Interim report January-June 2008
Accelerating growth for Care Electronics, now 33 per cent of Doro first half year 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 to first 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 within Care Electronics • Continued strong sales growth in Care Electronics business unit, which represents 33 per cent of total sales • Lower sales for Home Electronics as market continues to decline according to expectations • Launch of two new mobile phones HandleEasy 328gsm and 330gsm and an innovative amplified cordless phone HandlePlus 318w Comments by the CEO, Jérôme Arnaud “Care Electronics' sales continued to show strong growth during Q2, climbing by almost 300 per cent and the business unit now accounts for some 40 per cent of total sales. In June this figure was 47 per cent of total sales. The HandleEasy 328gsm and HandleEasy 330gsm mobile phones are being launched successfully across Europe. During the second half of 2008 this trend is expected to continue on the back of marketing efforts and the launch of new products for senior citizens. The market for easy-to-use mobile phones adapted to a senior target group continues to grow as the awareness of their availability and ease-of-use increases. According to what was communicated in the Q1 report, this development has not yet offset Home and Business Electronics' lower sales figures. Lower sales combined with higher marketing and sales costs for introducing new mobile phones in Care Electronics, resulted in a pre tax loss for Doro of SEK 4.3 million for the second quarter. During the second half of 2008 we will continue to build our Care Electronics business. In Home Electronics we will focus on the launch of new products to offset market decline. In Business Electronics we anticipate improved sales of our 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 (SEK 151.2 m) during the first half year. The lower sales follows forecasted sales trends in Home and Business Electronics. Care Electronics continues to show strong growth and increased its sales by almost 300 per cent compared to Q2 last year, and by over 200 per cent during the first half year. Care Electronics sales thereby represented 40 per cent of total sales for the second quarter and 33 per cent of total sales for the half year. Operating profit - EBIT The operating loss before tax and financial items for the second quarter was SEK 4.3 million (SEK -0.2 m) and for the half year SEK 3.7 million (SEK +1.1 m). The gross margin improved due to the increased sales mix of Care Electronics' products with higher margins. The weakened US dollar had a positive effect on margins. Cash flow, investments and financial position The 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 to seasonal pattern and higher working capital required by Doro´s new product launches in Care Electronics. Investments during the second quarter amounted to SEK 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 the company had SEK 60 million in total pre-agreed credit facilities including factoring as of 30 June 2008. The equity/assets ratio was 25 per cent (23) at the end of the period. Business units Doro 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 per cent of sales during the second quarter (17 per cent in Q2, 2007) and Care Electronics, which specialises in telecoms and electronic products for senior citizens, 40 per cent of sales during the second quarter (9 per cent in Q2, 2007). Home Electronics During the first half year sales fell for comparable units by 21 per cent to SEK 77.3 million (SEK 97.7 m) although only by 6 per cent in volume. Due to rationalization, product mix and currency effects, margins rose compared to the same period last year. The negative sales trend followed the general decline of the market. However, at the end of the second quarter demand improved. Business Electronics During 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) products during Q1 has been slow and therefore Doro has strengthened the sales force. A more positive sales figure for VoIP products is forecasted for the second half of 2008. Care Electronics During the first half year Care Electronics increased its sales to SEK 46.7 million (SEK 15.1 m) - a rise of more than 200 per cent. This strong growth is mainly driven by the success of easy-to-use mobile phones. Sales were particularly strong in the Nordic region and in the UK. In addition to the two latest additions to the product portfolio, the Doro HandleEasy 328gsm and HandleEasy 330gsm, Doro also introduced an innovative amplified cordless phone HearPlus 318w, emphasizing the need for strong ergonomic features for elderly. In July, Doro was presented in the American business magazine “BusinessWeek” as one of the winners of IDEA®, the American design award. It is one of the most prestigious prizes in the world, with only top-class international designs receiving recognition. This year, five of Doro's Care Electronics products have won bronze in the “Communications products” category. Regions Doro's three regions are Mainland Europe (43 per cent of sales for the first half year), Nordic (40 per cent) and UK and Ireland (17 per cent). Mainland Europe Sales fell by 11 per cent during the first six months of 2008, as sales still have 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 phones within Care Electronics has almost offset the declining sales in Home Electronics. UK and Ireland Sales by all business units progressed well and rose by 63 per cent in the UK and Ireland region through listings with key distributors. Due to the strong sales increase, Doro has gained market share in the UK. Personnel The headcount was 56 at the end of the period. 27 are based in Sweden, 17 in France, 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. She has extensive financial experience and for the past three years has worked at Länsförsäkringar Skåne as Financial Director. She has an MBA from Lund University. Doro's shares Doro 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 as of 7 January 2008. Parent company The parent company's net sales for the first half year amounted to SEK 59.5 million (SEK 5.3 m). Doro Nordic AB, the former sales company, merged with the parent company Doro AB on 1 January 2008. The loss before tax was SEK 9.3 million (SEK -27.9 m). Outlook The gradually increased proportion of Care Electronics, as part of total Doro sales combined with the improved total order intake, is anticipated to improve the result for second half of 2008 compared to the same period previous year. A continuous strengthening of the US dollar may adversely affect the gross margin. Risks Doro's risks and instability factors are mainly related to supplier disruption, customer relations and currency exchange rate fluctuations. Apart from these risks and instability factors, which are described in the Annual Report 2007 on pages 24, 41 and 42, no other risks of any significance have been identified during the last period. Accounting principles For the Group, this interim report is prepared according to IAS 34, Interim Financial Reporting, and the Annual Accounts Act and for the parent company, according to the Annual Accounts Act. Future reports and events Quarterly reports The Board has decided the following dates for the quarterly reports: January-September 2008: 23 October 2008 January-December 2008: 4 February 2009 The quarterly reports are available at Doro's website: www.doro.com This quarterly report has been drawn up in accordance with the same accounting principles as the last annual report, and has not been subjected to a review by the company's auditors. Information disclosed in this press release is provided herein pursuant to the Swedish Securities Markets Act and/or the Swedish Financial Instruments Trading Act. Lund, 20 August 2008 - 08.30 The Board Doro AB (publ) Co. Reg. No 556161-9429 Doro is listed on the OMX Nordic Exchange Stockholm Small Cap - Telekom/IT Information For further information, please contact: CEO Jérôme Arnaud, +46 46 280 50 05 Director Marketing, Fredrik Forssell +46 46 280 50 80 Magistratsvägen 10 SE-226 43 Lund, Sverige Telefon: +46 46 280 50 60 www.doro.com The Board and CEO confirm that this interim report provides a fair overview of the company´s and Group´s business, position and results and describes the significant risks and uncertainties faced by the company and the Group companies. Bo Kastensson Chairman of the Board Jérôme Arnaud CEO Peter Blom Board member Tomas Persson Board member Jonas Mårtensson Board member For further information, please contact: CEO Jérôme Arnaud, +46 46 280 50 05 Director Marketing, Fredrik Forssell +46 46 280 50 80 About Doro With over 30 years' experience in telephony Doro is today characterised by innovative and user-friendly consumer electronics products. The company develops markets and sells a wide range of products in three business units: Home Electronics, Business Electronics and Care Electronics. The company's products are sold in more than 30 countries worldwide through a variety of retail outlets, including electronics stores, online stores and specialized channels. The company had sales of SEK 346 million in 2007. Doro's shares are quoted on the Stockholm Stock Exchange, Nordic list, Small companies. Read more about Doro at www.doro.com.