Welcome to this webcast presentation and the Presentation of the Third Quarter Results for Kitron ASA. My name is Dag Songedal. I'm the interim CEO in the Kitron Group, and I will do the presentation together with the CFO, Cathrin Nylander. First, we go to the financial highlights for the third quarter, and it was a challenging quarter, and we had a slight decrease in the revenue and also a decrease in the EBIT figures. The main reason for this was postponement of deliveries to several customers of different reasons. This did also lead to a buildup in the inventory, which had the impact of a negative cash flow in the quarter. However, we also experienced a strengthened order backlog, and the order intake was good, which again, indicate growth in the months to come.
If you look at the operational highlights for the quarter, we have decided that we will do a major investment in Lithuania. We will expand the factory significantly. We do have a good factory in Lithuania today, but by this investment, we will invest in an additional 5,000 square meters of the factory. We will have the possibility to take on new customers and have growth in the years to come. We also secured a major industrial contract in the third quarter. The value of this contract is about NOK 150 million over a 3-year period, and the manufacturing for this customer will take place in both
Arendal and in Kaunas. As I said, we had a strong order intake, and this was mainly within the Offshore/Marine and industry segment.
The order backlog improved by more than NOK 100 million in the period. We go to the financials, and that will be presented by Cathrin Nylander.
Thank you. I'll present the financial statement for the quarter three 2013. The revenue was NOK 347 million for the quarter, which is a reduction of 5.2% compared to last year, which was NOK 366 million. The third quarter is seasonally lower than the second, first, and the fourth quarter normally. As said, we have had a production postponements in several segments for the quarter, which affects the revenues. We also had a challenging product mix. We don't foresee that these postponements will go have any abnormal effects for the production. They will go into the fourth quarter. We also had a lower demand in several segments. When we come to the segment information by market, we have a decline in the Offshore/Marine, the Medical, and Defense/Aerospace segments.
We are about the same level for the Energy/T elecoms, and we have an increase in the industrial segment. For the Offshore/ Marine, we've had a growth for the last few years, and we see now there is a short break in this segment. We foresee that the future prospects are positive, but we have a short decline for this segment in this quarter. It is going down by 16.5% compared to last year. For the Medical equipments, we have a reduction of 11% compared to last year. There is a market growth, but we've had a reduced scope from several of our customers in this segment for this quarter. For the Defense/A erospace, we have a reduction of 11.3%.
We are affected by the US market and its uncertainty there for our customers in the Scandinavian markets. This uncertainty will prevail for a while, we think. For the Energy/T elecoms, there is a modest growth, but we are shrinking within the metering business, so about the same level. The industry is very positive. We have new customers ramping up, and our key customers indicate also a modest growth. Now, we look on the revenue by country. When we look at our by far the largest market, which is Norway, which stands for 46% of the total revenue, they have a decline for the month for about 9.9%. Sweden is also declining with about 20% compared to last year, whereas Lithuania has a growth of 30%.
For Norway and Sweden, they are affected by the decline in the, primarily the defense and the Offshore/Marine segments, whereas Lithuania, who is strong in the industry, is growing. If we look on the EBIT. The EBIT for the quarter is NOK 7.6 million, which is a reduction about 50% compared to last year, where it was 15.4%. It is primarily a result of the reduction in revenue compared to last quarter, as our margins are about the same and our cost levels also are the same. We are working on several improvement programs, which we have been informing about previously. The work continues. We see some effects will be starting in 2013, but many of them will continue into 2014. Those effects we have, they are more or less offset by the volume effects.
We have an EBIT margin right now of 2.2% compared to 4.2% last year. When we look now on the EBIT by country, it's very much a result of the revenue decline for the different countries. Norway show decline from 8.1% to 5.5% and going from a growth EBIT margin from 4% until 3% for the quarter. It is volume, primarily. Same for Sweden, reduction 0.5 from 3% to 2.3%. And a reduction in the margin for 4.7% to 2.5%. It's also volume in both of them, as we said earlier, was Marine and Defense segments. Lithuania, increasing profitability, and due to the increased volume within the industrial segment, so we're going from 3.1 to 4.4 million NOK.
As to the new entities, we see a positive development in China. They are showing black figures, and they're about the same level as last year. In the U.S., however, it is production postponements and due to technical issues which are forcing the results to go down for the quarter. We are seeing a positive development for the fourth quarter, however, here. Now to the balance sheet. The facts, as was said earlier here, we have a negative cash flow for the quarter. It's more negative than the last quarter. It's at NOK -33.5 million for the quarter and a reduction of 117.9% compared to last year. This primarily inventory buildup due to the fact that we have postponed orders where we have actually purchased and have inventories in production.
When it comes to the target that we have previously announced of NOK 50 million, that is upheld, we see that some of the effects will be moving into 2014. One of the reason is that we have altered the implementation plan for the distribution center that we are implementing, the primary reason for the change in the plan is to reduce risk. It will continue as planned. The net working capital is reduced by 2% compared to last year and an increase for the month from NOK 496 to NOK 498. Now go to Dag again.
We will go into the market, the development, and also touch upon the outlook for the months to come. If you look at the order backlog, we see a mixed picture between the different market segments. The order backlog was strengthened significantly during the quarter, and the main segment that was strengthening was defense aerospace and industry. For the other segments, we had a slightly reduced order backlog. Overall, we see still an uncertainty in the market, and that is both in Europe and also in the U.S. We see some volatility in the customer forecasts, and we also see that some customers reducing the order horizon by and also by lowering their inventories. However, the strengthening order backlog indicate that we expect growth in the months to come.
If you look at the different market segments, Offshore/ Marine, we had a slight decrease this quarter, but still we expect a stable demand in the months to come. Also we have a positive look at the long-term prospects for this segment. Medical equipment, we've had a quite flat development this year in the medical segment. In the long term, we still have expectations for growth in the medical segments. defense aerospace, we had a strong order intake in the third quarter, and we have secured several larger project over the last year. Some of those are in the manufacturing at the moment. Some will come into manufacturing, and we have a promising long-term outlook.
However, there are still significant uncertainty both in the Swedish defense market and also in the U.S. market. Especially the U.S. market might influence mainly in the operation we have in the U.S. Energy/T elecoms, we expect a modest growth, mainly from existing customers. Industry is the segment that has shown the largest growth over the last two quarters, and we still expect this segment to grow. The main reasons are both growth from some existing larger customers and also the fact that several of the new customers we have taken in over the last year is within the industry segment. Several of those customers are in a ramp-up phase, which will have effect in the next quarters.
If we go to the outlook, we maintain the revenue outlook we had in the last quarterly presentation. That means that for the second half of 2013, we expect the same revenue level as we had in the second half of 2012. We also expect growth going into 2014 compared with the same months in 2013. This is based on the forecast from customers and also the strong order backlog at the end of the third quarter. As has been mentioned, we have significant focus internally on programs to increase profitability and cash flow. We also expect that these programs will have effect on the results when we are going into 2014. That was what we intended to present. I'm not sure if there are any questions.
There is. I'll do my best to translate. There has been talk of a big defense contract in Germany. What happens with that?
I can't comment on specific maybe future contracts. We have been open with the fact that we are having strong plans for the German market, and we have attracted several customers in Germany. We are also working towards defense-related customers. Of course, we will announce when any big contracts are signed.
Is there any reason to continue expanding the factory when the market is weak and Kitron is barely making money? Kitron has restructured since 2010 and continued the stock market price is on ATL. Result margin is too low. This should be over 7%? Why is this not happened?
The expansion in Lithuania, the reason for that is that we have had growth in Lithuania in 2013 compared with 2012, even though we don't have growth in Kitron overall. We believe we will have growth in Lithuania in the years to come, and in order to be able to take on that growth, we need the expansion. So we believe that this will secure future revenue for Kitron and also, of course, increase profitability. Related to the EBIT level, I don't think we want to comment any specific targets related to that
Last question. What does the management think about the stock market price?
You know, it is the market that decides the stock market price. I guess we have a strong belief in Kitron and that Kitron will have a good future. I guess everyone kind of agrees that the stock price at the moment is low b ut I guess that is up to the market to decide what the level should be. Okay, thank you for joining the webcast. Thank you.