Kitron: Q1 2014 - Continued revenue growth, but profitability remains challenging
(2014-04-23) Kitron ASA today reported that revenues continued to grow in the
first quarter, while profitability was under pressure. Important contracts were
secured. In order to improve profitability, Kitron has reorganised the sourcing
operations and will downsize the Arendal operations.
Kitron's revenues amounted to NOK 435.8 million, compared to NOK 378.3 million
in the first quarter of 2013. EBIT was reduced from NOK 4.0 million to NOK 2.0
million. Net profit amounted to a loss of NOK 1.7 million, a reduction from a
profit of NOK 1.4 million. Operating cash flow was minus NOK 17.4 million,
compared to minus NOK 15.9 million during the first quarter last year.
Dag Songedal, interim CEO, comments:
"While the increase in revenue was a positive aspect of this quarter, margins
are suffering from price pressure and are clearly not satisfactory. Kitron is
therefore taking action to improve profitability, as exemplified by the
reorganisation of the sourcing operations and the downsizing of the Arendal
* Important contracts secured
* Revenue continues to grow, profitability under pressure
* Downsizing of Arendal operations
* Reorganisation of sourcing operations
Important contracts secured
Kitron has secured important contracts in the first quarter. For instance,
Kitron AS in Arendal has received a new order worth approximately NOK 30 million
from Kongsberg Gruppen to supply electronics modules for integration in
Kongsberg's weapon guidance system Remote Weapon Station (RWS). In addition
Kitron has received a prognosis for orders of a further NOK 20 million.
The order backlog was nevertheless reduced by NOK 10.7 million in the quarter
and ended at NOK 707.4 million, which is a reduction of NOK 50.0 million
compared to last year. The reduction is foremost within the Offshore/Marine and
Revenue continues to grow, profitability under pressure
While revenues grew, profitability was under pressure in the quarter.Â The main
drivers affecting profitability are margin pressure on both new and existing
customers as well as a negative development in product mix as low-margin
products have increased in volume. In addition, payroll expenses are higher.
Downsizing of Arendal operations
The Arendal operations in Norway will be downsized by 60-100 employees during
2014, compared to the level at year-end 2013. The reduction is a consequence of
lower activity due to transfer of products and customers to other parts of
Kitron as well as an expected decline in revenue in the offshore sector during
the second half of 2014. In addition, the general cost base in Norway will be
Reorganisation of sourcing operations
The sourcing operations has been reorganised to accommodate cost savings in the
organisation. The changes involve a reduction of the global sourcing staff and
closer cooperation between the global and local sourcing activities.
Kitron expects a positive development in the Swedish and German markets. This
suggests 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
Overall, Kitron expects growth in revenue in 2014, partly explained by
development in foreign exchange. As a result of the reorganisation and other
actions taken, Kitron expects the profitability to improve during the year.
Enclosed in pdf are the quarterly report and the presentation.
For further information, please contact:
Dag Songedal, interim CEO, Tel: +47 913 86 468 or e-mail:
Cathrin Nylander, CFO, Tel: +47 900 43 284 or e-mail:
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.
Kitron Q1 2014 Report:
Kitron Q1 2014 Presentation:
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Source: Kitron ASA via GlobeNewswire