Embedded | July 24, 2012

Kontron adjusts FY2012 guidance

Kontron AG generated EUR 138.3 million of consolidated revenue in the second quarter of 2012.
Although revenue declined slightly compared with the previous year's quarter (EUR 145.2 million), it was ahead of the first quarter of 2012 (EUR 131.5 million). Revenue in the first half of the year totaled EUR 269.8 million, compared with EUR 275.3 million in the prior-year period.

The further deterioration in the state debt crisis and a weakening of the global economy impacted Kontron in terms of both revenue and earnings. The austerity measures pursued by many public-sector customers is feeding through to postponed orders and, at the same time, to a further increase in competitive intensity in many sectors such as infrastructure, security and telecommunications.

These factors are burdening revenue trends, diminishing achievable margins, and making further planning difficult. Kontron nevertheless succeeded in growing its revenue compared with the preceding quarter, but also in raising its gross margin from 25.7 % (Q1/2012) to 27.3 % (Q2/2012). The cost and margin situation in some areas remains unsatisfactory, however, and offers opportunities for improvements. Extraordinary costs arising from an outsourcing project are also affecting earnings.

With EUR 3.8 million of EBIT, Kontron did not achieve the previous year's quarterly result of EUR 11.4 million overall. In terms of the half-year, the Group reported EUR 8.0 million of EBIT (H1 2011: EUR 18.7 million). Second-quarter net income stood at EUR 2.3 million (Q2 2011: EUR 7.7 million), while net income for the first six months amounted to EUR 5.1 million (H1 2011: EUR 12.9 million).

The number of design wins improved by 8 % year-on-year to 132, and reflecting Kontron's continued good positioning. The volume of design wins was down from EUR 71.2 million in the previous year to EUR 60.8 million due to uncertainty on markets, however. The order book position was also affected by a more cautious approach among customers to the awarding of orders, and amounted to EUR 362.8 million as of June 30, approximately 14 % below the previous year's figure (June 30, 2011: EUR 424.0 million).

Kontron will prospectively fail to attain its FY 2012 targets due to current imponderables relating to the world economy, and continued prevailing uncertainties on many target markets, which are accompanied by an increase in competitive intensity.


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