-
- News
- Books
Featured Books
- smt007 Magazine
Latest Issues
Current IssueBox Build
One trend is to add box build and final assembly to your product offering. In this issue, we explore the opportunities and risks of adding system assembly to your service portfolio.
IPC APEX EXPO 2024 Pre-show
This month’s issue devotes its pages to a comprehensive preview of the IPC APEX EXPO 2024 event. Whether your role is technical or business, if you're new-to-the-industry or seasoned veteran, you'll find value throughout this program.
Boost Your Sales
Every part of your business can be evaluated as a process, including your sales funnel. Optimizing your selling process requires a coordinated effort between marketing and sales. In this issue, industry experts in marketing and sales offer their best advice on how to boost your sales efforts.
- Articles
- Columns
Search Console
- Links
- Events
||| MENU - smt007 Magazine
Kitron: Q3 2021 - Very Strong Demand, Revenue Constrained by Component Supply
October 21, 2021 | KitronEstimated reading time: 3 minutes
Kitron reported third-quarter results showing very strong demand, but also revenue constraints due to the component supply.
Kitron's revenue for the third quarter was NOK 831 million, compared to NOK 1 054 million last year. The decrease is explained by last year’s Corona-related and exceptional volumes within Medical devices, which are now normalized. For the other market sectors combined, demand is very strong, but revenue growth was limited by ongoing component shortages. More than NOK 200 million of demand has been delayed into later quarters.
Profitability expressed as EBIT margin was 6.0 percent in the third quarter, compared to 8.6 percent in the same quarter last year. The EBIT margin in the quarter is affected by inefficiencies caused by the component shortage and the fact that the third quarter is seasonally softer. Last year’s EBIT margin was affected by the exceptional Corona-related volumes within the Medical devices sector.
The order backlog ended at NOK 2 568 million, an increase of 38 percent compared to last year.
Peter Nilsson, Kitron’s CEO, comments:
“Demand continues to be very strong for both 2021 and 2022 with significant growth opportunities in most market sectors. However, the general material supply situation deteriorated rapidly in the third quarter and continues to be a challenge to lead times and deliveries. We currently believe that we are at the worst of these constraints, and we expect the situation to start showing some improvements as we progress into 2022. After last year’s high deliveries of medical devices driven by the Corona pandemic, 2021 has returned to more normal levels with normal seasonality in the third quarter. Given the constraints in the supply chain, I’m satisfied with the results we deliver in the quarter.”
“Currently the raw materials and component supply chain will not support higher output, even though Kitron stands ready to deliver more. Given this year’s increase of inventory and working capital, we now turn our focus to executing demand into deliveries, improving our cash flow, and protecting competitiveness and profitability.”
Mixed sector development
There was revenue growth in the third quarter within the Electrification, Connectivity and Industry sectors, while revenue declined within Defence/Aerospace and, in particular, within Medical devices.
Record order backlog
The order backlog ended at NOK 2 568 million, compared to 1 863 million last year. This is a record and reflects a strong total demand situation but also includes revenue delays due to the component shortage. The order backlog increased within all market sectors. In absolute numbers, the order backlog grew the most within Electrification and Defense/Aerospace, while the percentage growth was particularly strong within Connectivity.
EBIT margin 6.0%
Third quarter operating profit (EBIT) was NOK 50.1 million, compared to 90.5 million last year. EBITDA was NOK 75.7 million, compared to 115.7 million last year.
Profit after tax amounted to NOK 19.5 million, compared to 60.9 million in the same quarter the previous year. This corresponds to earnings per share of NOK 0.11, down from 0.34 last year.
Constraints in supply chain
Operating cash flow was negative NOK 70.2 million, compared to negative NOK 3.2 million in the third quarter last year.
Net working capital was NOK 1 158 million, an increase of 2 per cent compared to the same quarter last year. Net working capital as a percentage of revenue was 31.8 per cent, compared to 25.1 per cent last year. Capital efficiency ratios are heavily affected by the supply shortage, which deteriorated rapidly in the third quarter, with material decommitments and new delivery dates. The material constraints now seem to have levelled out. Management’s focus in the quarter and going forward is on balancing demand with the constraints in supply, executing demand into deliveries and improving cash flow.
Outlook
Total demand is very strong and the order backlog at a record level. However, in the very short term, supply shortages has somewhat limited Kitron's ability to turn demand into revenues, and the outlook for 2021 is adjusted to reflect this.
For 2021, Kitron has previously indicated a revenue outlook of between NOK 3?900 and 4.200 million and an EBIT margin between 6.8 and 7.4 per cent.
Due to the constraints in the supply chain and the resulting delays of revenue, the revenue for 2021 is now expected to be between 3 700 and 3?900 million. EBIT margin is expected to be between 6.8 and 7.1 per cent.
Growth is expected within the Connectivity, Electrification and Industry sectors, whereas there will be a decline within the Medical devices and Defence/Aerospace sectors.
Although the outlook 2021 is adjusted, the backlog and demand situation implies that Kitron remains on the long-term strategic trajectory for revenue and profitability.
The corona situation has so far had limited direct effects but nevertheless brings uncertainty to the outlook together with the constraints in the material supply situation.
Suggested Items
IDTechEx Examines the Opportunities for Wearables in Digital Health
04/19/2024 | IDTechExIDTechEx’s report, “Digital Health and Artificial Intelligence 2024-2034: Trends, Opportunities, and Outlook”, covers this ongoing trend in the consumer health wearables market and includes analysis of the opportunities and roadmap for biometric monitoring.
ZESTRON Welcomes Whitlock Associates as New Addition to their Existing Rep Team in Florida
04/19/2024 | ZESTRONZESTRON, the leading global provider of high-precision cleaning products, services, and training solutions in the electronics manufacturing and semiconductor industries, is thrilled to announce the addition of Whitlock Associates to its esteemed network of sales representatives.
IPC Bestows Posthumous Hall of Fame Award to Industry Icon Michael Ford
04/18/2024 | IPCIPC honored the late Michael Ford, Aegis Software, for his extraordinary contributions to the global electronics manufacturing industry with the IPC Raymond E. Pritchard Hall of Fame Award at IPC APEX EXPO 2024. IPC’s most prestigious honor, the Hall of Fame Award is given to individuals who have provided exceptional service and advancement to IPC and the electronics industry. Ford, an industry leader and valued IPC volunteer, died suddenly in January 2024.
SEMI Applauds U.S. Chips Act Award for Samsung Electronics Facilities to Strengthen Domestic Semiconductor Supply Chain
04/17/2024 | SEMISEMI, the industry association serving the global electronics design and manufacturing supply chain, applauded the United States Department of Commerce’s announcement of a Preliminary Memorandum of Terms for an award under the CHIPS and Science Act to support the expansion of Samsung Electronics’ presence in Texas and the company’s development and production of leading-edge chips.
Northrop Grumman honors Calumet Electronics with Supplier Excellence Award
04/17/2024 | Calumet ElectronicsNorthrop Grumman Corporation has recognized Calumet Electronics during the company’s 2024 Supplier Excellence Awards for “exceptional performance and unwavering commitment to delivering with excellence.” Calumet is one of 70 suppliers recognized from across the globe. In its award category of “Supplier Strategic Excellence,” Calumet was honored alongside global corporations such as Amazon Web Services, Dell Technologies, and Eaton Corporation.