NN Group Earnings: Solid Dividend Raise Accompanies Sound Capital Generation

NN Group reported another solid set of results, with operating capital generation of EUR 1.9 billion in 2023 versus EUR 1.711 billion in the prior year. As result, the group raised its 2025 target to EUR 1.9 billion. The amount of capital available for the business to invest and distribute to shareholders rose to EUR 1.4 billion in 2023 from EUR 1.3 billion. Commensurately, NN raised its 2025 free cash flow target to EUR 1.6 billion from EUR 1.5 billion and increased its full-year dividend to EUR 3.20 per share, above the EUR 3.05 consensus forecast as per LSEG. We had estimated EUR 2.69 per share. The final dividend of EUR 2.08 per share will be paid in cash or stock on June 20; on May 28, the shares will trade excluding this dividend. This means NN shares offer an 8.4% dividend yield, bolstered by an annual share buyback that has been raised to EUR 300 million from EUR 250 million. Our forecast for earnings per share was off, with NN delivering EUR 4.04 in 2023 versus our EUR 4.90 prediction.