Kontron CFO Clemens Billek outlined the company’s growth priorities, restructuring efforts and latest quarterly performance during a presentation at the Industrial Technology Conference, highlighting strong demand in transportation and defense alongside ongoing pressure in the Green Tech business.
Billek described Kontron as a provider of industrial IoT solutions, embedded computing systems and industrial software serving about 4,500 customers. He said the customer base is highly diversified, with no single customer accounting for more than 5% of revenue and the top 10 customers representing no more than about 15%.
Transportation and Defense Drive Growth
Billek said Kontron’s transportation and defense businesses were the primary growth drivers in the first quarter, with both segments growing by more than 20%. He said the company expects both areas to roughly double by 2030, implying high double-digit growth over that period.
In transportation, Billek called rail “the pearl” of Kontron’s portfolio, citing a market share of more than 60% in Europe and expected revenue of almost EUR 300 million this year. He said the business is growing at nearly 20% annually.
In defense, Kontron supplies VPX modules, which Billek described as ruggedized connectivity and computing modules used to transmit encrypted data between armored vehicles and central command stations. He said demand is rising both for new armored vehicles and retrofits of existing vehicles. In response to a question, Billek said both Hensoldt and Saab are customers in Kontron’s defense business.
Backlog Reaches EUR 2.5 Billion
Kontron reported a book-to-bill ratio of 113 and a record backlog of EUR 2.5 billion, according to Billek. He said nearly EUR 1.1 billion of that backlog relates to 2026, while first-quarter reported revenue was EUR 364 million. Together, he said, first-quarter revenue and backlog cover about 86% of the company’s forecasted revenue for the year.
Billek said revenue was “pretty much flat” on a like-for-like basis, while organic growth was 1.7% after adjusting for the deconsolidation of the COM business and units sold in Bulgaria and Hungary. Gross profit fell 10%, which he attributed to the sale of the COM business, customers “jumping ship” and supply-chain constraints.
Adjusted EBITDA was EUR 46 million after adding back EUR 8.5 million in one-off restructuring charges related to the Green Tech cash savings program. Net result after minorities was EUR 20 million, which Billek said was slightly higher than last year after accounting for one-off charges.
Operating cash flow was EUR 3 million on an adjusted basis, reflecting lower factoring, and minus EUR 9 million without that adjustment. Working capital improved to EUR 283 million from around EUR 450 million in 2024, while the equity ratio rose to 42.5% from 41.8%.
Green Tech Restructuring Underway
Billek said Kontron has begun restructuring its Green Tech division, which includes solar inverters and wall chargers, to improve competitiveness. The program is expected to generate EUR 30 million in annualized savings by the end of the third quarter, with significant savings visible in the fourth quarter. Total restructuring costs are expected to be EUR 25 million over the first three quarters, including EUR 8.5 million already expensed in the first quarter.
He said the Green Tech business weighed on results in 2025 and again in the first quarter, and he does not expect “a significant upwards movement” in the area. Billek cited strong competition from Chinese manufacturers in solar inverters and wall chargers. He also said Volkswagen ordered fewer wall chargers than Kontron had anticipated, though the company is in close negotiations with another German OEM.
Kontron is shifting part of its production to Bulgaria, where Billek said engineering costs are materially lower than in Germany, improving the company’s ability to compete with Chinese producers after logistics and tariffs are considered.
KontronOS Monetization and Ennoconn Offer
In the Q&A session, Billek said Kontron currently has about 4 million KontronOS devices outstanding and will begin delivering KontronOS to congatec from 2026 onward. He said customers may eventually choose a software-as-a-service model priced at EUR 1 per device per month after an initial one- to three-year period. With a target of 28 million devices equipped with KontronOS, Billek said the potential revenue opportunity exceeds EUR 300 million.
Billek also addressed Ennoconn’s mandatory tender offer after it crossed the 30% threshold in Kontron. He said the offer is expected to be launched by the end of June at EUR 23.50 per share, with an acceptance period of about four weeks. He said Ennoconn would not need antitrust approval unless it exceeded 50% ownership, and would require German foreign direct investment approval if it crossed 40%.
Billek said Ennoconn and Foxconn are interested in Kontron’s connectivity modules for factory automation and humanoid robots. He said the companies are trying to secure their stake and participation in Kontron, though he described the offer as unlikely to result in ownership above 50%.
Looking ahead, Billek said the company’s total revenue forecast is in the range of 2025, while EBITDA is expected to be in a similar range to last year. He cited supply-chain challenges and lower-than-expected wall charger orders from Volkswagen as headwinds.
About S&T (ETR:SANT)
S&T AG engages in the development, implementation, and marketing of hardware and software solutions, and IT services. It operates through three segments: IT Services, IoT Solutions Europe, and IoT Solutions America. The company offers consulting, integration, and outsourcing services in the areas of workplace, data centers, cloud, and application support and development; and consults and sells third-party hardware and software products. It also develops hardware and software products and solutions for Internet of Things and Industry 4.0 applications, including the associated implementation and operating services for industrial automation, medical technology, rail infrastructure, communications, and smart energy markets.
