Kitron: Q2 2017 – Strong growth and milestone EBIT margin of 7%

(2017-07-13) Kitron ASA today reported strong revenue growth and the achievement of an important margin goal in the second quarter.

Kitron’s revenue in the second quarter amounted to NOK 649 million, a 16 per cent underlying growth compared to 563 million in the same quarter last year.

Profitability expressed as EBIT margin was 7.0 per cent, compared to 5.9 per cent in the second quarter of 2016, an EBIT growth of almost 38 per cent.

Peter Nilsson, Kitron’s CEO, comments:
“The EBIT margin is in line with the long-term target that we presented at the Kitron Capital Markets Day in February 2016, and this is the first quarter in which we have achieved this ambition. While the margin will vary from quarter to quarter, this is an important milestone in the improvement process that has been under way the past couple of years. We also deliver on growth and capital efficiency, and at the same time we are investing in capacity and capabilities in order to improve our competitiveness further. We’re seeing growth in general with our customers. Together with new business awards Kitron demonstrates stronger growth than the industry in general. The strong first six month report of 2017 presented today proves that Kitron creates value for its customers and has a strong platform for further growth.”

Strong revenue growth
Kitron’s revenue for the second quarter increased by 15 per cent compared to the same period last year. Adjusted for foreign exchange effects, the increase was 16 per cent. Growth compared to the same quarter last year was particularly strong in the Industry market sector. Defence/Aerospace and Energy/Telecoms also recorded solid growth.

Improved profitability
Operating profit (EBIT) was NOK 45.5 million, compared to 33.1 million last year, an increase of 37 per cent. EBITDA was NOK 59.0 million, an increase of 31 per cent compared to last year.

Net profit amounted to NOK 31.4 million, an increase from 21.4 million. This corresponds to earnings per share of NOK 0.18, compared to NOK 0.12 last year.

Solid order backlog
The order backlog ended at NOK 1 018 million, an increase of 3 per cent compared to last year. Orders received in the quarter were NOK 590 million.

Improved capital efficiency
Net working capital increased by 8 per cent from NOK 521million to NOK 565 million compared to the same quarter last year, continuing the trend of decreasing net working capital compared to revenue. Operating cash flow was NOK 63.1 million, compared to 61.0 million in the second quarter 2016.

Key contracts won in the quarter
Kitron signed important contracts with key long-term customers in the second quarter.

In May, Kongsberg Defence Systems awarded Kitron a NOK 34 million order for military communications equipment. In June, Kitron signed a contract with a potential value of NOK 600 million over a five-year period with Husqvarna Group. The new agreement includes five products for the Husqvarna Robotic Lawn Mowers product range and is in addition to existing manufacturing volumes.

Investing for further growth
Over the past years, Kitron has invested in its facilities, ensuring that they are modern, highly competitive and able to handle expected growth. In the second quarter, the move and major upgrade of the Swedish plant in Jönköping was completed, with the official opening being celebrated in May.

In the second half of 2017 Kitron will invest in SMT equipment for increased capacity in the US, Lithuania and China. In addition, further investments in Norway, Sweden and Lithuania will focus on automation and robotics.

Outlook
For 2017, Kitron expects revenue to grow to between NOK 2 150 and 2 350 million. The EBIT margin is expected to be between 5.6 and 6.4 per cent. Revenue is now expected to be in the higher end of the indicated range. The growth is primarily driven by customers in the Industry sector. The profitability increase is driven by cost reduction activities and improved efficiency.

Enclosed in PDF are the Kitron Report Q2 2017 and the Kitron Presentation Q2 2017.

The interim report is presented today at 2:00 p.m. CEST. The presentation will be given in English by CEO Peter Nilsson and CFO Cathrin Nylander, and will be webcast at the following link: http://webtv.hegnar.no/presentation.php?webcastId=58375952

For further information, please contact:
Peter Nilsson, CEO, tel: +47 948 40 850
Cathrin Nylander, CFO, tel: +47 900 43 284
E-mail: investorrelations@kitron.com

Kitron is one of Scandinavia’s leading electronics manufacturing services companies for the Defence/Aerospace, Energy/Telecoms, Industry, Medical devices and Offshore/Marine sectors. The company is located in Norway, Sweden, Lithuania, Germany, China and the United States. Kitron had revenues of about NOK 2.1 billion in 2016 and has about 1 350 employees. http://www.kitron.com