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Kitron ASA has reported strong revenue growth and improved profitability for the first quarter. Kitron's revenue in the first quarter amounted to NOK 585 million, compared to NOK 497 million in the same quarter last year. Operating profit (EBIT) was NOK 30.9 million, compared NOK 20.5 million last year.
Net profit amounted to NOK 21.6 million, an increase from NOK 10 million. This corresponds to earnings per share of NOK 0.12, compared to NOK 0.06 last year.
CEO Peter Nilsson said, "While growth, both on the top and bottom line, was unusually strong this particular quarter, the main message is that the quarterly figures confirm the underlying progress that Kitron has made over the past couple of years. The order backlog is solid and the main production facilities are now updated and highly competitive, supporting our outlook for the rest of 2017."
Very strong growth
Kitron's revenue for the first quarter increased by 18 percent compared to the same period last year. Adjusted for foreign exchange effects, the increase was 23 percent. Growth compared to the same quarter last year was particularly strong in the defense/aerospace market sector. Industry and energy/telecoms also recorded solid growth.
Operating profit (EBIT) for the first quarter was NOK 30.9 million, an increase of 51 percent. Profitability expressed as EBIT margin was 5.3 percent, compared to 4.1 percent in the first quarter of 2016. EBITDA was NOK 42.7 million, an increase of 36 percent compared to last year.
Solid order backlog
The order backlog ended at NOK 1.059 billion, an increase of 17 percent compared to last year. Orders received in the quarter were NOK 620 million.
Improved capital efficiency
Net working capital increased by 6 percent from NOK 522 million to NOK 553 million compared to the same quarter last year, continuing the trend of decreasing net working capital compared to revenue. Operating cash flow was negative NOK 15.4 million, compared to negative NOK 25.3 million in the first quarter 2016.
Key defense orders
During the quarter, Kitron reported two key defense orders. Kitron received a NOK 120 million order from Kongsberg Defense Systems (KONGSBERG) for military communications equipment. Manufacturing and technical services will be provided by Kitron in Arendal, and deliveries will take place from 2017 to 2020. Further, Kitron signed an agreement with Rheinmetall MAN Military Vehicles. The potential contract value is NOK 250 million over a five-year period. The agreement covers manufacturing of electronics, measuring instruments and control devices. The production will take place at Kitron's plant in Kaunas, Lithuania.
Modern facility and new MD in Sweden
Kitron Sweden has relocated to the new-built facility in Torsvik. While the move was completed according to budget and without significant technical problems, some temporary inefficiencies impacted profitability in the first quarter. In March, Stefan Hansson Mutas assumed the role of managing director of Kitron Sweden.
For 2017, Kitron expects revenue to grow to between NOK 2.15 billion and NOK 2.35 billion. The EBIT margin is expected to be between 5.6 and 6.4 percent. The growth is primarily driven by customers in the industry sector. The profitability increase is driven by cost reduction activities and improved efficiency.
Kitron is one of Scandinavia's leading electronics manufacturing services companies for the Defense/Aerospace, Energy/Telecoms, Industry, Medical devices and Offshore/Marine sectors. The company is located in Norway, Sweden, Lithuania, Germany, China and the United States. Kitron had revenues of about NOK 2.1 billion in 2016 and has about 1,350 employees. For more information, click here.