Kontron AG reports high Q3 order intake and confirms 2014 guidance

• Very high Q3 order entry of EUR 134.9 million
• Revenues of EUR 108.6 million underpin full-year guidance
• Q3 gross margin of 24.4 percent affected by disadvantageous revenue mix
• Operating profit (EBIT) before restructuring costs slightly negative due to lower capitalization of R&D costs

Augsburg, 5 November 2014 – Kontron AG, a globally leading provider of Embedded Computer Technology (ECT), delivered Q3 results in line with its expectations. Guidance for the full year confirmed; record order intake gives reason for optimism for 2015.

Order intake for continuing operations reached a record in the third quarter of 2014, climbing to EUR 134.9 million or by more than 49 percent on the same quarter last year (Q3 2013: EUR 90.3 million), and by more than 12 percent sequentially (Q2 2014: EUR 120.4 million). Kontron generated revenues from continuing operations of EUR 108.6 million, up slightly on last year. Thus, the company achieved a book-to-bill ratio of 1.24, in excess of 1 for the fourth consecutive quarter.

“The fact that order intake, a metric of high significance to our business development, has grown so much, raises our confidence“, says Rolf Schwirz, CEO of Kontron AG. “Moreover, all business units contributed to this excellent result, which confirms to us that we have taken the right steps, and that our customers continue to support us through this difficult transformation process. Clearly, some challenges remain: for example, we were unable to complete as many customer orders as we could have done during the third quarter. We are working hard at resolving existing bottlenecks and expect these orders to have a positive impact on our revenues in the last quarter of the year.”

The gross margin for the quarter came in at 24.4 percent, earnings before interest and taxes (EBIT) for continuing operations and before restructuring costs fell to EUR -1.8 million, after EUR 1.3 million in the same quarter of the previous year. Profitability was affected by a disadvantageous revenue mix and lower capitalization of R&D costs.

Cash flow from continuing operating activities in the third quarter amounted to EUR -2.9 million, after EUR 4.8 million in the same period of the previous year.

“While cash flow from operations is still slightly negative, it has improved on the previous quarter“, says Michael Boy, CFO of Kontron AG. “Our equity ratio is once again above 60 percent, which will stand us in good stead for the significant strategic and operational challenges ahead.”

Energy business sold, “New Kontron” measures 80 percent complete

In August, the sale of the Russian RT Soft Group was successfully completed, despite unprecedented political and economic challenges for this transaction. In addition, a competence center for medical technology was established on Kontron’s new Technology Campus in Augsburg. Furthermore, the company opened a branch in Tokyo in the middle of July, offering primarily high-quality standard products, especially in the aerospace, defense, communication and industrial sectors.

The move to Augsburg and Deggendorf was completed as planned on 1 October 2014, thus implementing one of the key measures of the comprehensive “New Kontron” program to cut costs and enhance efficiency. The site consolidation and the creation of a Technology Campus will be transformational for Kontron, establishing a global center of excellence for the company’s products and services as well as providing an auspicious platform to forge the culture of a truly global player. The finalization of the site consolidation means that approximately 80 percent of the “New Kontron” measures announced in July 2013 are now successfully implemented.

Key figures for the third quarter 2014 (table)
(continuing operations)

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