Interim report January-June 2018

Press release
Lund, July 13, 2018

Interim report January-June 2018

Transformation towards service business continues

April – June 2018

• Net sales were SEK 424.2 million (446.0), a decrease of 4.9 percent.
• Net sales for the category Products were SEK 359.9 million (400.5), a decrease of 10.1 percent. Net sales for the category Services were SEK 64.4 million (45.5), an increase of 41.5 percent.
• The gross margin increased to 36.5% (31.1%). For Products, the gross margin increased to 34.7 percent (30.2) and for Services the gross margin increased to 46.8 percent (38.0).
• Operating profit (EBIT) was SEK 26.1 million (19.1), which corresponds to an operating margin of 6.2 percent (4.3). The costs of the acquisition of Welbeing had an effect on the financial results of SEK 4.0 million.
• Profit after tax for the period was SEK 20.8 million (15.3).
• Profit per share was SEK 0.87 (0.65).
• Free cash flow before acquisitions was SEK 22.8 million (-1.4).

Outlook

We firm up on our outlook for 2018 and expect sales in the range SEK 1.9bn – 2.0bn and an operating profit (EBIT) in the range SEK 105m – 135m, including Welbeing, but excluding any further acquisitions or restructuring costs.

Our previous expectation was sales in the range SEK 1.9bn – 2.1bn million and an operating profit (EBIT) in the range SEK 100m - 140m, excluding acquisitions.

CEO comment

During the second quarter, Doro continued to work towards its objective of being the leading technology enabled care solutions company in Europe. Step by step, we are transforming the business to offer the market complete, service-related solutions.

During the quarter, we acquired the British telecare company Welbeing. The United Kingdom is the largest telecare market in Europe with about 1.7 million safety alarms connected. With Welbeing’s attractive market position, we now have a platform for expanding Doro’s service offering in the British market. In the first stage, we are helping to drive the transformation from analogue to digital alarms and in the second stage we now have the prerequisites to capitalise on our mobile business with sales of services.

Doro’s sales for the period decreased by 4.9 percent compared with the same period last year. Organically, sales decreased by 6.6 percent. Obviously we are not happy with this and we see it as evidence of the great need to further accelerate our transformation. The loss of sales can mainly be attributed to the greater competition we are facing in markets outside the senior segment in Central and Eastern Europe and the Nordic Region. Sales for our Product category decreased by 10.1 percent for the same reason. At the same time, we can see a more stable senior market where we are maintaining our market share. Services increased its sales by 41.5 percent. Sales for Services include the acquisition of Welbeing, which has been included in our books since 1 June 2018. Organically, Services grew by 25.5 percent during the quarter.

Although we are making significant strides in the services segment, the greater part of our sales is still in the Products category. We have therefore now launched new feature phones with smart functions that are adapted for 4G. The first launch was Doro 7070 in the Nordic region at the end of the period. Further models will be rolled out in the rest of Europe and in the USA during the third and fourth quarters respectively.

We are continuing to develop our services offering and the first stage of this, Response by Doro, will be launched in October this year. Response and SmartCare by Doro are examples of integrated, smart solutions that make it possible for relatives and connected alarm centres to receive alarms that are activated automatically or manually by the user. With this concept, we bring our service and telephone offerings together to create an effective ecosystem that we can build on.

Doro’s move towards selling technology enabled care solutions involves a change in competences, which means that the business will be reinforced with new competences in selected areas. In order to ensure this transformation, we are now launching a transformation program that also aims to reduce costs by an estimated SEK 30 million on a yearly basis.

Robert Puskaric, President and CEO

For more information, please contact:
Robert Puskaric, President and CEO Doro Group, +46 (0)70 519 34 07
Carl-Johan Zetterberg Boudrie, CFO Doro Group, +46 (0)70 335 84 49
ir@doro.com

Doro’s report to be presented via audiocast
Analysts, investors and media are welcome to attend a presentation of the Q2 report via https://edge.media-server.com/m6/p/7mkhfhdx or by telephone at 9:00 CET on July 13, 2018. Doro’s President and CEO Robert Puskaric and CFO Carl-Johan Zetterberg Boudrie will hold the presentation and answer questions. Before the start of the presentation, the presentation material will be available at: https://corporate.doro.com/investors/reports-and-presentations/presentations/

Call-in numbers
Sverige:                               + 46 (0) 8 505 564 74
Frankrike:                            + 33 (0) 170 750 725
Storbritannien:                     + 44 (0) 203 364 5374
USA:                                    + 1 855 7532 230

About Doro

Doro develops telecom products and services for seniors to lead full and rich lives: to do things they want to do more easily as well as the things they thought they might never do. The global market-leader in senior mobile phone, Doro offers easy-to-use mobile phones and smartphones, mobile applications, fixed line telephony with loud and clear sound. Within Doro Group, Doro Care offers social care and telecare solutions for elder and disabled persons for independent and safe living in their own homes. Doro AB is a Swedish public company and its shares are quoted on the Nasdaq OMX Stockholm exchange, Nordic List, Small Companies. Net sales of SEK 1,924 million (EUR 200 million) were reported for 2017. www.doro.com

This information is information that Doro AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, on July 13 2018, at 08.00 CET.

Attachment

• Doro_Q218_EN