This article first appeared on GuruFocus .
-
EBITA:EUR 70 million in Q4 2025.
-
Return on Sales:14.6%, similar to 2024.
-
Turnover in Electrification:Up 29% in Q4 2025.
-
Automated Machinery Turnover:Down 6.9% in Q4 2025.
-
Vision Technologies Turnover:Up 1.8% in Q4 2025.
-
Innovation Rate:17% for 2025.
-
Net Debt:Reduced to EUR 460 million from close to EUR 500 million.
-
Leverage Ratio:Improved to 1.9 from 2.6 at mid-year.
-
Organic Revenue Growth:4.9% for 2025.
-
Adjusted EBITA:Close to EUR 190 million, a 7.2% organic decline from 2024.
-
Free Cash Flow:EUR 75 million for 2025.
-
CapEx:Approximately EUR 130 million, with EUR 15-16 million related to strategic investment programs.
-
Geographical Revenue Distribution:Europe 60%, Asia 23.7%, North America just below 15%, Other regions 2.7%.
-
Warning! GuruFocus has detected 10 Warning Signs with FRA:TWSA.
-
Is FRA:TWSA fairly valued? Test your thesis with our free DCF calculator.
Release Date: March 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
TKH Group NV ( FRA:TWSA ) reported a strong EBITA of around EUR70 million in Q4, showcasing a significant improvement from H1.
-
The Automation segment, particularly Smart Vision, experienced substantial growth in profitability due to strong development in new end markets.
-
The company secured a major eight-year contract with Alliander, valued at approximately EUR650 million, indicating strong future revenue potential.
-
The Vision Technology segment achieved a high innovation rate of 17%, driving technology leadership and above-average margins.
-
Net debt decreased, and the company managed working capital effectively, improving financial stability.
Negative Points
-
The Electrification segment faced challenges with output issues at Eemshaven, impacting profitability until Q4.
-
Automated Machinery experienced a 6.9% decline in turnover due to lower order intake in 2024, affecting overall performance.
-
The digitalization market remains difficult, with the segment not yet profitable and requiring more time to achieve profitability.
-
The company is cautious about Q1 2026, expecting it to be weak due to lower order intake in Tire Building and other segments.
-
Despite improvements, the Connectivity division still faces underutilization issues, impacting profitability.
Q & A Highlights
Q: Can you provide an update on the connectivity segment, specifically regarding the 600-kilometer, EUR180 million sales target and EBITA margin expectations? A: J.M. Alexander van der Lof, CEO: We are positioned to achieve the 600-kilometer target with a 15% to 17% EBITA margin. The risk is much lower compared to last year due to major upgrades in key lines, which have reduced the likelihood of issues.
Q: What are the incidental operational expenses that are not likely to reoccur in 2026? A: Elling de Lange, CFO: Incidental costs related to the transfer of telecom activities to Poland and other operational changes are estimated to be between EUR10 million and EUR15 million. These costs are not expected to reoccur in 2026.
Q: How is the onshore connectivity unit performing in terms of EBITA margins? A: J.M. Alexander van der Lof, CEO: The onshore unit has been underutilized, affecting cost levels. However, with higher utilization expected, we anticipate a substantial improvement in return on sales, similar to levels seen in 2023.
Q: Can you discuss the customer behavior and order intake expectations for Q1 2026? A: Harm Voortman, Executive Board Member: Tier 1 customers are still affected by pressures in the automotive industry, limiting modernization plans. However, Tier 2 and Tier 3 customers see opportunities, especially in export markets. We expect order intake to improve in 2026 compared to 2025.
Q: Why did TKH Group decide against a share buyback despite strong free cash flow? A: Elling de Lange, CFO: While share buybacks are part of our capital allocation policy, we are focusing on executing the dual-track program and the overall transition towards a split. We aim to maintain flexibility and not disrupt the process with intermediate steps.
Q: What is the status of the dual-track process for the separation of Electrification and Automation? A: J.M. Alexander van der Lof, CEO: We are preparing for a transaction in Q4 2026. Discussions with potential interested parties will begin mid-second quarter. We aim to show a strong performance track record before proceeding.
Q: How is the Vision business performing, and what are the growth expectations for 2026? A: Harm Voortman, Executive Board Member: Vision has shown growth, with Europe being slightly weaker. We are well-positioned to achieve mid-single-digit organic growth, aligning with market expectations.
Q: Can you elaborate on the impact of the subsea cable plant ramp-up on Electrification? A: J.M. Alexander van der Lof, CEO: We have solved the main challenges related to the ramp-up. The plant is operating at 95% of desired productivity, with further improvements expected as we stabilize manufacturing processes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
