Interim report January - March 2018

Press release
Lund, April 27, 2018

Improved earnings and increased margins despite lower sales

January – March 2018

• Net sales amounted to SEK 419.6m (452.3), a decrease of 7.2 percent.
• Net sales for the category Products were SEK 366.8m (405.2), down by 9.5 percent. Net sales for the category Services were SEK 52.7m (47.1), an 11.9 percent increase.
• The gross margin increased to 33.8 percent (29.3). The gross margin for Products increased to 32.2 percent (28.6), and for Services, the gross margin increased to 44.5 percent (36.2).
• Earnings before interest and taxes (EBIT) was SEK 24.9m (17.3), corresponding to an operating margin of 5.9 percent (3.8).
• Profit after tax for the period was SEK 18.6m (13.0).
• Earnings per share were SEK 0.78 (0.56).
• Free cash flow before acquisitions amounted to SEK 32.2m (26.5).

Outlook
Unchanged outlook: our expectation for 2018 is sales in the range of SEK 1.9bn - 2.1bn and EBIT in the range of SEK 100m - 140m, excluding potential acquisitions.

CEO comment

Doro’s sales were down by a total of 7.2 percent in the first quarter compared to the corresponding period of 2017. Sales in our category Products decreased by 9.5 percent due to a continuously challenging market for mobile phones. Sales in the Nordics and Central and Eastern Europe were down, while in other regions, sales were either stable or increased, despite a declining market. Sales in our category Services were up by 11.9 percent thanks to the positive progress of our subscription-based operation in Doro Care. Doro Care’s contract with Oslo Municipality was expanded to cover all social alarm services for the municipality.  We benefited from positive currency effects in Products which, combined with increased margin in Services, helped generate significantly higher earnings and improved margins in the quarter, despite lower sales.

Overall performance on our largest mobile phone market, Western Europe, has been negative for an extended period. This applies especially to the feature phones category, where we generate a significant share of sales. We are also encountering more competition in this category. To address the challenging market, we are working to increase our market shares, mainly in Southern and Eastern Europe, and strengthened our sales organization in Southern Europe in the quarter. We are also driving sales of our new products in established channels.

We launched two new mobile phones at the Mobile World Congress in February, the Doro 8035 (smartphone) and Doro 7060 (4G feature phone). During the quarter, our mobile phones received several awards, with the Doro 8040 recognized as the Best Senior Phone in Italy by Cellulare Magazine. The Doro 8040 also received the Red Dot Award 2018 for Best Product Design. Overall, this confirms that we have an offering that is relevant to our primary consumer segment—seniors.

After improving efficiency in our service delivery, which generated an improved gross margin for services, we are now focusing on reducing our cost base in areas such as procurement, logistics and administration. We have initiated significant consolidation of our warehouse units which, in addition to direct savings, will lower transportation costs, and are rationalizing our administrative functions.

Apart from mobile phone launches, we announced and demonstrated our new SmartCare by Doro service concept at the Mobile World Congress, which attracted substantial media attention in most European countries where we operate. SmartCare by Doro is part of our realigned strategy of delivering fully integrated solutions that provide seniors and their relatives with safety services. Development of the concept is going as planned, with the first service launches scheduled for the end of this year. We now have a dedicated Group function in place to drive service development and the critical integration with Doro mobile phones going forward.

With the first-quarter results in hand, we reiterate our expectations for the full year 2018 of sales in the range of SEK 1.9bn-2.1bn and EBIT in the range of SEK 100m-140m, excluding potential acquisitions.

Robert Puskaric, President & CEO

For more information, please contact:
Robert Puskaric, President and CEO, +46 (0)46 280 50 05
Carl-Johan Zetterberg Boudrie, CFO, +46 (0)46 280 50 47

E-mail: ir@doro.com

Doro’s report to be presented via audiocast
Analysts, investors and media are welcome to attend a presentation of the interim report via https://edge.media-server.com/m6/p/6da6bh6w or by telephone at 09:00 CET on April 27, 2018. Doro’s President and CEO Robert Puskaric and CFO Carl-Johan Zetterberg Boudrie will hold the presentation and answer questions. Before the start of the presentation, the presentation material will be available at https://corporate.doro.com/investors/reports-and-presentations/presentations/.

Call-in numbers
Sweden:                            + 46 (0) 8 505 564 74
France:                              + 33 (0) 1 7075 0725
UK:                                     + 44 (0) 203 364 5374
US:                                     + 1 855 7532 230

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 1,924 million (EUR 200 million) were reported for 2017. www.doro.com

Attachments

• Doro_Q118_EN
• Doro_Q118_EN