Kuka AG (KU2)
Source: Kuka website
When ACCICB told me about Kuka, I was like ok I can look into it as I did the same with Fanuc Corp earlier on. Since ACCICB is big on robots, we made some $$$ with Fanuc. But I didn't plan on writing about it since technical imdustries are not my strong suit and I struggle with these boy gadgets called robots. I remembered I had to do a piece on Vishay Intertechnology Inc previously and I ended up with a headache and much knowledge. That's what happens when you work with an engineer, he thinks in logical steps while my thought process resembles a mind map.
Kuka has 2 divisions namely Systems and Robotics with the former posting better numbers in terms of orders received, sales revenues and EBIT. The past few years post 2009 have seen the stock price shoot to the roof when they had a major shareholder Grezenbach Group step in and sort things out. The results have been positive, so much so that Grezenbach Group have recently sold off their stake in Kuka to Voith Group.
I wonder whether that's because of the recent announcement made by the Chinese government on the big push for local firms to purchase locally made robots. This could come in the form of incentives to buy locally made, as well as investments into R&D. This is pretty much a game changer for the robotics industry which is currently dominated by the Germans and Japanese. The sale by Grezenbach made me wonder whether this was because their investment target has been reached or they feel that this is pretty much the peak for Kuka.
In terms of personnel, current CEO Dr Till Reuter has worked with Grezenbach since 2008 as Chairman of Rinvest AG and so far it seems like he's here to stay until 2020. We do not know how Voith Group would manage their investment in Kuka, so the next few months would require some observation on my end.
Kuka has a collaborative nature it seems, from their annual report which is filled with stories and in a way testimonials of how they have worked with their customers, from Daimler to Siemens to test Kuka robots in their work environments. I find that to be a win-win situation for all companies involved.
About 40% of their orders come from automotive, 40% from general industry and 20% from service industry. Given that the automotive industry is cyclical, it could mean that investments in automation can taper off in the next few years, which would hit them rather badly. Kuka probably foresaw this happening as they bought REIS Group and Swisslog Holding to mitigate the probable drop of sales from the automotive sector.
They issued out a 150m euro convertible bond last year which would mature in February 2018 and this could be dilutive depending on the share price of Kuka. They just resumed giving out dividends in 2013 after a five year hiatus as well. They are likely to reach their 2014 targets but I'm more curious about whether they can continue to perform in 2015 and beyond. Currently they are quite close to their 52 week high price so it may be wiser to wait and watch the stock for a short while.