Kontron : closes 2015 on a high note, Ennoconn deal validates strategic realignment

Augsburg, March 17, 2016 - Kontron AG, a leading global provider of Embedded Computing Technology (ECT), has reached its revised financial targets for fiscal year 2015. Its strategic partnership with Ennoconn Corporation, announced in early 2016, represents a transformational strategic milestone, validating Kontron's decision to become a leading provider of combined hardware/software solutions.

Results 2015

Kontron's revenues increased by 2.4% to € 467.7 million, at the top end of the company's revised guidance corridor of € 460 and 470 million. Moreover, a gross profit margin of 26.1%, 10bp above the 2014 figure, demonstrates that the 'New Kontron' program continues to deliver improving profitability even on moderate revenue growth. In the same manner EBIT, adjusted for restructuring cost, rose by two-thirds to € 14.5 million, representing an adjusted EBIT margin of 3.1%, and reported EBIT turned to a positive € 6.2 million (1.3% margin), from € -5.1 million during 2014.

The company's order intake dropped by 18.7% to € 391.8 million (prior year: € 481.7 million), leading to a book-to-bill ratio of 0.84. As a result, the order backlog also dropped, by 17%, to € 269.3 million (prior year: € 324.6 million). The magnitude of this drop is due mainly to a base effect: while during 2014, many multi-year orders were registered in full, this could not be repeated during the reporting year. The effect was particularly pronounced in the business unit Industrial, where orders dropped by 25% after an especially strong fiscal year 2014.

'There is no doubt that we had to contend with major challenges during the 2015 fiscal year. For the first time since I was appointed CEO, we had to make a downward adjustment to our annual guidance. However, the results posted for the fourth quarter, and especially the new strategic partnership with Ennoconn give us reason to be optimistic for 2016 and beyond', says Rolf Schwirz, Kontron's CEO. 'This partnership puts us in an excellent strategic position to exploit the opportunities associated with the rapid development of the Internet of Things.'

Cash flow from operating activities rose by € 12.5 million to € 14.2 million (2014: € 1.7 million). In addition to a € 4.5 million increase in net income for the year, this effect was driven in particular by a decrease of more than € 15 million in trade and other receivables, as well as lower tax payments (€ 2.9 million), which outweighed the reduction in liabilities and provisions (€ 11.2 million).

The partnership with Ennoconn - validating Kontron's strategic realignment

Through this partnership with Ennoconn, a subsidiary of Foxconn Technology Group (Taiwan), Kontron achieves a range of strategic and operational objectives: most importantly, it converts its strategic decision to become a leading provider of hardware/software solutions into reality. It also re-establishes a strong and permanent foothold in the APAC marketplace. Likewise, it intensifies cooperation with a company which can help lower its cost base, thus giving especially its Communications business a new lease of life. Moreover, it regains access to production capacity in Asia which will boost its channel business in particular. And finally, the cash injection enhances financial flexibility.

Outlook 2016

Sales are expected between € 460 and 480 million and a gross margin of above 25%. The adjusted EBIT margin after eliminating one-off costs, which will be incurred primarily but not exclusively with regard to the partnership with Ennoconn, is expected within a corridor of 3-5%.

Key figures for fiscal year 2015

		FY 2015	FY 2014	Δ
Order intake	€ million	391.8	481.7	- 18.7%
Order backlog	€ million	269.3	324.6
Revenues	€ million	467.7	456.8	2.4%
book-to-bill ratio		0.84	1.05	- 0.21ppt
Gross margin	%	26.1	26.0	0.1ppt
EBIT adjusted for restructuring cost	€ million	14.5	8.8	64.8%
EBIT (reported)	€ million	6.2	- 5.1	11.3
Cashflow from operations	€ million	14.2	1.7	735%

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About Kontron

Kontron, a global leader in embedded computing technology and trusted advisor in IoT, provides a complete and integrated portfolio of hardware, software and services. Kontron creates many of the standards that drive the world's embedded computing platforms, bringing to life numerous technologies and applications. The result is an accelerated time-to-market, reduced total-cost-of-ownership, product longevity and the best possible overall application with leading-edge, highest reliability embedded technology.

Kontron is a listed company. Its shares are traded in the Prime Standard segment of the Frankfurt Stock Exchange and on other exchanges under the symbol 'KBC'.

For further information:

Chari Lazaridis
Head of Global Corporate Communications
Kontron AG
Tel: [phone]
[e-mail]

Alexandra Habekost
Head of Investor Relations
Kontron AG
Tel: [phone]
[e-mail]

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