Interim report (1 Jan. - 30 June 2001)

DORO Interim report (1 Jan. - 30 June 2001) · Sales totalled SEK 545 million (653 m) · Loss before tax of SEK -81 million (5 m) · EPS after standard tax of SEK -8.04 (0.34) · Stiff competition and clearance sale of products · Important reduction of the balance sheet Sales and results During the first six months of the year, DORO, the telecommunications company listed on the O-list of the Stockholm Stock Exchange, recorded sales of SEK 545 million (653 m), a drop of 16% over the same period last year. The total demand has been weak on all markets. The Group made a loss before tax of SEK -81 million (5 m). The US dollar strengthened during Q2 and affected margins negatively. Competition has been stiff due to both customers and competitors having substantial stocks. Large costs have decreased the results. The costs consisting of various clearance sales, depreciation of stock, disturbances in product supply and restructuring costs. The USD has also increased during the period and decreased the margins. The sales in Q2 was million 266 (306) and the pretax result was million -55 (-7). Stiff pricing competition and clearance sale of products Lacklustre trade conditions continued in Q2. Activities in Australia contracted at the end of last year, and similarly fell during Q1 2001 in the Nordic region and Q2 in the rest of Europe. Pricing competition has been stiff due to customers and competitors holding substantial stock. Comprehensive clearance sales of older ranges have been carried out and stock has been written-off to adapt it to the new market prices. During Q1, DORO was hit by major problems in its product supply. These problems decreased during Q2 and at the end of the period had returned to close to normal levels. The first half-year has been charged by the real costs and estimated future guarantee-costs. Exchanges and wireless broadband are also seeing flat demand, as many companies have reduced investments. Stronger dollar The dollar continued to strengthen from the start of 2001. A majority of DORO's products are bought in US dollars and sold in other currencies. The purchase price usually drops for each different product. The price reduction level has usually absorbed the higher USD exchange rate. The rising US dollar rate has only been marginally compensated for in higher sales prices. DORO's board decided to change its currency policy in April and a further amendment has been decided today. To reduce the risk level, 75% (previously 50 %) of the US dollar flow will also be hedged for the coming six months' sales. The new regulations have been steadily phased in during Q2. Important reduction of the balance sheet The Group's balance sheet total has fallen by SEK 179 million to SEK 545 million since the start of the financial year. Investments totalled SEK 4-million (3 m). Goodwill stood at SEK 65 million (91 m). The Group's net debt (interest-bearing liabilities less cash) has risen by SEK 48 million to SEK 248 million since the start of the year. The debt/equity ratio has gone up from 1.51 to 2.91. Stock has fallen due to considerably lower purchase volumes and comprehensive clearance sales of old models. The cash flow from current operation was positive in Q2. Restructuring scheme During the year an efficiency scheme will continue at all the companies in the Group. This will include completing a rationalisation scheme whereby the number of products in the Group will be reduced by 30%. Further cost-cutting measures will be implemented in all areas of the Group and the headcount will continued to fall, and further cuts are due. A comprehensive scheme is underway to reduce stock levels. Gunnar Åkerblom new CEO Gunnar Åkerblom started as CEO on 7 May. He has an M.E and was previously CEO at Heidelberg Nordic, a German group in the graphic media industry. He was voted onto DORO's board on 14th March. DOROs strategy A process for reviewing the strategy for DORO has started and has high priority by the new management. The reason is that the turbulent telekom-sector is specially requesting that your long-term works with the correct customer - and product segment. The ambition is to present the strategy in Q3. New issue The work to restore DORO's financial position following is progressing via capital rationalisation and profit improving measures. The AGM authorized the board to carry out a new share issue, of SEK 75 - 100 million, to enable the company's future growth. DORO's Board expects to revert in the question after the above described strategy process. Sales per region and product line Healthy sales were recorded in France, Finland and Poland. Sales of cordless telephones and terminal products have been down due to disruptions in product supply and weak demand. DORO is mainly active in the following product sectors: cordless telephones, terminal products, switchboards, and wireless broadband products. The largest proportion of sales is in cordless telephones (50% of sales), followed by terminal products (30%). The proportion for company switchboards and wireless broadband products is 10% each. European restructuring The stiff competition in Europe coupled with the positional change of GSM manufacturers, means that many firms are re-thinking their future strategies. Different telekom-operators are changing their purchase patterns and moving away from in-house development of terminal products. DORO is taking part in several structure discussions. Parent company The parent company's net sales totalled SEK 11 million (14 m) during the first six months. The loss before tax was SEK -22 million (28 m). Future reports The Board has decided on the following dates for the coming year's quarterly reports: 17 October 2001 and 23 January 2002. The AGM will be held on 5 March 2002. Quarterly reports can be found on DORO's website at: www.DORO.com. This interim report has been drawn up according to the same accounting principles as the last Annual Report and has not been subject to examination by DORO's auditors. For further information, please contact: Gunnar Åkerblom, CEO, + 46 (0)46 - 280 50 61 or Ingvar Karlsson, Deputy CEO, +46 (0)46-280 50 62 Lund, Sweden, 16 July 2001 The Board of Directors, DORO AB ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.bit.se/bitonline/2001/07/16/20010716BIT00530/bit0002.doc http://www.bit.se/bitonline/2001/07/16/20010716BIT00530/bit0002.pdf