Sales up by 52 percent with improved operating margin
Interim ReportJanuary - September 2010Press release, November 9, 2010Sales up by 52 percent with improved operating marginCare Electronics now over 80 percent of salesHighlights of the third quarter of 2010: Net sales for the third quarter rose to SEK 168.8 m (111.1), an increase of52 percent. The Care Electronics business unit generated sales of SEK 137.8 m,accounting for 82 percent of consolidated sales for the third quarter. Operating profit (EBIT) amounted to SEK 13.2 m (7.0),while profit for the period increased to SEK 10.7 m (6.4). Earnings per share after tax were SEK 0.56 (0.37). Cash flow from current activities: negative SEK 21.2 m (positive 1.5). Order intake amounted to SEK 205.3 m (139.6), an increase of 47 percent. In the third quarter, Doro® extended its cooperation with 20:20 Mobile bysigning a significant distribution deal, adding the UK, Italy, Turkey andgrowth markets in Eastern Europe. In addition, the Group signed agreements withVodafone in Germany to distribute the Doro PhoneEasy® 338gsm and 342gsm andwith operator SFR in France to distribute Doro PhoneEasy® 410gsm. Doro's VAT claim in France is expected to be repaid during the fourth quarterof 2010. After the end of the period, Doro signed a distribution agreement with RogersWireless in Canada to distribute the Doro PhoneEasy® 410gsm.Comments by the CEO, Jérôme Arnaud:“The third quarter of 2010 was characterized by a strengthened, record growth inboth revenues and order intake. We increased our sales in all markets, at thesame time as our partners confirmed increased interest in our products and thespecial features we offer in cooperation with operators.Sales generated within the Care Electronics business unit almost doubled, fromSEK 69 m in the third quarter of 2009, to SEK 138 m. Care Electronics accountedfor 82 percent of the Group's total sales for the quarter, which means we havenow achieved our strategic objective for Care Electronics to exceed 80 percentof our business. The remainder is generated by the Home Electronics businessunit, which now is a profitable, cash-generating operation, having recoveredfrom its loss in 2009. The continued reduction of costs in the Home Electronicsbusiness unit has resulted in the business unit achieving a profit of SEK 5.6 mfor the quarter and SEK 7.6 m for the first nine months of the year.I am pleased to report that we are continuing to increase the number ofcountries in which our mobile phones are available. At the end of October, wesigned partnership agreements with operators Rogers Wireless in Canada. Ourentry into the Canadian market has been eased by our existing presence in US,thus enhancing the payback on our investments to secure certification for ourproducts in the region. We are also able to report a steadily improved operating margin, with EBIT forthe third quarter of 2010 rising 89 percent compared with the year-earlierperiod. This is the seventh consecutive quarter with positive earnings and I amparticularly proud this time as the operating margin amounted to 7.8 percent(6.3). This increase is the result of higher sales that better absorb ouroverhead costs, consisting of investments to prepare new markets, marketingactivities to boost the brand and to increase visibility in retail stores, aswell as the development of new products and new versions of existing models.Cash flow was negatively influenced by delayed VAT recovery in France followingthe implementation of a streamlined Group organization and legal structure inJanuary 1, 2010. This VAT claim is expected to be repaid during fourth quarter.We have also been able to maintain efficiency in our logistics systems throughthis phase of strong expansion.Doro® will continue to achieve profitable growth. The brand is well-establishedand has become a benchmark in the niche area of telecommunication products forseniors. Doro's brand is now well positioned with seniors and has a strongposition with leading international operators.” The full report is enclosed in PDF.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 Tuesday, November 9, 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 inrecent years and the products have received several highly distinguishedinternational design awards. The company had sales of SEK 493 m in 2009. Doro'sshares are quoted on the Nasdaq OMX Stockholm, Nordic list, Small companies.Read more about Doro at www.doro.com.