Welcome to Kitron's first quarter 2017 results and webcast. My name is Peter Nilsson, I'm the CEO. With me today, Cathrin Nylander, as usual, our CFO. The first quarter of 2017 shows some very strong growth, particularly in the industrial sector. Our underlying growth was over 23%, with a top line revenue coming in at just over NOK 585 million. The profitability improved compared to last year. We were at 4.1% EBIT margin last year. We made close to NOK 31 million profit in the first quarter, equal to 5.3% EBIT margin. We see a continued strong growth in our order backlog when we look to the future, close to 20% growth in our order backlog.
Our net working capital remains stable, slight growth on working capital, but less so than revenue. We're pretty happy with the way that's developing. Cash flow, we see a seasonality in our cash flow, slightly negative on cash flow. Our financial gearing continues to be low at 1.3x, an improvement over 1.6x from last year. In the first quarter, we signed two major agreements or received two major orders. One was from Kongsberg Communications, Defense Communications, military communications equipment. The value is NOK 120 million, firm order for that, and it's being followed on also by additional orders, where we'll supply communications equipment, material kits, a lot of technical services and test equipment and test development in that project.
The delivery start during this year, they continue until 2020. The services will be provided out of our site in Arendal, Norway. We also signed a contract with Rheinmetall Military Vehicles. The potential value of this contract is NOK 250 million over a five-year period. Again, it's for manufacturing of electronics, measuring instruments and other control devices. Our production will take place at our manufacturing site in Kaunas, Lithuania.
Yep. Over to the financial statements of Q1 2017. Also this quarter, we see strong growth in several sectors. We ended at NOK 585 million, up NOK 88 million from NOK 497 million last year. It's a growth of 17.7%. Adjusting for about 5% of translation differences, the underlying growth is 23.1%. If we consider also the effect of the downturn in the oil and gas, we actually have a growth of 25% underlying in the quarter. Offshore marine now, it's down from last year, 50%, approximately down from NOK 13 million to NOK 6.5 million this year. Medical devices also show a reduction in the quarter with 11.4%. It's actually declined where a product is coming end-of-life.
We have to say that we're also producing the new generation and going forward. Defence/Aerospace, strong growth, 46.2% in the quarter, ending at about NOK 162 million. Very strong. I have to say, though, that Defence/Aerospace in the first quarter last year was not as strong as the other quarters. Energy/Telecoms, also here, double-digit growth of 23.3%, ending at about NOK 82 million. Finally, industry, a 21.1% growth, up NOK 40 million from last year, ending at NOK 230 million. A very strong growth in the quarter. When we look on the revenue by country, we see Norway, about same level as last year, which we expected.
Sweden continue to have a good growth, growing 24.8% compared to last year. Very good considering the fact that they've also made part of the move in this quarter. Very strong. Lithuania is up at 22.6% also this quarter. Strong growth and ending in now at NOK 213 and decidedly the strongest site we have now revenue-wise. The others, also they're a good growth, 16.2%, ending at NOK 89 million. We now see that Lithuania is about 33% of the total revenue in the group, and Sweden and Norway, approximately the same size. Profitability stabilized at a higher level. We now show a profit of NOK 30.8 million in the first quarter and an EBIT margin of 5.3%.
We have not had such a strong first quarter in EBIT for the last ten years. We see now that we have a strong stable level on the profitability at around NOK 30 million and above, and also a margin of above 5%. That in mind, we have to comment that we have made a move this quarter, which we did also Q1 last year. Q1 last year and this year, and also Q4 in 2017 have been affected by the cost of the move. In spite of this, we managed this kind of profitability, which we are quite happy about. Comment that we have this one-off in last year in Q1 of NOK 5 million. Lithuania and Norway drives profitability in the quarter.
As you can see, Norway had Cost reductions finalized. We also see that last year, we had trouble with the move, and now they're showing a NOK 8.1 million profit and 4.4%, whereas they were barely making a profit last year in the first quarter. Sweden, in spite of the strong growth, you see a reduction in the profitability in Q1 compared to last year, which is due to the inefficiencies that we have.
Primarily January-
Yeah
And February. We saw a remarkable comeback in March.
Yes
With an ability to reach, the target level on profitability, which gives us confidence going forward.
Absolutely. Very good comment. Lithuania continue to be very strong. NOK 20 million profit in the quarter and 9.3% profit margin, up from last year actually again. Strong performance there. We also see a good performance from the other side, U.S. and China, which is actually at NOK 7.2 million as a profit this year and 8.1% profit margin. In all, I think we have a very good progress. Sweden is struggling a bit for the first few months, but we're seeing a recovery now. Cash flow, we are growing, and that can be seen in the cash flow. Although it's better than last year, at the same time, we have a negative cash flow of NOK 15 million compared to NOK 25.3 million last year.
To comment that, we'd like to comment on the working capital. It's up 6% from last year in NOK, but our capital efficiency is higher, and our net working capital in percentage of revenue on a 3 months rolling average is actually down from 24% last year to 22% this year. The cash conversion cycle is down to 80 days compared to 91 in the same quarter last year. Return on operating capital is at 16.2%, improved from 11.5% last year.
Looking at the market development and what we think about the future. Go ahead with the next slide, please. The order backlog, as we mentioned, has an underlying growth of close to 20%. Strong in the order backlog is the Defence sector. A lot of Defence contracts are coming in now into both Sweden and Norwegian facilities. The Medical sector, there's some seasonality when we look at actual output in Q1, but we also see the further reduction as we look forward, based on the old generation going out and a new generation coming in on a specific medical product that brings down the top line a little bit. The Industry sector with the shortest lead times, we're also happy to see that growth in the order backlog.
Usually, you don't see the type of growth that you want to with industry because of very short lead times. NOK 295 million in the order backlog for industry. Very strong growth on Energy/Telecoms, driven primarily, I'd say half of it from the energy sector and the other half from telecom. Low order backlog in offshore industry. Now we're seeing some tendencies that it's stabilizing and perhaps turning around. I think it's too soon today to really determine that it is. As we take a look into the future, the full year, now the strength we had in the first quarter, we see that strength continuing on into the second quarter. Feel pretty secure about the second quarter.
And for the full year, uh, we continue to maintain our outlook of between 2150 and 2350 on the top line. And we expect our EBIT margin to, to continue to improve with the, uh, with the problems or challenges we've had in Sweden during the first two months of this year, uh, coming to a resolution and, and ending up, uh, somewhere between 5.6% And 6.4% , uh, EBIT margin, a little bit depending on, on product mix and, uh, the, uh, the top line. The growth, uh, is primarily driven by the customers in the industry sector. Even if, even if you're in the order backlog, see strong growth on defense, aerospace and, uh, and, and, uh, the energy telecoms.
The growth of 20%-22%-25% in the industry sector is so much more in actual NOK growth that that's the driver of our overall growth for the company. Our cost reduction activities continue. Our improved efficiency continues in all sites, and that drives our profitability increase for 2017. With that, I think we've covered everything. I think we're happy with the quarter, and we look forward to a continued strong second quarter also for Kitron. Thanks for listening.