Kitron — Earnings Release 2017

Feb 16, 2018

Kitron: Q4 2017 - Strong growth, improved profit and increased dividend

Kitron: Q4 2017 - Strong growth, improved profit and increased dividend

(2018-02-16) Kitron today reported improved revenue, order backlog and

profitability for the fourth quarter and full year 2017. The Board of Directors

proposes increasing the ordinary dividend and paying an extraordinary dividend,

and has also updated the dividend policy.

Peter Nilsson, Kitron's CEO, comments:

"We ended 2017 on a positive note in the fourth quarter. Strong growth, improved

profitability and improved capital efficiency indicate that we are on track

towards our strategic targets. It is especially gratifying that the improvements

continue despite component availability being a challenge for the industry in

2017. This demonstrates the importance of Kitron's strong supply chain."

High order intake and order backlog

Kitron's revenue in the fourth quarter amounted to NOK 668 million, compared to

570 million in the same quarter last year, an increase of 17 per cent. Adjusted

for foreign exchange effects, the increase was 12.5 per cent. Growth compared to

the same quarter last year was particularly strong in the Industry market

sector. Defence/Aerospace also recorded solid growth. The order backlog ended at

NOK 1 306 million, an increase of 28 per cent compared to last year. Orders

received in the quarter were NOK 941 million.

Strong profitability

Operating profit (EBIT) was NOK 43.1 million, compared to 34.1 million last

year, an increase of 26 per cent. Profitability expressed as EBIT margin was

6.5 per cent, compared to 6.0 per cent in the fourth quarter of 2016. EBITDA was

NOK 56.9 million, an increase of 24 per cent compared to last year. Net profit

amounted to NOK 29.6 million, an increase from 25.4 million. This corresponds to

earnings per share of NOK 0.17, compared to NOK 0.14 last year.

Profitability improvement and increased dividend

Full year revenue of NOK 2 437 million gave an overall revenue growth of 16 per

cent for the year. Growth adjusted for foreign exchange effects was 17 per cent.

Operating profit for the year ended at NOK 148.7 million, compared to 117.8

million in 2016, resulting in an EBIT margin of 6.1 per cent, up from 5.6 per

cent in 2016. Profit after tax was NOK 99.0 million, up from 74.6 million,

corresponding to NOK 0.57 earnings per share, compared to 0.43 in 2016.

The Board of Directors proposes an ordinary dividend of NOK 0.35 per share and

an extraordinary dividend of NOK 0.20 per share for 2017. Last year the dividend

was NOK 0.25. The reason to propose the extraordinary dividend is the clearly

improved free cash flow in 2017.

The board has also decided to update Kitron's dividend policy. The new policy is

as follows: "Kitron's dividend policy is to pay out an annual dividend of at

least 50 % of the company's consolidated net profit before non-recurring items.

When deciding on the annual dividend the company will take into account

company's financial position, investment plans as well as the needed financial

flexibility to provide for sustainable growth."

The previous policy was to pay a dividend of 30-60 per cent of net profit.

Improved capital efficiency and cash flow

Net working capital decreased by 5 per cent from NOK 512 million to NOK 486

million compared to the same quarter last year, continuing the trend of

decreasing net working capital compared to revenue. Operating cash flow was NOK

90.8 million, compared to 36.4 million in the fourth quarter 2016.

Active management of component availability

A shortage of electronic components has made 2017 a challenging year for many

companies in the Electronics Manufacturing Services industry. So far, Kitron's

swift and systematic approach combined with the company's preferred partner

program has prevented it from any serious supply disruptions. Kitron has also

been able to pick up business where it was second source and its competitors

were not able to secure supply. Shortages and allocations are expected to

continue in 2018 and the first half of 2019. Nevertheless, Kitron plans to

reduce material cost in the same manner as it has done over the past three

years.

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. The growth is

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

profitability is driven by cost reduction activities and improved efficiency.

Kitron will publish a capital markets presentation today, in which the company

will provide a status update on its progress towards the targets given at

previous capital markets days. See separate stock exchange notice for

highlights.

Enclosed in PDF are the quarterly report and the presentation.

The interim report is presented today at 8:30 a.m. CET. 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=77873241

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.