Continued strong sales growth for Care Electronics
Interim ReportJanuary - March 2010Press release, May 5, 2010Continued strong sales growth for Care ElectronicsHighlights 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 (positive8.0). 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 andFrench Bouygues Telecom. After the end of the fiscal period, in April, apartnership with leading Latin American based operator Claro to sell Doro'smobile phones in Chile was initiated. Comments by the CEO, Jérôme Arnaud:“Doro is a growth company and we remain highly focused on implementing ourstrategy. Care Electronics' sales continued to increase strongly in the firstquarter of the year. This growth was mainly generated in Europe, while newmarkets and partners are developing at a good pace.I am very pleased by us attracting new partners, Mobile 20:20 of Spain andIreland, and Bouygues Telecom of France, which now offer our mobile phones totheir senior customers.Among our new markets, we have now further begun to distribute our products inLatin America through our partnership with Claro in Chile. In April, Claro beganselling two of our most popular phones. The sell-through in the US market isdeveloping according to plan and sales have started with our partner ConsumerCellular, on the back of launch-related shipments from the end of 2009.The Care Electronics business unit accounted for 70 percent of sales for thequarter. Order bookings rose for Care Electronics products, increasing by 60percent compared with the first quarter of 2009.Doro's product range is strong and our GSM phones have been particularlysuccessful. In recent months our best-selling model, the Doro PhoneEasy® 410gsm,gained further recognition in consumer tests published in Swedish daily DagensNyheter and that were carried out by demanding testing institute StiftungWarentest of Germany. Product has also been awarded by the global designcompetition Red Dot Design jury. The recognition evidenced by these tests and the trust shown in us by keyoperators, in our home markets and further afield, shows that we are continuingto establish Doro as the category leader for telecom products within CareElectronics. We will continue to invest in maintaining and advancing thisposition. For the fifth consecutive quarter, we are able to report an improved operatingmargin compared with the year-earlier period. Both business units reported aprofit for the first quarter of the year. This is somewhat better than we hadforecasted. Home Electronics now focuses on a smaller range of products that work wellalongside Doro's Care products. These are marketed through a carefully limitedselection of distributors. As our organizational costs for this business unitare reduced for 2010, the unit now shows a profit. Finally, I am happy to report that Doro has consolidated its strong financialposition and remains solidly net debt free.”Net salesDoro's sales amounted to SEK 104.1 m (94.7) for the first quarter, an increaseof 9.9 percent. Using the same exchange rates as for the previous year, organicgrowth would amount to 18.3 percent. Operating result (EBIT)The Group's first quarter 2010 profit before tax and financial items amounted toSEK 4.5 m (4.0). This improvement was attributable to increased sales in CareElectronics as a result of earlier investments in products and marketing.Cash flow, investments and financial positionThe cash flow from current activities in the first quarter amounted to anegative SEK 3.9 m (positive 8.0). This follows a seasonal trend and anexpanding and profitable business. In order to comply with IFRS, the current hedge contracts have been valued amongnet financial items, affecting the result for the period positively by SEK1.2m. 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 previousyear, 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 endof the period. Business unitsCare ElectronicsCare Electronics supplies telecom and electronic products adapted to the needsof senior citizens.Sales in the first quarter increased to SEK 72.7 m (43.4), an increase of 67.5percent. Care Electronics represented 69.8 percent of Doro's total in theperiod. Home ElectronicsHome Electronics offers domestic telephones and other products for the modernfamily.Sales during the quarter amounted to SEK 31.4 m (51.3), a decrease of 38.8percent, due to lower demand combined with discontinued sales with somecustomers in France and the UK.RegionsEffective from January 1, 2010, Doro has reorganized the markets into Nordic,EMEA (Europe, Middle East and Africa), UK, US & Canada, CALA (Central and LatinAmerica) and AP (Asia Pacific).Of the Group's total sales, Nordic represented 34 percent, EMEA 56 percent, UK 7percent, and the other markets 3 percent.PersonnelAt the end of the quarter, the headcount was 59 (59). Of these, 26 (28) arebased in Sweden, 18 (17) in France, 5 (6) in the United Kingdom, 4 (4) inNorway and 6 (4) in Hong Kong.Parent CompanyThe Parent Company's net sales for the year's first quarter amounted to SEK104.1 m (45.2). The profit before tax amounted to SEK 18.5 m (1.9).Events after the close of the periodIn mid-April Doro's Easy-to-use mobile phones were launched in Latin America incooperation with the continent's leading operator Claro. The initial market isChile, 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 largestmobile operator with more than 201 million customers in 18 countries in theAmericas. Doro shareDoro is listed on the Nasdaq OMX Stockholm, Nordic list, Small Cap - Telecom/IT.Outlook - updatedDoro's first quarter revenues and order intake are in line with the company'splans, confirming the previous forecast of continued growth in sales andoperating profit (EBIT).Previous outlook: Based on new products to be launched and the evolution ofalready announced and partnerships to come, the growth in sales and operatingprofit (EBIT) is expected to continue. The operating profit in the firstquarter 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 SecuritiesMarkets Act and/or the Financial Instruments Trading Act. The information wassubmitted for public release on Wednesday, May 5, 2010, at 07:30 a.m. CET. Doro AB | Corporate reg. no. 556161-9429About DoroDoro is a Swedish company focusing on the development, marketing and sales oftelecom products specially adapted to the growing worldwide population ofseniors. With over 35 years of experience in telecommunications, and sales inmore than 30 countries on 5 continents, Doro is the world's leading brand foreasy-to-use mobile phones. Doro created the Care Electronics category and in recent years our productshave received several highly distinguished international design awards. Thecompany had sales of SEK 493 m in 2009. Doro's shares are quoted on the NasdaqOMX Stockholm, Nordic list, Small companies. Read more about Doro atwww.doro.com.