Defense Deals And Nordic Expansion from Kitron Group: EMS@C-Level with CEO Peter Nilsson

A Nordic acquisition with outsized impact: I sit down with Kitron Group President and CEO Peter Nilsson to unpack why bringing DeltaNordic into the Kitron family is more than a geographic play. It unlocks entrenched capability in electrical cabinets and control boards for combat vehicles and naval platforms, backed by fresh orders and the kind of incumbency that turns programs into multi-year revenue. We connect the dots between tier-one defense relationships, predictable volumes, and a growth path that targets 1.5 billion euros in top line by 2030. There's also an enthusiastic testimonial here for the great insight provided, and work done, by Shaan Tharani at MP Corporate Finance in supporting and advising Kitron in their M&A activity.

What makes this strategy work is the one-company operating model. Shared production platforms, common equipment, unified processes, and the same training and incentives across sites build speed that scales. That cohesion pays off when a site faces an end-of-product-life issue or a customer shift; the group can redeploy talent, rebalance load, and protect margins. Peter explains how this approach turns footprint into agility, and why integration discipline is the quiet engine behind reliable delivery in defense and beyond.

We also map the market terrain for 2026. Connectivity looks set for the fastest growth thanks to short product cycles and rapid innovation. Industrial shows a gentle rebound. Electrification holds steady after a surge, with data center-driven storage and grid upgrades still critical. Medical remains the smallest slice, but targeted moves into high-level assembly and carve-outs could unlock fresh value by letting OEMs focus on R&D and go-to-market while EMS partners scale manufacturing. Along the way, we discuss Europe’s M&A appetite, cash-rich balance sheets, and why selective acquisitions amplify organic growth rather than replace it.

If you’re tracking defense supply chains, EMS strategy, or how standardized operations beat complexity, this conversation offers a clear view of what’s next. Follow, share with a colleague who watches the Nordic EMS space, and leave a review with your biggest takeaway so we can keep raising the bar.

EMS@C-Level is hosted by global inspection leaders Koh Young (https://www.kohyoung.com) and Global Electronics Association (https://www.electronics.org)

You can see video versions of all of the EMS@C-Level pods on our YouTube playlist.

Transcript

Welcome And Guest Introduction

SPEAKER_00 0:08

From my house to yours, welcome to EMS at Sea Level. I am joined by Peter Nilsson from Keatron. Peter, great to talk to you. Always a pleasure to catch up. Um exciting news coming out from you guys recently. Let's start with the acquisition of Delta Nordic. That seems a very smart and strategic move.

Capabilities In Defense And Naval Systems

SPEAKER_01 0:29

Yeah, it adds a new capability to our group. We've tried to get into that market which they uh are really dominant in, which is uh electrical systems, electrical cabinets, and and the whole sort of uh uh control boards for for combat vehicles. And also now with a new with a new uh order that they just signed uh just days before we acquired them with uh with uh for naval vessels doing the same sort of thing. So very excited about that. Uh large volumes, a lot of orders for those combat vehicles through uh through uh BAE Heglunds as their main customer, about uh four what they do.

SPEAKER_00 1:06

Yeah, kind of a tier one tier one supplier, uh and you've been their um EMS supplier in the past.

SPEAKER_01 1:14

Yes, yes, very close with the customer. And uh I mean I had a discussion with their largest customer that the day before we signed. And and uh they knew something was going on, they didn't know uh, and and so the so we they presented us and they presented Keito, and of course they knew who we were, and and and and the feedback was we're so relieved that it was you guys.

SPEAKER_00 1:40

So there you go. That's that's great to hear, isn't it? And when you look at something like that, you know, strategically when you're looking at acquisitions, it's often geography, it's market, it's capability. Um, it's kind of giving you all those things. Give me a taste for the scale and size of their business and what their um footprint and capabilities are.

Sites, Footprint, And Mining Niche

SPEAKER_01 1:59

Well, they have three sites. They have two in in Sweden, just one John, one just outside of Stockholm, and then uh up north in in Sweden, in a place you can even pronounce it's called Earnquilzvik. That's where they have the the uh the there's a dockyard there, so that's where there's shipbuilding, and uh that's also where all of these uh combat vehicles are built. Uh in addition, they have a small, small unit in in Nanjing in China, only 19 employees, and really they serve the mining industry over there, which is another speciality of uh what they do.

Scale, Revenue, And Growth Outlook

SPEAKER_00 2:34

Yeah, it's another interesting market for you. What kind of number of people sales do they do?

Defense Super Cycle And Targets

SPEAKER_01 2:40

It's about it's about 200 people. It's about uh it's about uh 50 million euros for this year and uh and uh uh about 75 million euros for next year. Wow, that's um that's a substantial growth as well. I mean uh uh comparing to to the orders that we've uh we've announced over the past uh you know back in September we announced a 100 million euro order, and yesterday we announced a 55 million follow-on uh euro order. So compared to those the values that in contracts that Kitram win wins, it looks kind of small. But but the the the growth for this company and the and the real volumes are in in 27, 28, and 29. Yeah. So when we're looking at that time frame, we're probably looking at somewhere in the vicinity of of uh over 400 million euros accumulated over over the next four years.

SPEAKER_00 3:35

Yeah, and that's that's one of the factors that you get out of those um that defense industries and that long-termism and those.

SPEAKER_01 3:56

So that they can sort of look at, you know, what are they doing? They they from from from the the combat vehicle stuff to to the really large cabinets that that are delivered to the to the pulp industry, for example, that that regulates and monitors processes. So so some pretty big stuff that's uh very complicated. It's impossible to sell that unless you're already doing it.

European M&A Trends And Cash Readiness

SPEAKER_00 4:21

Yeah, that's right. But it's exciting for your sales and marketing team to get over there and get their teeth into and understand it. And talking about that, what they're doing, the growth you're expecting with those and those those two very large orders that you've announced um recently, that connects with what you also announced a few days ago, which is this defense investment super cycle that's accelerating growth. You really do have some ambitious targets going forward, and um defense is a big driver in that. It is, it is.

One-Kitron Operating Model And Integration

SPEAKER_01 4:49

Uh, we I think if we if we can do 10% uh uh uh kager uh on on our non-defense stuff, and it's about 500 million euros uh uh both that last year and this year, we'll be happy with that. But the defense side, we see a growth above 20 year over year over year until for the next five years. Uh and and that's gonna be driving the the entire top line for the company and and be allowing us to reach targets of of uh almost doubling the company or more than doubling the company in in revenue. So we have a we've set a midterm target of one and a half billion euros of top line. A lot of that is going to be organic, uh, and then there may be a few acquisitions in it also, but they're not gonna be the major driver. It's gonna be the customers that that have signed up with us uh that continue to grow with us and stay with us. Yeah. And that 1.5 billion, that's that's um over the next three, four, five years when we have we have we have not set uh we've set the timeline dot dot, but but yeah, but it most likely it looks to be on this side of 2030, right?

SPEAKER_00 5:57

So it could be it could be 2029 or maybe 2028, but the exciting times, and it's interesting when we look at what else has been going on in Europe over uh over the last quarter of of this year, but this year generally, there's been a lot of um a lot of movement in that top five and a lot of uh a lot of substantial growth and acquisition and um quite a lot of it being driven by northern Europe. Is that a trend that surprised you? Have their recent acquisitions, um excluding yours, obviously, been been uh a surprise to you?

M&A Advisors And Market Insight

2026 Opportunities Across Sectors

SPEAKER_01 6:32

No, not really. I think they these are uh profitable entities. Uh they're looking to expand and grow. Maybe they're not there they've struggled also a little bit lately with growth uh from from the regular commercial markets. Uh and and they've some of them, you know, they don't many have not had a stringent dividend policy. Uh and they've been accumulating cash to a very large extent. So so with cash, and maybe some of them uh use some equity also or or or some debt to finance it, but uh they have room in their balance sheet, all of them, to do something. Yeah, of course, that doesn't mean that from our perspective, right? We I I think I've had a crash course, uh an MBA in MA this last year and this year, because we've looked at so much. And and had uh some some gone pretty deep into several processes. But at the end of the day, it's sort of refined my strategy for the company, how I want Kitron to be. And and we're we're very much a one ketron company. We mean it's same, same, same production platforms, same equipment across all sites, same processes, same training for employees with with the online training for everybody, uh, same same reward system across across the whole group, across the world when it comes to targets and variable pay compensation and things like that. That that's created a mobility in our workforce. So we people can can seamlessly go over and work from Poland into Sweden, from Sweden into Norway, from Norway down to Lithuania if they have to, and utilizing the expertise we have across the group, and everybody's sort of uh uh on a first name basis with each other because you have that interaction uh down to down to the operator level. On a management level, it's it's it's easy. But it here we have also on the operator level, and that that creates uh uh everybody talks about the ketron family, and that that's the sort of uh thing that I want to make sure that when we when we do an acquisition, we have that possibility. Yeah. Because if somebody gets in trouble, you know, if if one site gets in trouble, and they do, right? There's a they can have a customer leave, they're end of life on a product, and and really they were depending on that. If you don't integrate, then those guys are left out there, you know, in the cold. And eventually, you know, it's not gonna go well. But if you if you're part of that family, you know, you will refocus uh business development and everybody will be working with that site in trouble and but do everything they can to quickly backfill it.

SPEAKER_00 9:16

Yeah, and that's important for the um, you know, for the mothership and the and the whole group generally, isn't it?

SPEAKER_01 9:21

Right, because if you do a big investment, right, you're doing you're you're you're acquiring something, you know, you want it to live for a very long time.

SPEAKER_00 9:29

Yeah, you absolutely do. And I think you know, we've talked about this before, Peter, as you extend your footprint, you build a substantial footprint. That footprint means nothing if you don't have the agility within that footprint to really leverage it. It's uh speed is everything scalable. Yeah, yeah. Speed and adaptability is completely scaled. It's interesting what you said about learning so much about the MA market. You uh it's in it's in the announcement, so it's not a secret. You have a first class um advisor on that. That's uh obviously done a good job for you.

SPEAKER_01 9:59

So uh we're very happy with Sean and and his uh his entire team. They've been supporting for a year and a half now, actually.

SPEAKER_00 10:07

So yeah, yeah, yeah, and you know, understanding the market and actually having a an MA advisor that really understands how the EMS EMS market works is uh is MP Finance are a good partner.

SPEAKER_01 10:20

I I would recommend it to anyone instead of having your own person here here. You get a team, and I mean the the the cost is competitive, right? And you get somebody who's sort of really focused on it.

SPEAKER_00 10:33

Yeah. So yeah, Sean is um incredibly knowledgeable about what's going on in the EMS industry, and we talk regularly, and uh I really enjoy his insights of what's going on. So as we close out 2025, um it's been a good year for you. Next year looks exciting, particularly in the defense sector. Interested that you talk about 10% Kager in the non-defense sector as well. I think um it's it's probably a little bit harder there than it is elsewhere. But what do you think are the big challenges and opportunities for 26?

SPEAKER_01 11:07

I think the opportunities are are are are in the we we have five market sectors and and we see the strongest growth potential in the connectivity market sector, about maybe upwards 20 percent. Because product life cycles tend to be short. There's a lot of innovation. So if you have a good product out there, you're launching good product, you'll take market share. And hopefully you're with Ketron, so so the business will will grow very, very rapidly. Uh industrial sector, we're starting to see some some of it revive also, and and and over the past six months, I've seen some strength in it. Uh, it should grow probably maybe five percent next year. Uh the electrification sector, it's a lot of grid uh uh uh and energy transmission and energy storage solutions. So there's a there's a strong drive on on in the US right now, driven by data centers. Obviously, everybody's about data centers. So but energy storage there is a big is a big part of that data center because of the fluctuations and the grid there, you're it with an energy storage unit, you can get a stable flow of of uh of electricity and power into your data centers. Uh and then also utilize uh sort of uh green options with solar and wind to recharge these if you want to. Yeah. So that's the big driver on on electrification. But overall, I see flat on electrification because uh it's grown so much, so it's sort of just stable right now. Around 170 million euros for us uh within electrification. Medical devices start to see some growth. It's our smallest area, it hasn't grown as fast as the others over years, so it's only around 8% of what we do. There, we're looking at doing some maybe strategic acquisitions, focus on somebody that does high-level assembly of of uh of medium to high level medical products or a carve out, right? We have customers that they shouldn't be doing manufacturing. Yeah, we should be doing all of it for them, right? So we'll we'll put that on the agenda and see if we can make something uh uh uh happen there.

SPEAKER_00 13:11

Yeah, I think the carve out option is fascinating, and I think it's one of these things that we need to be constantly thinking about is how do we how do we make that currently in-source business, outsource business, because it can be such a successful partnership for for both you and for the customer, and they can focus much more on what they're really good at, which is product development, market penetration, and all those all those good things. So, yeah, we certainly um want to continue to preach the uh EMS option to uh as many people as we can. Well, congratulations again, Peter. Look forward to watching what you do in 26 and look forward to um seeing you very soon in the new year. But in the meantime, thanks so much for your time.