Kitron: Q2 2014 - Strong order intake, profitability still challenging

(2014-07-22) Kitron ASA today reported that revenues and order backlog grew in the second quarter, but profitability is still challenging. As previously announced, Kitron is therefore downsizing the Arendal operations.

Kitron's revenues amounted to NOK 457 million, compared to NOK 430 million in the second quarter of 2013. EBIT was reduced from NOK 9.3 million to NOK 6.9 million. Net profit amounted to NOK 3.9 million, a reduction from NOK 7.8 million. Operating cash flow was NOK 9.5 million, compared to NOK 30.3 million during the second quarter last year.

Order intake in the quarter was NOK 603 million, which is 44 per cent higher than for the second quarter 2013. The order backlog ended at NOK 859 million, which is 15 per cent higher than at the same time last year.

Dag Songedal, interim CEO, comments:
"This was a mixed quarter. We won some very important orders, and both revenue and order backlog developed positively. However, margins and profitability are still not satisfactory. Also, in geographical terms, the quarter was mixed. While we have to downsize in Norway, Lithuania and China show strong growth and improved profitability." 

Air defence order from KONGSBERG
Kitron Arendal received an order from Kongsberg Defence & Aerospace for military communications equipment. The order is related to contracts KONGSBERG has signed with Raytheon for supplying the NASAMS air-defence system to Oman. The order has a value for Kitron of NOK 80.7 million, and will be fulfilled in 2014 and 2015.

The order increase from both last year and in the quarter is primarily within Defence Aerospace and split between Norway and the US. The US increase is related to current customers and products, and reflects an increase in activity in this market.

Continued revenue growth, but profitability in Arendal challenging
Revenue grew in the quarter, but year-on-year revenue growth is not as strong as in the first quarter. Margins continue to be challenging, especially for the Arendal operation. Looking to other parts of Kitron, the development is decidedly more positive compared to last year, for instance in Lithuania and China.

Arendal downsizing
The current plans imply a reduction of 85 in the number of employees during 2014. At the end of June, 40 of these have already left the company. The main focus in the third quarter will be to ensure that the effects of the initiated actions are fully realized and to initiate further actions to improve profitability.

New CEO appointed
Peter Nilsson is appointed new CEO of Kitron ASA and will take up his position in November 2014 at the latest. Peter Nilsson has held several senior and executive leadership positions for Swedish and US companies: PartnerTech, Rimaster, Sanmina, and Ericsson, latest as President, Electronics Technology Division, at PartnerTech AB.

Outlook
Kitron expects a positive development in the Swedish and German markets, with growth for the factories in Sweden and Lithuania. Growth is also expected in China and the US, whereas a lower volume is expected in the Norwegian operation.

Kitron expects growth in revenue in 2014, partly explained by development in foreign exchange. The growth has been significant in the first half of the year, while the expectations for the second half of 2014 are closer to the level in 2013.

In spite of revenue growth, profitability is not satisfactory for the first half year and actions are initiated to rectify the situation and target improved profitability.

Enclosed in pdf are the quarterly report and the presentation.

The interim report is presented at 14:00 CEST at Kitron ASA's head office, Olav Brunborgs vei 4, Billingstad.

The presentation will be given in English by interim CEO Dag Songedal and CFO Cathrin Nylander and will be distributed through webcast at the same time at the following link: http://webtv.hegnar.no/presentation.php?webcastId=19370853

For further information, please contact:
Dag Songedal, interim CEO
Tel: +47 913 86 468 or e-mail: dag.songedal@kitron.com

Cathrin Nylander, CFO
Tel: +47 900 43 284 or e-mail: cathrin.nylander@kitron.com

Kitron is one of Scandinavia's leading electronics manufacturing services companies for the Defence, Energy/Telecoms, Industry, Medical equipment and Offshore/Marine sectors. The company is located in Norway, Sweden, Lithuania, Germany, China and the United States. Kitron had revenues of about NOK 1.6 billion in 2013 and has about 1,200 employees. www.kitron.com

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.