Kverneland Group Kerteminde A/S

Ledelsesberetning

Key activities The main activity of the company is production and sale of agricultural machinery. Development in the year The income statement of the Company for 2024 shows a loss of TDKK 20,029, and at 31 December 2024 the balance sheet of the Company shows a positive equity of TDKK 256,699. The year's result is negatively affected by a declining demand for agricultural machinery globally in 2024. The year's result in general is negatively affected by challenged productivity. The past year and follow-up on development expectations from last year The result for the year is around DKK 20 million below expectations when the annual report for 2023 was presented. This is due to the economic downturn in the global market for agricultural machinery that started in Q3 2023. The main reasons were, like the 2022 effect, the effect of interest rate increases and high inventories at dealers, as well as uncertainty about framework conditions. The gross margin fell from 6.9% in 2023 to 5.4% in 2024. The decline was greater than expected, as revenue fell faster than we could adjust production. Operating risks The Company is dependent on its subcontractors to ensure timely delivery of the desired quality. Disruptions or errors from them can have a negative impact on operations. The Company therefore works continuously and proactively with its partners to reduce operational risks and strengthen the supply chain. Foreign exchange risks As the company primarily earns its income from export, the result is influenced by the general development of exchange rate and interest. It is the foreign exchange policy of the company to cover commercial exchange risks. This is done by means of foreign exchange forward contracts made at the time of order. No foreignexchange transactions are made for the purpose of speculation. Interest rate risks Moderate changes in interest rates will have a negative effect on earnings. Due to ownership structure as well as the general market we do not see it as a big risk in the short run. No transactions to cover interestrate risks are made. Credit risks For those customers who are not part of the Kverneland Group, a large part is secured by a Factoring agreement. Targets and expectations for the year ahead The total order backlog at the end of 2024 is at the same level as 2023. We anticipate a more normalized order backlog in the future, similar to last year. The company's capital resources are secured and are assessed as strong. The company's expectations for the future are that revenue will increase by around 5-10%. This will result in a slightly positive result of around DKK 5-10 million. Research and development The company's development department is working on continuous improvements to current products and developing new products. In 2024, the level of activity has been high again. The development department works closely with development units in other Kverneland companies to achieve synergies and share knowledge across the Kverneland organization. In 2024, 9% of net revenue has been spent on developing new products. Historically, the company has spent 5-6% of revenue. The reason for the large increase is the declining revenue. External environment The company places emphasis on environmental issues and is continuously working to ensure optimal working conditions for employees, etc., and to minimize the environmental impact of the surroundings. As expected, we were ISO 14001 certified this year. Which also strengthens the company's competitiveness. Intellectual capital resources The company continues to recruit and retain competent employees who are continuously retrained. Climate change and environmental At Kubota Group, we are working to achieve our environmental vision and medium- and long-term environmental conservation goals. One of these goals in particular is our goal of achieving net-zero CO₂ emissions from our own operations (Scope 1 and 2) by 2030 compared to 2014, implementing energy-saving activities and striving to expand our use of renewable energy to reduce CO₂ emissions from our facilities while expanding our business worldwide. These goals are an integral part of the company's environmental strategy and are reported on an ongoing basis in accordance with applicable international standards. One of the Kubota Group's measures to achieve carbon neutrality is to provide solutions that control the amount of greenhouse gas emissions that a society, including farmers, produces, in addition to operational improvements. Among them are technologies for electrification and hydrogen-based operation of agricultural and construction machinery. The Group continuously conducts TCFD-based climate scenario analyses and assesses risks related to regulation and extreme weather conditions. These analyses are actively used to shape the Group's strategy so that current and future risks are systematically reduced. Since June 2023, all Japanese CO₂-reducing projects have been registered under Japan's official J-Credit scheme. Up to and including March 2024, these initiatives have contributed to a total reduction of approximately 1,700 tons of CO₂. Overall, Kubota Group demonstrates a high level of ambition for sustainable development and invests significantly in both technological solutions and collaboration models that support a greener future. Human rights The Kubota Group considers respect for human rights to be a crucial prerequisite for business stability and responsibility. Through its Charter for Action and Code of Conduct, Kubota has implemented policies that anchor the company's responsibility for human rights throughout the value chain. In 2024, a risk assessment was conducted based on interviews and analysis of internal processes, which identified areas of particular impact, including economic security and labor rights. As a result, Kubota is working to strengthen its due diligence processes and establish concrete countermeasures to ensure respect for fundamental rights. Training and awareness are central elements of the effort, and ongoing training of management and key personnel is carried out to ensure understanding and compliance with the company's policies. In line with increasing global demands for responsible corporate behavior, Kubota has intensified its efforts, and the company expects to continue and expand this work in 2025. Kubota recognizes that potential human rights violations can pose a significant business and reputational risk, and has therefore anchored the work as an integral part of the group strategy. Social and employee conditions The Kubota Group places high priority on employee well-being and development, and has a strategy based on three pillars: DEI (Diversity, Equity & Inclusion), Purpose (individual development), and Promotion of Health & Productivity Management. The Group considers these elements to be fundamental to attracting, developing and retaining talent in a global context. In practice, this means that employees' individual skills and differences are seen as strengths. The Group actively works to promote diversity through targeted initiatives, including improved leadership training, career development, age-differentiated health education and updated HR processes. A particular focus is on non-Japanese leaders in global roles. In 2024, Kubota’s health management and stress control systems were combined into a new integrated health management system. The system uses data on working hours, engagement and health to identify risks and address causes of lost work performance. When we measure health-related losses per employee, the focus has traditionally been on medical costs and absence, but our analyses document that reduced attendance at work accounts for a whopping 87% of the total loss – and thus the most significant single factor. The Group also works to ensure that all employees experience a clear purpose in their work, which will support motivation and performance. There is a focus on improving the framework for development and well-being, so that employees can actively contribute to the company's goals while experiencing high satisfaction. The effort will continue in 2025 with further strengthening of personnel policies and implementation of best practices across the organization. Anti-corruption The Kubota Group has declared its commitment to the UN Global Compact and is working systematically to comply with its ten fundamental principles, including those relating to anti-corruption. The Group recognizes that corruption constitutes a significant obstacle to both economic and social development and is committed to combating it in all its forms. An important component of Kubota's anti-corruption efforts is the company's whistleblower program, which is administered centrally within the group. The program allows employees and stakeholders to anonymously report suspicions of unethical behavior. No cases were recorded in 2024, which is considered to reflect both a strong culture and preventive efforts. Anti-corruption is integrated into the Group's Code of Ethics and is regularly communicated to employees at all levels. Kubota also supports ongoing education and awareness, including training in ethical behavior, awareness of conflicts of interest, and responsibility in collaboration with suppliers and partners. Kubota plans to strengthen its efforts in 2025 through increased monitoring, compliance follow-up and stricter requirements for partners. The goal is to maintain a culture where integrity and transparency are fundamental values. We consider corruption to be a significant obstacle to economic and social development in the world. It has negative consequences for sustainable development and is a primary cause of poverty. Uncertainty relating to recognition and measurement There has been no uncertainty regarding recognition and measurement in the Annual Report. Unusual events The financial position at 31 December 2024 of the Company and the results of the activities and cash flows of the Company for the financial year for 2024 have not been affected by any unusual events.