Interim report January-September 2018

Press release
Malmö, October 19, 2018

Interim report January-September 2018

Acquisition driven growth and improved profitability

July – September 2018

• Net sales were SEK 508.5 million (465.3), an increase of 9.3 percent.
• Net sales for the category Products were SEK 426.4 million (416.5), an increase of 2.4 percent. Net sales for the category Services were SEK 82.1 million (48.8), an increase of 68.2 percent.
• The gross margin increased to 31.5% (29.4%). For Products, the gross margin increased to 28.4 percent (27.8) and for Services the gross margin increased to 47.3 percent (42.3).
• The operating profit (EBIT) was SEK 33.3 million (21.5), which corresponds to an operating margin of 6.5 percent (4.6). The operating profit includes restructuring costs of SEK 4.3 million (1.3).
• Profit after tax for the period was SEK 26.5 million (15.7).
• Earnings per share were SEK 1.12 (0.66).
• Free cash flow before acquisitions was SEK 31.4 million (6.4).

Outlook

Unchanged outlook: Our expectations for 2018 are sales in the range SEK 1.9 – 2.0 billion and an operating profit (EBIT) in the range SEK 105 – 135 million, including Welbeing but excluding any further acquisitions and restructuring costs.

CEO comment

During the quarter, Doro’s net sales increased by 9.3 percent and the gross margin rose by 2.1 percentage points compared with the same quarter last year. Net sales increased by 68.2 percent in our Services category. Developments are stable in all markets, and the integration of the British telecare company Welbeing is going as planned. During the period we also took part in a number of tenders in the Nordics with positive results. Despite a continued declining market trend for mobile phones, especially in Europe, sales in the Products business category increased by 2.4 percent. It is in the USA in particular that we are seeing increased growth, mainly due to a successful sell in of our new smart feature phone, the Doro 7050. Together with the launch of the equivalent model for the European market, the Doro 7060, we hope to be able to win additional market shares and strengthen our position as a leader in the senior segment.

Our market is evolving as digitalisation continues. Connected and smart homes are becoming increasingly common, and our seniors are naturally exposed to new technology. We are continuously mapping out and measuring our market. Doro recently conducted a broad-based European study that measured the attitude of seniors towards digital technology in everyday life. It clearly showed that our target group has a large and growing interest in smart solutions that can facilitate communication and provide greater safety in the home. The result confirms that Doro’s strategic focus, which is based on offering complete service-related solutions for seniors, is meeting the market’s needs.

During the period we have taken several strategic initiatives that are in line with our stated plan. Group management has been reinforced with three new members and the business is now divided into two focus areas - private and public customers. This new classification means that each focus area will be responsible for both products and services aimed at each customer group. We are also continuing to develop our service business in the markets where the Doro brand already has a strong position in the senior target group. Response by Doro, our service linked to alarm monitoring centres, is ready for launch during the fourth quarter. As a further step in our strategic direction, we have moved our head office to Malmö. Having new, bigger premises means that we have been able to merge a number of offices that deal with both products and services. We can now work from a bigger, shared platform, which provides the conditions to be able to drive our transformation at a faster pace.

We are at the same time working to improve our cost base. During the quarter, we started to centralise warehouse operations. Having previously used eight warehouse centres in Europe, we will now have just one large warehouse in the Czech Republic. The Swedish inventory has already moved and the others will be following in the next few months. The previously announced transformation programme for the organisation is proceeding according to plan. We are working to accelerate the development of our service business, which will require new skills and resources.

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 the media are welcome to join the presentation via https://edge.media-server.com/m6/p/mw3yr7ht or telephone at 09.00 CET on 19 October 2018. 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/sv/investerare/rapporter-och-presentationer/presentationer/.

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 October 19 2018, at 08.00 CET.

Attachment

• EN_Doro_Q318