Eventful quarter with improved cashflow
The quarter in summary
Message from the CEO
It has been another eventful quarter for Doro, we have taken several important steps forward in our ambition to become European market leader in technology enabled care. During the quarter, we completed two acquisitions whilst working to restructure the business. I am proud of the fantastic work that the Doro team has done during this intense period. Without their efforts and commitment, this would not have been possible, and together we will take steps towards becoming the leading player in the market.
The current pandemic has accentuated and accelerated some key market trends that influence our strategy and execution. Within business area Doro Care the market starts to demand solutions that are more efficient and secure which enables increased safety for seniors. Therefore, we continue to expand our service offering and develop new, innovative solutions to meet our customers’ growing demand. During the quarter we accelerated our strategy, completed the acquisitions of Victrix and Eldercare, and launched our new welfare hub Eliza.
The acquisition of Victrix is a big step forward in our own software platform and strengthen our technical capability. Together with the launch of Eliza, we are a company with technology enabled care at the forefront. This enables us to offer more proactive solutions, create flexibility and speed with integrations to other systems and products. Victrix’s strong technical competence and extensive experience in technology enabled care fits well with our strategy and will be a great addition to Doro. Another key part of our strategy is to strengthen our position in the UK market. With the acquisition of Eldercare, we expand our geographical presence in the UK and are one of the largest players in the market. The geographical position of Eldercare enables us to reach out and support new customers and thereby help more people to live a safer and secured life.
During the past quarter, the slow market development within business area Doro Care has continued, with postponed procurements. This has resulted in a sales development that is below our target, which we are not satisfied with. By reorganizing into two different business areas, we can work more intensely and focused within both business areas – Doro Care and Doro Phones. With a strengthened team and a greater focus, we can gradually improve the development and generate the results we want.
Sales during the third quarter amounted to SEK 443.2 million (521.4), a decrease of 15.0 percent compared to the third quarter of 2019. We see an improvement compared to the previous quarter, which is a result of a gradual recovery in our key markets, even though sales are still lower than last year. With good cost control, we managed to deliver an EBIT of SEK 31.7 million, excluding restructuring costs, (33.8) and a positive cash flow during the third quarter. It is too early to determine how long our business will be affected by the pandemic and it is still uncertain how the market will develop. Recently, however, we have shown that we are well prepared and in an efficient way have adapted the business to the current situation.
Early in the quarter we announced that we had decided to restructure the business in order to maintain and consolidate our market leading position in Europe. With a declining market and an ongoing pandemic, we want to ensure a sustainable and long-term profitability. To achieve this, we will reduce our operating expenses, predominately within business area Doro Phones, by SEK 110-130 million. We have already reduced our costs by SEK 50 million and I have strong belief that we will reach our saving target. The restructuring will create space for new innovative solutions and offerings, while we lay a strong foundation for continued success in both business areas.
I am convinced that the important steps we have taken in our strategy during the quarter will support a profitable growth. I look forward to all the challenges and new opportunities we have ahead of us. Together we will create a better future for seniors.
Carl-Johan Zetterberg Boudrie, President and CEO
A webcast conference call will be held on Friday 23 October 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-q3-2020. The presentation material is available on Doro’s financial website http://www.doro.com/corporate.
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