Total second quarter order intake up 56 percent Care Electronics' second quarter sales up 76 percent
Interim ReportJanuary - June 2010Press release, August 19, 2010Total second quarter order intake up 56 percentCare Electronics' second quarter sales up 76 percentHighlights of the second quarter of 2010: Net sales for the second quarter rose to SEK 130.8 m (99.2), an increase of32 percent.The Care Electronics business unit's generated sales of SEK 98.1 m,accounting for 75 percent of consolidated sales for the second quarter. Operating profit (EBIT) amounted to SEK 3.0 m (negative 3.5),while pre-tax profit increased to SEK 8.3 m (negative 4.8). Earnings per share after tax were SEK 0.38 (negative 0.27). Cash flow from current activities was SEK 2.2 m (4.3). Order intake amounted to SEK 151.7 m (97.1), an increase of 56 percent. Doro® signed a two year financing agreement totaling SEK 170 m, with a newbank, replacing the existing six month credit facility as of July 1, 2010. In the second quarter, Doro signed an agreement with Claro Chile, owned byLatin America's leading mobile operator, and broadened its offering to the UKmarket through Orange. After the end of the period, Doro commenced sales throughVodafone in Germany, reaching up to 1,800 stores, and signed a significantretail agreement with France's second-largest mobile operator, SFR - Vodafone'spartner in the French market. In addition Doro has extended its currentpartnership with 20:20 Mobile. Comments by the CEO, Jérôme Arnaud:“With order intake growing by 56 percent and sales increasing by 32 percent inthe second quarter and by 21 percent in the first six months of 2010, Doro®confirmed its growth strategy. For the sixth consecutive quarter, we were alsoable to report an improved operating margin compared with the year-earlierperiod. Sales generated within the Care Electronics business unit rose 76 percent, fromSEK 55.8 m in the second quarter 2009 to SEK 98.1 m. Care Electronics alsoaccounted for 75 percent of the Group's total sales for the quarter. Thebusiness unit's order intake was up 121 percent the second quarter. This trend reflects the strong sales increases generated through establishedpartnerships in Europe and an increasing share of new customers in the marketswe have entered more recently, such as the US, Latin America and the AsiaPacific region. These newer markets represented 8 percent of Group sales in thesecond quarter, compared with 3 percent in the first quarter of 2010.We have continued to be successful in signing partnerships with leadingoperators. In April, Claro began to distribute our products in Latin Americaand in June, Orange UK commenced sales of Doro PhoneEasy® 410gsm in matt-black.During the summer we announced new and extended partnerships with top-classtelecom operators, such as Vodafone in Germany and Ireland, as well as SFR inFrance. The fact that operators extend their cooperation with Doro intoadditional countries is a strong indication of their satisfaction. We alsoextended the agreement with 20:20 Mobile to include Italy, Turkey, the UK andexpanding eastern European markets. The Doro range was recently extended through the launch of the Doro PhoneEasy®332gsm, a mobile phone offering excellent sound quality in a modern designappealing to a broader audience, while remaining very easy to use, withpreprogrammable buttons and a direct access to sms functions.As a growth company, we invest continuously in developing existing and newpartnerships and markets, as well as new products. The company is alsoprogressively enhancing the level of brand recognition to support the Group'sexpansion. EBIT for the second quarter of 2010 amounted to SEK 3.0 m (negative 3.5). Theimprovement was in fact SEK 10.7 m, adjusted for a non-recurring income item ofSEK 4.2 m, attributable to the settlement of a Japanese dispute in the secondquarter of 2009. The operating margin for the second quarter 2010 was 2.3percent, and is still burdened by substantial investments in products andgeographical expansion in Care Electronics. As we are seeing continuedfavorable momentum in most of our markets, I expect investments to generate areturn already during the current year. I am also happy that Home Electronics reported a profit for the secondconsecutive quarter and continues to focus on a smaller range of products.These are marketed through carefully selected distributors to optimize thebusiness unit's profitability. Doro's stable financial position remains and was further confirmed by the twoyear financing agreement totaling SEK 170 m with a new bank, replacing theexisting six month credit facility of July 1, 2010.”Net salesDoro's sales amounted to SEK 130.8 m (99.2) for the second quarter, an increaseof 31.9 percent. Using the same exchange rates as for the previous year, organicgrowth amounted to 43.0 percent (29.1).Operating result (EBIT)The Group's second quarter 2010 profit before tax and financial items amountedto SEK 3.0 m (negative 3.5). EBIT was improved by SEK 10.7 m when adjusted for anon-recurring income item of SEK 4.2 m, attributable to the settlement of aJapanese dispute reported in the second quarter 2009.Cash flow, investments and financial positionThe cash flow from current activities in the second quarter was SEK 2.2 m (4.3)following a build-up of working capital in line with expanded volumes as wellas a result of a delayed VAT recovery of SEK 14.4 m, following the new legalset-up effective as of 1 January, 2010.In order to comply with IFRS, the current hedge contracts have been valued amongnet financial items, affecting the net result for the period positively by SEK5.8 m. At end of June, 2010, Doro was net debt free, with a net cash of SEK 19.3 m, tobe compared with a net debt of SEK 26.9 m for the same quarter the previousyear, 2009. In addition, the company has unused check facilities of SEK 42 m.The equity/asset ratio further improved to 33.0 percent (16.3) by the end of theperiod.Business unitsCare ElectronicsCare Electronics supplies telecom and electronic products adapted to the needsof senior citizens.Sales in the second quarter increased to SEK 98.1 m (55.8), an increase of 75.8percent. Care Electronics represented 75.0 percent of Doro's total sales for theperiod.Home ElectronicsHome Electronics offers domestic telephones and other products for the modernfamily.Sales during the quarter amounted to SEK 32.7 m (43.4), a decrease of 24.7percent, as a result of Doro's strategy to set a more focused range, which havelead to discontinued sales with certain customers.RegionsEffective from January 1, 2010, Doro has reorganized its 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 35 percent, EMEA 51 percent, UK 9percent, and the other markets 5 percent.PersonnelAt the end of the quarter, the headcount was 59 (61). Of these, 27 (27) arebased in Sweden, 17 (18) in France, 5 (6) in the United Kingdom, 4 (4) inNorway and 6 (6) in Hong Kong.Parent CompanyThe Parent Company's net sales for the year's second quarter amounted toSEK 130.8 m (50.7). The profit before tax amounted to SEK 13.9 m (8.0).Events after the close of the periodIn August, Doro extended its cooperation with 20:20 Mobile, Europe's leadingdistributor of mobile phones and accessories, by signing a significantinternational distribution deal. 20:20 Mobile will be distributing Doro'saward-winning range of easy-to-use mobile phones into UK, Italy, Turkey andEastern Europein addition to the current markets of Ireland, France, Nordics,Spain and the UAE. As of August, two of Doro's most popular models are being sold through theVodafone network in Germany. Vodafone is one of the largest mobile operators inthe world and provide service to approximately 35 million German customers.Doro also signed a significant retail agreement with France's second-largestmobile operator, SFR - Vodafone's French market partner. SFR will offer thetop-selling mobile, the Doro PhoneEasy® 410gsm through 820 “espace SFR” storesacross France and via the operator's online store.Doro shareDoro is listed on the Nasdaq OMX Stockholm, Nordic list, Small Cap - Telecom/IT.OutlookDoro's second quarter revenues and order intake are in line with the company'splans, confirming the previous full-year forecast of continued growth in salesand operating profit (EBIT).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 Thursday, August 19, 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.