Kitron, a prominent electronics manufacturing company in the Nordic region, is known for producing circuit boards, subassemblies, and complete products for clients in various industries like medical technology, electrification, defense, and communication. Founded in the 1960s with its headquarters in Arendal, Norway, Kitron has been listed on the Oslo Stock Exchange since 1997.
With approximately 2500 employees and multiple production facilities across Norway, Sweden, Denmark, Lithuania, Germany, Czech Republic, Poland, China, and the USA, Kitron has a strong presence in the global market. Led by CEO Peter Nilsson and Chairman Tuomo Lähdesmäki, the company has seen fluctuations in its financial performance in recent years.
In 2024, Kitron faced challenges with negative growth, particularly in its Electrification and Industrial segments. Major clients in these sectors experienced weaker-than-expected performance, contributing to a 16% decline in sales during the first three quarters of the year. This trend was reflected across other Nordic contract manufacturers, with an average organic growth rate of around -10% during Q1-Q3 2024.
Despite these setbacks, Kitron remains optimistic about its future. At a recent capital markets day, the company reaffirmed its guidance for 2024 and provided a broad outlook for 2025. While the short-term forecast predicts a decline in revenue and operating profit for 2024, Kitron expects to rebound in 2025 with revenue between 600-700 million euros and an Ebit margin of 8.1%.
One of the key growth drivers for Kitron is its Defense segment, which is anticipated to outperform other sectors in the coming years. With a portfolio of well-known clients in the defense industry and a projected growth rate of over 20% in 2025, Kitron is poised to capitalize on increasing defense budgets in NATO countries.
Additionally, the Connectivity and IoT segments are expected to contribute to Kitron’s growth, with forecasts of over 10% growth in 2025 and 20% in 2026. However, challenges in the Medical Technology sector, including the discontinuation of a major product line, may impact sales negatively in 2025.
Looking ahead, Kitron aims to achieve consistent annual growth of 10% over a business cycle, with a target of reaching 1 billion euros in revenue and a 9% Ebit margin in the medium term. The company’s solid financial position, highlighted by a net debt of 118 million euros, provides opportunities for strategic acquisitions to expand market reach.
While Kitron’s stock performance has been mixed, with a decline in revenue and margins in recent years, the company’s focus on diversification and growth in key sectors bodes well for its long-term prospects. With a neutral recommendation for investors at present, Kitron remains a company to watch in the contract manufacturing industry.