Release Date: July 11, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kitron ASA (FRA:KP5, Financial) delivered an operating profit of close to 9%, indicating strong profitability.
- The Nordic and US operations showed positive momentum with a robust margin, largely driven by increased scale, resulting in 15% growth.
- Kitron ASA (FRA:KP5) announced significant orders worth NOK500 million from Kongsberg Defense and Aerospace for electronics for the Naval Strike Missile.
- A new 7,500 square meter production facility is being built in Norway to support increasing demand, expected to be ready by early 2026.
- The restructuring program launched in the first quarter is close to completion, yielding expected cost improvements and strong margins in the second quarter.
Negative Points
- Revenue for the quarter ended at EUR167.6 million, a reduction of almost 19% compared to last year.
- EBITDA decreased to EUR15 million from EUR19.2 million last year, indicating a decline in earnings.
- There were dramatic reductions in revenue for both CEE and Asia, with volume reductions of around and above 40%.
- Net income decreased to EUR10.4 million, corresponding to about 6.2% of revenues, down from 7.6% last year.
- The electrification sector showed a year-on-year decline, with continued low sales on many green tech products due to reduced consumer spending.
Q & A Highlights
Q: With busy facilities in the Nordics and the U.S. and a slow market in CEE and China, have you been able to move products from the Nordics and the U.S. to CEE and China?
A: Not to any greater extent during the second quarter. Plans started in the fourth quarter last year and developed into more firm plans in the first quarter, with execution expected in the second quarter. However, delays have occurred due to the need for production test equipment and customer approvals. We expect significant output increases by Q4 this year. (Lars Nilsson, CEO)
Q: How is the M&A pipeline? Has it increased as markets have slowed down?
A: Yes, we are seeing more opportunities, although many are smaller and not aligned with our target market sectors or products. We have initiated a more targeted project to find the right size and market sectors for us. We will provide updates in the third and fourth quarters. (Lars Nilsson, CEO)
Q: When will the NOK500 million order from Kongsberg be included in the order intake and order book?
A: It has been included in the numbers presented for the second quarter, as it arrived towards the end of June. (Lars Nilsson, CEO)
Q: Why have you stopped providing the R12 number? Does it decrease visibility?
A: Yes, it decreases visibility. Changes in customer policies and how we treat long-term forecasts have made the final three months of the R12 less meaningful. We believe providing our outlook is more beneficial than showing R12 numbers. (Lars Nilsson, CEO)
Q: Just to clarify, is the NOK500 million order from Kongsberg included in the backlog?
A: Yes, it is included in the Q2 ending order backlog. (Lars Nilsson, CEO)
Q: Can the NOK500 million order from Kongsberg be retracted?
A: Usually, orders are binding agreements and are rarely canceled. We have a firm order with quantities and variants specified. (Lars Nilsson, CEO)
Q: Is the EBIT guidance adjusted for one-offs, such as the EUR5 million restructuring cost in Q1?
A: No, the EBIT guidance is not adjusted for one-offs. (Cathrin Nylander, CFO)
Q: What is the split between 2025 and 2026 for the NOK500 million Kongsberg order?
A: The larger part of the order will be in 2026, but exact numbers are not available at this time. (Cathrin Nylander, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
