Kitron: acquisition & strong demand support growth in 2022
Kitron's fourth quarter results is showing strong demand, but also revenue constraints due to the component supply and covid lockdown in China. A record order backlog and the acquisition of BB Electronics support a strong outlook for 2022.
Kitron's revenue for the fourth quarter 2021 was NOK 949 million (EUR 94.14 million), compared to NOK 992 million (EUR 98.40 million) last year. Demand is very strong, but revenue growth was limited by ongoing component shortages and a lockdown of Kitron’s facility in Ningbo, China, due to an outbreak of COVID-19 in the area, as previously reported by Evertiq.
The company says that more than NOK 160 million (EUR 15.86 million) of demand in the quarter has been delayed into 2022. The company states in its quarter report that there was strong growth within the Connectivity market sector.
The order backlog ended at NOK 2.82 billion (EUR 280.5 million), an increase of 41% compared to last year. The order backlog increased within all market sectors except Defence and Aerospace.
“Two forces dominated the fourth quarter: on the positive side, excellent demand and a record order backlog, on the negative challenges caused by lack of components and the covid pandemic. The highlight of the fourth quarter was the acquisition of BB Electronics. I was convinced about the merits of this deal before we announced it, and my conviction has grown even firmer as we have worked with the BB team on common plans. This strengthens my positive view of the coming quarters and years,” says Peter Nilsson, Kitron's CEO in the fiscal report.
Fourth quarter operating profit (EBIT) was NOK 52.3 million (EUR 5.2 million), a decrease of 23.5% from NOK 75.7 million (EUR 75.1 million) last year. EBITDA was NOK 78.4 million (EUR 7.78 million), compared to NOK 102.2 million (EUR 10.5 million) last year.
Profit after tax amounted to NOK 40.4 million (EUR 4.0 million), compared to NOK 47.1 million (EUR 4.6 million) in the same quarter the previous year.
Looking back at the full year
Full-year revenue of NOK 3.71 billion (EUR 368.5 million), which is an overall decrease in revenue of 6% for the year – the company states that 3% of this decrease stems from changes in currency rates. The decrease is also explained by the Corona-related volume changes within Medical devices being normalised from 2020 to 2021.
Operating profit (EBIT) for the year ended at NOK 240.8 million (EUR 23.9 million), compared to NOK 312.6 million (EUR 31.0 million) in 2020. Profit after tax was NOK 152.8 million (EUR 15.8 million), down from NOK 213.1 million (EUR 21.1 million).
In December, Kitron announced that it had reached an agreement to acquire the Danish EMS company BB Electronics, which has production facilities in Denmark, China and the Czech Republic. The deal is clearly earnings accretive and adds significant shareholder value.
Looking towards the future
For 2022, Kitron expects revenue between NOK 5.2 and 5.8 billion (EUR 516.5 and 576.1 million), including BB Electronics. Operating profit (EBIT) is expected to be between NOK 330 and 430 million (EUR 32.8 and 42.7 million). The company says that the growth is driven by the Electrification, Connectivity and Industry market sectors. Currently, the growth is constrained by the material supply situation.