Kontron AG shows seasonally subdued start to 2016, annual guidance confirmed

• Revenues down 9.1 % to € 89.5 million (1Q15: € 98.5 million)
• Gross margin up 1.6 percentage points on the prior year at 27.1 % on account of savings in cost of materials
• EBIT adjusted for restructuring cost down € 2.7 million to € -4.9 million compared to the prior year
• Order intake down 8.9 % to € 79.9 million
• Annual earnings guidance confirmed: revenues corridor € 460 - 480 million, gross margin > 25 %, adjusted EBIT margin 3 - 5 %

Augsburg, April 28, 2016 – Kontron AG, a leading global provider of Embedded Computer Technology (ECT), had a seasonally subdued start to 2016 but confirms earnings guidance for the year as a whole.

First-quarter results

Revenues of € 89.5 million were down 9.1 % and order intake of € 79.9 million was down 8.9 % on the comparable prior-year quarter. Order backlog developed in line with this decline and stood at € 255.1 million at the end of the first quarter. Profits saw a similar development: EBIT adjusted for restructuring cost was down € 2.7 million at € -4.9 million. By contrast, the gross margin developed positively with an increase of 1.6  percentage points to 27.1 %, clearly exceeding the targeted 25 %.

The main reasons for this start to the year relate to the development of the ATD (Avionics, Transportation, Defense) business unit, which, at € 22.1 million, recorded around 25 % lower revenues. This is due to the longer than expected development times for some new projects. Improvement is, however, expected over the course of the year. In the COM (Communication) business unit, hardware-based products continue to be replaced by software-supported solutions, causing a € 3.1 million decline in revenues (down 14.6 %). A slight increase in order intake, however, shows that Kontron is on track to catch up. While revenues in the IND (Industrial) business unit rose by a further 3.5 %, order intake was down by around 31 % due to a base effect: framework agreements in the Medical segment could not be concluded at the same level as during the first quarter of 2015. However, the company anticipates that this business unit will also return to growth in the near future.

“January and February did not give us the start to the year that we would have wished for,” says Rolf Schwirz, Kontron CEO. “But, as in previous years, monthly revenues rose considerably again in March. Building on this, we aim to now drive the business forward.”

Trade payables of € 26.6 million and bank liabilities of € 12.4 million were repaid in the quarter. At the same time, trade receivables were reduced by € 41.4 million. The receipt of proceeds for the sale of a 49 % shareholding in Kontron Canada Inc. (KCI) resulted in a € 39.4 million increase in cash and cash equivalents.

Ennoconn partnership realized, restructuring of the sales organization approved, SAP implemented

On April 1, 2016, the company entered into a partnership with Ennoconn Corporation, announced back in January, in the Communication business unit. Ennoconn Corporation acquired a share of 49 % in KCI for a purchase price of $ 57.3 million (approximately € 52.5 million). Likewise on April 1, the decision was taken to optimize our sales set-up, which is expected to improve order intake and revenues already this year. The sales organization is now directly aligned with the three business units. In addition, the global SAP-ERP system has been in use at all major locations since the beginning of April. With its introduction, many business processes around the world are now standardized, which puts Kontron in a position to respond faster and more effectively to rapidly changing market conditions.

Outlook 2016

The company anticipates revenues between € 460 - 480 million for the year, as well as a gross margin in excess of 25 %. The EBIT margin adjusted for restructuring cost and non-recurring effects is expected within a corridor of 3 to 5 %. Non-recurring effects will primarily, but not exclusively, stem from the partnership with Ennoconn.

Key performance indicators for the first quarter of 2016

About Kontron

Kontron, a global leader in embedded computing technology and trusted advisor in IoT, provides a complete and integrated portfolio of hardware, software and services. Kontron creates many of the standards that drive the world’s embedded computing platforms, bringing to life numerous technologies and applications. The result is an accelerated time-to-market, reduced total-cost-of-ownership, product longevity and the best possible overall application with leading-edge, highest reliability embedded technology.             

Kontron is a listed company. Its shares are traded in the Prime Standard segment of the Frankfurt Stock Exchange and on other exchanges under the symbol “KBC”.

For more information, please visit: www.kontron.com

For more information:

Chari Lazaridis
Head of Global Corporate Communications
Kontron AG
Tel: +49 (0) 821 4086 484
Chari.Lazaridis@kontron.com

Alexandra Habekost
Head of Investor Relations
Kontron AG
Tel: +49 (0) 821 4086 114
Alexandra.Habekost@kontron.com