Kitron Reports Strong Finish in Q4 2020

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Kitron has reported quarterly figures showing a solid end to a full year characterized by exceptional growth and margin expansion, leading the Board of Directors to propose a 40 percent increase in the annual dividend.

Kitron's revenue for the fourth quarter was NOK 992 million, an increase of 12 per cent compared to last year. Growth adjusted for currency effects was 7 per cent.

Profitability expressed as EBIT margin was 7.6 per cent in the fourth quarter, compared to 6.1 per cent in the same quarter last year.

The order backlog ended at NOK 2 006 million, an increase of 6 per cent compared to last year.

Peter Nilsson, Kitron's CEO, comments, “On top of a strong underlying trend for Kitron in 2020, the Covid-19 pandemic created a temporary demand surge within the Medical devices market sector, leading to unusually strong growth and high margins. In 2021, we see a more normalized market and expect to follow our long-term growth and margin trajectory. Looking ahead, we see exciting business opportunities related to megatrends within electrification and connectivity.”

Solid Revenue and Order Backlog

Kitron's revenue in the fourth quarter amounted to NOK 992 million, compared to 889 million in the same quarter last year. Revenue growth compared to the same quarter last year was particularly strong in the Industry market sector. As expected, the Medical sector normalized after extraordinarily high activity in the second and third quarter.

The order backlog ended at NOK 2 006 million, compared to 1 884 million last year. The order backlog increased the most within Energy/Telecom and Industry.

Strong Profitability

Fourth quarter operating profit (EBIT) was NOK 75.7 million, compared to 54.2 million last year. EBITDA was NOK 102.2 million, compared to 82.2 million last year. Profit after tax amounted to NOK 47.1 million, compared to 34.0 million in the same quarter the previous year. This corresponds to earnings per share of NOK 0.26, up from 0.19 last year.

Outstanding Full-year Results

Full-year revenue of NOK 3 964 million gave an overall revenue growth of 20 per cent for the year. Operating profit (EBIT) for the year ended at NOK 312.6 million, compared to NOK 201.5 million, resulting in an EBIT margin of 7.9 per cent, compared to 6.1 per cent in 2019. Profit after tax was NOK 213.1 million, up from NOK 132.5 million, corresponding to NOK 1.19 earnings per share, compared to NOK 0.74 in 2019.

The Board of Directors proposes a dividend of NOK 0.70 per share for 2020. The Board proposes a changed policy of dividend payments in two equal tranches, one in May and one in October. Last year Kitron paid a dividend of NOK 0.50 per share.

Improved Operating Cash Flow

Operating cash flow was NOK 132.2 million, compared to 97.2 million in the fourth quarter of 2019, recovering significantly from being temporarily challenged by the unusually strong growth in the second and third quarter. Net working capital was NOK 1 064 million, an increase of 13 per cent compared to the same quarter last year. As a percentage of revenue, net working capital was unchanged. Capital efficiency ratios are expected to improve further.

Outlook

For 2021, Kitron expects revenue between NOK 3 900 and 4 200 million. EBIT margin is expected to be between 6.8 and 7.4 per cent. The outlook for 2021 implies that Kitron is back on its long term trajectory for revenue and profitability after exceptional growth in 2020, largely driven by Corona-related demand within the Medical devices sector. Growth is driven by Defence/Aerospace, Electrification and Connectivity within Energy/Telecom and Industry Sectors. Medical devices is expected to be normalised and in line with previous years.