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Kitron Investor Presentation 2010
3643_rns_2010-05-06_9576c41d-8522-48c3-bd24-ecc5adf85a81.pdf
Investor Presentation
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Your ambition. Our passion.
Kitron
Q1 results 2010
6 May 2010
Jørgen Bredesen, CEO
Björn Wigström, CFO
Positive trend in Q1
Financial highlights
- Order intake increased by 13% and order backlog increased by 7% vs Q1 2009
- Revenue down 25.4% vs Q1 2009. Quarter on quarter trend is positive
- Operating profit of NOK 5.9 million. Operating margin 1.4%
- Cash flow negative with NOK 32 million. Recoil from strong Q4 position.
Your ambition. Our passion.
Kitron
Focus on streamlining operations
Operational highlights
- Positive effect in 2010 of completed downsizing
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Headcount reduced by 350 FTE’s in 2009
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Divesting development department
- Final conclusion expected in Q2
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Kitron increasing focus on NPI and Industrialisation
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Strong focus on Kitron AB challenges
- Margin slippage for certain customers
- Overcapacity within workforce – action taken
Your ambition. Our passion.
Kitron
Focus on streamlining operations
Operational highlights
- Growth initiatives on plan
- Germany - Sales and marketing in Germany started. Integration of acquired local company ongoing.
-
Kitron China operational in Q4.
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Focus on operational improvement programs
- Sourcing from China increasing
- Manufacturing efficiency program continues
- ERP system ready to be launched
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Kitron
Major New Orders in Q1
- Medical contract
- Industry contract
- First contract based on China manufacturing!
- Kongsberg Group
- Maquet Critical Care
NOK million
80
100
20
40
Important contract with new customer in Q2:
- Atlas Copco Tools AB (frame agreement signed)
Your ambition. Our passion.
Kitron
Your ambition. Our passion.
Kitron
Financial statements Q1 2010
Revenue as expected
- Revenue at NOK 411 million, 25% lower than last year
- Q1 change by market segment:
Q1 2010 vs Q1 2009
Data/Telecoms 2.7%
Defence -26.0%
Industry -8.0%
Medical equipment 21.9%
Offshore/Marine -81.5%
- Offshore/Marine and Defence segment down while trend in Medical equipment is positive
Revenue Group
Revenue by market segment
Total revenue NOK 411 million
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Kitron
Revenue by country
- Norway and Lithuania negatively affected by drop in Offshore segment
- Q1 2010 vs Q1 2009
- Norway -22.5%
- Sweden 8.2%
- Lithuania -47.5%
- Capacity in all operations adjusted to lower revenue level
Revenue by country *
Total revenue NOK 411 million
- Before group entities and eliminations
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K
Kitron
Operating profit lower
- Operating profit in Q1 was NOK 5.9 million (NOK 34.3 million) and margin was 1.4% (5.1%)
- NOK 10.5 million positive impact from reversal of pension liability.
- Poor performance in Karlskoga operation
- NOK 14 million in loss booked in Q1
- Firm measures are being taken to turn around operation.
- Relative payroll costs 24.7% of revenue (23.2%) and other operating costs 7.9% of revenue (5.7%)
Operating profit Group
Operating margin Group
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Kitron
Profit by country
- Profitability for Norway and Lithuania in line with expectations.
- Positive impact on result in Norway from reversal of pension liability.
- Negative result in Sweden explained by challenges in Kitron AB.
- Weak margin on certain projects
-
NOK 6 million in restructuring provision
-
Before group entities and eliminations
Operating profit by country *
Operating margin by country
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Kitron
Cash flow
- Cash flow was negative by NOK 31.7 million (NOK 35 million)
- Recoil from strong cash flow in fourth quarter
- Reduction of factoring debt included in Q1 cash flow
- Stable development in net working capital.
- Low exposure for bad debt and inventory write offs
Operating cash flow Group
Net working capital Group
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Kftron
Strong equity ratio
- Equity of NOK 441.1 million (478.9) and the equity ratio to 45.7% (40.8%)
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Kitron
Your ambition. Our passion.
Kitron
Market development
Improved market conditions expected
- Data/Telecoms trend mixed, but outlook is positive
- Defence trend positive – lower revenue in the short term
- Industry showing signs of recovery from a low level
- Medical equipment continues strong trend
- several companies ramping up manufacturing
- Offshore at a lower level, recovery expected 2H 2010
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Kitron
Order intake trend improving
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Order backlog is recovering
- Order backlog at NOK 783.5 million (NOK 731.9 million)
- Expected positive development in the Medical equipment, Industry and Defence segments
- Offshore expected to recover towards the end of 2010
Definition of order backlog includes firm orders and four month customer forecast
Order backlog Group
Order backlog Segment
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Kitron
Expanding market coverage
- Focus on gaining market share in Kitron “home markets”
- A smaller EMS company with NPI competence (prototyping) acquired
- The German EMS market is the largest in Europe
- First orders received, several RFQ’s in process
- Focus on NPI and industrialisation
- Based primarily on manufacturing in Lithuania and China
- Opportunities for “Offset” business
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Kitron
Expanding market coverage
- Status on the manufacturing operation in China
- Factory expected to be operational in Q4 2010
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Offering another lower cost manufacturing alternative and opening up new markets
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Establishment in North America
- Enable Kitron to serve existing and new customers globally
- Manufacturing and services set up planned
- Operational from Q1 2011
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Your ambition. Our passion.
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Outlook
Outlook
- Order intake and backlog expected to continue to improve quarter by quarter
- Capacity adjustments expected to yield positive effect on profitability
- Continued focus on operational improvements (supply chain management, ERP, exit or turn around loss making activities etc)
- Kitron AB expected to be profitable Q2 – Q4 2010
- Profitability for the Group expected to increase from Q2 and throughout 2010
Your ambition. Our passion.
Kitron
Thank you!
Your ambition. Our passion.
Kitron