Doro reports first quarter results 2020
Impact of covid-19 in the quarter
January-March
- Doro’s net sales amounted to SEK 424.2 million (466.2), a decrease of 9.0 percent.
- Net sales for the Care business segment were SEK 130.3 million (117.6), an increase of 10.8 percent and for the Phones business segment were SEK 293.9 million (348.6), a decrease of 15.7 percent.
- Gross margin increased to 33.7 percent (31.1). For Care, the gross margin decreased to 40.8 percent (42.8) and for Phones the gross margin increased to 30.6 percent (27.1).
- EBITDA amounted to SEK 43.7 million (43.6), an increase of 0.2 percent.
- Operating profit (EBIT) amounted to SEK 15.2 million (21.2), with an operating margin of 3.6 percent (4.5).
- Profit after tax for the period was SEK 14.5 million (15.4) and profit per share was SEK 0.61 (0.65).
- Free cash flow before acquisitions was SEK -22.0 million (19.2).
- As a result of the rapid spread of the covid-19 virus, especially order intake has been impacted within Phones business segment during end of the quarter. Many of Doro’s largest markets have been closed down since the second half of March.
- Measures have been taken in relation to all parts of the business to mitigate the effects of coronavirus.
As previously announced, the Board of Directors has decided to propose to the Annual General Meeting 2020, there will be no dividend 2020.
Employees are on short-term leave in many markets, starting in April. Cost savings have been implemented, investments have been withdrawn or postponed. We are monitoring the situation closely and are preparing further significant cost savings.
A significant decline in sales within the Phones business segment is expected during the second quarter.
Message from the CEO
The first quarter has been affected by the covid-19 situation. In the beginning of the first quarter, supply chain was affected by the current situation. The Phones business segment was affected by a declining market and the order intake was negatively affected by covid-19 at end of the quarter. The situation brings home the importance of the essential social roles we provide through our service business. We have implemented the measures needed to ensure that we can continue to maintain a high level of service and quality in our service delivery and we have worked continuously with crisis management. We are taking the necessary steps to ensure that we can handle the situation in both the short term and the long term. I believe that all of us together, employees and partners will be able to position ourselves where we need to be once the market begins to recover.
In order to provide greater transparency and a clearer picture of Doro, as of this quarter the reporting for the group will be divided into two business segments: Care and Phones. Sales continued to rise in Care this quarter, by 10.8 percent, but the gross margin was not at the level we would like. The main reasons for the lower margin are our recent acquisition of Centra Pulse and Connect and increased costs as a result of covid-19. The aim of extracting synergies from the acquisition has not progressed according to plan, which is disappointing. We have enhanced our efforts to achieve the profitability and to ensure our competitiveness in the future. Our innovation work continues and the upcoming launch of our new welfare hub, Doro Eliza, represents the very latest in technology enabled care. The product has won the iF Design Award for its basic and attractive design.
In the Phones business segment, total sales decreased by 15.7 percent compared with the same quarter last year, mainly caused by a general declining market and in the end of the quarter order intake was negatively affected by covid-19. We are working to improve profitability by adapting our cost structure with the aim of maintain our market position. We have therefore introduced short term leave for our employees on most of our markets, reduced the number of consultants and employees, investments have been withdrawn or postponed. The forecast indicates that sales will fall further during the second quarter. We are monitoring market developments closely and we will implement further substantial cost savings if necessary. During the quarter, we launched one of our anticipated hero products, our new Doro 8050 smartphone.
The current covid-19 situation is bringing many things to a head and in particular it highlights the importance of Doro’s ongoing work to develop the digital technology of tomorrow that provides independence to elderly people. The need for a safe, active and meaningful everyday life for seniors has never been more relevant.
WEBCAST
A webcast conference call will be held on Friday 24 April at 9.00 am (CET) when President and CEO Carl-Johan Zetterberg Boudrie and CFO Linda Nilsson will present the report. The webcast is accessed at https://tv.streamfabriken.com/doro-q1-2020. The presentation material is available on Doro’s financial website http://www.doro.com/corporate.
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