Strategy and financial objectives
Simplify, Focus, Grow
On 3 May 2016 Kendrion announced an updated strategy that is founded on three pillars: Simplify, Focus, Grow.
Kendrion continues to simplify its business. The reason for this is straightforward: complexity drives cost and slows down decision-making.The reduction in management and organisational layers combined with targeted streamlining of the manufacturing footprint has resulted in a more effective and efficient organisation. It also has improved operating margin and profitability.Going forward, we will continue to focus on ensuring that our organisation is as lean and simple as possible.
Kendrion will focus its resources and capital on the areas that offer the greatest opportunities for profitable growth. The designated areas in 2018 were:
■ China, where Kendrion has identified a significant opportunity for its products in a range of automotive and industrial applications, leveraging its unparalleled reputation for quality and reliability.
■ Passenger Cars, specifically in the areas of electrification, autonomous driving, safety and comfort.
■ Permanent Magnet brakes, especially in the market for industrial robots. Going forward, we expect to continue to invest our resources and capital in opportunities
We expect in the longer term that the pipeline we are currently developing in our three areas of growth mentioned before will allow us to accelerate growth in revenue in a manner that will provide the opportunity to grow faster than the historical average.
Kendrion announced its long-term financial targets for 2023 on 15 August 2018:
■ Return on investment of at least 20% by 2023
■ EBITDA margin of more than 15% by 2023
■ Dividend pay-out: 35-50%
We will continue to ensure Kendrion is managed in a simple and lean way. In addition, we will continue to invest in our R&D capacity and financial resources in our three focus areas: Passenger Cars, China and Permanent Magnet brakes.
Targeted add-on acquisitions
Kendrion has a strong financial position and a healthy balance sheet. Kendrion endeavours to acquire companies that enhance the company’s leading position in its automotive and industrial markets with emphasis on its three areas of focus. Acquisition targets must offer good returns in terms of their EBITDA and ROI in order to contribute to Kendrion’s financial targets.