Kitron — Report Publication Announcement 2014

Jul 22, 2014

Kitron: Q2 2014 - Strong order intake, profitability still challenging

Kitron: Q2 2014 - Strong order intake, profitability still challenging

(2014-07-22) Kitron ASA today reported that revenues and order backlog grew in

the second quarter, but profitability is still challenging. As previously

announced, Kitron is therefore downsizing the Arendal operations.

Kitron's revenues amounted to NOK 457 million, compared to NOK 430 million in

the second quarter of 2013. EBIT was reduced from NOK 9.3 million to NOK 6.9

million. Net profit amounted to NOK 3.9 million, a reduction from NOK 7.8

million. Operating cash flow was NOK 9.5 million, compared to NOK 30.3 million

during the second quarter last year.

Order intake in the quarter was NOK 603 million, which is 44 per cent higher

than for the second quarter 2013. The order backlog ended at NOK 859 million,

which is 15 per cent higher than at the same time last year.

Dag Songedal, interim CEO, comments:

"This was a mixed quarter. We won some very important orders, and both revenue

and order backlog developed positively. However, margins and profitability are

still not satisfactory. Also, in geographical terms, the quarter was mixed.

While we have to downsize in Norway, Lithuania and China show strong growth and

improved profitability."

* Air defence order from KONGSBERG

* Continued revenue growth, but profitability in Arendal challenging

* Arendal downsizing

* New CEO appointed

Air defence order from KONGSBERG

Kitron Arendal received an order from Kongsberg Defence & Aerospace for military

communications equipment. The order is related to contracts KONGSBERG has signed

with Raytheon for supplying the NASAMS air-defence system to Oman. The order has

a value for Kitron of NOK 80.7 million, and will be fulfilled in 2014 and 2015.

The order increase from both last year and in the quarter is primarily within

Defence Aerospace and split between Norway and the US. The US increase is

related to current customers and products, and reflects an increase in activity

in this market.

Continued revenue growth, but profitability in Arendal challenging

Revenue grew in the quarter, but year-on-year revenue growth is not as strong as

in the first quarter. Margins continue to be challenging, especially for the

Arendal operation. Looking to other parts of Kitron, the development is

decidedly more positive compared to last year, for instance in Lithuania and

China.

Arendal downsizing

The current plans imply a reduction of 85 in the number of employees during

2014. At the end of June, 40 of these have already left the company. The main

focus in the third quarter will be to ensure that the effects of the initiated

actions are fully realized and to initiate further actions to improve

profitability.

New CEO appointed

Peter Nilsson is appointed new CEO of Kitron ASA and will take up his position

in November 2014 at the latest. Peter Nilsson has held several senior and

executive leadership positions for Swedish and US companies: PartnerTech,

Rimaster, Sanmina, and Ericsson, latest as President, Electronics Technology

Division, at PartnerTech AB.

Outlook

Kitron expects a positive development in the Swedish and German markets, with

growth for the factories in Sweden and Lithuania. Growth is also expected in

China and the US, whereas a lower volume is expected in the Norwegian operation.

Kitron expects growth in revenue in 2014, partly explained by development in

foreign exchange. The growth has been significant in the first half of the year,

while the expectations for the second half of 2014 are closer to the level in

In spite of revenue growth, profitability is not satisfactory for the first half

year and actions are initiated to rectify the situation and target improved

profitability.

Enclosed in pdf are the quarterly report and the presentation.

The interim report is presented at 14:00 CEST at Kitron ASA's head office, Olav

Brunborgs vei 4, Billingstad.

The presentation will be given in English by interim CEO Dag Songedal and CFO

Cathrin Nylander and will be distributed through webcast at the same time at the

following link: http://webtv.hegnar.no/presentation.php?webcastId=19370853

For further information, please contact:

Dag Songedal, interim CEO

Tel: +47 913 86 468 or e-mail: dag.songedal@kitron.com

Cathrin Nylander, CFO

Tel: +47 900 43 284 or e-mail: cathrin.nylander@kitron.com

Kitron is one of Scandinavia's leading electronics manufacturing services

companies for the Defence, Energy/Telecoms, Industry, Medical equipment and

Offshore/Marine sectors. The company is located in Norway, Sweden, Lithuania,

Germany, China and the United States. Kitron had revenues of about NOK 1.6

billion in 2013 and has about 1,200 employees. www.kitron.com

This information is subject of the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.

[HUG#1833291]