Kitron — Report Publication Announcement 2019

Apr 30, 2019

Kitron: Q1 2019 - Very strong growth and earnings improvement

Kitron: Q1 2019 - Very strong growth and earnings improvement

(2019-04-30) Kitron today reported very strong growth as well as earnings

improvement in the first quarter. Revenue, order backlog and operating profit

all reached record levels.

Kitron's revenue for the first quarter was NOK 813 million, an increase of 25

per cent compared to last year. Organic growth, excluding the acquisition of the

EMS division of API Technologies Corp., was 20 per cent.

The order backlog ended at NOK 1 466 million, an increase of 43 per cent

compared to last year. Organic order backlog growth, excluding the API

acquisition, was 28 per cent.

Profitability expressed as EBIT margin was 6.3 per cent in the first quarter, up

from 6.0 in the same quarter last year.

Cathrin Nylander, Kitron's CFO and acting CEO, comments:

"The record performance in the first quarter demonstrated our ability to

successfully combine organic growth and M&A with operational and earnings

improvements. In 2019 we will significantly increase our capacity in the US and

Poland. On the demand side, the anticipated upturn among customers in the oil

and gas industry is gathering momentum and boosting growth. All these factors

strengthen our confidence in the new strategic ambitions that we outlined at our

capital markets day in March.

Very strong revenue growth

Kitron's revenue in the first quarter amounted to NOK 813 million, compared to

651 million in the same quarter last year. All market sectors grew

significantly. In absolute numbers, first quarter revenue growth compared to the

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

Percentagewise, Offshore/Marine grew the most.

Record order backlog

The order backlog ended at NOK 1 466 million, compared to 1 025 million last

year. All market sectors except Energy/Telecom increased the order backlog

substantially. Increasing activity among customers in the oil and gas industry

has led to a particularly strong backlog growth in the Offshore/Marine market

sector.

Improved earnings

First quarter operating profit (EBIT) was NOK 51.2 million, compared to 38.8

million last year. EBITDA was NOK 68.6 million, compared to 53.0 million last

year.

Profit after tax amounted to NOK 37.5 million, compared to 26.2 million in the

first quarter the previous year. This corresponds to earnings per share of NOK

0.21, compared to NOK 0.15 last year.

Inventory build-up to secure deliveries and future growth

Net working capital increased by 76 per cent compared to the same quarter last

year to NOK 927 million. The increase is primarily related to the deliberate and

temporary inventory build-up to avoid supply disruptions in the face of

previously reported electronic components shortages.

Component shortages have been an ongoing issue for the EMS industry over the

past quarters. The situation is expected to be less challenging throughout 2019

and Kitron expects that a gradual improvement over the year will lead to a

reduction of working capital, both in absolute numbers and as a percentage of

revenue.

Operating cash flow was positive NOK 25.4 million, compared to negative 19.4

million in the first quarter of 2018.

Acquisition in the United States

In the first quarter, Kitron completed the acquisition of the EMS division of

API Technologies Corp., substantially strengthening its position in the US

market. Kitron consolidated the acquired business effective 15 February.

Implementation of new accounting standard IFRS 16 "Leases"

Kitron implemented the new accounting standard IFRS 16 "Leases" from 1 January

2019. In the first quarter, this had a minor effect on profits, but it affected

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

Outlook

For 2019, Kitron expects revenue to grow to between NOK 2 900 and 3 200 million.

EBIT margin is expected to be between 6.2 and 6.6 per cent. Growth is primarily

driven by the acquisition of the EMS division of API Technologies Corp. and

growth for customers in the Industry and Offshore/Marine 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 CFO and acting CEO Cathrin Nylander, and will be webcast

at the following link:

https://webtv.hegnar.no/presentation.php?webcastId=97815173

For further information, please contact:

Cathrin Nylander, CFO and acting CEO, 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 2.6 billion in 2018 and has about 1 700 employees. www.kitron.com

This information is subject to the disclosure requirements pursuant to section

5 -12 of the Norwegian Securities Trading Act.