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Kitron ASA has reported strong revenue growth and the achievement of an important margin goal in the second quarter. Revenue in the second quarter amounted to NOK 649 million, a 16% underlying growth compared to NOK 563 million in the same quarter last year.
Profitability expressed as EBIT margin was 7%, compared to 5.9% in the second quarter of 2016, an EBIT growth of almost 38%.
"The EBIT margin is in line with the long-term target that we presented at the Kitron Capital Markets Day in February 2016, and this is the first quarter in which we have achieved this ambition. While the margin will vary from quarter to quarter, this is an important milestone in the improvement process that has been under way the past couple of years. We also deliver on growth and capital efficiency, and at the same time we are investing in capacity and capabilities in order to improve our competitiveness further. We're seeing growth in general with our customers. Together with new business awards Kitron demonstrates stronger growth than the industry in general. The strong first six month report of 2017 presented today proves that Kitron creates value for its customers and has a strong platform for further growth," said CEO Peter Nilsson.
Strong revenue growth
Kitron's revenue for the second quarter increased by 15% compared to the same period last year. Adjusted for foreign exchange effects, the increase was 16%. Growth compared to the same quarter last year was particularly strong in the Industry market sector. Defense/Aerospace and Energy/Telecoms also recorded solid growth.
Operating profit (EBIT) was NOK 45.5 million, compared to NOK 33.1 million last year, an increase of 37%. EBITDA was NOK 59 million, an increase of 31% compared to last year. Net profit amounted to NOK 31.4 million, an increase from NOK 21.4 million. This corresponds to earnings per share of NOK 0.18, compared to NOK 0.12 last year.
Solid order backlog
The order backlog ended at NOK 1.018 billion, an increase of 3% compared to last year. Orders received in the quarter were NOK 590 million.
Improved capital efficiency
Net working capital increased from NOK 521 million to NOK 565 million compared to the same quarter last year, continuing the trend of decreasing net working capital compared to revenue. Operating cash flow was NOK 63.1 million, compared to NOK 61 million in the second quarter 2016.
Key contracts won in the quarter
Kitron signed important contracts with key long-term customers in the second quarter.
In May, Kongsberg Defense Systems awarded Kitron a NOK 34 million order for military communications equipment. In June, Kitron signed a contract with a potential value of NOK 600 million over a five-year period with Husqvarna Group. The new agreement includes five products for the Husqvarna Robotic Lawn Mowers product range and is in addition to existing manufacturing volumes.
Investing for further growth
Over the past years, Kitron has invested in its facilities, ensuring that they are modern, highly competitive and able to handle expected growth. In the second quarter, the move and major upgrade of the Swedish plant in Jönköping was completed, with the official opening being celebrated in May.
In the second half of 2017 Kitron will invest in SMT equipment for increased capacity in the US, Lithuania and China. In addition, further investments in Norway, Sweden and Lithuania will focus on automation and robotics.
For 2017, Kitron expects revenue to grow to between NOK 2.15 and 2.35 billion. The EBIT margin is expected to be between 5.6% and 6.4%. Revenue is now expected to be in the higher end of the indicated range. The growth is primarily driven by customers in the Industry sector. The profitability increase is driven by cost reduction activities and improved efficiency.
Kitron is one of Scandinavia's leading electronics manufacturing services companies for the Defense/Aerospace, Energy/Telecoms, Industry, Medical devices and Offshore/Marine sectors. The company is located in Norway, Sweden, Lithuania, Germany, China and the United States. Kitron had revenues of about NOK 2.1 billion in 2016 and has about 1 350 employees. For more information, click here.