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Kitron: Strong growth in cash flow and profitability


February 13, 2013 - London

(2013-02-13) Kitron's revenue amounted to NOK 462.4 million in the fourth quarter of 2012, a 4.4 per cent increase compared with the same period last year. EBIT increased 416 per cent from fourth quarter last year to NOK 23.4 million. Operating cash flow for the fourth quarter was NOK 84.8 million compared to NOK 13.9 million same period last year.

* Significant inventory reduction                         * Trend towards higher profitability

* Restructuring of Sweden completed                   * Major Medical contract secured

Offshore/Marine continues to be the strongest growing market segment with a 78.5 per cent leap in revenues compared to the same quarter last year. Also the Defence/Aerospace and Medical segments show a positive trend with revenue growth of 8.3 and 8.8 per cent respectively. Kitron is particularly bullish about the outlook for the Defence/Aerospace segment.

Significant inventory reduction
Kitron is targeting to significantly reduce the capital tied up in operations. During the fourth quarter inventory was reduced by more than NOK 50 million and the company achieved a positive cash flow of NOK 84.8 million. The improvement is the result of close follow-up during the quarter across all entities. As announced in the last report Kitron is targeting further inventory reductions going forward. Based on today's business volume an additional reduction of at least NOK 50 million is expected, mainly as the result of the implementation of a common distribution centre for the Kitron manufacturing entities. The establishment of the distribution centre has started and will be completed during 2013.

The restructuring of Sweden completed
The restructuring of the Swedish operation which has been on-going for the last couple of years has now been fully completed. Following a number of years with poor profitability the Swedish posted a solid EBIT margin of 6.3 per cent for the year as a total. The Swedish operation has now been concentrated in Jönköping which enables further streamlining of the operation and reduction of the operating cost.

Trend towards higher profitability
The improved profitability in the quarter and for the year in total is partly the result of the successful restructuring in Sweden and partly due to the improved profitability from new operations. The new operations in China and Germany are now profitable, while the factory in US is expected to be profitable from the second quarter of 2013 onwards.

While streamlining the operations in Norway and Sweden down to one factory per country, Kitron has during the past few years been expanding its operations globally. This has been part of a deliberate strategy to increase competiveness and to follow the customers. The parallel establishment of factories in US and China while entering Germany through a smaller acquisition has been a major undertaking for Kitron and has had a significant negative impact on the result during the start-up phase. In Germany we have secured a number of new customers since the start up and revenue volume is increasing. Most of the manufacturing for the German market is done in our factory in Lithuania.

Major medical contract secured
Kitron secured the extension of a major contract within the Medical segment during the fourth quarter. The agreement means that Kitron will be supplier for an additional period of approximately 2 years. During this period, Kitron expects that revenue under the agreement will be between NOK 350 and NOK 400 million. Manufacturing will mainly take place at Kitron's factory in Arendal, while parts of the product will be manufactured at Kitron's factory in Ningbo, China.

During the fourth quarter Kitron further announced the first order in the Netherlands. Lely has selected Kitron as manufacturing partner for their milking robots. This agreement is strategically important for Kitron. Agriculture machinery is getting more 'intelligent' and Lely is at the forefront of this trend. The production of the electronics for Lely's milking robots will take place at Kitron's factory in Lithuania.

Enclosed in pdf are the quarterly report and the presentation.

Kitron is one of Scandinavia's leading electronics manufacturing services companies for the Defence, Energy/Telecoms, Industry, Medical equipment and Offshore/Marine sectors. The company is located in Norway, Sweden, Lithuania, Germany, China and the United States. Kitron had revenues of about NOK 1.7 billion in 2012 and has about 1,200 employees. www.kitron.com

This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act).

KIT Report Q4
KIT Presentation Q4



This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

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(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Kitron ASA via Thomson Reuters ONE

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