Kitron — Interim / Quarterly Report 2015

Apr 22, 2015

Q1 results 2015

Peter Nilsson, CEO Cathrin Nylander, CFO

April 22, 2015

Financial highlights for Q1:

Revenue growth with improved profitability

• § Revenue growth fueled by increased demand in defence
• § Improved profitability
• § Strong order intake, especially in Defence/Aerospace
• § PosiJve cash flow
• § Stable working capital in the quarter but an increase from last year

NOK mill.		Q1 2015 vs Q1 2014
Revenue 470,6	Ý	8,0 %
EBIT 20,8	Ý	954,2 %
Order backlog 854,6	Ý	20,8 %
Operating cash flow 35,0	Ý	301,3 %
Net working capital 562,8	Ý	15,3 %

Major new orders:

Important orders in the first quarter

§ Lockheed MarFn Awards Contract to Kitron AS

• § Kitron Norway received a contract from Lockheed MarJn Mission Systems and Training for producJon of Integrated Backplane Assembly, for deliveries to the F-35 low rate iniJal producJon program, LRIP 9 and 10.
• § Kitron will manufacture, test, maintain and repair the Integrated Backplane Assembly in the F-35 Joint Strike Fighter.
• § The contract value is USD 6.5 mill.
• § ProducJon at Kitron's plant in Arendal, Norway.

§ Northrop Grumman Awards F-35 Lightning II Contract to Kitron AS

• § Kitron Norway was also awarded a four-year development contract by Northrop Grumman CorporaJon to develop a test program set (TPS) for evaluaJng and troubleshooJng Lightning II Joint Strike Fighter aircra] avionics. Kitron was selected as an internaJonal source for TPS equipment, which consists of complex Interface Test Assemblies that work with the LM-STAR test system developed by Lockheed MarJn.
• § The contract has a total value of NOK 16 million.

Major new orders:

AcFons yield results

• § ShiO from high cost to low cost regions
• § 53% (46%) FTE in low cost
• § Payroll expenses/revenue 24% (29%)
• § Revenue per employee at KNOK 399 (KNOK 369)

§ All units profitable

• § Arendal downsizing during 2014
• § US and China operaJons at sustainable volumes

Financial statements Q1 2015

Revenue:

Strong Defence/Aerospace and Industry growth

	Q1 2015 vs Q1 2014	Share of total revenue
Offshore/Marine	Þ -44,6 %	9,7 %
Medical equipment	Þ -7,6 %	21,1 %
Defence/Aerospace	Ý 49,0 %	27,7 %
Energy/Telecoms	Ý 9,4 %	11,6 %
Industry	Ý 29,7 %	29,9 %

Revenue by country*:

ConFnued strong growth outside Scandinavia

^* Before group enJJes and eliminaJons

EBIT:

Fourth consecuFve quarter of improved profitability

• § Improvement in both nominal value as well as EBIT margin
• § All sites profitable
• § Personnel expense reducJon
• § Non-recurring gains of NOK 3.5 million booked in the quarter, compared to non-recurring costs of 2.0 million in the first quarter of 2014

EBIT by country:

All sites profitable

• § Norway
• § Cost reducJon acJons yield results
• § Sweden
• § Improved margins
• § Lithuania
• § Slight reducJon due to higher indirect cost

§ Other

§ China and US conJnue to contribute posiJvely

* Before group enJJes and eliminaJons

Balance sheet:

Cash flow improvement

• § Cash flow

• § Improved profitability affects cash flow posiJvely

• § Working capital increase

• § Cash conversion cycle 106 and at same level as fourth quarter

Market development

Order backlog:

ConFnued strong Defence/Aerospace order backlog

§ Defence/Aerospace

• § Increased by 87% (MNOK 190.8) from last year
• § Offshore/Marine
• § ReducJon of 38.2% (MNOK 38.8)

Order backlog

DefiniJon of order backlog includes firm orders and four month customer forecast

Market development

§ Offshore/Marine

§ General adjustment in the oil service market in Norway

§ Medical equipment

§ Stable development

§ Defence/Aerospace

§ Strong growth and posiJve outlook

§ Energy/Telecoms

§ Stable backlog and posiJve outlook

§ Industry

§ ConJnues to grow, increased revenue from exisJng and new customers

Outlook

Outlook

• § For 2015, Kitron expects growth and a clear improvement in profitability.
• § Growth is primarily driven by increased demand in Defence sector for US and Norwegian markets, as well as increases in Energy/Telecoms and Industry.
• § Offshore/Marine will have reducJon due to oil service market in Norway.
• § Kitron conJnue to monitor the volaJle currency markets and its effect on our operaJons

Thank you!