Accelerating growth for Care Electronics, now 33 per cent of Doro first half year sales
Accelerating growth for Care Electronics, now 33 per cent of Doro first halfyear sales• Sales amounted to SEK 139.5 million (SEK 151.2 m)• Loss after tax was SEK 3.7 million (SEK +1.1 m) • Earnings per share after tax was SEK -0.21 (SEK 0.06) • Order intake has increased significantly during second quarter compared tofirst quarter, with expected positive effect on third quarter sales• The cash flow from operations for the first half year was SEK -27.3 million(SEK -30.3 m) following seasonal pattern and introduction of new products withinCare Electronics• Continued strong sales growth in Care Electronics business unit, whichrepresents 33 per cent of total sales• Lower sales for Home Electronics as market continues to decline according toexpectations • Launch of two new mobile phones HandleEasy 328gsm and 330gsm and an innovativeamplified cordless phone HandlePlus 318wComments by the CEO, Jérôme Arnaud “Care Electronics' sales continued to show strong growth during Q2, climbing byalmost 300 per cent and the business unit now accounts for some 40 per cent oftotal sales. In June this figure was 47 per cent of total sales. The HandleEasy 328gsm and HandleEasy 330gsm mobile phones are being launchedsuccessfully across Europe. During the second half of 2008 this trend isexpected to continue on the back of marketing efforts and the launch of newproducts for senior citizens. The market for easy-to-use mobile phones adaptedto a senior target group continues to grow as the awareness of theiravailability and ease-of-use increases. According to what was communicated in the Q1 report, this development has notyet offset Home and Business Electronics' lower sales figures. Lower salescombined with higher marketing and sales costs for introducing new mobile phonesin Care Electronics, resulted in a pre tax loss for Doro of SEK 4.3 million forthe second quarter.During the second half of 2008 we will continue to build our Care Electronicsbusiness. In Home Electronics we will focus on the launch of new products tooffset market decline. In Business Electronics we anticipate improved sales ofour new range of VoIP products having strengthened our sales force”.Sales Doro had sales of SEK 68.1 million (SEK 72.5 m) in Q2 and SEK 139.5 million (SEK151.2 m) during the first half year. The lower sales follows forecasted salestrends in Home and Business Electronics. Care Electronics continues to showstrong growth and increased its sales by almost 300 per cent compared to Q2 lastyear, and by over 200 per cent during the first half year. Care Electronicssales thereby represented 40 per cent of total sales for the second quarter and33 per cent of total sales for the half year. Operating profit - EBITThe operating loss before tax and financial items for the second quarter was SEK4.3 million (SEK -0.2 m) and for the half year SEK 3.7 million (SEK +1.1 m). Thegross margin improved due to the increased sales mix of Care Electronics'products with higher margins. The weakened US dollar had a positive effect onmargins.Cash flow, investments and financial positionThe cash flow from operations during the second quarter was SEK -10.0 million(SEK -16.3 m) and for the half year SEK -27.3 million (SEK -30.3 m), due toseasonal pattern and higher working capital required by Doro´s new productlaunches in Care Electronics. Investments during the second quarter amounted toSEK 1.3 million (SEK 1.3 m) and SEK 2.8 million (SEK 1.3 m) for the half year.At the close of the period Doro had bank loans of SEK 35.7 million, and thecompany had SEK 60 million in total pre-agreed credit facilities includingfactoring as of 30 June 2008. The equity/assets ratio was 25 per cent (23) atthe end of the period.Business unitsDoro has three business units: Home Electronics, which is mainly home telephony,representing 51 per cent of sales during the second quarter (74 per cent in Q2,2007), Business Electronics, mainly specialising in business telephony, 9 percent of sales during the second quarter (17 per cent in Q2, 2007) and CareElectronics, which specialises in telecoms and electronic products for seniorcitizens, 40 per cent of sales during the second quarter (9 per cent in Q2,2007). Home ElectronicsDuring the first half year sales fell for comparable units by 21 per cent to SEK77.3 million (SEK 97.7 m) although only by 6 per cent in volume. Due torationalization, product mix and currency effects, margins rose compared to thesame period last year. The negative sales trend followed the general decline ofthe market. However, at the end of the second quarter demand improved.Business ElectronicsDuring the first half year Business Electronics had sales of SEK 15.5 million(SEK 22.2 m). The introduction of new ranges of VoIP (Voice over IP) productsduring Q1 has been slow and therefore Doro has strengthened the sales force. Amore positive sales figure for VoIP products is forecasted for the second halfof 2008.Care ElectronicsDuring the first half year Care Electronics increased its sales to SEK 46.7million (SEK 15.1 m) - a rise of more than 200 per cent. This strong growth ismainly driven by the success of easy-to-use mobile phones. Sales wereparticularly strong in the Nordic region and in the UK. In addition to the two latest additions to the product portfolio, the DoroHandleEasy 328gsm and HandleEasy 330gsm, Doro also introduced an innovativeamplified cordless phone HearPlus 318w, emphasizing the need for strongergonomic features for elderly.In July, Doro was presented in the American business magazine “BusinessWeek” asone of the winners of IDEA®, the American design award. It is one of the mostprestigious prizes in the world, with only top-class international designsreceiving recognition. This year, five of Doro's Care Electronics products havewon bronze in the “Communications products” category. RegionsDoro's three regions are Mainland Europe (43 per cent of sales for the firsthalf year), Nordic (40 per cent) and UK and Ireland (17 per cent). Mainland EuropeSales fell by 11 per cent during the first six months of 2008, as sales stillhave a higher proportion of Home products compared to Nordic region.Nordic region Sales fell by 4 per cent. The continued strong sales increase of mobile phoneswithin Care Electronics has almost offset the declining sales in HomeElectronics. UK and IrelandSales by all business units progressed well and rose by 63 per cent in the UKand Ireland region through listings with key distributors. Due to the strongsales increase, Doro has gained market share in the UK.PersonnelThe headcount was 56 at the end of the period. 27 are based in Sweden, 17 inFrance, 4 in the UK, 4 in Norway and 4 in Hong Kong.Doro has recruited Annette Borén as the company's new Chief Financial Officer.Annette Borén will replace Stefan Sjölin, as CFO of Doro on 17 October 2008. Shehas extensive financial experience and for the past three years has worked atLänsförsäkringar Skåne as Financial Director. She has an MBA from LundUniversity. 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 for the first half year amounted to SEK 59.5million (SEK 5.3 m). Doro Nordic AB, the former sales company, merged with theparent company Doro AB on 1 January 2008. The loss before tax was SEK 9.3million (SEK -27.9 m).OutlookThe gradually increased proportion of Care Electronics, as part of total Dorosales combined with the improved total order intake, is anticipated to improvethe result for second half of 2008 compared to the same period previous year. Acontinuous strengthening of the US dollar may adversely affect the gross margin.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, this interim report is prepared according to IAS 34, InterimFinancial Reporting, and the Annual Accounts Act and for the parent company,according to the Annual Accounts Act.Future reports and eventsQuarterly reportsThe Board has decided the following dates for the quarterly reports:January-September 2008: 23 October 2008January-December 2008: 4 February 2009The quarterly reports are available at Doro'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 subjected to a review bythe company'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, 20 August 2008 - 08.30 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 Director Marketing, Fredrik Forssell +46 46 280 50 80Magistratsvägen 10SE-226 43 Lund, SverigeTelefon: +46 46 280 50 60www.doro.comThe Board and CEO confirm that this interim report provides a fair overview ofthe company´s and Group´s business, position and results and describes thesignificant risks and uncertainties faced by the company and the Groupcompanies.Bo Kastensson Chairman of the BoardJérôme Arnaud CEOPeter BlomBoard memberTomas Persson Board memberJonas MårtenssonBoard member For further information, please contact:CEO Jérôme Arnaud, +46 46 280 50 05 Director Marketing, Fredrik Forssell +46 46 280 50 80About 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.