Interim report January-March 2019

Press release
Malmö, May 3 2019

Interim report January-March 2019

Good sales and stable results in the transition to services

January – March 2019

• Net sales were SEK 466.2 million (419.6), an increase of 11.1 percent.
• Net sales for the category Products were SEK 380.7 million (366.8), an increase of 3.8 percent. Net sales for the category Services were SEK 85.5 million (52.7), an increase of 62.2 percent.
• Gross margin decreased to 31.1 percent (33.8). For Products, the gross margin decreased to 27.4 percent (32.2) and for Services the gross margin increased to 47.8 percent (44.5).
• Operating profit (EBIT) was SEK 21.2 million (24.9), which corresponds to an operating margin of 4.5 percent (5.9).
• Profit after tax for the period was SEK 15.4 million (18.6).
• Earnings per share was SEK 0.65 (0.78).
• Free cash flow before acquisitions was SEK 19.2 million (32.2).

Message from the CEO

Net sales during the period amounted to SEK 466.2 million (419.6), an increase of 11.1%, thanks to positive development in both Products and Services. The operating margin for the quarter was 4.5 percent (5.9).

During the first quarter we have continued to develop the service business, which now accounts for more than 18% of our total sales. The new organisation that was launched last year, which now targets private and public customers, is having positive effects. Business in the public sector is based on winning public procurements, something we are now addressing with a better structure and offer.

Organic growth for Services is 10.4 percent for the quarter, with the increase in sales in Norway prominent. Our subsidiary Welbeing, which we acquired in June 2018, continues to drive sales growth in the United Kingdom. During the period we have appointed a new country manager with extensive industry experience, which we hope will give even better results on the contract side. We continue to promote technology enabled care services for private individuals, such as Response by Doro. During the quarter the service was launched with one of Scandinavia's largest electronic retail chains, Elkjöp/Elgiganten.

The development of our Products business category has been positive compared to the same period last year, despite a continued weak general market for mobile phones and consumer electronics. This is a sign that we have a strong brand that stands up in competition. It is primarily in feature phones that we have taken up a position and in total product sales grew by 3.8 percent during the period.

Our sales development in the USA continues to show good growth figures, as in recent quarters. Our feature phone adapted for 4G, 7050, is a product that shows good traction also after its launch period. At the same time, challenges continue in Central and Eastern Europe, particularly in Germany. The German market had had a negative development for eleven consecutive quarters which has pushed forward structural changes at one of the largest electronics chains, affecting the quarter negatively.

The quarter's sales increase and results show that we have the ability to generate a solid cash flow despite the fact that we are going through a transition phase to become a more service-based company. We are now continuing to optimise operations and we are further reviewing our organisation in order to adapt to prevailing market conditions.

More acquisitions in technology enabled care services are also on the agenda, and we are constantly evaluating companies that could match for our strategy. My assessment is that we have both the knowledge and the ability to drive consolidation on the European market. The acquisition of Welbeing almost a year ago is one such example. Now we would like to see more.

Outlook

We reiterate our previously communicated outlook.

The overall market for mobile phones is expected to remain challenging, Doro has maintained and is expected to maintain or increase market share in the senior segment.

Services is growing organically and we are active in multiple acquisition discussions and we expect continued double-digit growth for Services in 2019.

The profitability is expected to remain at a healthy level.

For further information, please contact:
Robert Puskaric, President and CEO, +46 (0)70 519 34 07
Carl-Johan Zetterberg Boudrie, CFO, +46 (0)70 335 84 49
 ir@doro.com
Doro’s report is presented via an audiocast
Analysts, investors and the media are welcome to join the presentation via https://edge.media-server.com/m6/p/qfih5y7d or telephone at 09.00 CET on 3 May 2019. Doro’s President and CEO Robert Puskaric and CFO Carl-Johan Zetterberg Boudrie will give the presentation and answer questions. The presentation is available in advance on https://corporate.doro.com/investors/reports-and-presentations/presentations/
Telephone numbers
Sweden:                               + 46 (0) 8 505 583 52
France:                                 + 33 (0) 1 7075 0718
United Kingdom:                   + 44 (0) 303 300 9272
USA:                                    + 1 646 722 4902

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 1,906 million (EUR 186 million) were reported for 2018. 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 May 3 2019, at 08.00 CET.

Attachment

• Doro_Q119_eng