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1
Q1 results 2009
7 May 2009
Jørgen Bredesen, CEO
Björn Wigström, CFO
2
Strong cash generation
Financial highlights in Q1
• Excellent cash flow
• Revenue growth of 15.4%
• Operating profit increase by 33.4%
• Decline in order intake and backlog
2
3
Capacity adjustments
Operational highlights in Q1
• Activity level high in Q1 but customers signal lower demand
• Capacity adjustments ongoing. Downsizing with 60 FTEs in Q1
• Continued focus on operational improvements:
• Manufacturing efficiency programmerolled out in Sweden and Norway
• Positive effect from sourcing efforts
Financial statements Q1 2009
3
5
Revenue growth
• Revenue reached NOK 571.2 million which represents a 15.4% increasecompared to Q1 2008
• Strong growth within Defence/Offshore and growth in Data/Telecom
• Growth by market segments
Q1 2009 vs Q1 2008
Data/Telecom 1.7%Defence/Offshore 78.3%Medical Equipment -5.7%Industry -32.3%
Industry15%
Medical equipment
17%
Defence/Offshore
47%
Data/Telecom
21%
Revenue Group
Revenue by market segmentTotal revenue NOK 571.2 million
571.2
677.4
483.6
613.3
495.0
0
120
240
360
480
600
720
Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009
NO
K m
illio
n
6
Norway60%
Sweden16%
Lithuania24%
Revenue by country
• Growth in Lithuania and Norway
Growth by countryQ1 2009 vs Q1 2008
Norway 11.4%Sweden -9.4%Lithuania 23.1%
• Transfer of manufacturing to Lithuania continues
328.7
103.5
366.1
93.8
143.9116.9
Norway Sweden LithuaniaQ1 2008 Q1 2009
Revenue by countryTotal revenue NOK 571.2 million
Revenue by country*
* before Kitron Group eliminations
4
7
Revenue mix impact gross margin
• Gross margin is down from 39.8 % in Q1 2008 to 37.5 % in Q1 2009.
• This is due to different revenue mix and not a margin performance issue:
• Lower sales of Development & Services
• Lower sales in Microelectronics
• Transfer of business to low cost
39,8 % 39,5 %
38,8 %
37,5 %37,3 %
30,0 %
32,0 %
34,0 %
36,0 %
38,0 %
40,0 %
42,0 %
Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009
Per
cen
t
Gross margin Group
Gross margin in Kitron is meassured after direct material but before direct labour.
8
Improved operating profit
• Operating profit up by 33.4%
• Operating margin improved from 4.4% to 5.1%
• Operational efficiency improvements (5S, LEAN etc)
• Global sourcing yield strong contribution
• Relative payroll costs improved to 24.6% of revenue (27.1%)
• Other operating costs down to 6.0% of revenue (6.5%)
Operating profit Group
Operating margin Group
21.6
48.7
37.2
51.0
28.9
10
20
30
40
50
Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009
NO
K m
illio
n
4.4%
7.9% 7.7% 7.5%
5.1%
Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009
NO
K m
illio
n
5
9
10.3%
1.3%
3.0%
7.8%
6.0%
-1.2%-2 %
0 %
2 %
4 %
6 %
8 %
10 %
12 %
Norway Sweden Lithuania
Per
cen
t
Q1 2008
Q1 2009
Profit by country
• Norway (Arendal) and Lithuania deliver a solid profit
• Slow start in Sweden but improvements expected following capacity adjustments.
(1.2)
12.19.8
1.3
11.2
22.1
(5.0)
-
5.0
10.0
15.0
20.0
25.0
Norway Sweden Lithuania
NO
K m
illio
n
Q1 2008
Q1 2009
Operating margin by country
Operating profit by country
10
430.7
482.3 476.0
541.8
457.4
200
250
300
350
400
450
500
550
Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009
NO
K m
illio
n
(60.9)
51.6
27.8
66.5
35.0
-80
-60
-40
-20
20
40
60
80
Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009
NO
K m
illio
n
Strong operating cash flow
• Fourth quarter in a row with a strong operating cash flow
• Operating cash flow was NOK 35 million vs negative NOK 60.9 million in Q1 2008
• Cash flow before repayment of factoring debt was NOK 100 million
• Net Working capital improved to 20% of revenue from 22% in Q1 2008
• Strong cash flow mainly driven by a reduction in receivables
Operating cash flow Group
Net working capital Group
6
11
262.5303.1
400.4
480.4 478.9
100
200
300
400
500
600
Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009
NO
K m
illio
n
Equity ratio above 40%
• Equity of NOK 478.9 million (262.5) and the equity ratio to 40.8% (26.8%)
• Mainly driven by the working capital improvement.
• Positive net profit offset by negative currency translation difference. 26.8% 28.2% 34.9% 38.4% 40.8%
Equity
Equity ratio
Market development
7
13
60
110
160
210
260
Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009
NO
K m
illio
n Data/Telecom
Defence/Marine
Medical equipment
Industry
Continued strong activity in Q1• Revenue trend driven by strong trend in Defence/Offshore.
• Drop in demand from Offshore.
• Mixed trend in Data/Telecom but video projection positive.
• Customers in Medical equipment adjusting inventory level.
• Industry segment most affected by the crisis
Revenue by market segment
14
300
350
400
450
500
550
600
650
Q4/2007 Q1/2008 Q2/2008 Q3/2008 Q4/2008 Q1/2009
NO
K m
illio
n
Order intake down
Order intake Group
Total
Q1 average
8
15
Medical equipment23%
Indusrty13% Data/Telecom
21%
Defence/Offshore43%
Order backlog signals reduction in activity level• Order backlog at NOK 732
million (NOK 994 million).
• Backlog reduced across all segments.
• Sharp drop for Offshore during Q1.
Definition of order backlog includes firm orders and four months customer forecast
732
971
1100
1006994
400
500
600
700
800
900
1000
1100
Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009
NO
K m
illion
Order backlog Group
Order backlog Segment
Outlook
9
17
Safeguarding competitive edge and profitability
• Kitron to reduce work force by 370 FTE’s in 2009• Productivity improvements
• 15% drop in revenue outlook
• Reduction of cost by NOK 60 million in 2009 (excl material)
• Annualised NOK 135 million in cost reduction
• Accelerate operational improvement activities• Transfer of manufacturing to
Lithuania (lower costs)
• Manufacturing efficiency programme
• Global sourcing
• Strategic opportunities emerging
18
2009 Outlook
• 15% drop in revenue expected
• A solid profit level but lower margin expected:
• Lower productivity due to capacity adjustments
• Difficulties to immediately adjust fixed costs
• Investments to improve competitiveness are prioritised while capacity related investments are being postponed
10
19