Kitron: Q1 2024 - Strong underlying profitability in challenging market
(2024-04-25) Kitron today reported strong underlying profitability in a challenging market. Cost initiatives are implemented to maintain operating margins in line with the company’s strategic target.
Kitron's revenue for the first quarter was EUR 173.9 million, compared to 190.6 million last year. There was strong growth within the Defence/Aerospace market sector, while other market sectors showed declines.
First-quarter operating profit (EBIT) was EUR 10.6 million, compared to 17.3 million last year. EBITDA was EUR 15.2 million, compared to 21.4 million last year. Profits are impacted by restructuring charges of EUR 4.8 million.
Profitability expressed as EBIT margin was 6.1 per cent, including the restructuring charges, compared to 9.1 per cent last year. Profitability adjusted for restructuring charges was 8.8 per cent.
The order backlog ended at EUR 445 million, a decrease of 24 per cent compared to last year and a decrease of 10 per cent from the preceding quarter.
Peter Nilsson, Kitron's CEO, comments:
"Nordic and U.S. operations show positive momentum, mainly driven by increased demand in the Defence and Aerospace sectors.
However, the broader market environment is challenging, leading us to revise our full year sales outlook. The slower than anticipated market recovery, along with extended de-stocking activities by our customers, necessitate this adjustment. These challenges are affecting our operations in Central and Eastern Europe (CEE) and to a greater extent in China. Despite these headwinds, we see signs of recovery in some market sectors as we approach the fourth quarter.
In response to these conditions, we are strategically aligning our capacity with the prevailing demand to bolster our future efficiency and competitiveness. We are implementing cost initiatives expected to reduce our annual cost base by approximately EUR 12 million, with the full benefits to be realized starting from the middle of the second quarter.
We remain agile and fully prepared to seize any opportunities should the market conditions improve sooner than expected.
While our commitment to our strategic targets remains steadfast, we recognize that short-term fluctuations around our 9 percent margin target may occur as we adapt our strategies responsively based on evolving market conditions.”
Profit after tax amounted to EUR 6.5 million, compared to 13.3 million in the same quarter the previous year. This corresponds to earnings per share of EUR 0.03, down from 0.07 last year.
Stable working capital
Operating cash flow in the first quarter was EUR 8.5 million, compared to 10.5 million in the first quarter of 2023.
Net working capital was EUR 196.9 million, an increase of 7.1 per cent compared to the same quarter last year. Net working capital as a percentage of revenue was 28.0 per cent compared to 23.7 per cent last year.
Outlook
For 2024, Kitron has previously indicated a revenue outlook of between EUR 700 and 800 million and an operating profit (EBIT) between EUR 60 and 74 million. Due to the challenging market outlook, we now expect revenue to be between EUR 660 and 710 million. Cost initiatives are implemented to maintain operating margins, and we expect an operating profit (EBIT) between EUR 53 and 60 million, including EUR 4.8 million in restructuring costs in the first quarter.
Enclosed in PDF are the quarterly report and the presentation. The interim report is presented today at 8.30 a.m. CEST by CEO Peter Nilsson and CFO Cathrin Nylander. It will be webcast at the following link: https://channel.royalcast.com/hegnarmedia/#!/hegnarmedia/20240425_9
For further information, please contact:
Peter Nilsson, President and CEO, tel. +47 94 84 08 50
Cathrin Nylander, CFO, tel: +47 900 43 284
E-mail: investorrelations@kitron.com
Kitron is a leading Scandinavian electronics manufacturing services company for the Connectivity, Electrification, Industry, Medical devices and Defence/Aerospace sectors. The group is located in Norway, Sweden, Denmark, Lithuania, Germany, Poland, the Czech Republic, India, Malaysia, China and the United States. Kitron has about 2 800 employees, and revenues were EUR 775 million in 2023. www.kitron.com
This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act
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