Highlights since Q2/first half reporting:
· Global recession with reduced and postponed defence
spending starting to impact on activity levels.
· Acquisition of Wibe Telescopic Mast AB has been
· Reduced activity level for BU Norway but still
delivering satisfactory financial contributions.
·Continued weak development and performance for BU
During Q3 2011 Comrod Communication acquired 80% of
the shares of WIBE TM AB in Sweden with an obligation
to acquire the remaining shares within two years. The
purchase price for the 80% shareholding of Wibe TM
was MSEK 12.5.
WIBE TM brings an extended aluminium mast product
range to Comrod Group's current composite mast
offering. This will provide Comrod with a unique
opportunity to expand its tactical mast offering to
the global civil and defence markets. This expansion
is fully in line with Comrod's strategic plan to
develop and expand the Group through additional high-
value products designed for demanding defence and
high-end niche civil markets.
Revenues from Business Unit Sweden for Q3 2011 were
MNOK 0.8 effective from the month of September.
EBITDA for the same period was MNOK - 0.3.
For further information see attached note.
The Group has experienced a weaker revenue
development in the first three quarters of 2011. In
addition to the impact of the unstable situation in
the Middle East and North Africa the global financial
crisis with fast reducing public spending in many
countries has now started to directly impact on short
term defence spendings. This has negatively impacted
on Comrod's order intake and activity levels. In
particular the impact of postponed and reduced US
defence programmes are starting to hurt Comrod.
However, in spite of the above the Group is still
experiencing positive feedback from specific market
areas with new and existing products. The timing of
conversion of this positive feedback into tangible
sales is still uncertain.
Despite a positive contribution from BU Norway, the
Group's overall financial performance during Q3 was
Revenues for Q3 2011 were MNOK 59.0 compared with
MNOK 74.3 in 2010. (Figures for corresponding period
of 2010 will hereafter be shown in parentheses).
Revenues for the first three quarters of 2011
totalled MNOK 217.9 (MNOK 233.2).
Operating profit before depreciation (EBITDA) for Q3
2011 was MNOK - 2.9 (MNOK 11.1). EBITDA for the first
three quarters of 2011 amounted to MNOK 11.9 (MNOK
EBITDA for Q3 2011 includes a total non-recurring
cost of MNOK 9.0. This includes cost related to the
acquisition of Wibe Telescopic Masts in Sweden,
change of CEO and payroll cost of a staff reduction
plan for BU France.
The fast developing global financial crisis is
resulting in reduced public spending levels which are
creating a volatile market situation for some of the
Group's key products. This is likely to negatively
impact on the Group's business activities moving into
Q4 2011 and early 2012. This view is in line with
what has been previously communicated to the market.
The Board is not satisfied with the Group's current
financial performance, but acknowledges that the
current volatile market is challenging. The
establishment and follow up of short and medium term
actions to ensure that the Group's business
activities are aligned to the current market
opportunities will be a continued key focus area for
both the Management and the Board. The short term
impact of the US defence spending cuts could be
significant for the Group as the US defence market is
considered to be approximately 40-50% of the world
market. However, the communication segment of this
defence market (which is Comrod's space) is likely to
be less impacted than other segments.
The Group continues to explore mergers and
acquisition targets, both in Europe and in other
As outlined above the Board acknowledges the current
market instability and expects this to continue in
the fourth quarter of 2011 and early 2012. However,
the Group has received positive feedback from its
main customers regarding technical performance of its
key products and general service levels.
An action plan to regain profitability has been
initiated and parts are already being implemented.
This includes both short term cost cutting measures
and special focus on new revenue opportunities. In
line with this plan, initial personnel adjustments
have already been actioned both for BU Norway and BU
France. Financial impact will be gradually effective
from 4Q 2011.
For further information please contact:
Ole Gunnar Fjelde CEO, of Comrod Communication Group,
mobile phone +47 959 34 541 or email@example.com
Kari Duestad, CFO, of Comrod Communication Group,
mobile phone +47 924 63 690 or firstname.lastname@example.org
About Comrod Communication Group:
Comrod Communication ASA is a Norwegian public
limited company headquartered at Tau outside
Stavanger in the south-western Norway. The company
develops and manufactures tactical masts, antennas
and antenna systems, power supply, battery chargers
and commercial products. Comrod Communication`s main
focus is on the defense market. The company has
around 215 employees and had operating revenues of
NOK 332 million in 2010 and NOK 344 million in
For more information, please visit www.comrod.com