Interim report (1 Jan-31 March 2008)
Interim report (1 Jan-31 March 2008)Continued strong growth in Care ElectronicsFirst quarter 2008 Sales amounted to SEK 71 million (SEK 79 m) Profit after tax was SEK 0.6 million (SEK 1.3 m) Earnings per share after tax was SEK 0.03 (SEK 0.07) Operating profit (EBIT) was SEK 1.1 million ( SEK 1.2 m) Strong performance in Care Electronics , which more than doubled sales volumemainly as a result from strong sales of mobile phones Continued price pressure in Home Electronics resulting in lower sales Cash flow from operations SEK -17 million (SEK -14 m) following investments innew products and increase in working capital Improved Equity base with assets ratio now 27 per cent (19 per cent)Comments by the CEO, Jérôme Arnaud “For the first quarter Doro shows a small positive result, which is inaccordance with plan. It is the fifth quarter in a row that Doro can show apositive net result.In Q1 Doro's business unit Care Electronics more than doubled the sales comparedto Q1 2007. Care Electronics now constitutes some 30 per cent of total sales,compared to 15 per cent in 2007. The increase is mainly coming from thesuccessful sales of our range of easy-to-use mobile phones, particularly in theNordic region. New distributors and the launching of new Care Electronicproducts, in the mobile phone segment as well as other products, in 2008 willimprove sales further. The outlook for the German market is promising after therecent signing up of several new German distributors. Home Electronics continues to operate in a difficult market with continuedstrong price pressure. In addition, the market for corded phones is contracting.Doro has in Q1 lost market shares in the cordless market in France and Swedendue to fierce competition. During Q1 Home Electronics had sales that were 17per cent lower than Q1 2007 for comparable units, while quantities sold fell by10 per cent.The development of the business unit Business Electronics was in line with thefirst quarter last year. At the end of Q1 2008, we launched important new Voiceover IP products. We are progressively building an improved market access byestablishing new distribution channels. Trend-wise, organic sales growth for Doro´s overall current product range,excluding divestments, is now at a positive 3 per cent. All in all, due to animprovement in gross margins with 2 per cent and a 12 per cent lower operationalcost base, Doro's Q1 EBIT is on about the same level as last year, despiteoverall lower sales. We will continue to invest in Care Electronics and feed our growth with newproduct launches. In the Home Electronics business unit we will focus onregaining market share and in Business Electronics additional Voice over IPproducts will be launched.Sales The first quarterDoro had sales of SEK 71 million (SEK 79 m) in Q1. The lower sales are due tothe divestments of Doro's operations in Australia and Poland and fall in salesfor Home Electronics. For comparable units, Doro´s overall sales fell by 7 percent in the first quarter, while Doro managed to maintain volumes compared tothe same period last year. Care Electronics continues to show important andcontributing growth in sales, with a 128 per cent rise compared to last year.Operating profit - EBITThe first quarterDespite lower sales the operating profit before tax and financial items was inline with last year, SEK 1.1 million (SEK 1.2 m). The gross margin improved due to a more favourable product mix with highermargins, notably products within the Care Electronics business unit. Lower costscompared to last year as a result of cost rationalisation did continue tocontribute. The weaker US dollar has also had a positive effect on margins. Cash flow, investments and financial positionThe cash flow from operations during Q1 was SEK -17million (SEK -14 m),following seasonal patterns and higher working capital due to the build-up ofnew product ranges. Investments during the period amounted to SEK 2 million (0).At the close of the period Doro had bank loan for SEK 19 million, and thecompany had a total of SEK 50 million in total pre-agreed credit facilities per31 March 2008. The equity/assets ratio was 27 per cent (19) at the end of theperiod Business unitsDoro has three business units,; Home Electronics, which is mainly hometelephony, represents 59 per cent of sales (73 per cent in Q1, 2007), BusinessElectronics, mainly specialising in business telephony, 14 per cent of sales (15per cent in Q1, 2007) and Care Electronics, which specialises in telecoms andelectronic products for senior citizens, 27 per cent of sales (12 per cent inQ1, 2007). Home ElectronicsDuring Q1 sales fell by 29 per cent to SEK 42 million (SEK 60 m). For comparableunits, sales fell by 17 per cent. Margins are, however higher than last year.The most positive sales development has been shown by the new thin line of DECTtelephones, which so far has been launched in the Nordic region.Business ElectronicsBusiness Electronics had sales of SEK 10 million (SEK 10 m). The new VoiP (Voiceover IP) products, IP 500 and IP 800, were launched at the end of Q1 and areexpected to contribute positively to sales from the second quarter onwards.Care ElectronicsCare Electronics increased its sales to SEK 19 million (SEK 9 m). This growthwas driven by the new GSM phone, the HandleEasy 326gsm, designed with simplifiedfeatures making it easy to use for elderly.The photo phone, MemoryPlus 319ph received the French design award dedicated tothe health sector: “Janus de la Santé”.RegionsDoro's three regions are Mainland Europe run from France (44 per cent of sales),the Nordic region (40 per cent) and the UK including Ireland (16 per cent). Dorooperates via its own sales force or distributors in selected markets in theseregions. Mainland Europe Mainland Europe's sales fell by 7 per cent during Q1 2008. Home electronicssales drop is partially compensated by Care Electronics sales growth. Sales ofmobile telephones for elderly have not yet reached levels of Nordic region.Nordic region Nordic sales rose by 2 per cent during Q1 2008. Major regional operators Telia,Telenor and TDC are actively promoting the Care gsm range in their stores.UK and IrelandThe UK is developing well in all three business segments due to listings withkey distributors.PersonnelThe number of employees amounted to 57 at the end of the period. 28 are based inSweden, 17 in France, 4 in the UK, 4 in Norway and 4 in Hong Kong.Doro's sharesDoro is listed on the OMX Nordic Exchange Stockholm Small Cap - Telekom/IT.Eight key employees bought 130 000 shares in the company from DO Intressenter asof 7 January 2008.Parent companyThe parent company's net sales amounted to SEK 30.6 million (SEK 1.2 m). DoroNordic AB, the former sales company, merged with the parent company Doro AB on 1January 2008. The loss before tax was SEK 7.7 million (SEK -13.1 m).OutlookLower sales in Home Electronics and higher marketing expenses invested in CareElectronics may have a negative effect on the results in the coming quarter,while the growth from the higher margin products in Care Electronics is expectedto gradually improve the quarterly result compared to last year from Q3 onwards.RisksDoro's risks and instability factors are mainly related to supplier disruption,customer relations and currency exchange rate fluctuations. Apart from theserisks and instability factors, which are described in the Annual Report 2007 onpages 24, 41 and 42, no other risks of any significance have been identifiedduring the last period.Accounting principlesFor the Group's part this interim report is prepared according to IAS 34,Interim Financial Reporting, and the Annual Accounts Act and for the parentcompany's part according to the Annual Accounts Act.Future reports and eventsAnnual ReportThe Annual Report 2007 was published on 18 April. A pdf version of the AnnualReport can be downloaded at www.doro.comAGMThe Annual General Meeting will be held at the Scandic Star Hotel, Glimmervägen5, Lund at 5 pm on 6 May 2008.Quarterly reportsThe Board has decided the following dates for the quarterly reports:January-June 2008: 20 AugustJanuary-September 2008: 23 OctoberThe quarterly reports are available atDoro's website: www.doro.comThis quarterly report has been drawn up in accordance with the same accountingprinciples as the last Annual Report and has not been subject to a review by thecompany's auditors. Information disclosed in this press release is provided herein pursuant to theSwedish Securities Markets Act and/or the Swedish Financial Instruments TradingAct. Lund, 6 May 2008 - 11. 00 a.m.The Board Doro AB (publ)Co. Reg. No 556161-9429Doro is listed on the OMX Nordic Exchange Stockholm Small Cap - Telekom/ITInformation For further information, please contact:CEO Jérôme Arnaud, +46 46 280 50 05 CFO Stefan Sjölin +46 46 280 50 62Magistratsvägen 10SE-226 43 Lund, SverigeTelefon: +46 46 280 50 60www.doro.coAbout DoroWith over 30 years' experience in telephony Doro is today characterised byinnovative and user-friendly consumer electronics products. The company developsmarkets and sells a wide range of products in three business units: HomeElectronics, Business Electronics and Care Electronics. The company's productsare sold in more than 30 countries worldwide through a variety of retailoutlets, including electronics stores, online stores and specialized channels.The company had sales of SEK 346 million in 2007. Doro's shares are quoted onthe Stockholm Stock Exchange, Nordic list, Small companies. Read more about Doroat www.doro.com.