Doro reports second quarter results 2020
Effective measures contributed to a positive operating profit in the quarter
The quarter in summary
- Doro’s net sales amounted to SEK 332.3 million (459.6), a decrease of 27.7 percent.
- Net sales for the business segment Care were SEK 124.9 million (109.4), an increase of 14.2 percent and for the business segment Phones were SEK 207.4 million (350.2), a decrease of 40.8 percent.
- Gross margin decreased to 34.8 percent (34.9). For Care, the gross margin increased to 44.9 percent (43.3) and for Phones the gross margin decreased to 28.8 percent (32.4).
- EBITDA amounted to SEK 38.0 million (47.3), a decrease of 19.7 percent.
- Operating profit (EBIT) amounted to SEK 7.8 million (26.2), with an operating margin of 2.3 percent (5.7).
- Profit after tax for the period was SEK -3.3 million (18.7) and profit per share was SEK -0.14 (0.79).
- Free cash flow before acquisitions was SEK 29.3 million (0.0).
- The rapid spread of the COVID-19 virus had a negative effect on sales in the quarter due to closed markets, which predominately affected business segment Phones. A limited recovery occurred in the end of the quarter.
Message from the CEO
During the quarter, COVID-19 continued to influence companies, markets and communities all around the world. The current situation highlights the importance to develop digital technology of the future for seniors and the essential social role Doro fulfils. My belief is that the COVID-19 virus will lead to an increased demand in technology enabled care, which allows us to enhance safety for seniors in their daily life’s.
Overall, we have managed to handle the effects of the pandemic in our business in a quick and successful way in a challenging quarter. There was a negative impact on sales at the beginning of the quarter due to markets being closed, but during June we saw a gradual recovery. With strong and successful measures, we have managed to maintain our service levels and quality in our service business whilst reducing our costs. The cost reducing activities, decreased inventory levels and improved working capital have contributed to a positive operating profit and cashflow in the quarter. I would like to thank all our employees for their commitment during this uncertain time, it makes me convinced that all of us together will stand strong through the pandemic.
In line with our strategic ambition of becoming a European market leader in technology enabled care, we accelerate the strategy implementation and reorganize the business into two separate business areas, Doro Care and Doro Phones. The business area Doro Phones will be restructured to ensure long-term profitability. The restructure aims to increase focus on our key markets and products where we will reduce cost structures for continued competitiveness. We preserve our vision to empower seniors to get the most out of every day, enable independence and ensure peace of mind when it matters most.
Sales during the second quarter amounted to SEK 332.3 million (459.6). The decline is mainly an effect of COVID-19 as the markets were completely or partially closed during the first part of the period but where we could see a recovery during the end of the quarter. With early and effective cost reducing activities we have, despite lower sales, managed to deliver a positive operating profit of SEK 7.8 million (26.2).
Sales of services within business segment Care was stable compared to the previous quarter and increased compared to same period last year. However, during the quarter there have been fewer procurements as health and social care commissioners had their focus on handling the immediate effects of the pandemic. The organic growth during the quarter has not been according to my expectations, which is a disappointment. Profitability improved during the quarter and the gross margin amounted to 44.9 percent. Our work to streamline service delivery and extract synergies from our latest acquisition, Centra Pulse and Connect, is showing progress during the quarter which resulted in an improved profitability.
Sales in business segment Phones were negatively affected by lock down at several markets, which resulted in an increased focus on e-commerce and increased online sales in the quarter. During May customer’s sales improved, which contributed to a recovery in our sales in several of our markets during June.
As the corona virus spreads, social exclusion and involuntary loneliness have become a reality for many seniors. Therefore, recognizing our social responsibility, we have donated a number of Doro phones to isolated seniors in a new initiative “Doro Do Good”. At Doro we drive innovation and create services that meet the needs and provide the support the seniors require. It has been a turbulent time, but my convictions are that we together will create a safer everyday life for seniors.
Carl-Johan Zetterberg Boudrie, President and CEO
WEBCAST
A webcast conference call will be held on Thursday 16 July 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-q2-2020. The presentation material is available on Doro’s financial website http://www.doro.com/corporate.
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