Product category:
Embedded Computing and Control
News Release from: Kontron UK
Edited by the Electronicstalk Editorial
Team on 04 April 2007
Record year for embedded computing
specialist
Embedded computing specialist breaks euro 100 million revenue barrier for a quarter and increases net profit by 56%
For the financial year 2006, Kontron AG, on a purely organic basis, realised a record rate of revenue growth of 35%, with a rise to euro 405 million (compared to euro 300 million in 2005), and an increase of 56% in net profit to euro 25.7 million, compared to euro 16.5 million in 2005 In the best year in the company's history, operating cash flow over the same period doubled to nearly euro 23.4 million and the company's liquidity was up by euro 11 million, resulting in a cash position of over euro 64 million
This article was originally published on Electronicstalk on 30 Jun 2008 at 8.00am (UK)
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"This solid financial situation will allow us to once again increase the dividend payout for shareholders for the 2006 financial year, compared to 2005, and to continue with our stock purchase program", states CEO Hannes Niederhauser at the company's balance sheet press conference in Munich.
For 2007, CEO Niederhauser expects "a further double-digit increase in revenue, and net earnings growth at a faster rate".
Following the dynamic development of business in the first half of the year, and breaking the euro 100 million revenue barrier for the first time in the third quarter, Kontron AG continued to power ahead in the final three months of the 2006 business year with sales reaching a new historic record level of euro 119 million.
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This means that the company has achieved the highest level of organic growth from among the top five global competitors, and established itself as the number one global provider of embedded computer technology (ECT).
Earnings in the fourth quarter developed even more favourably than revenue.
Operating earnings (EBIT) rose to euro 12.2 million, in excess of 45% above the previous year's level (euro 8.4 million).
At euro 11.1 million, net profit for 2006 was 82% above prior year earnings (euro 6.1 million).
As a consequence, Kontron, in the fourth quarter, has for the first time significantly surpassed the 10% EBIT margin level.
Kontron generated a full-year EBIT euro 32.9 million (2005: euro 22.6 million), thereby achieving an 8.2% margin, compared to 7.5% in 2005.
The 2006 order book rose to a level unsurpassed in the history of Kontron AG: it climbed by 46%, from euro 151.1 million as of the end of 2005 to euro 220 million at the end of the 2006 financial year.
There was a comparably dynamic rise in the number of design wins.
Volumes rose to euro 217.7 million, following euro 175.6 million in 2005.
Kontron experienced strong growth in all markets in 2006.
Europe continued its positive trend with an increase of 23% year on year.
In line with the overall business development from quarter to quarter, European revenue rose to almost euro 228 million.
America trailed only slightly behind Europe, with an overall sales growth rate of 23%.
"As in 2005, our strongest rate of revenue growth was in emerging markets, particularly Russia and China", says Niederhauser.
"Here the increase was 118%".
As a result, this region already contributes 24% of Kontron AG's entire sales on the basis of 2006 turnover.
As was the case previously, the largest proportion is contributed by Europe, with America returning around 30%.
In terms of vertical markets, telecoms applications represented the largest proportion, with around 28%, followed by automation with 19%.
Besides communications, strong growth drivers included mainly the gaming areas (15%) and energy (12%).
Medical applications in particular experienced a strong upwards trend, and they already generate a 9% share of total sales on the basis of 2006 figures.
Niederhauser sayst that Kontron attributes the marked profitability improvement primarily to the successful implementation of the Profit Improvement Program.
Sustainable effects were felt particularly from the relocation of basic production to the new location in Malaysia.
Kontron is aiming to produce more than 50% of its entire product at this location by 2008, which should reduce the proportion of production costs expressed as a percentage of revenue from currently 8.5% to less than 7%.
"We were able also to achieve major cost reductions in warehouse administration in 2006", says Niederhauser.
Here, the figure of euro 65.7 million was almost unchanged compared to the prior year (euro 68.4 million) - despite the strong rise in revenue.
Overall operating costs in 2006 rose by only 18% to euro 98.2 million (2005: euro 83.2 million), compared to revenue growth in excess of 35%.
Compared to the leap in revenue, growth in the number of employees was moderate in 2006, with the Group total amounting to 2,445 (2005: 2,382).
The majority of newly appointed members of staff comprised highly qualified managers for the research and development area.
With a base of now 849 engineers, which corresponds to over one third of the entire workforce, Kontron AG now occupies a position of pioneering technology leadership in the sector.
Kontron AG also achieved one of its further key objectives for the 2006 financial year, which was to raise liquidity and generate further cash: as of December 31, 2006, the cash position at euro 64.4 million was euro 11 million higher than at the end of 2005 (euro 53.3 million), despite spending around euro 8 million on the dividend distribution and the stock purchase program.
At the same time, bank borrowings were reduced by euro 10.7 million to euro 7.0 million.
As a result, the net cash position rose to euro 28.5 million as of the year-end.
Operating cash flow doubled nearly to euro 23.4 million.
Total assets amounted to euro 362.8 million (2005: euro 339.2 million) and the equity ratio was 69.4%.
As Hannes Niederhauser comments: "Both in the awareness of our employees and in our organisational structures, a shift in values has taken place: we have made the transition from a primarily technology-driven company to an organisation with a stringent strict focus on markets and earnings".
"Our highest priority is raising corporate value and profitability".
"We are concentrating on dynamic, high-quality, and organic growth".
"We are not contemplating acquisitions, and continue to focus on the cost and earnings side".
"Kontron AG enjoys very favourable perspectives for 2007 and the years beyond". Request free introductory details about products from Kontron UK ...
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