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© studio 37 dreamstime.com Electronics Production | February 11, 2013

Kitron: Swedish profitability after successful restructuring

The restructuring of Kitron's Swedish operations is completed. - We are now seeing the results of the substantial actions we have taken in the last two years to improve profitability, says Thomas Löfgren, head of Kitron's Swedish operation.
The Swedish turnaround plays a central role in the rapid growth in profitability for the Norwegian technology company Kitron ASA. The next quarterly report, which will be published February 13th, will show a solid jump in profitability in 2012 for the Swedish business after many years of low operating results.

Successful restructuring

- The last two years we have cut the cost of our Swedish operations by 35 per cent while we have managed to keep the sales volume, continues Löfgren.

Kitron's main markets are Norway and Sweden, but most of Kitron's customers sell their products globally. The Swedish operation accounts for about a quarter of the Group's gross revenues, while revenues from customers in the Swedish market accounts for about 40 per cent of total revenues.

- Sweden is important to us. We have now completed a successful restructuring of the business that enables efficient operation and reduced costs, says Kitron CEO Jørgen Bredesen, adding that the costs for the closure of the factory in Karlskoga were included in the accounts for 2011, and that no further provisions are required.

Located in Jönköping

All Swedish business is now concentrated in Jönköping. The closure of the factory in Karlskoga was completed last autumn.

- We have transferred most customers from Karlskoga to Jönköping, says Löfgren.

Revenues at Karlskoga had decreased over a long period following a decline in the Swedish defence industry, the main customer group of the Karlskoga factory. While revenues from the defence segment have fallen, Kitron has experienced growth in other segments in the Swedish market.

- The last few years we have seen growth in manufacturing, telecommunications and medical equipment, Löfgren explains, pointing out that several of Kitron's customers have experienced success with their products.

The Swedish listed Telecoms company Transmode is an example of this. With its solutions for more efficient utilization of fibre optical networks, Transmode enjoys the strong growth in network traffic. Kitron Jönköping delivers about 90 different products in the form of printed circuit boards, racks and box build products to Transmode's system deliveries.

The Swedish industrial giant Atlas Copco has also contributed to the growth of Kitron Sweden.

- "The choice of Kitron as a partner has been based on finding a supplier who can live up to the very high standards we impose on a partner", said Henrik Danielsson, Purchasing Manager, Atlas Copco Industrial Technique AB, when Kitron Jönköping signed a strategic cooperation agreement with the company in 2010. The agreement covers electronics manufacturing and assembly of industrial tools.

Increased profitability with global focus

In parallel with the restructuring of the Swedish business, Kitron has expanded globally. New factories in China and the U.S. are established, and a smaller German business has been bought. Most of the manufacturing for the German market is performed by Kitron's factory in Lithuania.

- We believe in increased profitability. The new factories in the U.S. and China and the streamlined operations in Europe play a crucial role in this, says Bredesen, and reminds us that important milestones were reached in the third quarter when Kitron China and Kitron Germany reached break-even. Revenues from the Norwegian operation, with the factory in Arendal, are still by far the biggest, accounting for about half of the groups gross revenues.

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