Investment
Why invest in Kempower?
Excellent combination of experience, innovation and advanced technology.
Our revenue has grown at a CAGR of 1,191 percent between 2018 and 2020. Revenue growth has been driven by Kempower’s technologically sophisticated product offering and increasing demand for Electric vehicle’s DC fast charging solutions. By 2030, the DC fast charging equipment market in Europe is expected to increase at a CAGR of 17 percent and in the United States at a CAGR of 27 percent, to an aggregate of approximately EUR 4,000 million1.
1 Sources: BCG Stock Model: Why Electric Cars Can’t Come Fast Enough, April 2021; IHS Markit EV Charging Infrastructure Report and Forecast, July 2021.
We have outsourced significant parts of the DC fast charger materials manufacturing to third party suppliers, enabling us to focus on the final assembly process, which is where the key know-how and competitive advantage of the production lies. We expect that the unit cost of materials will decrease as our sales increase due to volume discounts. In addition, we believe that the modularity of our products and our cloud based Kempower ChargEye™ software that utilises artificial intelligence, will support the scalability of our operations.
Our products have been developed for mass customisation, but they are also flexible as the charging power units may be positioned at up to 50 metres from the charging post. Our movable chargers offer great flexibility in places where electricity is difficult to obtain. Furthermore, Kempower’s charging solutions are compatible with the most common charging standards. Our chargers can dynamically share power between satellite charging posts, which enables an efficient distribution of charger capacity across the charging system. Directing electricity dynamically where it is needed the most, provides each vehicle with its preferred charging power. We believe the dynamic nature of our products is a key competitive advantage.
Kempower was formed out of the Kemppi Oy group, a leading welding solutions provider founded in the 1950s. As a testimony of the successful R&D work, Kempower supplied power sources to CERN in 2006 and received a supplier of the year award. Supported by this technological heritage, we have been able to build a culture of innovation and a roadmap for future R&D development with a target of fulfilling future needs for EV fast charging.
We have signed customer framework agreements and/or purchase orders with reputable international companies that we believe to be forerunners in their own field of business. Our customer base includes, among others, various charge point operators (CPOs), commercial fleet operators and original equipment manufacturers (OEMs), and our products are also sold through our distribution network, making Kempower less dependent on any single customer or customer group.
We aim to operate at the forefront of electrifying traffic and transport as our solutions are designed to enable emission-free mobility. We are committed to the United Nations (UN) 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs). Kempower is committed to 100 percent carbon neutrality by 2035 and 100 percent recyclability in our own operations by 2025.
Our management team consists of competent people with extensive experience from managing rapidly growing international business operations. Kempower’s management also has significant experience in the demanding electrical engineering industry and/or their respective fields. We invest in our personnel by both recruiting more experts to support our growth as well as by developing their expertise. Employee satisfaction is on a very high level as Kempower’s net promoter score (NPS) was 87 percent positive according to an employee satisfaction survey conducted in June 2021. Kempower’s employee attrition has been very low.
Growth strategy and sustainability
Kempower has formulated a growth strategy built on two distinct pillars. First, a go-to-market strategy outlining which geographic markets and customer segments Kempower will focus on during its five-year strategy period until the end of 2025. Second, an innovation strategy consisting of Kempower’s plan to continue developing its products and solutions portfolio. Sustainability is also key part of Kempower’s operations.
We aim to continue expanding in the European market in the short to medium term, and we target to establish operations in the U.S. by the end of 2023. Our focus is on organic growth, but in the future corporate or business acquisitions are possible.When evaluating potential markets for expansion, we assess the prospective market’s characteristics and customers. For example, market entry into new geographies in public charging is considered separately for each geographic market, and the market attractiveness is estimated by examining, for example, prospective market winning customers, how well the local regulations and political decisions promote EVs and electrification of traffic and the competitive landscape.
Depending on the customer type, sales are conducted through direct sales, local sales companies, a key account management model or business partners.
1. Current product offering as a basis for future growth
We aim to continue developing our current product offering by maintaining scrutinised product design and management in order to allow mass customisation. We intend to continue to focus on designing products that are easy to assemble for mass customisation, while simultaneously continuing to serve different customer and charging needs.
2. Cost and capital expenditure efficiency of production and operations
As we scale up our production capacity to meet the forecasted demand for our products, we will continue to follow a multi‑sourcing policy by outsourcing the production of materials to third‑party suppliers, while keeping the most critical phases of the assembly process in‑house. In addition, we plan to continue utilising standardised technology in our product assembly where possible.
3. R&D and innovation of new products and features
By continuing to invest in R&D and innovation, we aim to keep our existing products ahead of competition and to maintain financial competitiveness through design improvements that lower the production costs of our products. We aim to utilise market knowledge, consumer feedback and data collected from our chargers to improve our existing products and services and develop new products and services that meet our customers’ and consumers’ needs.
Kempower’s aim is to be the best partner for its customers in developing emission-free business and its solutions are designed to enable emission free mobility. We aim to promote fully electric transportation in society, decreasing the relative carbon footprint of our operations and products annually and increasing the end of lifetime recyclability rate for all our EV chargers. We believe that responsibly produced, durable EV charging solutions have an important role in a sustainable economy. When selecting suppliers, we value short transport distances and responsible operations. For example, since our production is located in Finland, a major part of the materials and components used are sourced from Finland.
Sustainability is a key criterion for selecting our suppliers. We require all our suppliers to fill in a self-assessment survey and we may reject suppliers based on sustainability related information provided in the survey.
Financial and sustainability targets
Kempower’s Board of Directors has confirmed the company’s medium and long-term financial targets. In addition, Kempower is committed to three sustainability commitments and their targets.
Financial targets
The Board of Directors resolved on Kempower’s financial targets on 19th of April 2023.
- Growth: revenue of EUR 750 million in the medium term (years 2026-2028)
- Profitability: operative EBIT margin of 10 percent to 15 percent reached in the medium term (years 2026-2028) and operative EBIT margin of at least 15 percent in the long term
- Dividends: No dividends in the short term
Sustainability commitments and long-term targets
| 1. Commitment | targets |
|---|---|
| 100% Carbon Neutrality by 2035 | – Reducing the relative carbon footprint annually – Using 100 percent fossil‑free electricity by 2025 in operations and production – Compensating the carbon footprint of personnel’s business flight travel – Reducing the amount of landfill waste to zero by 2025 |
| 2. Commitment | targets |
|---|---|
| Sustainable products that enable a society functioning with 100% electric transportation | – Reducing plastic packaging by 50 percent by 2025 from the level of 2021 and transferring to bio‑plastics and biodegradable plastics when economically viable – 99 percent end of lifetime recyclability rate for EV chargers |
| 3. Commitment | targets |
|---|---|
| Number one workplace for future professionals | – Reducing the accident rate to zero – Securing high work satisfaction – Training personnel with first aid skills to reduce serious harm in case of accidents and other medical emergencies |
IFRS key figures
Order intake
Revenue
Gross profit
Operative EBIT
Quarterly financials
| Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | |
|---|---|---|---|---|---|
| Order backlog | 95.1 | 118.9 | 124.4 | 138.5 | 126.7 |
| Order intake | 65.4 | 61.7 | 61.4 | 86.3 | 60.9 |
| Revenue | 32.7 | 37.8 | 55.8 | 72.5 | 72.6 |
| Revenue growth | 227% | 352% | 385% | 235% | 122% |
| Gross profit | 15.1 | 17.7 | 28.4 | 37 | 38.4 |
| Gross margin | 46.0% | 47.0% | 50.8% | 51.1% | 52.9% |
| EBITDA | 3.2 | 3.9 | 7.9 | 15.4 | 16 |
| EBITDA margin | 10.0% | 10.0% | 14.2% | 21.2% | 22.0% |
| Operating profit (EBIT) | 2.4 | 2.9 | 6.8 | 13.9 | 14.3 |
| EBIT margin | 7.0% | 8.0% | 12.3% | 19.2% | 19.7% |
| Operative EBIT | 2.4 | 3.5 | 6.9 | 13.9 | 14.4 |
| Operative EBIT margin | 7.0% | 9.0% | 12.4% | 19.2% | 19.8% |
| Profit for the period | 1.6 | 2.5 | 5.6 | 11.1 | 11.7 |
| Equity ratio | 70.0% | 68.0% | 62.2% | 58.1% | 58.3% |
| Cash flow from operating activities | 6.7 | -8.4 | 2.5 | 20.5 | 15.9 |
| Investments | 1.6 | 2.2 | 1.6 | 2.4 | 2.8 |
| Net debt | -69.8 | -58.4 | -58.6 | -68.3 | -81 |
| IAC | 0 | 0.6 | 0.1 | 0 | 0 |
| Earnings per share | 0.03 | 0.05 | 0.1 | 0.2 | 0.21 |
| Earnings per share after dilution | 0.03 | 0.05 | 0.1 | 0.2 | 0.21 |
| Headcount, end of period | 307 | 375 | 465 | 596 | 619 |
Annual financials
| 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|
| Order backlog | 0.2 | 3.8 | 13.7 | 118.9 |
| Order intake | 0.5 | 7.1 | 37.4 | 208.9 |
| Revenue | 0.3 | 3.3 | 27.4 | 103.6 |
| Revenue growth | 1 578% | 894% | 741% | 279% |
| Gross profit | 0.2 | 1.8 | 12.9 | 48.2 |
| Gross margin | 69.0% | 54.0% | 47.0% | 46.5% |
| EBITDA | -2.2 | -2.1 | 0.5 | 9.5 |
| EBITDA margin | -667.0% | -66.0% | 2.0% | 9.2% |
| Operating profit (EBIT) | -2.2 | -2.2 | -0.7 | 6.1 |
| EBIT margin | -679.0% | -68.0% | -3.0% | 5.9% |
| Operative EBIT | -2.2 | -2.2 | 1 | 6.7 |
| Operative EBIT margin | -679.0% | -68.0% | 4.0% | 6.4% |
| Profit for the period | 0.2 | 0.2 | 0.3 | 3.6 |
| Equity ratio | 32.0% | 10.0% | 91.0% | 67.5% |
| Cash flow from operating activities | -2.5 | -2.5 | -2.6 | -5.4 |
| Investments | 0.2 | 0.5 | 1.6 | 6.2 |
| Net debt | -0.1 | 2.9 | -89.3 | -58.4 |
| IAC | 0 | 0 | 1.7 | 0.6 |
| Earnings per share | 0.01 | 0.01 | 0.01 | 0.06 |
| Earnings per share after dilution | 0.01 | 0.01 | 0.01 | 0.06 |
| Headcount, end of period | 17 | 38 | 136 | 375 |
Market and growth drivers
Kempower operates on the international EV charging market. Megatrends behind EV demand are expected to drive the EV charging market growth.
Megatrends driving growth in EV demand
Vehicle emissions regulations are becoming stricter globally, forcing personal vehicle (PV) manufacturers to manufacture vehicles with less emissions than traditional internal combustion engine (ICE) vehicles. In practice, this is leading PV manufacturers to manufacture more EVs to avoid potentially substantial fines or other negative consequences. There are a number of regulations that are expected to continue driving increased EV demand, which can be divided into three categories: emission standards, credit programmes and limits on the use of ICE vehicles.
In the coming years, the total cost of ownership for EVs is expected to decrease driven by decreasing battery prices1. Battery cell prices are expected to decrease from USD 143/kWh in 2020 to less than USD 100/kWh by 20302. More than 50 percent of this decrease is expected to take place in the next five years, increasing the economic benefits of EV ownership and usage, which, in turn, is expected to accelerate EV penetration in car fleets.
1 Sources: Who Will Drive Electric Cars to the Tipping Point?, June 2021.
2 Sources: Bloomberg: Better batteries, 2019.
Vehicle manufacturers are taking action to respond to the tightening regulation and increasing EV demand. They have announced plans to bring nearly 400 EV models to the personal vehicle market by 2025. This increase in options is expected to accelerate the penetration of EVs, which, in turn, is expected to increase demand for EV charging infrastructure, and, therefore, demand for DC fast charging equipment1. By September 2021, altogether 26 cities had signed on to the C40 Cities Clean Bus Declaration of Intent where they have collectively committed to reducing the emissions of the transportation sector, and to procure only zero‑emission buses from 2025 onwards2
1 Sources: IHS Markit EV Charging Infrastructure Report and Forecast, July 2021 and public announcements made by OEM decision-makers.
2 Sources: C40 Cities Clean Bus Declaration of Intent., July 2021 and public announcements made by OEM decision-makers.
The number of personal and commercial electric vehicles is expected to grow
The aforementioned megatrends are expected to drive the increase of personal and commercial EV stocks in both Europe and the United States, and the total EV stock, including both personal and commercial EVs, in the two markets, which are expected to amount to approximately 90 million EVs by 2030.1
Kempower’s target market
We currently target the DC fast charging and high power charger (HPC) equipment markets of EVs in Europe and also see significant potential to expand into the United States. By 2030, the DC fast charging markets in Europe and the United States are expected to increase to EUR 7,600 million and EUR 6,500 million respectively, to an aggregate of approximately EUR 14,000 million, from the approximately EUR 638 million in 2020.1
In Europe, most of the relative growth in the DC fast charging equipment market between 2020 and 2030 is expected to come from commercial vehicle charging, while the largest relative growth contributor in the United States is expected to be personal vehicle charging.
1 Sources: Kempower market research, ACEA European EV Charging Infrastructure Masterplan March 2022
Nasdaq Green Equity Designation
Kempower has received Green Equity Designation from Nasdaq. According to an assessment carried out by CICERO Green, in 2021, 100% of Kempower’s revenue and 100% of investments (CAPEX) are shaded Dark Green. CICERO Green considers Kempower’s charging products to contribute toward climate change mitigation and acts as an important enabler of the 2050 solution.