Kitron Posts Solid Growth, Improved Profitability in Q3

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Kitron ASA today reported the sixth consecutive quarter of improved profits, due to a combination of growing revenue and improved margins.

Kitron's revenue in the third quarter amounted to NOK 468 million, an increase from 382 million in the third quarter last year, reflecting both underlying growth and currency effects.

Operating profit (EBIT) was NOK 26.3 million, compared to 6.9 million last year. The improved results are a consequence of increased revenue, helped by a stronger demand for technical services.

Net profit after tax amounted to NOK 22.8 million, an improvement from 4.8 million. This corresponds to earnings per share of NOK 0.13, compared to NOK 0.03 last year. In addition to the underlying improvement in operating profitability, currency effects on intra-group financial loans affected net profit positively.

Peter Nilsson, Kitron's CEO, comments:

"Once again we are able to demonstrate that Kitron is on the right track. This quarter we combined strong growth, improved profitability and important new orders, particularly in the Defence and Aerospace sector. In the coming quarters, we plan to build on the improvements in our underlying margins while also aiming for top-line growth."

• Sixth consecutive quarter of improved profits
• Strong overall revenue growth
• Defence orders strengthens future position
• Increased operational cash flow

Sixth consecutive quarter of improved profits

Profitability expressed as EBIT as a percentage of revenue was 5.6 per cent for the quarter, up from 1.8 per cent in the third quarter of 2014. The substantially improved results are a consequence of increased revenue, improved products mix and increased service sales, both from development and engineering. In general, there is a stronger demand for technical services than last year.

Strong overall revenue growth

Kitron's revenue in the third quarter was 22 per cent higher than last year. Adjusted for currency effects, growth was 14 per cent. Growth was particularly strong in the Defence/Aerospace sector, where revenue increased 71 per cent. Growth was also solid in Energy/Telecoms and Medical equipment, while Offshore/Marine fell sharply, affected by the adjustment in the oil service market.

Defence orders strengthens future position

The order backlog ended at NOK 916 million, an increase from 807 million a year ago. Significant defence orders awarded in the quarter further underline Kitron's position as a strong partner within the Defence/Aerospace sector. In particular the expansion of the footprint in the F35 program secures this position for the future.

Increased operational cash flow

Operational cash flow was NOK 32.7 million, an improvement from minus 9.7 million in the same quarter last year, primarily related to the significant improvement in profit.

Outlook

For 2015, Kitron expects growth and a clear improvement in profitability. Growth is driven by increased demand in the Defence sector for US and Norwegian markets, as well as increases in Energy/Telecoms and Industry. Offshore/Marine will have a reduction due to the oil service market in Norway.

About Kitron

Kitron is one of Scandinavia's leading electronics manufacturing services companies for the Defence/Aerospace, 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 1.75 billion in 2014 and has about 1 200 employees.