SUMMARY APRIL – JUNE 2014
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Net sales of April – June 2014 grew to EUR 52.2 million (EUR 47.9 million, 2Q 2013), representing an increase of 9.0 % year-on-year.
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Operating profit was EUR 3.1 million (EUR 0.7 million, 2Q 2013).
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Net cash flow was EUR -11.6 million (EUR -1.5 million, 2Q 2013).
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Earnings per share were EUR 0.014 (EUR 0.001, 2Q 2013).
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The number of EB’s shares increased during the reporting period by altogether 581 624 new shares subscribed by virtue of the stock option rights 2008A, 2008B and 2008C. At the end of the period, the number of shares in Elektrobit Corporation totaled 131,191,196.
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Parrot S.A. initiated legal proceeding against e.solutions GmbH, a jointly owned company of Elektrobit Corporation (EB) and AUDI, seeking to collect damages in the amount of approximately EUR 18.4 million for loss of profit and reputational damage. Based on the e.solutions’ initial legal analysis the claim is without merit both in terms of the grounds and the amount of the claim.
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Elektrobit (EB) has decided to temporarily lay off 90 persons at the maximum, for 90 days at the maximum, part-time or full-time in Wireless Business Segment and targets to achieve EUR 0.8 million cost savings, which are expected to materialize mainly during the third quarter of the year.
SUMMARY JANUARY – JUNE 2014
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Net sales of January – June 2014 grew to EUR 103.9 million (EUR 94.1 million, 1H 2013), representing an increase of 10.4 % year-on-year.
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Operating profit was EUR 5.0 million (EUR 1.4 million, 1H 2013, including non-recurring costs of approximately EUR 0.8 million resulting from the cost saving measures in the Wireless Business Segment).
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Net cash flow was EUR -12.1 million (EUR 27.8 million, 1H 2013, including non-recurring net cash flow of about EUR 28 million resulting from the sale of the Test Tools product business).
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Earnings per share were EUR 0.027 (EUR 0.006, 1H 2013).
| Group (MEUR) | 2Q 14 | 2Q 13 | 1H 14 | 1H 13 | 2013 |
| NET SALES | 52.2 | 47.9 | 103.9 | 94.1 | 199.3 |
| Change of net sales, % | 9.0 % | 15.5 % | 10.4 % | 11.8 % | 14.6 % |
| OPERATING PROFIT / LOSS | 3.1 | 0.7 | 5.0 | 1.4 | 8.1 |
| Operating profit / loss, % of net sales | 5.9 % | 1.5 % | 4.8 % | 1.5 % | 4.1 % |
| Operating profit /loss without non-recurring items | 3.1 | 0.7 | 5.0 | 2.2 | 9.0 |
| EBITDA | 5.1 | 2.9 | 9.2 | 5.8 | 17.2 |
| CASH AND OTHER LIQUID ASSETS | 30.9 | 42.1 | 30.9 | 42.1 | 43.0 |
| EQUITY RATIO (%) | 61.7 % | 64.0 % | 61.7 % | 64.0 % | 65.1 % |
| EARNINGS PER SHARE (EUR) | 0.014 | 0.001 | 0.027 | 0.006 | 0.051 |
| Automotive Business Segment (MEUR) | 2Q 14 | 2Q 13 | 1H 14 | 1H 13 | 2013 |
| NET SALES | 39.8 | 32.6 | 77.3 | 63.0 | 138.3 |
| Change of net sales, % | 22.4 % | 30.6 % | 22.6 % | 22.9 % | 25.0 % |
| OPERATING PROFIT / LOSS | 4.2 | 0.1 | 7.1 | 1.2 | 8.5 |
| Operating profit / loss, % of net sales | 10.4 % | 0.2 % | 9.1 % | 1.9 % | 6.2 % |
| EBITDA | 5.6 | 1.6 | 10.1 | 4.1 | 14.6 |
| Wireless Business Segment (MEUR) | 2Q 14 | 2Q 13 | 1H 14 | 1H 13 | 2013 |
| NET SALES | 12.4 | 15.4 | 26.6 | 31.2 | 61.2 |
| Change of net sales, % | -19.4 % | -7.0 % | -14.7 % | -5.5 % | -3.7 % |
| OPERATING PROFIT / LOSS | -0.9 | 0.6 | -2.0 | 0.1 | -0.5 |
| Operating profit / loss, % of net sales | -7.4 % | 3.6 % | -7.6 % | 0.5 % | -0.8 % |
| Operating profit /loss without non-recurring items | -0.9 | 0.6 | -2.0 | 1.0 | 0.4 |
| EBITDA | -0.3 | 1.2 | -0.8 | 1.7 | 2.5 |
EB’S CEO JUKKA HARJU
“In January-June, EB’s net sales grew by 10.4 per cent year-on-year to EUR 103.9 million. Operating profit improved and was EUR 5.0 million. The reason for the improved net sales and operating profit was the good development of Automotive Business Segment.
In Automotive Business Segment, the demand for EB’s software products and R&D services remained good as car makers invested in the development of new car models. Net sales of Automotive Business Segment grew strongly by 22.6 % from the previous year and operating profit improved to 9.1 % of net sales. The improvement of the operating profit resulted from the good performance in services projects, the growth of software license sales especially for the in-car navigation software and lower R&D investments.
The net sales in Wireless Business Segment decreased by 14.7 % from the previous year due to the decreased demand for R&D services for mobile telecommunications network equipment. The operating result in the Wireless Business Segment was below our target and remained negative. In the second half of the year, we expect the Wireless Business Segment to develop positively and operating result to be profitable.
Our main target in 2014 is to grow net sales and operating profit from the previous year and EB is in a good position to achieve this target.”
OUTLOOK FOR 2014
EB expects for the year 2014 that net sales and operating result will grow from the previous year (net sales of EUR 199.3 million and operating profit of EUR 8.1 million, in 2013). Net sales growth rate in 2014 is expected to be slower than in the previous year (net sales growth 14.6 %, 2013). Operating profit in the second half of the year is expected to be higher than in the first half (operating profit of EUR 5.0 million, 1H 2014).
The demand for R&D services and software products of the Automotive Business Segment is expected to continue good in the second half of the year, and operating profit of Automotive Business Segment is expected to be at the same level or better than in the first half of the year (operating profit of EUR 7.1 million, 1H 2014). Operating result of the Wireless Business Segment in the second half of 2014 is expected to be positive (operating loss of EUR -2.0 million, 1H 2014). In the Wireless Business Segment in the second half of 2014, the demand for R&D services is expected to recover and product-based net sales is expected to grow compared to the first half of the year. EB aims at bringing its Wireless Business Segment’s products to the global defense and other authority markets, and expects to start gradually generating net sales from these markets from the latter half of 2014 onwards. In the second half of the year the product-based net sales is expected to accumulate mainly from the domestic customers and mainly during the fourth quarter.
More specific market outlook is presented under sections “Market outlook for the Automotive Business Segment” and “Market outlook for the Wireless Business Segment”.
The profit outlook for the year 2014 does not include possible non-recurring income or costs related to the reorganization cases of TerreStar Networks Inc. More information about the reorganization cases of TerreStar Networks and the amount of the receivables and collecting the receivables as well as other uncertainties regarding the outlook is presented in the “Events after the review period” and in the Report by the Board of Directors 2013, available at http://annualreport.elektrobit.com
