Today, TKH Group NV (TKH), a leading technology company focused on advanced innovative technology systems in high growth markets, releases its Q1 2022 Market Update.
Financial developments in the first quarter of 2022
Further strong growth in turnover and results compared to previous quarters.
Q1 2022 revenue increased by 31.3% to €436.7 million (Q1 2021: €332.7 million) including 28.3% organic growth. All segments contributed to this significant revenue growth, with a particularly strong recovery in Smart Manufacturing systems. The impact of supply chain challenges remained limited.
Significant increase in EBITA to a record level of €58.5 million (Q1 2021: €31.9 million).
ROS improved to 13.4% (Q1 2021: 9.6%).
The order book remained at a high level and even increased slightly compared to the end of 2021.
Alexander van der Lof, CEO of TKH: “Today we are reporting strong results, showing an excellent start to 2022. At the same time, the situation for our employees in Ukraine continues to be difficult and we are supporting them where we can. Our Ukrainian factory remains intact and we are preparing to restart production at this facility in the next few days, assuming it proves safe.
Our revenue in the first quarter of 2022 reached an all-time high, benefiting from strong order intake in 2021, demonstrating our strong positioning amid current megatrends. So far, we have managed the supply chain challenges well, and the recent lockdowns in Asia have had only a limited effect on TKH’s business. Although some activities may experience more effects in the coming period, we expect these to be temporary and balance out throughout the year. Demand for our technologies remains high, resulting in a further increase in our backlog as of March 31, 2022. With our increased focus and planned investments, we can take full advantage of the continued market growth that we look for our technologies and stimulate economies. of scale, leading to a ROS of more than 17% in the medium term.”
Developments by technology segment
Intelligent vision systems
We saw a solid increase in revenue of 12.2% compared to the first quarter of 2021. This was somewhat impacted by the recent lockdowns in Asia and supply constraints, caused by component shortages. In most cases, we have succeeded in securing most of the required components or we have redesigned our products to include more widely available components. Within Machine Vision, revenue growth was largely achieved in 2D vision, while revenue in 3D vision remained stable. Falling demand from the consumer electronics industry was offset by growth in other markets. Within Security Vision, growth was supported by strong demand for our communication systems (vision).
Intelligent manufacturing systems
There was a substantial increase in revenue of 61.2% compared to the first quarter of 2021, with a particularly strong recovery in tire construction systems. In tire construction, we increased our production capacity thanks to the record order intake of 2021, contributing to the strong improvement in results. Order intake for both passenger car and truck tire systems remained at a high level in the first quarter of 2022. Other activities in this segment also contributed to the improvement in sales and results.
Intelligent Connectivity Systems
We benefited from strong revenue growth of 28.0% compared to the first quarter of 2021, achieved in all areas. Regarding the energy transition, there was a strong demand for our energy connectivity systems, supporting higher production and use. In Europe, our Digitization activities benefited from continued investments in the fiber network. The price of fiber optics began to improve in the first quarter of 2022, due to anti-dumping duties imposed by the EU on imports of fiber optic cables from China. Growth was also achieved in data network cable systems and broadband products for data centers and offices, particularly in France and Germany. Additionally, there has been substantial growth in specialized connectivity systems for the machine building and robotics industry.
Expansion of production capacity
In March 2022, following the publication of our 2021 annual results, we announced that we were preparing for an expansion of our production capacity, to meet increased market demand in the areas of energy, digitalization and pneumatic building systems. In the second quarter of this year, we will begin this expansion, which will involve additional capital investments spread over the remainder of 2022 and 2023, specifically to:
Underwater connectivity systems (new factory in a Dutch seaport)
Medium and high voltage cables (expansion in the Netherlands)
Fiber optic cables (new factory in Poland)
Specialized connectivity systems (new factory in Poland)
Tire construction systems (expansion in Poland)
We reiterate our guidance for organic growth in revenue and earnings in 2022 in all segments, as published in March 2022. The current uncertainty in the supply chain and delays in the delivery of components have up to now had a limited effect on TKH’s business, but we expect this uncertainty to continue. As usual, TKH will provide a more accurate profit forecast for the year 2022 when presenting its interim results in August 2022.
The full press release can be downloaded as a PDF.