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Kitron today reported quarterly figures that demonstrate continued growth and improved profitability. Kitron's revenue in the first quarter increased by 11%. Profitability expressed as EBIT margin was 6.0%, compared to 5.3% in the first quarter of 2017.
Peter Nilsson, Kitron's CEO, comments:
"We're seeing demand increase in all regions and most market sectors. The solid growth and improved profitability in the first quarter indicates that we are on track for our 2018 outlook and our strategic ambitions. Service sales accounted for close to 9% of revenue in the quarter. In the first quarter, Kitron won more than 30 new programs worth more than NOK 230 million of annualized revenue, compared to NOK 75 million in the same quarter last year. 70 per cent of the programs came from existing customers while the other 30% came from new customers."
Solid revenue growth
Kitron's revenue in the first quarter amounted to NOK 651 million, compared to 585 million in the same quarter last year, an increase of 11%. Adjusted for foreign exchange effects, the increase was 9%.
Revenue growth compared to the same quarter last year was particularly strong in the Industry market sector.
Order backlog increased by 10% on a comparable basis. After adjustment for the introduction of the new IFRS 15 accounting rules, the order backlog ended at NOK 1 025 million.
Operating profit (EBIT) was NOK 39 million, compared to 31 million last year, an increase of 26%. EBITDA was NOK 53 million, an increase of 24% compared to last year. Net profit amounted to NOK 26 million, an increase from 22 million. This corresponds to earnings per share of NOK 0.15, compared to NOK 0.12 last year.
More efficient use of capital
Net working capital decreased by 5% compared to the same quarter last year to NOK 526 million, continuing the trend of decreasing net working capital compared to revenue. Operating cash flow was negative NOK 19 million, compared to negative 15 million in the first quarter 2017.
Active management of component availability
Shortages of electronic components made 2017 a challenging year for many companies in the Electronics Manufacturing Services business. These challenges have continued into 2018 and are expected to last throughout the year. Kitron's timely and systematic approach combined with its preferred partner program has prevented serious supply disruptions. In spite of challenges in the supply chain Kitron aims to reduce material cost in the same manner as achieved over the past three years.
New accounting standard
Kitron implemented the new accounting standard IFRS 15 "Revenue from Contracts with Customers" from 1 January 2018. In the first quarter, this had minimal effect on revenue and profits, but it reduced the order backlog. It also affected certain balance sheet items. See the quarterly report for details
For 2018, Kitron expects revenue to grow to between NOK 2 500 and 2 700 million. The EBIT margin is expected to be between 6.1 and 6.5 per cent. Growth is primarily driven by customers in the Industry and Energy sectors. Profitability is driven by cost reduction activities and improved efficiency.
Kitron is one of Scandinavia's leading electronics manufacturing services companies for the Defence/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 2.4 billion in 2017 and has about 1 450 employees. For more information, click here.