Doro reports third quarter results 2019

Press release
Malmö, 25 October 2019

Doro reports third quarter results 2019

Strategic acquisition strengthens Doro's offering in technology enabled care

July - September 2019

• Net sales were SEK 521.4 million (508.5), an increase of 2.5 percent.
• Net sales for the category Services were SEK 95.9 million (82.1), an increase of 16.8 percent. Net sales for the category Products were SEK 425.5 million (426.4), a decrease of 0.2 percent.
• Gross margin decreased to 31.1 percent (31.5). For Services, the gross margin decreased to 42.4 percent (47.3) and for Products the gross margin increased to 28.6 percent (28.4).
• Operating profit (EBIT) amounted to SEK 36.5 million, excluding acquisition costs of SEK 2.7 million, corresponding to an operating margin of 7.0 percent. Including acquisition costs, EBIT amounted to SEK 33.8 million (33.3), with an operating margin of 6.5 percent (6.5).
• Profit after tax for the period was SEK 23.0 million (26.5).
• Profit per share was SEK 0.97 (1.12).
• Free cash flow before acquisitions was SEK 40.8 million (31.4).

Message from the CEO
The transformation to a services based technology enabled care company continues at a fast pace. With Doro's strategic acquisition of Centra Pulse and Connect in September, the services business now accounts for 20 percent of Doro's sales on a full-year basis. Doro is now the market leader in telecare in three markets: Sweden, Norway and Europe's largest market the United Kingdom. This is in line with our strategy and our objective that the services business should account for at least 30 percent of sales.

In the Services category, Norway continues to develop strongly and now accounts for a large part of the group's organic growth. However, the strong growth has driven increased costs to cope with implementation and alarm receiving for the new connections, which decreased the margin. In other markets, we have not achieved the growth we wanted but we have seen a positive trend in Sweden where we won a number of new contracts during the quarter. Strengthening our services offering and our market position remains a priority. We have therefore appointed a new manager for Sweden with extensive experience from sales and marketing in health and social care.

In the Products category, sales are in line with the third quarter last year. In order to best meet the needs and wishes of seniors, in September we launched five new mobile phones: a new flagship smartphone, Doro 8080, and four new feature phones. Seniors value both design and performance that take into account their needs and nobody, regardless of age, should have to limit their lives because of technology. We have received positive feedback from our customers, both retailers and operators, on our new products and sales have so far been successful. As we have mentioned previously, sales in Products are burdened by the UK's certificate problems, which significantly affected developments in the UK market during the quarter. The problems are now resolved, but unfortunately we see that they will still slow down sales into part of the fourth quarter. Apart from the United Kingdom, during the period we increased our market share in senior mobile phones in all major markets.

During the quarter, a new brand platform has been launched that better reflects the Doro of today. We are now building a strong organisation and culture that reinforces innovative thinking and commitment to making life better for our elderly. I look forward to our continued journey together to make Doro A appreciated company and brand that generates value at all stages.

Outlook
We reiterate our previously communicated outlook.

The overall market for mobile phones is expected to remain challenging. Doro has maintained and is expected to maintain or increase its market share in the senior segment.
Services is growing organically and we are active in multiple acquisition discussions and we expect continued double-digit growth for Services in 2019.

The profitability is expected to remain at a healthy level.

Doro’s report is presented via an audiocast
President and CEO Carl-Johan Zetterberg Boudrie and acting CFO Ronnie Ekman will comment on the report and take questions. The conference call will begin at 09.00am CEST.

To participate in the conference call, and be able to ask questions verbally, please call one of the following numbers:
Sweden:                               +46 8 566 426 51       
United Kingdom:                   +44 333 300 08 04    
United States:                       +1 63 191 314 22        
France:                                 +33 170 750 711              

Enter code PIN: 25544235#

For more information, please contact:
Carl-Johan Zetterberg Boudrie, President and CEO, +46 (0)70 335 84 49
 ir@doro.com

This information is information that Doro AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, on October 25 2019, at 08:00am CEST.

About Doro
Doro develops telecom products and services for seniors to lead full and rich lives: to do things they want to do more easily as well as the things they thought they might never do. The global market-leader in senior mobile phone, Doro offers easy-to-use mobile phones and smartphones, mobile applications, fixed line telephony with loud and clear sound. Within Doro Group, Doro Care offers social care and telecare solutions for elder and disabled persons for independent and safe living in their own homes. Doro AB is a Swedish public company and its shares are quoted on the Nasdaq OMX Stockholm exchange, Nordic List, Small Companies. Net sales of SEK 1,906 million (EUR 186 million) were reported for 2018. www.doro.com

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