Kontron AG reports Q1 results in line with its 2014 guidance

• Revenues from continued operations of EUR 102.8 million
• Gross margin increases by more than one percentage point to 25.75 percent
• Operating profit (EBIT) from continued operations after special items of EUR 0.1 million

Eching near Munich, 06 May 2014 – Kontron AG, the globally leading provider of Embedded Computer Technology (ECT), delivered a solid performance in the first quarter of 2014, in spite of a still challenging market environment. In accordance with the annual report 2013, the activities of the energy project business are reported as “discontinued operations”.

Order entry for continued operations amounted to EUR 105.2 million (Q1 2013: EUR 117.9 million). Kontron generated revenues from continued operations of EUR 102.8 million, after EUR 107.2 million in the same quarter last year. As before, this development is a result of both the still difficult market and industry environment and one-off effects. The switch to a royalty model for two customers in 2013 for instance led to a negative impact of EUR 11 million. Currency fluctuations also had a negative effect. That said, the book-to-bill ratio exceeded 1 for the second consecutive quarter, and the gross margin increased by more than one percentage point to 25.75 percent compared to the first quarter of 2013 (Q1 2013: 24.7 percent).

Earnings before interest and taxes (EBIT) for continued operations and before one-off effects improved to EUR 1.2 million, after EUR -0.1 million in the year-earlier quarter. Earnings in this quarter were affected by restructuring costs of EUR 1.1 million. After these one-off effects, the reported EBIT for continued operations amounted to EUR 0.1 million compared with EUR -3.7 million in the year-earlier quarter.

“The gradual improvement of our results shows that, even in a challenging environment, we are developing compelling, innovative and intelligent ECT solutions with crucial added value for our clients,” says Rolf Schwirz, Kontron AG’s CEO. “With the determined implementation of the “New Kontron” measures, we are on course to become sustainably profitable once more.”

Cash flow from continued operations in the first quarter increased by EUR 3.2 million year on year to EUR 4.5 million. With a sound equity ratio of 58 percent, Kontron retains a healthy financial base.

“New Kontron” measures are on schedule

The comprehensive cost-cutting and efficiency program hinges on the consolidation of Kontron’s sites in Augsburg and Deggendorf. The first teams are about to relocate to these sites. Existing buildings in Augsburg have already been refurbished and refitted to accommodate them. All other relocation measures are scheduled to be completed by the end of November 2014.

Furthermore, about one third of the product portfolio is subject to review. The review’s objective is to decrease complexity in development, production and distribution. This process has already identified 800 products for phase-out in the near future. Another 1,300 products are expected to follow over the next six months. This will conclude the review of the product portfolio for the time being.

Further information:
Harald Kinzler
HERING SCHUPPENER Consulting
Tel:        +49 69 9218 7465
Email:  hkinzler@heringschuppener.com