Kitron: Q3 2014 - Continued growth outside Norway

(2014-10-22) Kitron ASA today reported revenue growth for the third quarter. Profitability in Arendal continues to be challenging, but this is partially compensated by improvements in other units.
 
Kitron's revenues amounted to NOK 382 million, an increase from 347 million in the third quarter of 2013.
 
EBIT was NOK 6.9 million, compared to NOK 7.6 million last year. Net profit amounted to NOK 4.8 million, an increase from 3.2 million. Operating cash flow was negative NOK 9.7 million, compared to negative NOK 33.9 million.
 
The order backlog was NOK 807 million, compared to NOK 847 million at the same time last year, showing the effect of lower activity within the Norwegian oil service market. On the other hand, there was strong growth in the Defence/Aerospace order backlog.
 
Dag Songedal, interim CEO, comments:
"The situation in Arendal is still challenging, but cost initiatives are improving the outlook. Other units are showing very positive developments. I would particularly like to highlight the important defence orders received by our subsidiary in the United States. This validates our strategy in this segment."
 
* Important defence orders for Kitron Inc., USA
* Continued revenue growth
* Growth and improved profitability outside Scandinavia
* Restructuring for competitiveness of the operation in Norway
 
Important defence orders for Kitron Inc., USA
In June and July, Kitron Inc. received orders of NOK 18 and 13 million respectively, from Kongsberg Protech Systems related to electronic modules that are part of Kongsberg Protech's Remote Weapon Station (RWS). In addition, in the beginning of October, Kitron Inc. received a new order worth approximately NOK 51 million from Kongsberg Gruppen.
 
The orders are both connected to the CROWS program in the United States. Forecasts have also been received for upgrades and repairs of units that have already been delivered for the CROWS program. These forecasts indicate a volume of approximately NOK 125 million.
 
Continued revenue growth
Revenues increased 10 per cent compared to the third quarter last year. There was revenue growth in all market sectors except Offshore/Marine. Growth was particularly strong in Defence/Aerospace and Industry.
 
Growth and improved profitability outside Scandinavia
Revenues primarily grew outside Scandinavia. Lithuania, China and the United States collectively grew by 42 per cent compared to the third quarter last year and the results have increased over 200 per cent over the same period.
 
The increase in the US is due to the above-mentioned orders within the Defence sector. In China growth comes from existing customers primarily in the Industry and Medical sectors ramping up volume. For Lithuania, growth is with existing customers within the Industry sector.
 
Restructuring for competitiveness of the operation in Norway
The Norwegian operation is restructuring in order to secure a competitive setup for the future. Several activities are initiated to reduce operational cost and increase profitability, and further actions are evaluated.
 
The current plans imply a reduction of 85 employees during 2014. The full reduction in number of employees will be in effect from year-end 2014, and during the fourth quarter the need for further reductions will be assessed.
 
Outlook
Kitron expects growth in revenue in 2014, partly explained by development in foreign exchange. The growth in the first nine months has been significant, while the expectations for the fourth quarter are slightly lower than in 2013.
 
In spite of revenue growth, profitability is not satisfactory for the first three quarters 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 08:30 a.m. 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=19429169
 
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.