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© andrzej thiel dreamstime.com Embedded | October 24, 2013

Kontron to reduce supplier network to below 500

Kontron intends to streamline the complex network of suppliers from currently 1'900 to less than 500. The number of distribution partners - currently 100 - shall be reduced to less than 40 companies.
Preparations to consolidate locations are proceeding apace. Kontron plans to realize synergies in Research & Development, manufacturing as well as sales. In this context, about one-third of the product portfolio are currently under review. Already, 700 products were identified for phase-out in the foreseeable future. With a reduced product portfolio, complexity in development, manufacturing and sales will be reduced and efficiency enhanced.

Kontron AG generated revenues of EUR 124 million in the third quarter of 2013 (Q3 2012: EUR 131 million). In addition to a market environment that continues to be challenging, this was due to a switch to a royalty model for one customer, which had a negative impact of approximately EUR 10 million in the quarter.

The gross margin rose to 24.2 percent (Q3 2012: 20.1 percent). Operating income (EBIT) – before special items – rose to EUR 1.4 million (Q3 2012: EUR -1.0 million). Reported EBIT of EUR 5.8 million after special items stood at EUR -4.4 million. Order entries were muted and came in at EUR 105.5 million (Q3 2012: EUR 141.1 million). They too were influenced by negative special items.

After the end of the third quarter, the Management Board narrows its revenue expectations and stays with the guidance for the result. For the 2013 financial year, revenue of between EUR 510 million and EUR 530 million are expected. Gross profit and operating earnings are unchanged set to come in at around the previous year's level.

“Our third-quarter earnings show both the potential of our company as a leading player in the ECT market as well as the enormous efforts we still have to undertake in order to transform Kontron”, says Rolf Schwirz, CEO of Kontron AG. “I am delighted to see the commitment of our employees who remain ‘on the ball’ even during these difficult times. I am also confident that the measures we have taken to reduce costs and increase efficiency will make Kontron sustainably more efficient.”

Compared with the prior-year quarter, cash flow from operating activities rose by EUR 1.7 million to EUR 4.8 million in the third quarter. With an equity ratio of 60.5 percent, Kontron continues to have a solid financial basis to exploit the ECT market’s dynamic growth and take the announced cost reduction program forward.

“We have a very solid equity ratio of 60.2 percent. Therefore, I am convinced that we can start our cost reduction program on a sound financial basis”, says Andrea Bauer, CFO of Kontron AG.

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