Kontron: Revenue down 17.7% YoY

The revenues generated by the Industrial business unit fell 15.6 percent to EUR 198.4 million in the reporting year (prior year: EUR 234.7 million). The Avionics/Transportation/Defense business unit generated revenues of EUR 96.6 million (prior year: EUR 127.2 million), down 24.3 percent on the prior year. The performance of the Communication business unit was also below the prior year with revenues of EUR 90.1 million (prior year: EUR 105.8 million). The order intake of EUR 361.5 million is 7.7 percent down on the prior year (2015: EUR 391.8 million). The gross margin deteriorated by 11.5 percentage points on the prior year to 14.6 percent on account of non-recurring costs of approximately EUR 30 million due to impairments of inventories and capitalized development projects (prior year: 26.1%). The impairment of goodwill and expenses relating to the restructuring program initiated in the second half of 2016 also impacted profits and resulted in EBIT of EUR -141.7 million (prior year: EUR 6.2 million) and adjusted EBIT of EUR -58.8 million (prior year: EUR 14.5 million). Non-recurring effects from sale transactions led to cash inflows and in effect to positive cash flow of EUR 60.5 million (prior year: EUR 14.2 million). “We are facing enormous challenges,” says Hannes Niederhauser, Kontron’s CEO. “The 2016 fiscal year was a difficult year for Kontron. The task now is to turn the ship around, with a lot of hard work, by keeping costs strictly under control and using innovative technologies. An important step in this direction is the merger between S&T Deutschland Holding AG and Kontron AG, a move that we will submit to our shareholders at this year's annual general meeting for approval.” Synergies from future collaboration with S&T AG The S&T Group has been Kontron AG’s biggest shareholder since November 2016, with a share of about 29.9 percent of the voting rights and share capital. In February 2017, it was announced that the Management Board of Kontron AG and the Management Board of S&T Deutschland Holding AG, a wholly owned subsidiary of S&T AG, had signed a letter of intent providing for Kontron AG’s merger with S&T Deutschland Holding AG. The two companies, Kontron and S&T, have a complementary portfolio of hardware, software and services, and also complement each other in terms of the markets in which they operate. Consequently, a number of positive effects and synergies such as the joint application of expertise in the field of research and development in order to develop innovative new products, solutions and services can be expected from the future partnership or merger with S&T. Outlook 2017 Due to the decline in the order intake, revenues are forecast to remain comparable in the 2017 fiscal year to the 2016 fiscal year. The gross margin is anticipated to rise again to over 25 % on account of partnerships with Ennoconn and S&T. Based on the current restructuring program, the Management Board expects annual savings of over € 15 million which will start to take effect from the second quarter of 2017. Thanks to these cost-savings and a higher gross margin a break-even result is expected for 2017.