Kitron: Q4 2013 - Revenue growth but lower profitability in the fourth quarter
Kitron's revenues amounted to NOK 476.3 million, compared to NOK 462.4 million in the fourth quarter 2012. EBIT was reduced from NOK 24.4 million to NOK 4.3 million. Net loss amounted to NOK 4.0 million, compared to a net profit of NOK 27.9 million the corresponding quarter a year ago. Operating cash flow for the fourth quarter was NOK 51.0 million, compared to NOK 84.8 million during the same quarter 2012.
Dag Songedal, interim CEO, comments:
"Kitron's top line grew in the fourth quarter, but all in all this was a weak quarter for us. Clearly, profitability must and will be improved. This will be on top of management's agenda in 2014. On the positive side, it should be noted that we have won important contracts in the fourth quarter."
- Important customer contracts secured
- Revenue growth but lower profitability
- Change of strategy regarding distribution centre
Important contracts secured
Kitron has during the fourth quarter renewed the agreement with Maquet Critical AB, a part of the Getinge Group. Husqvarna has also decided to renew its contract with Kitron and has increased the contract scope by adding new products. Kitron has also received the first orders from Cassidian Optronics GmbH, a worldwide leader in optronic defense and security solutions. The orders cover prototype production of power supply units for one of Cassidian Optronic's target acquisition systems. These initial orders from Cassidian are of limited value in terms of revenue, but they are a milestone for Kitron's operations in Germany.
The order backlog was reduced by NOK 128.9 million in the quarter and ended at NOK 718.1 million.
Revenue growth but lower profitability
The reduction in profitability compared to last year is partly due to changed product mix and partly due to costs related to change of strategy regarding the distribution centre in Lithuania. There has been a negative development in the product mix com- pared to previous periods as low margin products have increased in volume. Also, Kitron experiences strong margin pressure, both on existing and new customers.
Change of strategy regarding distribution centre
Kitron has over the last year been in a process to establish a distribution centre in Lithuania. However, the project has proved to be costlier and more complex that originally assumed. Kitron has therefore decided to terminate the project, partly to avoid increased operating costs going forward. Kitron will take other measures in order to achieve the cost savings that the project was meant to deliver.
Kitron expects a positive development in the Swedish and German markets, which suggests growth for the factories in Sweden and Lithuania. Growth is also expected in China, whereas the development in the Norwegian market is more uncertain.
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
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