TKH Group (TWEKA) CMD 2025 summary

Strategic direction and business focus

• Accelerating transition to a leading Automation company, with automation as the core focus and electrification as a strong but separate business, planning to divest non-core and digitalization activities totaling about €250 million.

• Transformation from Smart Connectivity to Electrification and from Smart Manufacturing to Automated Machinery, with new segmentation and reporting to clarify business focus and align with IFRS.

• Material steps to separate Electrification, including legal structuring, with options such as IPO or sale, aiming for a transaction within 12–18 months.

• No major CapEx programs planned; focus on cash generation, disciplined capital allocation, and bolt-on acquisitions in automation.

• Capital allocation priorities: organic growth, bolt-on acquisitions, dividends (40–70% payout), share buybacks, and leverage below 2x.

Financial guidance and targets

• Automation targets: 5–7% organic CAGR to 2028, EBITDA/EBITA margin of 17–19%, and return on capital employed of 25–30%.

• Electrification targets: above 7% organic CAGR, EBITDA/EBITA margin of 12–15%, and return on capital employed of 18–23%.

• CapEx to be reduced, with R&D CapEx cut by 30% over three years and overall CapEx below €100 million by 2028; strategic CapEx program completed.

• Working capital targeted at 12–15% of revenue, with normalization expected as divestments are completed.

• Dividend payout ratio set at 40–70% of normalized net profit, with a target yield of 3%; share buybacks subject to leverage below 2.0.

Business developments and growth drivers

• Automation segment now represents about 60% of activities, up from 50% in 2021, with higher gross margins and added value, leveraging global trends like labor shortages and productivity demands.

• Smart Vision Systems and AI are central to growth, with a unified software platform (GoPxL) and a shift from components to solutions.

• Tire building (VMI) expects mid-term growth driven by outsourcing, technology leadership, and new UNIXX platform, with post-2028 growth from new addressable markets.

• Electrification growth underpinned by strong order book, offshore wind leadership, and innovations in high/medium voltage cables, with 7–9% organic growth expected.

• Ongoing consolidation and efficiency improvements in Vision, with integration of brands and R&D, aiming for higher top-line and margin benefits.