Welcome to a review of Kitron's first quarter of 2021. I'm Peter Nilsson, CEO of Kitron, and with me today, as usual, is CFO Cathrin Nylander. I'd like to remind you that we will conclude with a Q&A session, and I encourage you to post questions during the presentation. Now let's take a look at an overview of the first quarter. Next slide, please. Slide two. Some of the highlights of the quarter. Revenue in the quarter was at a record high, reaching over NOK 1.4 billion, with a growth of over 50% compared to previous years. Order levels are very strong. Demand, measured as rolling twelve forward-looking, grew to NOK 6.6 billion from NOK 3.3 billion the year before.
EBIT, however, was under pressure from rapid cost increases, as well as an uneven incoming flow of raw material and spot buys of semiconductors. Margins were just over 1% lower than expected. Next slide, please. Slide three. Let's talk about market and operations. As I said, demand continues to be very high, reaching all-time high levels. The top 10 customers, R12 demand, is NOK 3 billion, with a growth rate of 50% year-over-year. Actually, when we look at the top 30 customers, which is NOK 5.2 billion, the growth rate there is also 50%. The highest growth is driven by demand for industrial communication, sensor technology, sustainable energy, heating, ventilation solutions for residential and professional markets.
New product introduction and ramp-ups on business won in 2020 through 2023 will generate over NOK 500 million in sales in the next 12 months. Next year, a few of these customers will even be on the top 10 list. These products are primarily within EV charging, advanced battery management systems, or sustainable energy heating and ventilation solutions. Availability of material is key to higher growth. This year has not become any easier compared to the last six months. Shortages continue on semiconductors and other critical parts, with demand surpassing capacity. COVID lockdown in China is affecting supply chains and transportation, and the war in Ukraine may have some longer term effects. As a solution, customers are encouraged to redesign products in line with material availability. The strong customer demand for 2022 and 2023, combined with the constraints in material availability, have increased inventories.
Delivery plans are now adjusted and in line with expected component availability. Inventory management will remain our key focus area for 2022. To ensure profitability, target profitability, price reviews are being implemented to adjust for increased prices on material, transportation, energy, and other inflation-driving factors. Next slide, please. Slide four, sorry. Revenues. I've spoken about the strong demand and a very positive outlook. Let's take a look at the first quarter revenues and where we've been able to deliver regarding supply chain constraints. We have a strong underlying growth within Connectivity as new customers have been ramped. 55% growth. This market sector is known for shorter life cycles of products and one or more new design releases per year, hence delivering a higher capability and higher availability from the supply chain.
All other sectors are stable and show little variance compared to 2021. This is not due to a lack of demand, but a lack of available material. Our indications are that approximately NOK 350 million, or 25%, of customer demand is unfulfilled. Now let's move on to the next slide, please, and that is, demand and order backlog, slide five. To give a more complete outlook over the next 12 months, we've decided to share with you not only our order backlog, containing all orders and the first four months of forecast, but also what we call the R12 demand, containing all planned demand with regards to component supply and customer requests for the next 12 months. As lead times are extended in the market, it's more relevant to look at the R12 to understand the trends for the immediate future.
As you can see, the R12 is NOK 6.6 billion with a like for like growth of 50%. Let's move on to Cathrin, thank you, with the next slide, please, which is slide number six.
Six. Thanks, Peter.
You're asking me to do too much.
Okay. Thank you, Peter. I will now present the results. Business entities. As we now have included BB, it was relevant to adapt the business entities.
Nordics include Kitron Norway and Sweden and Denmark from BB. CE includes Kitron Lithuania and Poland and Czech from BB. Rest of the world are Kitron China in Ningbo and BB in Suzhou, and Kitron U.S., including some smaller entities that we also have. In all, we ended up at NOK 87.1 million and a 5.5% margin. EBIT margin in the quarter is mainly affected by revenue delays and inefficiencies caused by component situation. Energy costs are also having a negative effect. Having said that, I have to comment that BB, our recent acquisition, has delivered revenue higher and profits slightly higher than planned. The EBIT margin, however, is slightly lower due to spot buy invoicing in the revenue.
BB in total grew 87% in revenue and increased EBIT margin with 1.7 percentage points from the same period last year. As for the Nordics, we see a growth of 35%, including BB, and an 8% growth for Kitron. Sweden has had growth and profitability according to our plans. Norway had a difficult material delivery situation and ended up with revenue and profitability slightly below last year's level due to less favorable mix, inefficiencies, and increased energy costs. For CE, we see a growth of 20%, including BB, and a 4% decline for Kitron. In Lithuania and Poland, we have very high degree of electronics and are therefore more vulnerable to material delays. Lithuania came in with revenue according to plan, and Poland slightly below. Profitability in CE is lower than last year.
This is a result of ramp-up of the organization to manage large new product introductions, as well as more unfavorable product mix, spot buy invoicing and higher energy cost effects in general. For the rest of the world, we see growth of 170%, including BB, and a 23% growth for Kitron. Profits are also up substantially from last year. U.S. delivers revenue in line with last year, but with considerably better profitability. China has improved both profitability and revenue. As for the employees, BB now has a little over 993 employees. Increase of employees over the last year, mainly due to strong revenue growth and ramp-ups, particularly in China. Kitron basically at last year's level, but up from year-end. FTEs are continuously adjusted according to our factory load.
That they vary over the quarters is quite normal. Slide seven, please. Cash flow and working capital. Firstly, the acquisition of BB was finalized very early in January. Net payment was NOK 878 million, partially financed by the share issue that we made in late December 2021 of NOK 340 million, and the remainder loans, of which NOK 500 million is a term loan in euro of five years. Operating cash flow is a - 107 million compared to a +78.8 million last year. The increased capital binding in the quarter is coming from both Kitron and BB. A decrease in factoring that negatively affects the operating cash flow in the quarter. For the operational cash flow, the challenges in material availability continues to affect.
A number of actions are continuously ongoing, such as balancing demand with material availabilities, customer prepayments, and consigned inventory. Actions to stabilize working capital should have positive effect in the operating cash flow going forward. At the bottom of the slide, our working capital ended at NOK 709 million, an increase of 63% from last year. BB stands for NOK 445 million of the increase in the quarter, if just, in total, but, they had came in with 320 in the opening balance. The buildup of working capital are due to delays in the material, but have now to a larger extent been compensated for by customer deposits and consigned material by our customers, and will continue to be so.
As mentioned, in addition to the inventory carrying in our books, out of our books, we carry a couple of hundred million that we cannot see here. We also have customer deposits for material. Slide eight, please. Ratios. The three main capital efficiency ratios, net working capital as a percentage of sales, return on operating capital, and cash conversion cycle, all continue to show decline compared to last year. However, we do see improvement from last quarter in both net working capital as a percentage of sales and CCC. BB as such have no material effect to these capital ratios. Net interest-bearing debt over EBITDA increased to 3.5 from 1.7 same quarter last year and 1.8 last quarter. The net debt ended at NOK 1.6 billion, up from NOK 570 million last quarter.
The development in the quarter is affected by the closing of the acquisition of BB and the negative operational cash flow. Equity as a percentage varies due to share capital issued in the last quarter and the increasing, and the acquisition of BB in this quarter increasing the balance sheet. The percentage as such, is also affected by the high working capital, that we currently carry. Net gearing follows the same logic. After that, I would like to say that covenants in Kitron are now based on loan to value and net interest bearing debt over EBITDA. Both are met, in the current situation. Finally, earnings per share declined compared to last year. But however, Kitron standalone, adjusted for any BB-related transactions, comparable to last year, is actually lower.
They've had a positive effect on the earnings per share in the quarter. Slide nine, please. Now back to you, Peter.
Thank you, Cathrin. So let's talk about the outlook and move on to the next page, please. The outlook. Slide 10. Well, again, reiterating total demand is very strong. Order backlog at a record level. However, in the short term, supply shortages are affecting our ability to turn demand into revenues. For 2022, we reiterate earlier outlook, and we expect revenues between NOK 5.2 billion and NOK 5.8 billion, including BB Electronics. The operating profit, EBIT, is expected to come in between NOK 330 million and NOK 430 million. Growth for 2022 is driven by Connectivity and Industry market sectors. Again, the constraints in material supply and the COVID lockdowns in China and the development of Russia's war in Ukraine bring uncertainty to the outlook. Let's look at some of the key takeaways. Next slide, please.
Slide 11. Growth for 2022 is propelled by the acquisition of BB Electronics. The order backlog and 2022 demand outlook for 2022 and 2023 support strong continued growth. In addition, new programs are being introduced that will sufficiently allow us to follow our strategic trajectory. This concludes the presentation portion, and we're ready to move on to the Q&A. Next slide, please. Slide 12. I've got to say, Cathrin, if you're with me, and I see that you are, obviously.
Mm-hmm
The crew, the teams, the sites have done a fantastic job this quarter. Some very difficult circumstances.
Mm-hmm
Balancing the constraints in the supply chain, uneven flow and, you know, you have one foot on the gas pedal and the other on the brake constantly, and chasing. A lot of very tired people out there.
Yes.
I just wanna give them a shout that I appreciate everything they do.
Yeah.
Yeah. It doesn't look like we have any questions today.
Mm-hmm.
I think we'll maybe have to bring it up in the later meetings then.
Let's see. Let's wait a while and see if something comes up, due to the delay. There is nothing currently. Nothing.
Okay. I think we'll wrap it up.
Okay
We'll get back to everyone as we go into one-on-ones over the next few days.
Very good.
Thanks, see you in the next quarterly review in the beginning of July.
Mm-hmm. Thank you.