COVID-19 IN CHINA POSTPONES RTX Q2 REVENUE – OUTLOOK MAINTAINED - Seite 2

• Gross profit decreased by 15.4% to DKK 66.3 million in Q2 2019/20 (Q2 2018/19: DKK 78.3 million). The gross margin increased by 2.0%-points to 58.8% (Q2 2018/19: 56.8%) impacted by the revenue mix.
   
• Operating performance was impacted by the lower revenue with EBITDA reaching DKK 11.3 million in Q2 2019/20 (Q2 2018/19: DKK 23.1 million) and EBIT reaching DKK 5.7 million in Q2 2019/20 (Q2 2018/19: DKK 19.6 million). In addition, to the impact from the revenue development, EBITDA and EBIT are impacted by higher capacity costs related to ramp-up of activities and investments in capacity related to the major framework agreements announced over the last years. Thus, the average number of FTEs reached 292 in Q2 2019/20 compared to 272 in Q2 2018/19. Also, EBITDA and EBIT are impacted by implementation of IFRS 16 regarding capitalization of leasing costs, which increases EBITDA (and to a minor degree EBIT).
   
• Cash flows from operating activities (CFFO) increased to DKK 23.7 million in Q2 2019/20 compared to DKK 15.0 million in Q2 2018/19 impacted by developments in earnings and working capital fluctuations.
  
  

RTX POSITIONED TO MANAGE UNCERTAIN IMPACT FROM COVID-19 SITUATION

• RTX’s key priorities during the unprecedented global COVID-19 outbreak are the health and safety of our employees and societies at large, as well as protecting the commercial and financial health of our business. We are implementing significant actions to protect our people and our business in the short term while still ensuring the long-term health and development of RTX.
• At present the impact of the COVID-19 outbreak and countermeasures on RTX’s business is difficult to predict as various effects will impact over different time horizons. In Q2, postponed deliveries due to the delayed opening of RTX’s suppliers in China after the Chinese New Year caused revenues to be postponed from Q2 to Q3 2019/20. After this impact in February and March 2020, the manufacturing sites of our suppliers are now again fully operational and keeping up with demand.
• In the near-term, Q3 and the early part of Q4 2019/20, we see increased demand for RTX’s products within healthcare (products for critical patient monitoring solutions) and business headsets as societies around the world increase intensive care capacity and as companies and organizations prepare their employees for increasingly working from home. RTX is ramping up short-term supply chain capacity to meet this increased demand. Conversely, products related to large scale events in the ProAudio segment see reduced demand in the near term.
• With the impact from these directly affected segments and product types and with current visibility, RTX is maintaining the communicated outlook for 2019/20. However, given the unprecedented nature of the COVID-19 situation a fundamental uncertainty as to any impact on other segments must be acknowledged. While RTX’s customers are typically strongly positioned in their respective industries, they may yet experience a further near-term impact from the COVID-19 situation which could impact RTX’s sales in 2019/20. Similarly, a potential tightening of global supply chains for key components or restricted logistics flows as a result of the COVID-19 situation could impact deliveries and thus revenues in 2019/20. RTX is thus monitoring the situation closely and taking mitigating actions where possible. The outlook for the financial year assumes that RTX can maintain production and logistics flows at current and forecasted levels without major supply disruptions and that additional near-term impact on customer demand is limited.
• The mid- to longer-term impact from the COVID-19 outbreak, countermeasures and resulting economic development is also uncertain. While a longer-term economic downturn will also affect RTX’s business to a certain degree, certain structural changes resulting from COVID-19 countermeasures within societies and organizations are likely to continue to be advantageous to RTX within areas such as headsets (Enterprise framework agreements), conference microphones (ProAudio framework agreement) and healthcare. Additionally, RTX’s business development with several new large framework agreements added within the last 2-3 years will to a certain degree increase RTX’s resilience against any adverse effects from a global economic downturn. 
• RTX’s balance sheet and liquidity remain very strong with a significant net cash position. As a precautionary measure to safeguard the strong cash position, the Board of Directors of RTX suspended the ongoing share buy-back programme until further notice on 13 March 2020.
• Considering COVID-19 and its impact on the global economy, RTX is actively managing its cost base and has therefore among other things delayed additional headcount investments and instead redeployed employees internally to maintain full momentum on the development activities for the large framework agreements which hold significant growth potential for RTX.