Comrod Communication : Report for first quarter of 2012

Highlights since Q4 reporting are recession in key markets with reduced and postponed defence spending in the communication segment still impacting the level of activity.

Continuing low activity levels during the quarter for all Business Units. Financial results for Q1 are in line with expectations. A number of business opportunities outside traditional markets are being explored utilizing existing niche technology competence and manufacturing capabilities. However, this is unlikely to yield a significant short term financial impact. 

Download pdf file: Financial report 1st quarter 2012 (pdf, 1MB)

The Group is still experiencing a weak revenue development during Q1 of 2012. The financial crisis in key markets has continued to have a negative impact on defence spending within the communication segment. As a consequence, this has negatively influenced Comrod's order intake and activity levels for the quarter.

In spite of the above, the Group is still experiencing positive feedback from specific market areas on new and existing products. However, the timing for converting this positive feedback into firm orders is still uncertain.

In view of the current situation, numerous actions have been taken to strengthen the Business Unit's product portfolio and position in the market.

The Group's overall financial performance during Q1 is considered weak.

Revenues for Q1 of 2012 were MNOK 55.5 compared with MNOK 84.7 in 2011. Operating profit before depreciation (EBITDA) for Q1 2012 was MNOK -0.3 (MNOK 10.8).

OUTLOOK
The financial crisis affecting key Comrod markets is still resulting in reduced public spending levels for some of the Group's key products. This is likely to continue to have a negative impact on the Group's business activities during the year. The Board is not satisfied with the Group's financial performance for Q1 2012. However, the Board and Management have acted on a number of initiatives aimed at identifying alternative revenue streams for the Group utilising its key niche technologies and flexible manufacturing platforms. The majority of these initiatives are within the civil technology segments, and if successful are likely to decrease the current strong dependence of its established defence products. However, these initiatives, if successful, are likely to demonstrate a slow and gradual impact on revenue. The ongoing follow up of short and medium term actions to ensure that the Group's business activities are aligned to the current market opportunities will still be a continued focus area.

As outlined above, the Board acknowledges the current market instability and expects this to continue during 2012. However, the Group has reason to believe that the market conditions for its communication products are likely to improve slightly compared to current activity levels towards the end of 2012.

For further information please contact:
Ole Gunnar Fjelde CEO, of Comrod Communication Group, mobile phone [phone] or [e-mail]
Kari Duestad, CFO, of Comrod Communication Group, mobile phone [phone] or [e-mail]