Kitron — Earnings Release 2018

Apr 20, 2018

Kitron: Q1 2018 - Solid growth and improved profitability

Kitron: Q1 2018 - Solid growth and improved profitability

(2018-04-20) Kitron today reported quarterly figures that demonstrate continued

growth and improved profitability.

Kitron's revenue in the first quarter increased by 11 per cent. Profitability

expressed as EBIT margin was 6.0 per cent, compared to 5.3 per cent in the first

quarter of 2017.

Peter Nilsson, Kitron's CEO, comments:

"We're seeing demand increase in all regions and most market sectors. The solid

growth and improved profitability in the first quarter indicates that we are on

track for our 2018 outlook and our strategic ambitions. Service sales accounted

for close to 9 per cent of revenue in the quarter. In the first quarter, Kitron

won more than 30 new programs worth more than NOK 230 million of annualized

revenue, compared to NOK 75 million in the same quarter last year. 70 per cent

of the programs came from existing customers while the other 30 per cent came

from new customers."

Solid revenue growth

Kitron's revenue in the first quarter amounted to NOK 651 million, compared to

585 million in the same quarter last year, an increase of 11 per cent. Adjusted

for foreign exchange effects, the increase was 9 per cent.

Revenue growth compared to the same quarter last year was particularly strong in

the Industry market sector.

Order backlog increased by 10 per cent on a comparable basis. After adjustment

for the introduction of the new IFRS 15 accounting rules, the order backlog

ended at NOK 1 025 million.

Improved profitability

Operating profit (EBIT) was NOK 39 million, compared to 31 million last year, an

increase of 26 per cent. EBITDA was NOK 53 million, an increase of 24 per cent

compared to last year. Net profit amounted to NOK 26 million, an increase from

22 million. This corresponds to earnings per share of NOK 0.15, compared to NOK

0.12 last year.

More efficient use of capital

Net working capital decreased by 5 per cent compared to the same quarter last

year to NOK 526 million, continuing the trend of decreasing net working capital

compared to revenue. Operating cash flow was negative NOK 19 million, compared

to negative 15 million in the first quarter 2017.

Active management of component availability

Shortages of electronic components made 2017 a challenging year for many

companies in the Electronics Manufacturing Services business. These challenges

have continued into 2018 and are expected to last throughout the year. Kitron's

timely and systematic approach combined with its preferred partner program has

prevented serious supply disruptions. In spite of challenges in the supply chain

Kitron aims to reduce material cost in the same manner as achieved over the past

three years.

New accounting standard

Kitron implemented the new accounting standard IFRS 15 "Revenue from Contracts

with Customers" from 1 January 2018. In the first quarter, this had minimal

effect on revenue and profits, but it reduced the order backlog. It also

affected certain balance sheet items. See the quarterly report for details

Outlook

For 2018, Kitron expects revenue to grow to between NOK 2 500 and 2 700 million.

The EBIT margin is expected to be between 6.1 and 6.5 per cent. Growth is

primarily driven by customers in the Industry and Energy sectors. Profitability

is driven by cost reduction activities and improved efficiency.

Enclosed in PDF are the quarterly report and the presentation.

The interim report is presented today at 8:30 a.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=83473890

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 2.4 billion in 2017 and has about 1 450 employees. www.kitron.com

This information is subject to the disclosure requirements pursuant to section

5 -12 of the Norwegian Securities Trading Act.