Interim Report January - March 2010
Press release, May 5, 2010
Continued strong sales growth for Care Electronics
Highlights in the first quarter of 2010:
- Net sales in the first quarter rose to SEK 104.1 m (94.7), an increase of 9.9 percent.
- Operating profit (EBIT) amounted to SEK 4.5 m (4.0), while pre-tax profit increased to SEK 5.1 m (0.1).
- Earnings per share after tax were SEK 0.26 (0.01).
- Cash flow from current activities amounted to negative SEK 3.9 m (positive 8.0).
- Order intake amounted to SEK 121.2 m (99.4), an increase of 21.9 percent.
- New partnership agreements signed with Spanish and Irish Mobile 20:20 and French Bouygues Telecom. After the end of the fiscal period, in April, a partnership with leading Latin American based operator Claro to sell Doro's mobile phones in Chile was initiated.
Comments by the CEO, Jérôme Arnaud:
“Doro is a growth company and we remain highly focused on implementing our strategy. Care Electronics' sales continued to increase strongly in the first quarter of the year. This growth was mainly generated in Europe, while new markets and partners are developing at a good pace.
I am very pleased by us attracting new partners, Mobile 20:20 of Spain and Ireland, and Bouygues Telecom of France, which now offer our mobile phones to their senior customers.
Among our new markets, we have now further begun to distribute our products in Latin America through our partnership with Claro in Chile. In April, Claro began selling two of our most popular phones. The sell-through in the US market is developing according to plan and sales have started with our partner Consumer Cellular, on the back of launch-related shipments from the end of 2009.
The Care Electronics business unit accounted for 70 percent of sales for the quarter. Order bookings rose for Care Electronics products, increasing by 60 percent compared with the first quarter of 2009.
Doro's product range is strong and our GSM phones have been particularly successful. In recent months our best-selling model, the Doro PhoneEasy® 410gsm, gained further recognition in consumer tests published in Swedish daily Dagens Nyheter and that were carried out by demanding testing institute Stiftung Warentest of Germany. Product has also been awarded by the global design competition Red Dot Design jury.
The recognition evidenced by these tests and the trust shown in us by key operators, in our home markets and further afield, shows that we are continuing to establish Doro as the category leader for telecom products within Care Electronics. We will continue to invest in maintaining and advancing this position.
For the fifth consecutive quarter, we are able to report an improved operating margin compared with the year-earlier period. Both business units reported a profit for the first quarter of the year. This is somewhat better than we had forecasted.
Home Electronics now focuses on a smaller range of products that work well alongside Doro's Care products. These are marketed through a carefully limited selection of distributors. As our organizational costs for this business unit are reduced for 2010, the unit now shows a profit.
Finally, I am happy to report that Doro has consolidated its strong financial position and remains solidly net debt free.”
Net sales Doro's sales amounted to SEK 104.1 m (94.7) for the first quarter, an increase of 9.9 percent. Using the same exchange rates as for the previous year, organic growth would amount to 18.3 percent.
Operating result (EBIT) The Group's first quarter 2010 profit before tax and financial items amounted to SEK 4.5 m (4.0). This improvement was attributable to increased sales in Care Electronics as a result of earlier investments in products and marketing.
Cash flow, investments and financial position The cash flow from current activities in the first quarter amounted to a negative SEK 3.9 m (positive 8.0). This follows a seasonal trend and an expanding and profitable business.
In order to comply with IFRS, the current hedge contracts have been valued among net financial items, affecting the result for the period positively by SEK 1.2m.
At end of March, 2010, Doro was net debt free, with a net cash of SEK 24.2 m, to be compared with a net debt of SEK 23.5 m for the same quarter the previous year, 2009. In addition, the company has unused credit facilities of SEK 42 m.
The equity/asset ratio has further improved to 34.0 percent (18.2) at the end of the period.
Care Electronics supplies telecom and electronic products adapted to the needs of senior citizens.
Sales in the first quarter increased to SEK 72.7 m (43.4), an increase of 67.5 percent. Care Electronics represented 69.8 percent of Doro's total in the period.
Home Electronics offers domestic telephones and other products for the modern family.
Sales during the quarter amounted to SEK 31.4 m (51.3), a decrease of 38.8 percent, due to lower demand combined with discontinued sales with some customers in France and the UK.
Effective from January 1, 2010, Doro has reorganized the markets into Nordic, EMEA (Europe, Middle East and Africa), UK, US & Canada, CALA (Central and Latin America) and AP (Asia Pacific).
Of the Group's total sales, Nordic represented 34 percent, EMEA 56 percent, UK 7 percent, and the other markets 3 percent.
At the end of the quarter, the headcount was 59 (59). Of these, 26 (28) are based in Sweden, 18 (17) in France, 5 (6) in the United Kingdom, 4 (4) in Norway and 6 (4) in Hong Kong.
The Parent Company's net sales for the year's first quarter amounted to SEK 104.1 m (45.2). The profit before tax amounted to SEK 18.5 m (1.9).
Events after the close of the period
In mid-April Doro's Easy-to-use mobile phones were launched in Latin America in cooperation with the continent's leading operator Claro. The initial market is Chile, with 16.6 million inhabitants, of whom 1.5 million are over 65 years. Claro is part of the Mexican América Móvil Group, the world's fourth largest mobile operator with more than 201 million customers in 18 countries in the Americas.
Doro is listed on the Nasdaq OMX Stockholm, Nordic list, Small Cap - Telecom/IT.
Outlook - updated
Doro's first quarter revenues and order intake are in line with the company's plans, confirming the previous forecast of continued growth in sales and operating profit (EBIT).
Previous outlook: Based on new products to be launched and the evolution of already announced and partnerships to come, the growth in sales and operating profit (EBIT) is expected to continue. The operating profit in the first quarter may be lower than previous year due to further market investments, which is in line with the growth strategy.
Full Report is enclosed.
Doro AB discloses the information provided herein pursuant to the Securities Markets Act and/or the Financial Instruments Trading Act. The information was submitted for public release on Wednesday, May 5, 2010, at 07:30 a.m. CET. Doro AB | Corporate reg. no. 556161-9429
Doro is a Swedish company focusing on the development, marketing and sales of telecom products specially adapted to the growing worldwide population of seniors. With over 35 years of experience in telecommunications, and sales in more than 30 countries on 5 continents, Doro is the world's leading brand for easy-to-use mobile phones.
Doro created the Care Electronics category and in recent years our products have received several highly distinguished international design awards. The company had sales of SEK 493 m in 2009. Doro's shares are quoted on the Nasdaq OMX Stockholm, Nordic list, Small companies. Read more about Doro at www.doro.com.