Interim report January - June 2019

Press release
Malmö, July 12 2019

Interim report January - June 2019

The transformation continues with growing services business

April – June 2019

• Net sales were SEK 459.6 million (424.2), an increase of 8.3 percent.
• Net sales for the category Services were SEK 86.3 million (64.4), an increase of 34.0 percent. Net sales for the category Products were SEK 373.3 million (359.9), an increase of 3.7 percent.
• Gross margin decreased to 34.9 percent (36.5). For Services, the gross margin decreased to 46.0 percent (46.8) and for Products the gross margin decreased to 32.4 percent (34.7).
• Operating profit (EBIT) was SEK 34.9 million (26.1) excluding restructuring costs, which corresponds to an operating margin of 7.6 percent (6.2). Including restructuring costs the operating profit was SEK 26.2 million with operating margin of 5.7 percent.
• Profit after tax for the period was SEK 18.7 million (20.8).
• Earnings per share was SEK 0.79 (0.87).
• Free cash flow before acquisitions was SEK 0.0 million (22.8).

Message from the CEO

Since I was appointed new President and CEO, my focus has been to drive Doro’s transformation towards becoming a services-based company. We will create and deliver even more attractive technology-oriented care services for seniors and do it better than our competitors. Doro shall be a leading player on the European market and I have therefore chosen to review our priorities. 

Going forward, our strategic focus will be to have a greater emphasis on public care. We will develop our offer and the efficiency of our service delivery. That work has already started and we are working purposefully on it. I am convinced that if we can make a breakthrough in public care, the consumer market will follow. Today, the services business accounts for about 19 percent of our total sales. As a first step our goal is to achieve 30 percent through continued organic growth and complementary acquisitions.

During the second quarter we saw positive sales growth. Sales amounted to SEK 459.6 m (424.2), an increase of 8.3 percent. Our business category Services had a positive sales trend with a growth of 34.0 percent. Norway shows continued stable growth in the public sector and our British telecare company Welbeing continues to show growth. Organically the growth in Services was 6.8 percent in the quarter. It is clear that market demand for more comprehensive digital solutions is increasing.

The development of our business category Products has been positive compared to the same period the previous year and grew in total by 3.7 percent. This means that we have a competitive offering despite the weak market trend. It is gratifying to note growth in Central and Eastern Europe, where we are now taking market shares again after some strenuous quarters in this region. As in the previous quarter, sales growth in the USA continued to be positive during the second quarter.

The operating margin of 5.7 percent is slightly lower than the same period last year but better than in the first quarter of the year. During the quarter, restructuring costs of SEK 8.7 million, due to the change of CEO, were charged against earnings. The gross margin has been negatively affected by currency effects in product sales and by the fact that we have not achieved our high efficiency targets for the services business in the quarter. We are therefore working consistently to push through improvements and review the cost structure in both products and services.

After my years as CFO of Doro, I know the company well and feel full of motivation for taking the company to the next level in my new role as CEO. My aim is to make the group well adapted for future digital services for seniors, with the goal of creating a higher value for our customers as well as our shareholders. We have a very ambitious plan for how to create further success. Generally speaking, the development of the senior market is very clear. Forecasts show that by 2050 a quarter of the population of Europe will be 65 or older. At the same time, the will to be able to live independently and the demand for better care services are growing. Doro must drive innovation and deliver smart and efficient services that meet these needs. With the right strategic initiatives, I am convinced that we have a great future before us.

Outlook

We reiterate our previously communicated outlook.

The overall market for mobile phones is expected to remain challenging, Doro has maintained and is expected to maintain or increase market share in the senior segment.

Services is growing organically and we are active in multiple acquisition discussions and we expect continued double-digit growth for Services in 2019.

The profitability is expected to remain at a healthy level.

For further information, please contact:
Carl-Johan Zetterberg Boudrie, President and CEO, +46 (0)70 335 84 49
 ir@doro.com

Doro’s report is presented via an audiocast
Analysts, investors and the media are welcome to join the presentation via https://edge.media-server.com/m6/p/bmbq9dqu or telephone at 09.00 CET on 12 July 2019. Doro’s President and CEO Carl-Johan Zetterberg Boudrie will give the presentation and answer questions. The presentation material is available in advance on https://corporate.doro.com/sv/investerare/rapporter-och-presentationer/presentationer/
Telephone numbers
Sweden:                               + 46 (0) 8 466 426 51
France:                                 + 33 (0) 1 7075 0711
United Kingdom:                   + 44 (0) 333 300 0804
USA:                                    + 1 631 913 1422
Pin code:                             90596310#

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. Net sales of SEK 1,906 million (EUR 186 million) were reported for 2018. www.doro.com

This information is information that Doro AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, on July 12 2019, at 08:00 CET.

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• EN_Doro_Q219