Q3 report (1 Jan. - 30 Sep. 2002)

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Q3 report (1 Jan. - 30 Sep. 2002) · Sales totalled SEK 585 million (777 m) · Profit before tax of SEK 5 million in Q3 - first profit since Q1 2000 · Loss before tax of SEK 7 million (-115 m) for first nine months · EPS after tax SEK -0.67 (SEK -10.18) · Market share retained on lacklustre market · Continued restructuring and reduced costs · Conditions for a profit before tax judged to be good for the full year Sales and results DORO, listed on Stockholmbörsen's O-list, recorded sales of SEK 585 million (777 m) for the first nine months of 2002, a fall of 25% compared with the previous year. Adjusted for the disposed telephone exchange activities, sales fell by 19%. Margins have improved due to better quality giving lower guarantee costs, better stock control and launches of new products. Overheads have fallen thanks to lower personnel and administration costs. Reduced borrowing and reduced loans in foreign currency have cut financial costs. The Group's loss before tax was SEK 7 million (-115 m). Sales in Q3 amounted to SEK 193 million (232 m) and the profit before tax was SEK 5 million (-34 m). This is DORO's first recorded quarterly profit since Q1 2000. Market and range The sales trend has basically followed the general development in home electronics and telecom products. The lacklustre demand from 2001 continues. It is estimated that DORO has around the same market share as last year Demand for DORO's corded telephones continues to exceed expectations, which has underpinned the company's position on the market thanks to the extensive range for both consumers and smaller companies. Within the cordless analogue range a new pair of analogue phones (CT1) will be launched in the Nordic region and Poland in Q4. The new analogue program (CT0) launched in the autumn in France, the UK and Australia, has been well received in all three countries. The market for cordless broadband products continued to be weak during the first nine months of the year. Several different distribution agreements have been signed to further strengthen the product portfolio. Restructuring and reduced costs Restructuring is proceeding according to plan and the headcount has been reduced to 191 (266). DORO's costs have been cut by over 25% compared to the same period last year. DORO's strengthened quality assurance routines continue to have the desired effect and the quality of DORO's new products is now so high that reject levels are at a highly competitive level. The results are considerably lower quality costs, a much-improved image and greater customer satisfaction. Co-operation agreements have been signed with two major suppliers within the product supply sector concerning the development and manufacture of new telephony products. Improved forecasting and a greater synergy of the range in Europe are other measures being introduced to improve delivery precision and flexibility. When fully introduced these measures will also create more rational purchasing and logistics as well as reducing tied-up capital in stocks. The Nordic structure is being further co-ordinated through the creation of a joint Nordic management team that has responsibility for administration, logistics and stocks. Sales and marketing support is being retained in each respective country to ensure the best customer contacts and knowledge of local market conditions. Significant restructuring has been carried out within wireless broadband, focusing on fewer products and markets. Reducing staff and administrative costs has cut overheads. The Swedish business was moved to Lund during Q3. Balance sheet continues to decline The consolidated balance sheet total has declined by SEK 86 million to SEK 311 million (426 m) since the start of the financial year. Investments totalled SEK 5 million (7 m). Goodwill stood at SEK 31 million (57 m). The Group's net debt (interest bearing liabilities less cash) has declined to SEK 83 million (219 m). The net debt/equity ratio has improved to SEK 1.80 (4.65). Cash and unutilised credit lines amounted to SEK 60 million at the end of Q3. Stock has fallen by SEK 13 million to SEK 112 million (193 m) from already low levels. The cash flow from current activities was negative in Q3 at SEK -6 million (+22 m) and for the first nine months stood at SEK -49 million (- 17 m). DORO usually has a negative cash flow for the first nine months. Last year's comprehensive clearance sale of stock produced a better cash flow. This is the pivotal explanation for the worse cash flow compared to the same period last year. Outlook for the coming year DORO stands by the assessment made in its Annual Report that 2002 will show a positive trend in terms of the company's internal processes and produce significantly better results compared to last year. Considerably better product quality has reduced returned items and guarantee provisions. Demand in the telecom sector is expected to continue to be flat for the remainder of the year. DORO has hedged 50% of the expected forthcoming six-month's cash flow in US dollars. The current significantly lower exchange rate will have an impact on margins firstly at the end of Q4. In summary, conditions for a profit before tax are judged to be good for the full year. Parent company The parent company's net sales totalled SEK 28 million (16 m). The loss before tax was SEK 24 million (-46 m). Future reports The Board has decided on the following date for 2002's final quarterly report: 30 January 2003. The AGM will be held on 13 March 2003 The Board has decided on the following dates for 2003's quarterly reports: 25 April, 18 August, 21 October, and 30 January 2004. The quarterly reports will be available at DORO's website: www.DORO.com. This Financial Statement 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 46 280 50 61 or Ingvar Karlsson, Deputy CEO, +46 46 280 50 62 Lund, Sweden, 22 October 2002 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.waymaker.net/bitonline/2002/10/22/20021022BIT01240/wkr0001.doc The full report http://www.waymaker.net/bitonline/2002/10/22/20021022BIT01240/wkr0002.pdf The full report