Good afternoon, ladies and gentlemen, and welcome to Kitron's first half and second quarter results 2015. I'm Peter Nilsson, CEO of the group, and with me today is Cathrin Nylander, our CFO. I'm happy to announce that our profitability continues to improve. We've had our fifth consecutive quarter with improved profitability. We've also significantly improved our cash flow this quarter, and our backlog remains stable. We still have work to do on our working capital. We continue to have a high inventory level even though we see a decrease from it in the past quarter. This is primarily driven by the shift from the Offshore/ Marine sector to more Defence/ Aerospace-related products that have a longer cycle time.
As well as we introduce new business and grow, we have a timing issue between ramp up and getting product out the door. Now, our overall growth, so far this year, excluding the Offshore/ Marine sector, is more than 18%. We have introduced a lot of new product. Our EBITDA for the quarter, our revenue for the quarter is close to NOK 490 million. Nylander came in at NOK 489 million. Our EBIT is NOK 22.1 million with an EBIT margin of 4.6%. Backlog's stable at about close to NOK 830 million. Our cash flow favorable in the quarter with NOK 48.6 million. As you can see, our net working capital overall is up slightly.
Looking back then at the first half of the year, our revenue comes in at close to NOK 860 million. That's a growth of 7.5% overall. As I said, if you exclude the Offshore/ Marine sector where we've had a significant decline over the past year and a half, we have an overall growth on the, in the other sectors with more than 18%. EBIT levels significantly improved in line with our targets coming in at 42.8%, just over 4.5% year to date. Of course, the operating cash flow year to date, NOK 83.6 million, whilst backlog and working capital remain the same. Looking then into what has happened in the past quarter, what important announcements have we had?
Well, we've continued to grow in our Aerospace/Defence sector. Our facility, our Norwegian company closed the deal with Kongsberg Defence & Aerospace for communications equipment deliveries to Hungary. Contract for that was about NOK 32 million, starting this year and going into next year with production in Norway. We announced yet another customer in the jet fighter sector of the aerospace with Saab AB, the Avionics division, for deliveries over more than a 20-year period with a significant order value. This also includes manufacturing and supply for the civilian side of products into the civilian aerospace sector. Production for the Saab products will take place at our facility in Jönköping in Sweden.
We continue to have as we reached in the first quarter, for about 53% of our employees are in low-cost regions. That remains stable now. We continue to operate at a level of just over 23% payroll versus revenue, coming down from the 29% level we were at in the beginning of last year. Now we're looking to maintain that level at or reduce it even further as we go forward. Our sales per employee is significantly up at NOK 420,000 per employee versus the NOK 369,000 we had in the beginning of last year. The expansion of our Kaunas facility in Lithuania is complete.
The facility was officially opened with close to 100 guests and at the end of May this year, guests consisting of primarily customers. The operation is not only manufacturing but also significant service sale, service sales, primarily from test development and engineering. New prototype lines are being put in place. Project management resources are being added. Overall, the expansion's over 5,000 square meters, and the investment was EUR 7 million in the Kaunas facility.
Okay. Thanks, Peter. I'll talk a bit about the financial statements for the first half year and second quarter. What we're seeing now is that Defence/ Aerospace and Industry growth offsets the decline in the Offshore/ Marine. The end of the quarter ended at NOK 489 million compared to NOK 457 million last year. It is a growth of 7% or NOK 32 million. The underlying growth for the total Kitron is adjusted for translation differences is NOK 1.9 million. Peter mentioned that the growth this year adjusted for the downturn in the Offshore/ Marine, cumulative is 18%. That same figure for the first quarter is slightly above 16% for the other segments. If we look on the segment growth then, Offshore/ Marine has a decline of 45%.
Medical, a slight decline of 4.6%. Defence/ Aerospace, a growth of 55.6%. Energy/Telecoms, a growth of 3.8%, Industry a growth of 12.3%. We now see that the Offshore/Marine is getting smaller and smaller of the total share. It's now only at 7.7%. The Medical is at 21.5%. Defence/Aerospace at almost 30% now, Energy/ Telecoms at 40.7%, Industry finally at 27.1% for the quarter. Looking into the revenue for the first half year, looking back from 2013, 2014, and 2015, we can see a stable growth. We have a growth between 2013 and 2014 for the half year, about 10.4%, from 2014 to 2015 of 7.5%.
Adjusted, the growth from 2014 to 2015 for the other segments, apart from Offshore/Marine, is over 18%. The development for the first half year is very much in height to development for the second quarter. Offshore/Marine is down almost 45%. Medical equipment has a slight downturn of 6%. Defence/Aerospace is up 52.4%. Energy/Telecoms at 6.1%, and Industry at 20.7%. If we now look at the revenue by country for the quarter, we see now that Norway has a slight decline of 4.2%. They're going from NOK 225 to NOK 216. Sweden is up 8.6% from NOK 112 to NOK 122.
Lithuania up 5%, or 5.2%, from NOK 13-NOK 90, NOK 113-NOK 119. The others, up 75.3% from 59%-104%. We now see again that the Norwegian share is getting slightly smaller and the other ones are coming close, around 20% each. The revenue growth for the first half year in total then, accumulative, Norway is on a slight reduction, 1% from last year, from NOK 452-NOK 447. Sweden is on the same level as last year now, from NOK 219-NOK 220 because of the last, or the good second quarter.
Lithuania has a growth of 11.3%, 230, 206 to 230, 208 to 231, and the others are at almost 90% growth for the half year, 100-190. As Peter said, we ended up at a good NOK 22.1 million, or a profit margin of 4.5%, and we are very happy to say that we have a fifth consecutive quarter of improved profitability, both in nominal value as well as in EBIT margin. We managed to increase from 4.4% last quarter to 4.5% this quarter.
The reason for the improvement is of course we have a strong contribution from services this quarter, but, the personnel expense reductions made during last year and the work that we have made to reduce cost has given result as well as the improved revenues and all the fact that all sites now also are profitable. We're happy to say that.
Okay.
Looking at the EBIT by country, for the Q2, has a very, or similar development as Q1. We see a strong improvement in Norway going from NOK 7.5 million loss last year for the quarter to a NOK 7.3 million profit this year. That are the cost reductions made last year as well as the revenue is on the same level. The revenue margin is going from 3.3% to 3.4% positive.
I think also.
Mm.
Contributing here is the significant increase in the service sales.
Yeah.
For our Norwegian operations.
Sweden show a significantly improved margins from last year and improvement in the south from 2.7%, or NOK 2.7 million to NOK 7.5 million, then improved margins from 2.4% to 6.1%. Lithuania, on the other hand, has a slight reduction in the profitability from 7.5% to 5.6% and reduction from 8.5% to 6.5%. This is due to partly the investments that we have made in Lithuania and that they have quite a high pressure on the margins in the industry they are working in, and they are ramping up customers as well.
For the other ones, China and U.S., they continue to contribute positively and improve from NOK 2.3 million to NOK 8.6 and improve the margins from 3.9% to 8.2% for the quarter. We see a similar development then for the first half. The first quarter and the second quarter has kind of similar development. The Norway then improving from a loss of NOK 8.2 last year to a fantastic NOK 19.3 so far this year. Sweden coming from NOK 5.8 to NOK 10.9 now. Lithuania has the same development for both quarters, a slight reduction from NOK 14.2 to NOK 11.7. U.S. and China are improving from NOK 0.8 to NOK 14.5, you can see the profit margins down there. Good results.
What we're also satisfied to talk about is the cash flow improvement so far. The improved profitability, of course, affects our cash flow, and we actually can now show a third quarter of a consecutive quarter of improvement. The cash flow for the quarter is NOK 48.6 compared to then NOK nine and a half last year. Compared to last year, it's of course the improved profitability, but also that we had a deteriorating working capital during the quarter last year, part of the development now. If we look on the total working capital, you can see that for the month or for the quarter of Q2, it's down to NOK 559 from NOK 563 last quarter and NOK 568 for the Q4.
We're still at a too high level, but we can see a positive downwards trend. Our cash conversion cycle is at 106, which is at the same level as the last quarter. The most part of the increase from last year is actually the due to the inventory which Peter mentioned previously that the higher share of the Defence sector compared to the reduction in the oil and gas, Offshore/Marine sectors, drives inventory for us.
You're phasing out and you're phasing in, so you have a sort of time gap of getting things in balance.
Mm-hmm.
I'm confident that the programs we have in place now are gonna yield results, into the second half of the year.
Mm-hmm. I'll leave over to you, Peter.
Thanks. What do we think about the market? When we look at our order backlog, it was at NOK 855 million at the end of the last quarter. This quarter, it's NOK 830 million. We think that's stable. When we break it down and look at what's happening inside the order backlog, we see double-digit growth on the Energy/Telecoms and Medical. I think Medical is in the teens, the growth. On the Energy/Telecoms is close to 25% growth. Our Defence/Aerospace, which started to grow last year, is stable on last year's level. Of course, the Offshore/Marine we've spoken about so many times now, continues that development, that's on.
Overall, in general, I think we should expect here to see the Offshore/Marine somewhere in the 5% range of sales for us as we move forward. We have a stable development on Medical. We've had a slight decline in the beginning, the first half of this year. It may continue into Q3. It really varies week to week, a very dynamic market on the Medical products. One of the reasons is that some of our customers are in generational shifts. They're phasing in and phasing out an old generation, phasing in a new one. When we look into next year for those products, I think we're looking at a pretty decent level that we're happy with. The Defence/Aerospace continues to grow.
We've already had some really nice successes with contracts for our Norwegian facility and now latest with our Swedish operations for Saab Avionics. We're looking to close deals into next quarter for new markets, for new Defence/Aerospace customers. We have a positive outlook on that market market sector. Our Energy/Telecoms continue to grow as more energy metering products and RF controlled, radio controlled type products for that marketplace are put into the market. We have looking very favorable on that development. Industry, as we said, it looks kind of flat in this past quarter. We've had some sign, especially when you look at the order backlog.
When we look at the forecasted production levels for the rest of this year, we see continued growth on the Industry sector. Overall, you know, we've delivered now three nice quarters of good profitability, starting with a fourth quarter at, we came in about 3% operating margin. Even though we took a significant cost for our restructuring in Norway in that result. We came in at 4.5% margin or just over NOK 20 million in our first quarter, and now with NOK 22 million and 4.6% in our second. We're looking to continue this trend for the rest of this year. That'll give us, as we say, a growth and clear improvement in profitability.
The growth is primarily driven by the defense sector for the U.S. and the Norwegian markets, even though now we're coming in also with the customers in Sweden and in other countries coming along into Q3 and Q4. I've already touched upon the Energy and Telecoms development. It bears to be repeated, right? The Offshore/Marine segment is shrinking with us, but it's nice that we can replace it, and we're pretty confident on what we're doing here. We don't have a whole lot of costs connected to disengaging from some of these programs. I think that's it.
We're happy with the results we've had so far this year, and we have a decent outlook or a nice outlook to reaching our targets and our plans for the rest of the year. Thank you very much.