From an operational profitability standpoint, 2019 was all in all a disappointing year. With 3% revenue growth, we declined 5% in adjusted EBIT. Significant operational improvements and some volume growth did not quite offset the significant negative mostly macro headwinds that we experienced in 2019. Also, unfortunately, we had higher growth rates in our lower-margin segments, which contributed to the reduced nominal adjusted EBIT says Henning E. Jensen President & CEO Kongsberg Automotive.
-Our Specialty Products segment actually had a decline in yearover-year revenues as opposed to P&C and Interior. On the brighter side, our EBIT and net income increased by 16% and 21% respectively, driven primarily by the strong reduction in restructuring costs more than offsetting the negative development in adjusted EBIT. We saw very limited portfolio change in 2019. The only activity was the completion of the divestiture of our small MRF activities to Inventus GmbH, which closed in Q1 of 2019. In our plants, we had a challenging year with an unprec – edented number (more than 60) of launches of new products. On one hand, I am very proud of our organization’s ability to execute all but a few launches flawlessly.
A Few Difficult Launches
At the same time, we had a few difficult launches that did cost us profitability in 2019 – this is an area in which we need to improve. Our cash flow was weak with a negative cash flow of EUR 44 million in 2019. Our 2019 cash flow plan called for a zero net cash flow for the year. We experienced sig – nificantly less cash from operations than expected as our revenues fell short of the plan due to the negative market development. At the same time, we had to make substantial investments in new equipment in order to fulfill our com – mitments to new customer programs. In addition, we did, as opposed to most automotive suppliers, grow in China which led to higher levels of receivables as credit periods in China are higher than our global average. From a segment performance standpoint, Specialty Products performed well considering that this segment was most affected by the negative market developments. In the Interior segment, declining earnings in spite of solid revenue growth was very disappointing. This was only partly driven by an excessive, partly non-recur – ring, increase in Mexican labor costs.
Continued Improvement
More importantly, Interior deteriorated its operational performance, par – ticularly in our Polish manufacturing facilities, which we are working to fix. In Powertrain & Chassis, we continued to improve at a slow but consistent pace while realizing that there is still a lot of work to do before we get to our targeted performance levels. Given the changes in market dynamics, we are focusing on three main areas for 2020: 1. Improving cash flow performance with the goal of de – livering positive cash flow for FY 2020. 2. Managing our operations well in what we predict will be a year of somewhat “bumpy” and downward end markets. 3. Driving one or more strategic decisions especially in the form of portfolio trimming, as we focus on our end-market activities of the future. KA will continue to drive its improvement plan in order to further strengthen our performance. We have the right plan and strategy, good products, a solid order book and we are committed to our customers. Our team is strength – ened. We are all aware that improvement does not come easily. To turn KA into the company that we envision, we all need to continue to work hard on reaching our ambi – tious objectives for 2020 and beyond, says Henning E. Jensen President & CEO Kongsberg Automotive through Cicion.
