8 October 2020
Announcement No. 22
Financial outlook 2020 reinstated for NKT Photonics and update of strategic review process
NKT A/S provides an update to the 2020 financial outlook. The outlook for NKT, the power cables business, is unchanged, while it is reinstated for NKT Photonics.
On 5 May 2020, the 2020 financial outlook for NKT Photonics was withdrawn due to the negative impact of the coronavirus pandemic on several of the markets NKT Photonics is operating in, particularly in the Industrial segment.
Today, the financial outlook is reinstated. The expectation is that NKT Photonics’ organic revenue growth in 2020 will be approx. -12% to -2% (initially approx. 5-15%) and the EBITDA margin is expected to be approx. 1% to 6% (initially approx. 15-18%).
The financial outlook is subject to unusually high uncertainty given the current market situation related to the continued development of the coronavirus pandemic and the associated impact on the global economy. Furthermore, the main part of NKT Photonics’ earnings in 2020 is as in previous years expected to be generated in Q4.
The primary assumption for achieving the updated financial outlook will therefore be a normalized market situation without significant negative demand or supply implications.
In Q3 2020, the preliminary financial figures for NKT Photonics were revenue of EUR 16.7m, equaling organic growth of 3%, and EBITDA of EUR 1.0m. The company experienced a gradually improved market environment during the quarter, but market uncertainty remains high and certain parts the markets were still experiencing headwinds due to the coronavirus pandemic. The earnings in Q3 2020 were lower than in the same period of 2019 as NKT Photonics’ cost base increased driven by investments in future growth opportunities and a less favorable customer mix leading to lower earnings margins.
Strategic review to be continued when performance stabilizes
On 20 November 2019, the company announced the initiation of a review of the strategic alternatives for NKT Photonics with the objectives of maximizing value creation, positioning NKT Photonics for long-term growth, and support the deleveraging of the Company's balance sheet. On 13 May 2020, it was announced that the Board of Directors deemed that the strategic review of NKT Photonics could not be concluded in the near future due to the market uncertainties and with respect to the objectives of maximizing the value creation.
The Board of Directors intends to resume the strategic review when the business and financial performance of NKT Photonics is no longer materially affected by the coronavirus pandemic and the general economic situation, with the objectives of maximizing value creation, and positioning NKT Photonics for long-term growth.
Investor Relations and press:
Michael Nass Nielsen, Head of Investor Relations, tel.: +45 2494 1654