Kontron AG reaches its targets for fiscal year 2014

• Order intake rises by 7.9% (9.4%*) to 481.7 million €, book-to-bill 1.05
• Revenues grow 2.6% (7.2%)*, revenues from continued operations 456.8 million €
• Gross margin at 26.0% above its target of 25.0%
• EBIT, adjusted for restructuring cost, increases by 91.3% to 8.8 million €
• More than 80% of „New Kontron“ restructuring program implemented

Augsburg, 25 March 2015 – Kontron AG, a leading global provider of Embedded Computing Technology (ECT), has reached all its operational and financial targets for fiscal year 2014. It has therefore delivered fully on its plans for the second year in succession.

Kontron’s order intake, adjusted for effects caused by a switch to a royalty model for two US customers, rose by 9,4%* to 481.7 million € (prior year: 446.4 million €), which has effected a positive book-to-bill ratio of 1.05 and allowed the order backlog to grow by 15.9% to 324.6 million € (prior year: 280.0 million €). This is all the more encouraging as the large majority of these orders are to be delivered during 2015. Taking into account the above-mentioned royalty effect in the business units Avionics / Transportation / Defense and Communications, all three units could increase their order intake. Backlogs of the BUs Industrial und Communications were especially positive.

Adjusted revenues increased by 7.2% (prior year: 445.3 million €) to 456.8 million €, leaving them inside the corridor of 450-470 million € projected for 2014. As a result of higher revenues as well as „New Kontron“-induced improvements in manufacturing and material costs, much progress was made on gross profit: the gross margin came in 50 basis points higher than the year before at 26.0%, one full percentage point higher than the 25.0% target. EBIT, adjusted for restructuring cost, almost doubled during 2014, growing to 8.8 million € (prior year: 4.6 million €). Reported EBIT for continued operations was -5.1 million € (prior year: -29.0 million €).

„Considering the challenges our ‚New Kontron‘ program posed, we can be satisfied with this result, in particular because above and beyond the financials, we have developed and brought to market many new products, deepened relationships with existing customers, and won new ones“, says Rolf Schwirz, Kontron’s CEO. „We are now looking ahead and considering our strategic growth ambitions. We will present our plans at a Capital Markets Day on 19 May at our new Technology Campus in Augsburg.“

Cashflow from operations fell slightly to 1.7 million € (prior year: 2.0 million €) as a result of high restructuring outlays but also owing to exceptionally high revenues during the fourth quarter. At 59.9%, the equity ratio is higher than prior year (55.5%), which underscores Kontron’s healthy financial foundations.

„New Kontron“ – focused, successful implementation

Fiscal year 2014 was characterized by „New Kontron“, a comprehensive cost-cutting and efficiency program: costs were structurally reduced, rendering the company sustainably more profitable as a consequence. The program’s main aspect was a concentration of sites in order to generate synergies in the areas of R&D, production and distribution. The sites Eching, Kaufbeuren, Roding and Ulm were therefore consolidated and integrated into Augsburg and Deggendorf.

Additionally, a large number of purchasing agreements were renegotiated and terms improved. The number of suppliers was reduced to 1,145 in the process. The company’s product portfolio was streamlined and historic complexities simplified.

Outlook

2015 will be all about Kontron’s growth strategy, to be introduced shortly. Revenues are projected to come in between 490 million € and 510 million €, consistent with our 2016 revenue target of more than 550 million €. Our gross margin is targeted to be above 25%, our EBIT margin – adjusted for one-off items – to be 3-5%. These targets, too, are consistent with our profitability objectives for 2016 (>25% gross margin, >6% EBIT margin adjusted for one-off items).

Key figures for fiscal year 2014

(Continued operations)

                                                                                                             *Like for Like (Adjusted for royalties)

For further information, please contact
Alexandra Habekost
Kontron AG
Tel: +49 (0) 821 4086 114
Alexandra.Habekost@kontron.com