INTORQ fully integrated, and China well over 10% of the Group’s revenue, our profile has changed. We invest in growth opportunities in Automotive, Industrial Brakes and China. The focus in Industrial Actuators and Controls is on profitability and cash generation.

Looking ahead, we expect the pandemic to continue to determine our (business) life. We withstood the shock of the COVID-19 crisis, adjusted our cost levels and stabilised our financial position. We have reached agreement in principle with the banks on an increased buffer within our financial covenants. Kendrion's product pipeline is healthy and the work on all future products is continuing. We remain positive about our underlying business fundamentals for the longer term and work diligently to ensure that beyond COVID-19, our prospects are better than ever.”

Update on COVID-19
In all of Kendrion's facilities, we have strict operating procedures in place to protect the health and safety of our employees. We will keep in place and adjust these measures as appropriate and for as long as it is needed. To date, Kendrion has had nine known COVID-19 infections, seven are fully recovered and two are recovering. So far, there are no secondary infections at Kendrion identified. 

As part of our strict cost control programme, we continued to make use of available short-time work arrangements in all European facilities. Discretionary spending has been restrained and we have suspended all uncommitted and non-urgent capital expenditure.

Kendrion's supply chain is fully operational. Kendrion continuously monitors suppliers that are critical to its supply chain and is committed to reducing its cash contained in working capital in a period where revenues are under pressure.

Progress on strategy
Kendrion has built a robust and lean organisation, operating in three business units: Automotive Group (AG), Industrial Brakes (IB) and Industrial Actuators and Controls (IAC). We maintain our focus on operational effectiveness and cost levels and continue investing in growth in Automotive, Industrial Brakes and China. In IAC the focus is on profitability and cash generation. 

Within the Automotive Group, we have continued to make progress with our five Lighthouse platforms. We see significant interest in solutions for sensor cleaning and our solution for the so-called acoustic vehicle alerting system (AVAS). Furthermore, we have received additional nominations in active suspension. We are prioritising capital investments for revenue generating projects for which we have received nominations over the last years. 

The COVID-19 effect on IB in Q2 has been limited and revenue was ahead of its original budget. IB experienced strong orders in the wind power segment in China, driven by Government subsidies for clean energy. Within Industrial Brakes, INTORQ performed ahead of expectations. The realisation of the targeted EUR 2.0 million run rate for cost synergies as per the end of 2020 is on track. 

Revenue in IAC decreased in the second quarter as demand from customers in textile machinery and aviation was weak, with customers in the medical segment and infrastructure being more stable, IAC experienced some COVID-19 related supply chain interruptions resulting in a greater than normal revenue backlog.

China had a strong second quarter as the economy experienced a ‘V-shaped’ recovery, with current volumes of passenger cars sold back at pre-pandemic levels. Our pipeline is strong, and we continue to invest in production equipment, our local workforce and supply chain. The training of the Chinese R&D team by our German engineers is now fully virtual. We expect continued growth in our Chinese operation as we add to our project pipeline in all three business units.

Kendrion will host a Capital Markets Day on 10 September 2020, to present a comprehensive strategy update for the enlarged Kendrion Group, reflecting our changed profile. This will include updated medium-term financial targets. 

Financial review

Q2 2020
Revenue in the second quarter of 2020 came in at EUR 85.1 million, a decrease of 22% compared to the second quarter of 2019 (EUR 109.0 million). Excluding the revenue contribution of INTORQ, organic revenue decreased by 34%. Exchange rates had a limited adverse effect of 0.1% on consolidated revenue. 

Automotive revenue decreased by 44% in the second quarter as a result of the global decline in passenger car and commercial vehicle production, most notably in April and May 2020. Revenue recovered sharply in June 2020, but still at a lower level than pre-COVID-19. The Industrial activities increased by 15% compared to the second quarter of 2019 and generally showed more robustness. Organic Industrial revenue decreased by 18%.

Revenue in China showed a strong recovery from the first quarter with 13% organic growth compared to the same quarter last year and 63% higher revenue compared to the first quarter of this year when China faced the largest impact from the COVID-19 pandemic. Both the Industrial and Automotive activities in China reported year-on-year growth. 

HY1 2020
Overall revenue for the first half of 2020 decreased by 10% to EUR 194.7 million (HY1 2019: EUR 217.3 million). Organically, revenue decreased by 23%. Exchange rates had a limited adverse impact of 0.1% on revenue in the first half year of 2020. 

Revenue for our Industrial activities, representing 50% of Group revenue, increased 19% and organically, excluding the contribution of INTORQ, decreased by 14% compared to the first half year of 2019. Automotive revenue decreased by 28% in the first six months, impacted by the global car production declining 32% and commercial vehicle production declining 28%. 

Q2 2020
The normalised operating result before depreciation and amortisation (EBITDA) was EUR 8.1 million (normalised Q2 2019: EUR 12.7 million). A positive gross margin development and cost reductions helped to mitigate the profitability impact of the EUR 37.5 million lower organic revenue. The added value margin increased 310bp on the back of the increased revenue share of Industrial activities and positive product mix effects in Automotive. Total staff and other operating costs decreased on an organic basis by EUR 8.9 million, or 23%, as a result of strict cost control, structural cost measures implemented in the previous quarters, voluntary and temporary salary reductions and the use of available governmental measures, such as short-time work arrangements in Europe. For the Group, the EBITDA margin in Q2 2020 was 9.5%, compared to 11.7% in Q2 2019.

HY1 2020
Normalised EBITDA in HY1 2020 decreased by 14% to EUR 21.8 million (HY1 2019: EUR 25.4 million). The normalised EBITDA margin was 11.2% compared to 11.7% in the first half year of 2019.

Normalised EBITDA for the Industrial activities increased to EUR 14.2 million from EUR 10.8 million in the same period last year on the back of a strong contribution from INTORQ and strict cost control in both Industrial Brakes and Industrial Actuators and Controls. Total staff and other operating costs in Industrial were EUR 3.4 million below last year on an organic basis.

The Automotive activities posted normalised EBITDA of EUR 7.6 million compared to EUR 14.6 million in HY1 2019. Automotive has shown resilience amidst the COVID-19 pandemic and was able to reduce costs by EUR 8.6 million, or 20% compared to the first half year of 2019. 

The added value margin of the Group increased to 49.0% (HY1 2019: 47.2%) with most of the improvement coming from the increased revenue share of the Industrial activities. Total staff and other operating costs decreased by EUR 3.5 million more than offsetting annual wage inflation and the addition of INTORQ. Depreciation charges increased by EUR 0.8 million to EUR 12.8 million. 

Normalised net finance costs of EUR 1.6 million in the first six months of 2020 were higher than in the same period last year (HY1 2019: EUR 1.2 million) due to the additional debt taken on to fund the acquisition of INTORQ. The normalised income tax expenses for HY1 2020 was EUR 1.1 million (HY1 2019: EUR 2.8 million). The normalised effective tax rate in the first six months of 2020 was 21.3% (HY1 2019: 25.6%).

Normalised net profit, before amortisation of intangibles arising on acquisitions, in HY1 2020 was EUR 5.8 million (HY1 2019: EUR 9.1 million). Normalised earnings before amortisation per share amounted to EUR 0.39 (HY1 2019: EUR 0.68). Basic reported earnings per share amounted to EUR 0.20 (HY1 2019: EUR 0.66).

Financial position 
Total net debt including IFRS 16 lease liabilities decreased from EUR 131.8 million at the end of Q1 to EUR 130.5 million at the end of the second quarter. The positive free cash flow of EUR 2.2 million in the second quarter contributed to the debt reduction. The normalised free cash flow came in at EUR 0.2 million negative in the first half year (HY1 2019: EUR 2.7 million negative) as the positive cash flow in the second quarter nearly offset the negative cash flow in the first quarter, which is traditionally impacted by seasonal effects due to lower working capital in December when activity levels are lower. Total working capital at the end of the first half year was EUR 61.0 million. Excluding the additional working capital requirement caused by the acquisition of INTORQ, working capital was 24% lower compared to the end of the first half year of 2019. Cash flow and reducing working capital will remain a priority for the remainder of the year. 

Capital expenditure totalled EUR 9.8 million in the first half of 2020, below the depreciation level of EUR 12.8 million. We expect 2020 investments to be around the EUR 19.5 million level of FY 2019 as we continue to focus on cash flow and prioritise investments that protect existing and future revenue. 

Kendrion has reached an agreement on key terms with its banking syndicate to increase the leverage covenant for the quarters up to and including the third quarter of 2021. The agreement in principle allows for a total net debt (including IFRS 16) to EBITDA ratio of maximum 5.8 as per the end of Q1 2021 gradually decreasing to 3.25 from 31 December 2021 onwards. Although Kendrion currently operates well within its existing leverage covenants, the agreed covenant relief is designed to assure that Kendrion will continue to be able to invest in its longer-term growth opportunities, also in case of additional unforeseen circumstances as a result of COVID-19. At the end of the second quarter, the leverage ratio (based on definitions in the existing loan documentation) was 2.6 against a permitted financial covenant level of 3.5. 

Kendrion’s liquidity position remains strong with a total of EUR 54.3 million available in undrawn credit facilities and cash. The solvency ratio at the end of June 2020 was 43.3% compared to 44.1% at the end of the first quarter of 2020. 

Number of employees
The number of employees (FTEs) at the end of the second quarter was 2,428, including 63 temporary employees (Q1 2020: 2,522 employees, including 69 temporary employees). Of the total number, INTORQ represents 274 FTE, including 6 temporary employees as at the end of the first half year. 

Alternative Performance Measures (APM) adjustments to EBIT(D)A and net profit
An amount of EUR 1.6 million (EUR 1.2 million after tax) in staff and other operating expenses has been normalised in the results over the first half year of 2020 and is adjusted in EBITDA. EUR 0.9 million in normalised costs related to restructuring activities, EUR 0.2 million in costs were incurred relating to the realisation of synergies in Industrial Brakes and the Group incurred EUR 0.5 million in transaction costs related to the acquisition of INTORQ. For a full reconciliation reference is made to Annex 2.

The global economy is severely impacted by the effects of the COVID-19 pandemic, and we expect this to continue for the remainder of 2020 and possibly into 2021. In the medium to long-term, we continue to see growth opportunities in our focus areas of Automotive, Industrial Brakes and China. Our product pipeline is healthy and the work on future projects is continuing. Kendrion has shown resilience, making full use of available cost saving and cash preserving instruments. We remain positive about our business fundamentals, with our main objective being the delivery of sustainable profitable growth. 

Audio webcast interim results 2020
Kendrion CEO Joep van Beurden and CFO Jeroen Hemmen will present the interim results on Tuesday, 18 August 2020 at 11:00 a.m. A live audio webcast will be available on this page with playback functionalities.

Capital Markets Day 
Kendrion will organise a Capital Markets Day for analysts and investors on Thursday, 10 September 2020 at 11:00 a.m. A live audio webcast will be available on with playback functionalities.

Profile of Kendrion N.V.
Kendrion develops, manufactures and markets high-quality electromagnetic systems and components for industrial and automotive applications. For more than a century, we have been engineering precision parts for the world's leading innovators in passenger cars, commercial vehicles and industrial applications. As a leading technology pioneer, Kendrion invents, designs and manufactures complex components and customised systems as well as local solutions on demand.

We are committed to the engineering challenges of tomorrow, and taking responsibility for how we source, manufacture and conduct business is embedded into our culture of innovation. Rooted in Germany, headquartered in the Netherlands and listed on the Amsterdam stock exchange, Kendrion's expertise extends across Europe, to the Americas and Asia. Created with passion and engineered with precision.

Regulated information
This press release contains information that qualifies or may qualify as information within the meaning of article 7(1) of the EU Market Abuse Regulation. 

Responsibility statement  
In accordance with article 5:25d of the Financial Markets Supervision Act (Wet op het financieel toezicht), the Executive Board of Kendrion N.V. hereby declares that to the best of its knowledge, the consolidated interim financial statements, which have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’, give a true and fair view of the assets, liabilities, financial position and profit or loss of Kendrion N.V. and the companies included in the consolidation taken as a whole, and the semi-annual management report for the six-month period ended 30 June 2020 gives a fair view of the information required pursuant to article 5:25d subsection 8 and 9 of the Financial Markets Supervision Act.

Amsterdam, 18 August 2020

The Executive Board

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


1.    Financial calendar 2020 - 2021
2.    Semi-annual financial statements 2020
2.1    Consolidated statement of comprehensive income
2.2    Consolidated statement of financial position
2.3    Consolidated cash flow statement
2.4    Consolidated statement of changes in equity
2.5    Reconciliation of normalised to reported 2020 figures
2.6    Risks and risk management
2.7    Notes to the consolidated interim financial statements