Kitron: Strong growth in cash flow and profitability
(2013-02-13) Kitron's revenue amounted to NOK 462.4 million in the fourth
quarter of 2012, a 4.4 per cent increase compared with the same period last
year. EBIT increased 416 per cent from fourth quarter last year to NOK 23.4
million. Operating cash flow for the fourth quarter was NOK 84.8 million
compared to NOK 13.9 million same period last year.
* Significant inventory reductionÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â * Trend towards
* Restructuring of Sweden completedÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â * Major Medical
Offshore/Marine continues to be the strongest growing market segment with a
78.5 per cent leap in revenues compared to the same quarter last year. Also the
Defence/Aerospace and Medical segments show a positive trend with revenue growth
of 8.3 and 8.8 per cent respectively. Kitron is particularly bullish about the
outlook for the Defence/Aerospace segment.
Significant inventory reduction
Kitron is targeting to significantly reduce the capital tied up in operations.
During the fourth quarter inventory was reduced by more than NOK 50 million and
the company achieved a positive cash flow of NOK 84.8 million. The improvement
is the result of close follow-up during the quarter across all entities. As
announced in the last report Kitron is targeting further inventory reductions
going forward. Based on today's business volume an additional reduction of at
least NOK 50 million is expected, mainly as the result of the implementation of
a common distribution centre for the Kitron manufacturing entities. The
establishment of the distribution centre has started and will be completed
The restructuring of Sweden completed
The restructuring of the Swedish operation which has been on-going for the last
couple of years has now been fully completed. Following a number of years with
poor profitability the Swedish posted a solid EBIT margin of 6.3 per cent for
the year as a total. The Swedish operation has now been concentrated in
JÃ¶nkÃ¶ping which enables further streamlining of the operation and reduction of
the operating cost.
Trend towards higher profitability
The improved profitability in the quarter and for the year in total is partly
the result of the successful restructuring in Sweden and partly due to the
improved profitability from new operations. The new operations in China and
Germany are now profitable, while the factory in US is expected to be profitable
from the second quarter of 2013 onwards.
While streamlining the operations in Norway and Sweden down to one factory per
country, Kitron has during the past few years been expanding its operations
globally. This has been part of a deliberate strategy to increase competiveness
and to follow the customers. The parallel establishment of factories in US and
China while entering Germany through a smaller acquisition has been a major
undertaking for Kitron and has had a significant negative impact on the result
during the start-up phase. In Germany we have secured a number of new customers
since the start up and revenue volume is increasing. Most of the manufacturing
for the German market is done in our factory in Lithuania.
Major medical contract secured
Kitron secured the extension of a major contract within the Medical segment
during the fourth quarter. The agreement means that Kitron will be supplier for
an additional period of approximately 2 years. During this period, Kitron
expects that revenue under the agreement will be between NOK 350 and NOK 400
million. Manufacturing will mainly take place at Kitron's factory in Arendal,
while parts of the product will be manufactured at Kitron's factory in Ningbo,
During the fourth quarter Kitron further announced the first order in the
Netherlands. Lely has selected Kitron as manufacturing partner for their milking
robots. This agreement is strategically important for Kitron. Agriculture
machinery is getting more 'intelligent' and Lely is at the forefront of this
trend. The production of the electronics for Lely's milking robots will take
place at Kitron's factory in Lithuania.
Enclosed in pdf are the quarterly report and the presentation.
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 1.7
billion in 2012 and has about 1,200 employees. www.kitron.com
This information is subject of the disclosure requirements acc. to Â§5-12 vphl
(Norwegian Securities Trading Act).
KIT Report Q4:
KIT Presentation Q4:
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Source: Kitron ASA via Thomson Reuters ONE