Double digit sales growth despite weak performance

Sweden, Lund, 2016-08-11 08:00 CEST (GLOBE NEWSWIRE) -- Press release

April – June 2016

• Net sales amounted to SEK 473.5m (423.7), an increase of 11.8 percent.
• Operating profit (EBIT), including restructuring costs of SEK 4.9m, was SEK 4.2m (29.3), corresponding to an operating margin of 0.9 percent (6.9).
• Order intake amounted to SEK 458.8m (389.2), an increase of 17.9 percent.
• Order book at the end of the period amounted to SEK 227.1m (209.3).
• Profit after tax for the period amounted to SEK 1.2m (21.1).
• Earnings per share after tax amounted to SEK 0.05 (0.91).
• Cash flow from current activities amounted to SEK 7.0m (65.3).

CEO comment

Sales in the quarter increased by 11.8 percent despite Doro Care’s weak performance. As we have communicated earlier, sales in Sweden in Doro Care have been held back in Q2, just as in Q1, due to the appeal of a new framework agreement with the procurement office of the Swedish municipalities (SKL). Sales development in Doro Care Sweden is thus to a large extent currently reflecting recurring sales from existing agreements. This is also the main reason to why Q2 2016 result is lower than Q2 2015 as new Doro Care contracts contribute significantly to profitability. Cash flow from current activities stood at SEK 7.0m (65.3) in the second quarter.

The group gross margin was 36.4 percent in Q2, and the EBIT-margin this quarter stood at 0.9 percent compared to 6.9 percent in Q2 2015. The margin is affected by lower share of sales from Doro Care and higher expenses in general, including integration costs related to Trygghetssentralen.

In Q2 price pressure in the segment of low-end feature phones resulted in a situation where a listing with a major customer was not renewed. The quarterly result was also affected by some supply delays related to high end feature phones and smartphones (Doro 8030). We expect these delays to affect the third quarter as well, and that sales recovery will come in Q4. We continue to actively manage the transformation of our business from feature phones to smartphones with ambition to significantly increase the share of smartphone sales over time. For the first half 2016 smartphone sales represented 21 percent (13) of total phone sales.

We are executing on a plan to address profitability and sales growth. We have recruited Henric Ungh as new VP Sales and we focus on increased efficiency by streamlining operations and reducing operational costs as well as trimming our development portfolio, with a clear focus on the needs of the end user. Restructuring costs amounted to SEK 4.9m in the quarter. The integration of Trygghetssentralen AS proceeds according to plan and will continue during second half of 2016.

We continue to have strong presence in key markets. In Q2 2016, sales in the USA and Canada increased by 71.8 percent y/y supported by the 4G smartphone and in the Nordics sales of smartphones increased in all channels which is a strong sign in our trend-setting home market. In Q2, sales declined by 13.7 percent in the UK, negatively impacted by the transition from old models to new ones and partly also negatively affected by a depreciated GBP, while EMEA and DACH remained flat.

Doro Care continues to be impacted by a situation where Swedish municipalities are postponing new tenders until the outcome of the appeal of the new framework agreement is known. We naturally hope for a clearance within the coming months and when this happens, we will have the capacity to accelerate deliveries of new orders to customers, but we are no longer sure we will be able to catch up with what has been postponed during 2016. This is why we recently altered our full year outlook and instead of expecting sales and profits to increase, we now expect profit for the group to be somewhat below 2015 while sales can still be expected to be higher than previous year.

Jérôme Arnaud, President & CEO

For further information, please contact: Jérôme Arnaud, President and CEO, +46 (0)46 280 50 05 Magnus Eriksson, CFO, +46 (0)46 280 50 06

Doro’s report to be presented via audiocast Analysts, investors and the media are welcome to attend a presentation via http://edge.media-server.com/m/p/srnq49y2 or by telephone at 09:00 CET on August 11, 2016. Doro’s President and CEO Jérôme Arnaud and Doro’s CFO Magnus Eriksson will hold the presentation and answer questions. Before the start of the presentation, the material will be made available at http://corporate.doro.com/investors/financial...al-reports .

Phone numbers for the telephone conference, calling from: Sweden:                        + 46 (0) 8 505 564 74 France:                          + 33 (0) 170 750 712 United Kingdom:            +44 (0) 203 364 5374 United States:                + 1 855 7532 230

About Doro Doro develops telecom products and services for Seniors to lead full and rich lives: to do things they want to do more easily as well as the things they thought they might never do. The global market-leader in senior mobile phone, Doro offers easy-to-use mobile phones and smartphones, mobile applications, fixed line telephony with loud and clear sound. Within Doro Group, Doro Care offers social care and telecare solutions for elder and disabled persons for independent and safe living in their own homes. Doro AB is a Swedish public company and its shares are quoted on the Nasdaq OMX Stockholm exchange, Nordic List, Small Companies. Total revenue of SEK 1,838 million (EUR 200 million) were reported for 2015. www.doro.com

This is information that Doro AB (publ) is required to publish in accordance with the Swedish Securities Markets Act and/or the Swedish” Financial Trading Act. This information was submitted for publication on 11 August, 2016 at 08:00 CET.