Elektrobit Group Oyj - EB, ELEKTROBIT CORPORATION, GIVES NEW GUIDANCE FOR THE FIRST HALF OF 2008 AND STARTS REARRANGEMENTS
March 27, 2008
EB, ELEKTROBIT CORPORATION, GIVES NEW GUIDANCE FOR THE FIRST HALF OF 2008 AND STARTS REARRANGEMENTS
STOCK EXCHANGE RELEASE
Free for publication on March 27, 2008 at 08.00 am. (EET)
EB, ELEKTROBIT CORPORATION, GIVES NEW GUIDANCE FOR THE FIRST HALF OF 2008 AND STARTS REARRANGEMENTS
During the first half of 2008 EB expects the net sales to grow clearly compared to the second half of 2007 (EUR 79.9 million). After the later referred rearrangement actions, EB expects the operating loss in the first half of 2008 to be on the same level or less than during the second half of 2007, (EUR -7.9 million without the non-recurring net income of EUR 1.5 million as announced in 28 December 2007), with the start of the year being clearly weaker than the latter part of the half. In addition the result of the first half of 2008 will be weakened by the non-recurring items referred below.
EB has decided as a part of it's actions to increase the productivity and improve the fixed cost efficiency to examine the possibilities for rearrangements in the Wireless Communications Tools ("WCT"), Radio Network Solutions ("RNS"), and Wireless Sensor Solutions ("WSS") Business Units. Due to the rearrangements, EB will register non-recurring costs of approximately EUR 2.9 million for the first quarter of 2008, which was not taken into account in the guidance given by EB in its Financial Statement Bulletin published on February 6, 2008. The possibilities for rearrangements have been decided to be examined as follows:
EB has decided to examine the possibility of renouncing the main part of production activities of the WCT Business Unit. EB intends to acquire this activity not belonging to its core businesses from external outsourcing partners and consequently to improve the cost efficiency and flexibility of its supply chain. However, the final assembly, configuration and testing operations of the WCT products will be maintained in EB. Therefore EB has decided to start personnel negotiations related to the personnel of the WCT Business Unit on the financial and production-related as well as on the restructuring related grounds. The negotiations concern approximately 50 employees in Oulunsalo.
Due to the weaker than expected demand and due to strong price competition in the R&D services provided by the RNS Business Unit, EB has decided to start personnel negotiations also in the RNS Business Unit on the financial and production related grounds. The negotiations concern approximately 40 employees mainly in Oulu and Kajaani.
In addition to the above mentioned, EB has signed a pre-agreement to sell the shares of its Swiss subsidiary, Elektrobit AG, to the acting management of the said company. So far the Swiss entity has served mainly the WSS Business Unit. In the future it will concentrate on developing products related to wireless industrial solutions and providing R&D services while acting also as EB's subcontractor. The arrangement will not change the EB WSS Business Unit's strategy, according to which the WSS Business Unit will concentrate on delivering RFID Reader System Solutions. The transaction is intended to be completed by March 31, 2008 and consequently, the personnel of EB will be reduced by approximately 34 employees. The transaction alone will not have a significant impact on EB's balance sheet or result. The parties have agreed not to publish the purchase price or other agreement terms.
Due to the rearrangements under examination in the Wireless Business Segment, a non-recurring cost provision of approximately EUR 2.2 million will be allocated for the first quarter of 2008. In addition, in case the sales of the Swiss entity is completed, a capital loss and a write-off totalling in aggregate approximately to EUR 0.7 million will be allocated for the first quarter. Therefore, a total of approximately EUR 2.9 million of non-recurring items will be allocated for the first quarter, which were not taken into account in the guidance given by EB in its Financial Statement Bulletin published on February 6, 2008
Previously EB told in its Financial Statement Bulletin on February 6, 2008 that it expects the turnover during the first half of 2008 to grow compared to the second half of 2007 (EUR 79.9 million). Further EB told it expects the operating loss in the first half of 2008 to be less than during the second half of 2007, (EUR -7.9 million without the non-recurring net income of EUR 1.5 million as announced in 28 December 2007), with the start of the year being weaker than the latter part of the half.
March 27, 2008
Elektrobit Corporation
Board of Directors
Further information:
Pertti Korhonen
CEO
Tel. +358 40 344 5148
Panu Miettinen
CFO
Tel. +358 40 344 5338
DISTRIBUTION:
OMX Nordic Exchange Helsinki
Principal media
EB, Elektrobit Corporation
EB creates advanced technology and turns it into enriching end-user experiences. EB is specialised in demanding embedded software and hardware solutions for automotive and wireless industries. The net sales for the year 2007 totalled EUR 144.3 million. Elektrobit Corporation is listed on OMX Nordic Exchange Helsinki. www.elektrobit.com
