Doro lifts Q2 net sales 8.3% with Services sales up 34%, EBIT dented by restructuring costs

Friday 12 July 2019 | 12:54 CET | News

Swedish smartphone manufacturer Doro report second quarter net sales of SEK 459.6 million, an increase of 8.3 percent from 424.2 million a year earlier. EBIT was SEK 34.9 million (SEK 26.1 mln) excluding restructuring costs, or SEK 26.2 million including restructuring costs linked to the change of CEO. Net profit fell to SEK 18.7 million from SEK 20.8 million.

Net sales in the Services division surged by 34.0 percent to SEK 86.3 million from SEK 64.4 million and net sales for the products division rose by 3.7 percent to SEK 373.3 million from SEK 359.9 million.

The gross margin decreased to 34.9 percent (36.5%). For Services, the gross margin fell to 46.0 percent (46.8%) and for Products it shrank to 32.4 percent (34.7%).

Operating profit (EBIT) was SEK 34.9 million (SEK 26.1 mln) excluding restructuring costs, which corresponds to an operating margin of 7.6 percent (6.2%). Including restructuring costs, the operating profit was SEK 26.2 million with a margin of 5.7 percent.

Net profit for the period declined to SEK 18.7 million from SEK 20.8 million and earnings per share to SEK 0.79 from EPS of 0.87. Free cash flow before acquisitions was SEK 0.0 million (22.8).

The company reiterated its view that the overall market for mobile phones is likely to remain "challenging", but it expects to main or increase its share of the market for handsets for senior users. For the Services division, Doro expects continued double-digit growth for the full year. It said Services is growing organically, and that is in "multiple" acquisition discussions. FY profitability is expected to remain "at a healthy level", it added.

CEO Carl-Johan Zetterberg Boudrie said that Doro will have a greater emphasis on public care in future. It aims to develop its products and the efficiency of service delivery. If Doro can make a breakthrough in public provision, the consumer market will follow, he said. Currently, Services accounts for about 19 percent of total sales and it intends to lift this to 30 percent in a first step, through continued organic growth and complementary acquisitions.

In Products, Doro is taking market share in Central and Eastern Europe again after some "strenuous" quarters in this region. Sales growth in the US remained positive during the second quarter.

Second quarter restructuring costs of SEK 8.7 million were charged against earnings in connection to the change of CEO. The gross margin has been hit by currency effects in Product sales and by the fact that Doro missed its efficiency targets for Services. It is working consistently to push improvements and review the cost structure in both Products and Services.

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Categories: Mobile & Wireless
Companies: Doro
Countries: Sweden / World
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