Kitron Posts Continued Growth, Solid Order Backlog in Q1 2016

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Kitron ASA has reported growth in revenue and order backlog, as well as continued improvement in underlying profitability. Kitron's revenue in the first quarter amounted to NOK 497 million, an increase from 471 million in the first quarter last year. Operating profit (EBIT) was NOK 20.5 million, compared 20.8 million last year, with one-offs masking an underlying improvement.

Net profit amounted to NOK 10.0 million, a decrease from 13.6 million. This corresponds to earnings per share of NOK 0.06, compared to NOK 0.08 last year. The main reason for the change was non-cash currency effects on intra-group financial loans.

Peter Nilsson, Kitron's CEO, comments:

"We continue to grow our sales, and our order book is solid. Orders from the Industry market sector were particularly strong, and we also continue to secure key defence orders. While one-off effects and change in net finance cause a decrease in profit, the underlying positive trend towards stronger margins and profits remains intact."

• Revenue continues to grow
• Underlying profitability improved
• Solid order backlog
• Key defence order

Revenue continues to grow

Kitron's revenue in the first quarter was 6 per cent higher than last year. The Industry market sector performed particularly well, with a revenue growth of 35 per cent. As in preceding quarters, revenue within Offshore/Marine continues to fall due to the general downturn in the oil service market.

Underlying profitability improved

Profitability expressed as EBIT as a percentage of revenue was 4.1 per cent for the quarter, compared to 4.4 per cent in the first quarter of 2015

In the quarter one-off costs of NOK 5 million have been booked related to a contemplated acquisition process that ultimately was deemed not to be in the best interest of Kitron's shareholders and therefore terminated. In first quarter of 2015 there was a one-off related to buy-out of pension liabilities having a positive effect of NOK 3.5 million. Adjusted for this, the underlying profit (EBIT) is increased from NOK 17.3 million (3.7 per cent) in the first quarter 2015 to NOK 25.5 million (5.1 per cent) in the first quarter 2016.

The completed factory move in Norway has had a negative impact on efficiency and profitability in the first quarter.

Solid order backlog

The order backlog ended at NOK 902 million, an increase from 855 million a year ago. Growth in order backlog was especially strong in the Industry market sector, with an increase of 56 per cent.

Key defence order

On 31 March it was announced that Kitron has been selected as an international source for manufacturing of a sub-assembly related to the JSF Radar system developed by Northrop Grumman Corporation for the F-35 Lightning II. The contract has a potential value of more than NOK 500 million over the serial production lifespan of the F-35 program.

Outlook

For 2016, Kitron expects revenue of between NOK 2 050 and 2 250 million and EBIT margin of 5.3 to 6.3 per cent. The growth is driven by increased demand in the Industry and Defence/Aerospace sectors. The profitability increase is driven by cost reduction activities and improved efficiency.

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 1.95 billion in 2015 and has about 1 250 employees.