ASKER, NORWAY – Kitron reported third quarter revenue of NOK 831 million (US$99.5 million), down 21.2% year-over-year.

The decrease is attributed to Covid-related issues and exceptional volumes within medical devices, which are now normalized. For the other market sectors combined, demand is strong, but revenue growth was limited by ongoing component shortages, the firm says.

Profit after tax amounted to NOK 19.5 million, down 68% year-over-year.

More than NOK 200 million of demand has been delayed into later quarters.

The order backlog ended at NOK 2.6 billion, an increase of 38% compared to the third quarter of 2020. This is a record and reflects a strong total demand situation but also includes revenue delays due to the component shortage. The order backlog increased within all market sectors.

“Demand continues to be very strong for both 2021 and 2022, with significant growth opportunities in most market sectors,” said CEO Peter Nilsson. “However, the general material supply situation deteriorated rapidly in the third quarter and continues to be a challenge to lead times and deliveries. We currently believe we are at the worst of these constraints, and we expect the situation to start showing some improvements as we progress into 2022. After last year’s high deliveries of medical devices driven by the corona pandemic, 2021 has returned to more normal levels with normal seasonality in the third quarter. Given the constraints in the supply chain, I’m satisfied with the results we deliver in the quarter.

“Currently, the raw materials and component supply chain will not support higher output, even though Kitron stands ready to deliver more. Given this year’s increase of inventory and working capital, we now turn our focus to executing demand into deliveries, improving our cash flow, and protecting competitiveness and profitability.”

The company saw revenue growth in the third quarter within the Electrification, Connectivity and Industry sectors, while revenue declined within Defense/Aerospace and Medical.

Operating cash flow was negative NOK 70.2 million, compared to negative NOK 3.2 million in the third quarter last year.

For 2021, Kitron previously indicated a revenue outlook of between NOK 3.9 billion and NOK 4.2 billion. Revenue for the year is now expected to be between NOK 3.7 billion and NOK 3.9 billion.

Growth is expected within Connectivity, Electrification and Industry, whereas there will be a decline within Medical and Defense/Aerospace.

Although the outlook 2021 is adjusted, the backlog and demand situation implies Kitron remains on the long-term strategic trajectory for revenue and profitability. Covid has so far had limited direct effects but nevertheless brings uncertainty to the outlook together with the constraints in the material supply situation.

Ed.: NOK 1 = US$0.12

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