PRESS RELEASE: Kontron AG raises revenue and earnings
24.03.2009
Kontron AG / Final Results
24.03.2009
Release of a Corporate News, transmitted by DGAP - a company of EquityStory AG.
The issuer / publisher is solely responsible for the content of this announcement.
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Successful 2008: double-digit revenue growth to EUR 496.9 million, EBIT
climbs to EUR 48.3 million, earnings per share up from 60 cents to 69 cents
/ High order backlog of EUR 291 million and growth in a design win volumes
to EUR 317 million / Solid financial cushion and good cash position /
Outlook: countering the economic crisis with a high degree of
diversification, Profit Improvement Program, and ongoing outsourcing trend
/ Continued profitability in a difficult environment
Eching, Munich, March 24, 2009. TecDAX-listed Kontron AG, one of the
world's leading providers of embedded computer technology with around 2,500
employees, brought the 2008 financial year to a successful conclusion
despite the global financial and economic crisis. The targets that had been
set and announced - double-digit revenue growth, an even faster rise in
profitability, and an extremely solid cash position - were fully achieved
despite the deterioration in the economic environment. Consequently, the
company continued along the profitable growth path of recent years. In
2008, Kontron AG's total revenue rose to EUR 496.9 million compared with
EUR 446.5 million in the previous year. This corresponds to an 11 percent
growth rate. It also reflected a continuous year-on-year rise in revenue
from quarter to quarter. In the fourth quarter alone, a new record level of
EUR 141 million was achieved. The strong dynamic in business growth was
reflected in the strong order intake and in the resulting further growth in
orders on the books. Order intake was up from EUR 267.9 million in 2007 to
EUR 291.4 million in 2008. Design wins, which provide a key indicator for
medium- and long-term growth, also reached a new record level of EUR 317.1
million by the end of the fiscal year, compared with a volume of EUR 273.3
million in the previous year.
EBIT margin at almost 10 percent
Kontron AG's significant revenue growth last year also fed through to
further improvement in its earnings and profitability. Operating earnings
(EBIT) rose to EUR 48.3 million compared with EUR 46.3 million in the
previous year. This resulted in an EBIT margin slightly below 10 percent.
High one-off extraordinary effects arising from the sale of the Mobile
Computer division, and the acquisition of PLG, which together amounted to
almost EUR 7 million in 2007, should be taken into account when drawing a
comparison with the previous year's result. Operating earnings rose by
around 18 percent year-on-year when adjusted for this factor. Net income
came in at EUR 36.3 million compared with EUR 32.6 million in the previous
year. Here too, extraordinary effects in the third quarter of 2007 should
be taken into account. Earnings per share rose 15 percent from 60 euro
cents to 69 euro cents.
Equity ratio at 73.1 percent
The company regards itself as enjoying a highly healthy liquidity position,
even in today's global economic crisis, in view of its cash holdings of EUR
53.1 million, a positive net cash position (after deducting liabilities to
banks) of over EUR 41 million, as well as an operating cash flow EUR 27.5
million and an equity ratio of 73.1 percent (given total assets of EUR
396.8 million compared with EUR 381.9 million in 2007).
Broadly positioned for the future
Kontron regards itself as well positioned to continue to operate profitably
in the market, even given the ongoing global economic crisis, thanks to its
high degree of diversification, the company's ongoing Profit Improvement
Program, and the continued trend towards outsourcing. CEO Ulrich Gehrmann
commented as follows at today's press conference: 'While it is impossible
for us to decouple ourselves entirely from the current negative economic
situation, the success of our company nevertheless depends to a large
extent on our own performance. From this vantage point, economically
difficult times not only entail risks, but also opportunities. Given
ongoing cost pressure on the customer side, we are able to generate new
business as a classic outsourcing partner. This is why we will orient our
strategy to an even greater extent towards these potentials, especially in
the long-term infrastructure project area.' The company aims to boost its
EBIT margin from currently slightly below 10 percent to 12 percent by 2011.
Growth in all regions
Kontron AG's dynamic business growth resulted from all regional markets in
equal measure. The ongoing growth trend continued in Europe with a rise of
around 5 percent compared with the previous year. Kontron generated 46
percent of its total revenue in Europe. The EBIT margin amounted to 11.5
percent.
Business in America experienced further stability in 2008. Although growth
of 14 percent was above-average (it was significantly more when adjusted
for currency effects), profitability was lent even greater sustainability.
For example, the EBIT margin rose from 8.9 percent in the previous year
(excluding extraordinary effects arising from the sale of the mobile
product line) to 10.9 percent. With 29 percent of total Kontron Group
revenue, and rising profit margins, the American continent consequently
represents its second most important strategic sales market.
High growth levels, particularly in emerging markets, continued unabated,
as in previous years. At 21,1 percent, the highest growth rates were
achieved in these regions in 2008. Their share of Kontron Group total
revenue was 25 percent. On the earnings site too, Kontron AG's
restructuring measures in Asia are already bearing their first fruits. The
EBIT margin in emerging markets was up from 6.9 percent in 2007 to 7.6
percent. The successfully implemented strategic reorganization of sales
structures had a particularly positive effect in this respect: since
January 2008, Kontron has assumed control and management of its sales
companies in China, Australia, Japan, and Korea. Further production
capacities were also relocated to the Penang location in Malaysia after
Kontron acquired 100 percent of the shares in this Malaysian company at the
end of June 2008.
Diversification in application areas
Kontron AG's high degree of diversification is having a sustainably
positive effect in vertical markets. Weaker growth rates in the automation
area of application, particularly for European mechanical and plant
engineering companies, were in the main more than compensated for by higher
orders in the promising areas of transport/infrastructure, the energy
sector, medical and security technology, and telecommunications. In overall
terms, the distribution among the seven central vertical markets is as
follows: industrial automation 23 percent, telecommunications 22 percent,
infotainment 19 percent, security/defense 11 percent,
transport/infrastructure 8 percent, the energy sector 10 percent, and
medical technology 7 percent. As a consequence, Kontron generated the
significantly largest part of its revenue in comparatively defensive areas
that are relatively independent of the economic cycle such as medical
technology, energy, security, telecommunication and infrastructure.
Strategic purchases strengthen market position
The 2008 acquisition of Rackmount Server's communications business division
from Intel(R) Corporation represented an ideal opportunity for Kontron AG
to complete its product range in the important telecommunications
application area. The sales volume for this new acquisition will be around
USD 35 million for 2009. Kontron also further expanded its high-margin
security technology/aerospace application area in 2008 with the acquisition
of the French company Thales Computers S.A.
Joint-venture in Asia cuts materials costs and boosts capacities
Kontron AG's higher profitability resulted particularly from the successful
implementation of the Profit Improvement Program. The production location
in Penang, Malaysia, which Kontron acquired at the end of 2005, was of
central significance in this respect. Gradual relocation of basic
production to this location has resulted in significant savings. Asia is
already the location of over 60 percent of Kontron's entire production
today. The success of these measures was clearly underscored by the
figures. In 2005, production costs still amounted to 8.8 percent of total
revenue, while this figure has now been cut to 6.6 percent. 'Asia also
offers further cost-saving potentials, which we can exploit further in the
future,' CEO Ulrich Gehrmann went on to emphasize. An important step
towards the planned medium-term enhancement of the EBIT margin to 12
percent by 2011 was realized in March last year with the founding of a
joint-venture with the Taiwanese company Quanta Computer Inc. Taipei, the
world's largest producer of laptops, and the related creation of a
strategic purchasing team in Taipei. Kontron can now significantly optimize
its materials and manufacturing costs on the basis of considerably more
favorable Asian purchasing and production terms. A further strategic
advantage lies in the option whereby Kontron can now also offer very major
volumes of over 100,000 units on a cost-effective basis, and consequently
further expand its customer base.
Outlook: Continued profitability in a difficult environment
Now, as before, Kontron AG is operating in a rapidly consolidating market,
and ranks as the fastest growing company expanding by organic growth,
holding a market share of over 12 percent, according to Ulrich Gehrmann.
The company retained its number one ranking in the market in 2008. While
its major international competitors are favoring acquisition-led growth,
Kontron will continue to prioritize organic growth in the future, as well
as targeted strategic acquisitions at fortuitous prices. Specific forecasts
Kontron AG / Final Results
24.03.2009
Release of a Corporate News, transmitted by DGAP - a company of EquityStory AG.
The issuer / publisher is solely responsible for the content of this announcement.
=--------------------------------------------------------------------------
Successful 2008: double-digit revenue growth to EUR 496.9 million, EBIT
climbs to EUR 48.3 million, earnings per share up from 60 cents to 69 cents
/ High order backlog of EUR 291 million and growth in a design win volumes
to EUR 317 million / Solid financial cushion and good cash position /
Outlook: countering the economic crisis with a high degree of
diversification, Profit Improvement Program, and ongoing outsourcing trend
/ Continued profitability in a difficult environment
Eching, Munich, March 24, 2009. TecDAX-listed Kontron AG, one of the
world's leading providers of embedded computer technology with around 2,500
employees, brought the 2008 financial year to a successful conclusion
despite the global financial and economic crisis. The targets that had been
set and announced - double-digit revenue growth, an even faster rise in
profitability, and an extremely solid cash position - were fully achieved
despite the deterioration in the economic environment. Consequently, the
company continued along the profitable growth path of recent years. In
2008, Kontron AG's total revenue rose to EUR 496.9 million compared with
EUR 446.5 million in the previous year. This corresponds to an 11 percent
growth rate. It also reflected a continuous year-on-year rise in revenue
from quarter to quarter. In the fourth quarter alone, a new record level of
EUR 141 million was achieved. The strong dynamic in business growth was
reflected in the strong order intake and in the resulting further growth in
orders on the books. Order intake was up from EUR 267.9 million in 2007 to
EUR 291.4 million in 2008. Design wins, which provide a key indicator for
medium- and long-term growth, also reached a new record level of EUR 317.1
million by the end of the fiscal year, compared with a volume of EUR 273.3
million in the previous year.
EBIT margin at almost 10 percent
Kontron AG's significant revenue growth last year also fed through to
further improvement in its earnings and profitability. Operating earnings
(EBIT) rose to EUR 48.3 million compared with EUR 46.3 million in the
previous year. This resulted in an EBIT margin slightly below 10 percent.
High one-off extraordinary effects arising from the sale of the Mobile
Computer division, and the acquisition of PLG, which together amounted to
almost EUR 7 million in 2007, should be taken into account when drawing a
comparison with the previous year's result. Operating earnings rose by
around 18 percent year-on-year when adjusted for this factor. Net income
came in at EUR 36.3 million compared with EUR 32.6 million in the previous
year. Here too, extraordinary effects in the third quarter of 2007 should
be taken into account. Earnings per share rose 15 percent from 60 euro
cents to 69 euro cents.
Equity ratio at 73.1 percent
The company regards itself as enjoying a highly healthy liquidity position,
even in today's global economic crisis, in view of its cash holdings of EUR
53.1 million, a positive net cash position (after deducting liabilities to
banks) of over EUR 41 million, as well as an operating cash flow EUR 27.5
million and an equity ratio of 73.1 percent (given total assets of EUR
396.8 million compared with EUR 381.9 million in 2007).
Broadly positioned for the future
Kontron regards itself as well positioned to continue to operate profitably
in the market, even given the ongoing global economic crisis, thanks to its
high degree of diversification, the company's ongoing Profit Improvement
Program, and the continued trend towards outsourcing. CEO Ulrich Gehrmann
commented as follows at today's press conference: 'While it is impossible
for us to decouple ourselves entirely from the current negative economic
situation, the success of our company nevertheless depends to a large
extent on our own performance. From this vantage point, economically
difficult times not only entail risks, but also opportunities. Given
ongoing cost pressure on the customer side, we are able to generate new
business as a classic outsourcing partner. This is why we will orient our
strategy to an even greater extent towards these potentials, especially in
the long-term infrastructure project area.' The company aims to boost its
EBIT margin from currently slightly below 10 percent to 12 percent by 2011.
Growth in all regions
Kontron AG's dynamic business growth resulted from all regional markets in
equal measure. The ongoing growth trend continued in Europe with a rise of
around 5 percent compared with the previous year. Kontron generated 46
percent of its total revenue in Europe. The EBIT margin amounted to 11.5
percent.
Business in America experienced further stability in 2008. Although growth
of 14 percent was above-average (it was significantly more when adjusted
for currency effects), profitability was lent even greater sustainability.
For example, the EBIT margin rose from 8.9 percent in the previous year
(excluding extraordinary effects arising from the sale of the mobile
product line) to 10.9 percent. With 29 percent of total Kontron Group
revenue, and rising profit margins, the American continent consequently
represents its second most important strategic sales market.
High growth levels, particularly in emerging markets, continued unabated,
as in previous years. At 21,1 percent, the highest growth rates were
achieved in these regions in 2008. Their share of Kontron Group total
revenue was 25 percent. On the earnings site too, Kontron AG's
restructuring measures in Asia are already bearing their first fruits. The
EBIT margin in emerging markets was up from 6.9 percent in 2007 to 7.6
percent. The successfully implemented strategic reorganization of sales
structures had a particularly positive effect in this respect: since
January 2008, Kontron has assumed control and management of its sales
companies in China, Australia, Japan, and Korea. Further production
capacities were also relocated to the Penang location in Malaysia after
Kontron acquired 100 percent of the shares in this Malaysian company at the
end of June 2008.
Diversification in application areas
Kontron AG's high degree of diversification is having a sustainably
positive effect in vertical markets. Weaker growth rates in the automation
area of application, particularly for European mechanical and plant
engineering companies, were in the main more than compensated for by higher
orders in the promising areas of transport/infrastructure, the energy
sector, medical and security technology, and telecommunications. In overall
terms, the distribution among the seven central vertical markets is as
follows: industrial automation 23 percent, telecommunications 22 percent,
infotainment 19 percent, security/defense 11 percent,
transport/infrastructure 8 percent, the energy sector 10 percent, and
medical technology 7 percent. As a consequence, Kontron generated the
significantly largest part of its revenue in comparatively defensive areas
that are relatively independent of the economic cycle such as medical
technology, energy, security, telecommunication and infrastructure.
Strategic purchases strengthen market position
The 2008 acquisition of Rackmount Server's communications business division
from Intel(R) Corporation represented an ideal opportunity for Kontron AG
to complete its product range in the important telecommunications
application area. The sales volume for this new acquisition will be around
USD 35 million for 2009. Kontron also further expanded its high-margin
security technology/aerospace application area in 2008 with the acquisition
of the French company Thales Computers S.A.
Joint-venture in Asia cuts materials costs and boosts capacities
Kontron AG's higher profitability resulted particularly from the successful
implementation of the Profit Improvement Program. The production location
in Penang, Malaysia, which Kontron acquired at the end of 2005, was of
central significance in this respect. Gradual relocation of basic
production to this location has resulted in significant savings. Asia is
already the location of over 60 percent of Kontron's entire production
today. The success of these measures was clearly underscored by the
figures. In 2005, production costs still amounted to 8.8 percent of total
revenue, while this figure has now been cut to 6.6 percent. 'Asia also
offers further cost-saving potentials, which we can exploit further in the
future,' CEO Ulrich Gehrmann went on to emphasize. An important step
towards the planned medium-term enhancement of the EBIT margin to 12
percent by 2011 was realized in March last year with the founding of a
joint-venture with the Taiwanese company Quanta Computer Inc. Taipei, the
world's largest producer of laptops, and the related creation of a
strategic purchasing team in Taipei. Kontron can now significantly optimize
its materials and manufacturing costs on the basis of considerably more
favorable Asian purchasing and production terms. A further strategic
advantage lies in the option whereby Kontron can now also offer very major
volumes of over 100,000 units on a cost-effective basis, and consequently
further expand its customer base.
Outlook: Continued profitability in a difficult environment
Now, as before, Kontron AG is operating in a rapidly consolidating market,
and ranks as the fastest growing company expanding by organic growth,
holding a market share of over 12 percent, according to Ulrich Gehrmann.
The company retained its number one ranking in the market in 2008. While
its major international competitors are favoring acquisition-led growth,
Kontron will continue to prioritize organic growth in the future, as well
as targeted strategic acquisitions at fortuitous prices. Specific forecasts
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