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
• Continued revenue growth, but profitability in Arendal challenging
• Arendal downsizing
• New CEO appointed

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.