Page 6 - Kitron Annual Report 2011

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Kitron annual report 2011
Kitron remains optimistic about the future develop-
ment in this segment. Firstly, the factories in Lithuania
and China make Kitron less vulnerable to competitive
pressure from low cost. Secondly, the niches and
customers that Kitron is involved in are showing a
stronger trend than the market in general. Within Tel-
ecoms Kitron deliver to one of the fastest growing mid
sized telecoms infrastructure companies in Europe.
The Industry segment increased revenue by 37.1
per cent to NOK 415.3 million (NOK 302.9 million),
accounting for 25.1 per cent of the group’s total rev-
enue (18.4 per cent). The revenue growth is primarily
explained by the recovery in the Swedish industrial
sector during 2011. Industry is the market segment
within Kitron that is most closely correlated with the
general economic development. So far, however,
there are few signs of weaker demand from Kitron’s
Medical equipment
Revenue in the Medical equipment segment de-
creased by 7.4 per cent to NOK 467.0 million in
2011 (NOK 504.1 million), corresponding to 28.2
per cent of the group’s revenue (30.7 per cent). The
medical segment is less cyclical than other market
segments and the small drop in volume is not seen as
sign of lower demand going forward. Kitron focuses
on additional growth in this segment and expects a
long-term positive development with customers in
Norway, Sweden and Germany. This trend is sup-
ported by strong market fundamentals for the prod-
ucts and services Kitron offers to the market. Kitron is
working on several interesting new prospects within
this segment.
The Offshore/Marine segment increased by 102.4
per cent in terms of revenue from NOK 87.3 million
in 2010 to NOK 176.7 million in 2011. The segment
accounted for 10.7 per cent (5.3 per cent) of the
group’s total revenues. The trend in the Offshore/
Marine segment is closely correlated with the devel-
opment of the oil price. At this point it is not expected
that the slow down in the general economy will have
a significant negative effect on the demand within
the Offshore/Marine segment. On the contrary it is
expected that the strong trend within Offshore/Marine
segment will continue in 2012. We are in dialogue
with existing and new customers about significant
new business opportunities.
Important events in 2011
Global Expansion
In 2011 Kitron has taken several steps to expand the
market coverage and further improve its competitive-
ness. The factory in US was opened in Q2 2011 and
the factory in China was opened in Q3 2011. Both
factories are now fully operational and are building
up volume step by step. Kitron’s strategy to enter
the German market is starting to pay off with sev-
eral smaller contracts secured, all with potential for
The start up of new entities in China, USA and Ger-
many has been a major investment and operational
undertaking for Kitron during 2011. Adjusted for the
negative impact from start up activities the EBIT result
for 2011 would have been NOK 25.4 million higher.
It is targeted that the new entities will turn profitable
during 2012.
Strategic co-operation with Prevas
In the second quarter Kitron ASA and Prevas AB an-
nounced a strategic co-operation agreement. Prevas
is a leading Scandinavian product development com-
pany. Through the co-operation between Prevas and
Kitron customers are offered market leading services
covering the entire value chain, including product &
test development, industrialisation, sourcing, manu-
facturing, logistics, redesign and after sales services.
In co-operation Prevas and Kitron will assist the cus-
tomer in thinking product life cycle from the beginning
and by using a joint Component Information System
(CIS) help standardizing and optimizing the products
and cost structures.