- Doro Group
- Corporate Governance
- A responsible governance
- General Meeting
- Board and Management
Continued sales growth, improved operating margin and cash flow
Lund, Sweden, 2011-11-09 07:30 CET (GLOBE NEWSWIRE) --
Highlights of the third quarter of 2011:
CEO Jérôme Arnaud: A profitable quarter with initiatives for continued growth
“Over the quarter, we increased our international presence, updated our product range and acquired two companies, positioning us within mHealth and other applications.
At the same time, we were again able to report strong EBIT. This was, in fact, the 11th consecutive quarter with increased EBIT year on year. In addition, all of our geographical markets reported positive operating margins (EBIT).
In the third quarter net sales grew by almost 8 percent, while adjusted for currency effects organic growth was 15 percent. Order intake continued to show the improved trend that we saw in the last quarter and increased by 17 percent. On an accumulated basis for 2011 revenues increased by 19 percent and order intake by 16 percent.
In the Nordic region we returned to growth in the third quarter with sales increasing 34 percent. This was largely due to the success of our recently launched mobile phones with cameras and 3G technology.
During the third quarter, we announced new series of three mobile phones in classic formats but with different features and at different price levels. Our design is attracting recognition in various ways. For example, we have now been nominated for the Swedish Guldmobilen award.
Innovation and design represent important parts of our strategy. The third quarter brought confirmation, for the second time, of the strength of our legal design protection. The Landgericht Hamburg court in Germany issued a ruling prohibiting Emporia Deutschland from marketing a clamshell model very similar to ours within the European Union.
During the quarter, we continued to develop our global distribution through agreements with Finnish operator Sonera and the Swedish operator 3. Both commenced sales of our new 3G telephone in July. In July, we also extended our cooperation with Orange, which now sells our telephones in more than two thousand stores across Spain.
Following the close of the period, Vodafone in Germany began selling a third Doro model that is now available through their more than one thousand stores in Germany. In October, we also secured an agreement with Business Beyond Boundaries of South Africa, which will start marketing three Doro models that have now been certified for the South African market.
In addition to the development of new markets and products, we also have continued to develop mHealth. This involves mobile solutions that improve the health of seniors and simplify everyday life for them and their families.
To more rapidly and cost efficiently position ourselves in the area of mHealth, we acquired two companies during the quarter. Prylos provides us with an Android-based platform for our new products and services, and also strengthens our development team. The second acquisition, Birdy Technology, positions us within TeleCare, a priority area within mHealth.
Both companies are now being integrated into Doro according to plan. In the short term, their impact on our sales and profits will be marginal. With the acquisitions, we expect to be able extend the content of our new competitive offering, which will combine adapted hardware and applications. The acquisitions will help hasten the pace at which future offerings can be launched.”
The Group, Third quarter 2011
Net sales and operating profit
Doro’s net sales for the third quarter amounted to SEK 181.9 m (168.8), an increase of 7.8 percent compared with the strong third quarter in 2010. Growth in the quarter is primarily driven by the US and Canada and the Nordic region. The recovery in the Nordic region, which is still impacted negatively by the phasing-out of certain Home products, is mainly the result of successful launches of new phones with cameras and 3G technology. Moving ahead, we expect that these models will have an equivalent effect on sales in other regions.
Accumulated growth is above 19 percent, which is close to our financial target. This is despite the phase-out of the Home products, which will also have an effect on the year as a whole.
Using the same exchange rates as for the previous year, organic growth amounted to 14.9 percent for the third quarter.
Operating profit (EBIT) amounted to SEK 15.6 m (13.2), an increase of 18.2 percent. The operating margin thus rose to 8.6 percent (7.8) despite nonrecurring costs for the acquisitions of Prylos and Birdy, during the second and third quarter, amounting to SEK 3 m.
The improved EBIT margin is mainly attributable to the increased sales volume, as well as to the higher gross margin compared with last year. The gross margin may vary from quarter to quarter, primarily due to the geographical distribution of sales as well as product mix.
Compared with the third quarter of 2010, sales in our largest region, the Nordic countries, rose by 33.9 percent to SEK 66.3 m, primarily due to the updated product range.
For the year to date, sales rose 9.4 percent while we continued to maintain our highest EBIT margin, primarily due to Doro’s strong market position.
In the UK, third quarter sales amounted to SEK 18.9 m – a decline of 14.5 percent compared with the strong third quarter of 2010, but with a positive operating margin.
For the year to date, sales growth remains strong and rose by 63.5 percent, with a significantly better operating margin.
EMEA (Europe, Middle East and Africa)
The EMEA experienced a certain decrease in sales in terms of value, with sales declining 17.1 percent to SEK 70.3 m compared with the corresponding quarter in 2010, although the EBIT margin improved.
Due to this and the phase-out of Home products, sales for the year to date fell by 8.5 percent, but with a sustained operating margin.
US and Canada
Compared with the corresponding quarter in 2010, operations in the US and Canada reported doubled sales in the quarter - up to SEK 25.0 m, with a significant improvement in operating margin.
Sales for the year to date rose by more than 336 procent, again with a significant improvement in operating margin.
Other regions only account for SEK 1.4 m (0.2) and the negative EBIT is attributable to the costs involved in developing the business in new markets.
The operating margin for the different regions may vary from quarter to quarter since the allocation of overhead costs is based on sales.
Profit/loss for the period
Profit for the third quarter amounted to SEK 25.7 million (10.7). Net financial items for the period were SEK 23.7 m higher than in the year-earlier period. This is primarily due to the fact that Doro’s current hedge contracts have, in accordance with IFRS, been assessed under financial items, affecting net financial items positively by SEK 10.3 m (negative 12.2).
Cash flow, investments and financial position
The cash flow from current activities for the period amounted to SEK 51.0 m (negative 21.2). The improvement is primarily attributable to increased EBIT, improved net interest and less tax paid. Other causes include a positive change in working capital due to focused cash management efforts, lower accounts receivable and temporarily low inventory.
The group’s net cash flow has in the quarter been burdened by the cash payment for the acquired companies Prylos SAS and Birdy Technology SAS amounting to SEK 19.7m.
The equity/asset ratio improved to 43.7 percent (30.2) at the close of the period.
At the end of the period, Doro had interest-bearing liabilities of SEK 2.7 m (11.3) with a net cash balance of SEK 90.3 m (negative 6.6). The company also has unutilized overdraft facilities of SEK 32.0 m.
For more information about the acquisitions see Doros’ press releases published on July 11 and August 31.
At the end of the quarter, the headcount was 75 (60). Of these, 29 (28) are based in Sweden, 28 (17) in France, 8 (5) in the United Kingdom, 3 (4) in Norway and 7 (6) in Hong Kong.
The Parent Company’s net sales for the year’s third quarter amounted to SEK 179.9 m (168.8). The profit before tax amounted to SEK 24.4 m (loss 28.3).
Events after the close of the period
As its third phone from Doro, Vodafone has selected the Doro PhoneEasy®409 gsm. From October 4, the phone will be available from all of Vodafone’s more than a thousand stores in Germany.
Doro has secured an exclusive agent agreement with Business Beyond Boundaries of South Africa. BBB-SA will market Doro’s mobile phones in South Africa. The three models, Doro PhoneEasy® 615, Doro PhoneEasy® 341 gsm and Doro PhoneEasy® 410s gsm, have now been fully certified by the South African telecommunications authority ICASA and will be available from select stores in South Africa from the fourth quarter of 2011.
Doro’s US partner Consumer Cellular has signed a distribution agreement with US pharmacy chain Walgreens, which will sell the Doro PhoneEasy® 410gsm model in 826 stores throughout Florida.
The results for the third quarter confirm the previous outlook with improved sales and operating profit for 2011.
For full report, please view the enclosed pdf file.
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
Doro’s interim report to be presented via audiocast
Analysts, investors and the media are welcome to attend a presentation via www.doro.com or by telephone from 09:00 a.m. CET on November 9, 2011. Doro’s President and CEO Jérôme Arnaud and CFO Annette Borén will participate.
Approximately 1 hour before the start of the presentation, the presentation materials will be made available on the Company’s website.
Please call about five minutes before the advertised starting time to access the telephone conference.
UK: +44 (0)20 3043 2436, SE: +46 (0)8 505 598 53, US: +1 866 458 40 87 France: +33 (0) 172 72 0115
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 Wednesday, November 9, 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
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