(2012-10-24) Kitron's revenue amounted to NOK 365.8 million in the third quarter of 2012, a 3.7 per cent increase compared with the same period last year. EBIT were NOK 15.4 million, a 67.9 per cent increase compared with same period last year. Operating cash flow for the third quarter was negative by NOK 15.4 million (NOK 8.2 million).
* Major Defence contracts secured * Targets NOK 100 mill inventory reduction
* Kitron China reaches break-even * Government funding for expansion
Offshore/Marine continues to be the strongest growing market segment with a 71.8 per cent leap in revenues compared to the same quarter last year. It is expected that this strong trend will continue. We are also bullish about the prospects in the Defence segment. The major contracts we secured during third quarter illustrate the strong momentum in this segment.
Major Defence contracts secured
Kitron has secured two significant contracts with KONGSBERG during Q3. Firstly, in August Kitron signed an exclusive manufacturing agreement for electronics modules that are part of the Kongsberg's newly won framework agreement with the US Army for the weapon station CROWS. The agreement means that Kitron is the preferred supplier of electronics to Kongsberg Protech Systems. The deliveries under the agreement will come from Kitron's subsidiary in Norway and the newly established operation in the US. For the US factory the CROWS program alone will generate revenue of more than NOK 60 million per annum over the next five years. The total potential under the contract is significantly higher. Secondly, in September Kitron received orders from KONGSBERG related to military communication equipment at a value of NOK 70 million. The deliveries will take place in 2013, 2014 and 2015.
Kitron China and Germany reach break-even
Kitron believes in improved profitability. The new factories in US and China and streamlined European operations play a key role in achieving this. In the third quarter we reached a major milestone with both Kitron China and Kitron Germany reaching breakeven. The factory in China was opened one year ago and has now grown to more than 100 employees and an annual turnover approaching NOK 150 million. 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 globally. 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.
Investment in distribution centre to drive inventory reduction
Kitron has decided to establish a distribution centre to streamline the logistics process and drive down inventory. Combined with other initiatives within logistics and supply chain process, Kitron is targeting to reduce inventory by at least NOK 100 million from the current level. The distribution centre will be established in Lithuania and will primarily serve the sites in Europe. The plan is to have the distribution centre in full operation during 2013. When fully implemented it is estimated that it will help reducing inventory by more than NOK 50 million.
Funding obtained to expand operation in Lithuania
The ambition is to develop Kitron Lithuania to the main factory for PCB manufacturing in Europe. Kitron will receive up to LTL 4.5 million (NOK 10 million) in funding from the Lithuanian government in relation to expansion investments over the coming years. The plans include an expansion of the factory in Kaunas and the establishment of a distribution centre as described above. The total investment is estimated to NOK 40 - 50 million over the next three years. The funding from Invest Lithuania is expected to cover up to 25% of the total investment.
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 2011 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
