- Doro Group
- Corporate Governance
Sweden, Lund, 2011-05-06 07:30 CEST (GLOBE NEWSWIRE) --
Highlights of the first quarter of 2011:
Comments by the CEO, Jérôme Arnaud:
“I am pleased to report that sales for the first quarter of the year amounted to SEK 135 m (104), an increase of 30 percent. This growth is explained by favorable sales development in North America, both US and Canada, and in the UK. Sales in mainland Europe developed somewhat more weakly. The main reasons are the continued phase-out of certain products in the Home range and some reduced re-ordering in Care following some customers high year-end stock level. This is a seasonal effect in the first quarter. Sell-through of our Care products in all regions is still reported strong.
In this report we start to disclose operating margin per market region in our effort to continue to improve transparency. Margins are an effect of costs allocated per region proportionally to sales. With only one quarter reported, comparison with the same quarter last year needs to be interpreted cautiously. I am happy to see that the overall gross margin actually increased slightly compared to last year.
The sales increase was 41.8 percent if we use the same exchange rates as last year. The order intake in the first quarter of the year amounted to SEK 132 m, an increase by 9 percent. Using the same exchange rates as last year, the increase in order intake was correspondingly higher. The Care range actually grew by 28 %. We also see an even stronger order intake so far in the second quarter.
Operating profit (EBIT) amounted to SEK 6.0 m (4.5), an increase of 33 percent. The operating margin was in line with the corresponding quarter in 2010 at 4.4 percent (4.3). That means we are able to report an improved operating profit for the ninth consecutive quarter compared with the corresponding quarter in previous year.
Doro is relatively well protected from the crisis in Japan, as the supply of most of its components comes from China. The few components we have from Japan are integrated in only a few Doro products. The effect on current production has been minimal and we do not foresee any interruption in production.
Cash flow from operating activities was negative in the amount of SEK 12.6 m (3.7), which is primarily a seasonal effect resulting from both customer and staff bonuses due to higher volumes and results. The overall cash flow and financial evolution is strong.
At the Mobile World Congress in Barcelona, we launched some important new models with functions meeting the requirements that senior consumers now seek in our devices; including an easy-to-use camera. In addition, Doro disclosed the first product available in 3G, a technology that operators demand, as well as our first launch of products within the area of mobile health.
In the first quarter, Doro’s network of retailers was supplemented by Mobistar in Belgium and Tesco in the UK for sales of Doro’s two best-selling mobile phones. Following the close of the period, Doro further signed sales agreements in Australia and Italy, two countries that we believe have a strong potential for our category of mobile phones.
As further announced in our last quarter’s results, we have entered into a new strategic phase where we, besides continuing our organic growth through geographical expansion, are making concrete steps into the area of mobile health applications adapted for seniors. This includes developing devices using the Android operating system. We believe that this market termed “mobile Health” or just “mHealth”, will offer strong growth for senior telecom devices and hence is particularly interesting for Doro´s continued growth.
Finally I would also like to report strong interest from staff in participating in Doro’s warrant program. All Doro’s personnel were invited to subscribe for warrants and the fact that 60 percent of the employees chose to participate demonstrates strong support for the company.”
Doro’s sales for the first quarter amounted to SEK 135.1 m (104.1), an increase of 29.8 percent. Using the same exchange rates as for the previous year, organic growth amounted to 41.8 percent for the first quarter.
Operating result (EBIT)
For the first quarter of 2011, the Group’s profit before tax and financial items amounted to SEK 6.0 m (4.5), an increase of 33.3 percent, as a result of a slightly higher gross margin and reduced depreciation of the investments in the market of the Americas, which was fulfilled in the third quarter 2010.
Cash flow, investments and financial position
The cash flow from current activities in the first quarter was negative in an amount of SEK 12.6 m (negative 3.7). This is mainly explained by the lower working capital attributable to normal seasonal payments of personnel and customer bonuses.
In line with IFRS, current hedge contracts that have been valued among net financial items, affected the net earnings negatively for the first quarter by SEK 0.9 m.
At the end of the first quarter Doro was net debt free, with a net cash of SEK 64.8 m, after the dividend payment decided by the Annual General Meeting, and to be compared with a net cash of SEK 24.2 m at the end of the first quarter 2010. The company has unused check facilities of SEK 32.0 m.
The equity/asset ratio improved to 44.9 percent (34.0) at the end of the period.
New reporting structure as of 2011
As of the first quarter 2011, Doro reports by geographical region, Nordic, UK, EMEA (Europe, Middle East and Africa), USA and Canada and other Regions. Doro now also reports consolidated gross margin.
Sales in the Nordic region decreased by 5.0 percent to SEK 34.2 m, primarily due to some customers reducing their stock and reduced sales within the Home range. Nordic market is so far the most penetrated for Doro´s Care products and Doro’s market position and profitability is hence still strongest in this geographic market with an EBIT-margin of 14.3 percent for the first quarter.
In the United Kingdom sales grew 238 percent to SEK 24.3 m, as a result of the distribution agreement with Orange and Tesco. The UK also reports a significantly improved EBIT margin after allocation of costs. We have however not yet reached break-even due to the continued investments in market and product development.
In EMEA, sales decreased by 6.9 percent to SEK 54 m with a reduced EBIT margin of 1.3 percent due to continued phase-out of certain products in the Home range and some reduced re-ordering in Care due to some major customers wanting to reduce their stock.
USA and Canada
The USA and Canada reported a substantial growth as a result of both of the partnerships in US and Canada. Sales increased from SEK 0.2 m to SEK 20.8 m. As a result of Doro´s investment this region now turned profitable with an EBIT margin of 7.7 percent.
Other regions only account for SEK 1.8 m and the negative EBIT relates to early market costs for business development.
At the end of the quarter, the headcount was 61 (59). Of these, 30 (26) are based in Sweden, 16 (18) in France, 6 (5) in the United Kingdom, 3 (4) in Norway and 6 (6) in Hong Kong.
In accordance with the mandate given by the Annual General Meeting on March 23, 2011, all of Doro’s employees have been offered warrants. Thirtysix employees have subscribed for 679,770 warrants. Doro AB has subscribed for 265,830 warrants, enabling the Company to potentially sell these at market prices to new employees following the close of the subscription period.
The Parent Company’s net sales for the year’s first quarter amounted to SEK 133.9 m (104.1). The profit before tax amounted to SEK 2.7 m (18.5).
Events after the close of the period
Doro announced a deal with Australian retail chain TeleChoice to distribute the Doro PhoneEasy®410gsm model through their online shop and their 153 retails stores nationwide.
Doro has also entered into an agreement with retailer Amplifon, an Italian chain with 400 stores around the country that specializes in helping people with impaired hearing.
The results of the first quarter confirm the previous outlook presented: Sales and operating profit (EBIT) are expected to continue to grow in 2011.
For full Report, please view the enclosed pdf file.
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 Friday, May 6, 2011, at 07:30 a.m. CET.
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, its products have received several highly distinguished international design awards. The company had sales of SEK 633 m in 2010. Doro’s shares are quoted on the Nasdaq OMX Stockholm, Nordic list, Small companies. Read more about Doro at www.doro.com
For further information, please contact:
President & CEO, Jérôme Arnaud, +46 (0)46 280 50 05
Vice President & CFO, Annette Borén, +46 (0)70 630 00 09
226 43 Lund
Phone 0046 46 280 50 00
Corporate identification number