Nordic report total revenue of MUSD 38.7

Total revenue in Q2 2012 was MUSD 38.7, representing a 1% increase from the prior year. Sales to the PC accessories business segment fell by 3% from the prior year, but this was offset by 11% annual revenue growth in other business segments. Order inflows were MUSD 22 during the second quarter 2012. The company attributes the slowdown in order inflows primarily to temporary factors, including slower sales of PC accessories and a changeover of product lines by Nordic’s PC accessories customers in advance of the launch of the new Windows 8 operating system. The order backlog was MUSD 20 at the end of the quarter. Gross profit was MUSD 20.1, or 52% of revenue, compared with MUSD 16.5, or 43% of revenue during Q2 2011. In recent months, the company’s gross margin has benefited from a shift in its revenue mix from its highest-volume PC peripheral customers toward smaller customers in other business segments. Furthermore, the company has executed manufacturing cost improvements to reduce its cost of goods. The company expects that it will maintain a gross margin of approximately 50% during the coming quarters. Total payroll and other operating expenses were MUSD 10.1 in Q2 2012, compared with MUSD 8.1 in Q2 2011. The growth in operating expenses was primarily driven by an increase in the number of employees from 151 to 178 during the past year, as well as by increased product development activity. Total depreciation expenses were MUSD 0.7 in Q2 2012 compared with MUSD 1.1 in the prior year. R&D costs of MUSD 0.3 were capitalized in accordance with IAS 38 criteria. Due to an improved gross margin, the company’s Operating Profit (EBIT) was MUSD 9.4, compared with MUSD 7.3 in Q2 2011. Net financial items had almost no impact on the income statement in Q2 2012, compared with an expense of MUSD -0.1 in the prior year. Profit before tax was MUSD 9.4, compared with MUSD 7.3 in Q2 2011. Income tax expense was MUSD 2.9 in Q2 2012, or 31% of pretax profit. The company’s base tax rate is 28%, but the actual rate will fluctuate based on the effect of net financial items during the quarter, as these items are calculated differently in the parent company’s financial reporting (calculated in USD) and its tax reporting (calculated in NOK). Nordic Semiconductor reported flat revenue but strong growth in operating profit during the first half of 2012. Total revenue in 1H 2012 was MUSD 70.8, representing a 2% decline from the prior year. Sales to the PC accessories business segment fell by 4% from the prior year, but this was offset by 5% annual revenue growth in other business segments. Gross profit was MUSD 37.1, or 52% of revenue, compared with MUSD 31.8, or 44% of revenue during 1H 2011. In recent quarters, the company’s gross margin has benefited from a shift in its revenue mix from its highest-volume PC peripheral customers toward smaller customers in other business segments. Furthermore, the company has executed manufacturing cost improvements to reduce its cost of goods. The company expects that it will maintain a gross margin of approximately 50% during the coming quarters. Total payroll and other operating expenses were MUSD 19.7 in 1H 2012, compared with MUSD 16.1 in 1H 2011. The growth in operating expenses was primarily driven by an increase in the number of employees from 151 to 178 during the past year, as well as by increased product development activity. Total depreciation expenses were MUSD 1.4 in 1H 2012 compared with MUSD 2.3 in the prior year. R&D costs of MUSD 0.9 were capitalized in accordance with IAS 38 criteria. Due to an improved gross margin, the company’s Operating Profit (EBIT) was MUSD 15.9, compared with MUSD 13.4 in 1H 2011. Net financial items were an expense of MUSD -0.2 in 1H 2012, compared with an expense of MUSD -0.3 in the prior year. Profit before tax was MUSD 15.8, compared with MUSD 13.1 in 1H 2011. Income tax expense was MUSD 4.4 in 1H 2012, or 28% of pretax profit. The company’s base tax rate is also 28%, but the actual rate can fluctuate based on the effect of net financial items during the quarter, as these items are calculated differently in the parent company’s financial reporting (calculated in USD) and its tax reporting (calculated in NOK). Net profit after tax was MUSD 11.3 in 1H 2012, compared with MUSD 10.0 during 1H 2011. The company’s earnings per share were USD 0.069 in 1H 2012, compared with USD 0.059 in 1H 2011. Market Outlook Nordic Semiconductor expects the market for ultra-low power wireless solutions to grow rapidly in the coming years, with the increasing popularity of wireless accessories and with new wireless products being launched. The company believes that the market for ultra-low power wireless communication is just entering a period of long-term growth which will transform the way we interact with electronic devices. Nordic Semiconductor’s wireless business can be separated into two overlapping market opportunities, its current market for proprietary wireless solutions (including 2.4 GHz RF and ANT+ products) and its emerging market for Bluetooth Smart wireless technology.