Kitron: Q3 2021 - Very strong demand, revenue constrained by
(2021-10-21) Kitron today reported third quarter results showing
very strong demand, but also revenue constraints due to the
Kitron's revenue for the third quarter was NOK 831 million,
compared to NOK 1 054 million last year. The decrease is
explained by last year’s Corona-related and exceptional volumes
within Medical devices, which are now normalized. For the other
market sectors combined, demand is very strong, but revenue growth
was limited by ongoing component shortages. More than NOK 200
million of demand has been delayed into later quarters.
Profitability expressed as EBIT margin was 6.0 per cent in the
third quarter, compared to 8.6 per cent in the same quarter last
year. The EBIT margin in the quarter is affected by inefficiencies
caused by the component shortage and the fact that the third
quarter is seasonally softer. Last year’s EBIT margin was affected
by the exceptional Corona-related volumes within the Medical
The order backlog ended at NOK 2 568 million, an increase
of 38 per cent compared to last year.
Peter Nilsson, Kitron’s CEO, comments: “Demand continues to be
very strong for both 2021 and 2022 with significant growth
opportunities in most market sectors. However, the general material
supply situation deteriorated rapidly in the third quarter and
continues to be a challenge to lead times and deliveries. We
currently believe that we are at the worst of these constraints,
and we expect the situation to start showing some improvements as
we progress into 2022. After last year’s high deliveries of medical
devices driven by the Corona pandemic, 2021 has returned to more
normal levels with normal seasonality in the third quarter. Given
the constraints in the supply chain, I’m satisfied with the results
we deliver in the quarter.”
“Currently the raw materials and component supply chain will not
support higher output, even though Kitron stands ready to deliver
more. Given this year’s increase of inventory and working capital,
we now turn our focus to executing demand into deliveries,
improving our cash flow, and protecting competitiveness and
Mixed sector developmentThere was revenue growth in the third
quarter within the Electrification, Connectivity and Industry
sectors, while revenue declined within Defence/Aerospace and, in
particular, within Medical devices.
Record order backlogThe order backlog ended at NOK 2 568
million, compared to 1 863 million last year. This is a record
and reflects a strong total demand situation but also includes
revenue delays due to the component shortage. The order backlog
increased within all market sectors. In absolute numbers, the order
backlog grew the most within Electrification and Defense/Aerospace,
while the percentage growth was particularly strong within
EBIT margin 6.0%Third quarter operating profit (EBIT) was NOK
50.1 million, compared to 90.5 million last year. EBITDA was NOK
75.7 million, compared to 115.7 million last year.
Profit after tax amounted to NOK 19.5 million, compared to 60.9
million in the same quarter the previous year. This corresponds to
earnings per share of NOK 0.11, down from 0.34 last year.
Constraints in supply chain
Operating cash flow was negative NOK 70.2 million, compared to
negative NOK 3.2 million in the third quarter last year.
Net working capital was NOK 1 158 million, an increase of 2
per cent compared to the same quarter last year. Net working
capital as a percentage of revenue was 31.8 per cent, compared to
25.1 per cent last year. Capital efficiency ratios are heavily
affected by the supply shortage, which deteriorated rapidly in the
third quarter, with material decommitments and new delivery dates.
The material constraints now seem to have levelled out.
Management’s focus in the quarter and going forward is on balancing
demand with the constraints in supply, executing demand into
deliveries and improving cash flow.
OutlookTotal demand is very strong and the order backlog at a
record level. However, in the very short term, supply shortages has
somewhat limited Kitron's ability to turn demand into revenues, and
the outlook for 2021 is adjusted to reflect this.
For 2021, Kitron has previously indicated a revenue outlook of
between NOK 3 900 and 4.200 million and an EBIT margin between 6.8
and 7.4 per cent.
Due to the constraints in the supply chain and the resulting
delays of revenue, the revenue for 2021 is now expected to be
between 3 700 and 3 900 million. EBIT margin is expected to be
between 6.8 and 7.1 per cent.
Growth is expected within the Connectivity, Electrification and
Industry sectors, whereas there will be a decline within the
Medical devices and Defence/Aerospace sectors.
Although the outlook 2021 is adjusted, the backlog and demand
situation implies that Kitron remains on the long-term strategic
trajectory for revenue and profitability.
The corona situation has so far had limited direct effects but
nevertheless brings uncertainty to the outlook together with the
constraints in the material supply situation.
Enclosed in PDF are the quarterly report and the presentation.
The interim report is presented today at 08:30 a.m. CEST. The
presentation will be given in English by CEO Peter Nilsson and CFO
Cathrin Nylander, and will be webcast at the following
For further information, please contact:Peter Nilsson, President
and CEO, tel. +47 94 84 08 50Cathrin Nylander, CFO, tel: +47 900 43
Kitron is a leading Scandinavian electronics manufacturing
services company for the Connectivity, Electrification, Industry,
Medical devices and Defence/Aerospace sectors. The company is
located in Norway, Sweden, Lithuania, Germany, Poland, China and
the United States. Kitron had revenues of about NOK 4.0 billion in
2020 and has about 1 800 employees. www.kitron.com
This information is subject to the disclosure requirements
pursuant to Section 5-12 the Norwegian Securities Trading Act
- Kitron 2021 Q3 Report
- Kitron 2021 Q3 Presentation
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