Kontron increased its revenue by 2.4% to EUR 467.7 million in the 2015 financial year. The operating result, which was negative at EUR -5.1 million a year ago due to the high restructuring costs, has now returned to the profit zone and amounts to EUR 6.2 million. However, the company's order intake has fallen sharply - by 18%. CEO Rolf Schwirz said that this was due to the fact that many customers had initially waited for the restructuring and then, once they had regained confidence, a particularly large number of orders were received in mid-2014. The effect was particularly pronounced in the Industrial business division: Here, incoming orders fell by 25% after a particularly strong year in 2014. This does not bode well for the current 2016 financial year, especially as Industrial accounted for half of Kontron's revenue last year and was therefore the strongest division.

The Communication business division is also under pressure. Here, sales fell by 5% and incoming orders by 12%. According to Kontron, this is due to changed market conditions with a clear shift away from hardware and towards SDN (software-defined networks). Due to this shift, declining profitability and market consolidation in the industry can be observed.

Deal with Foxconn

Kontron wants to counteract this with a deal with Foxconn that kills several birds with one stone: Kontron has sold 49% of Kontron Canada to the Foxconn subsidiary Ennocon (Taiwan). This will inject 52 million euros into Kontron's coffers, with which the company intends to free itself from the debts that have accumulated as a result of the restructuring measures.

At the same time, Ennocon will become Kontron's preferred contract manufacturer, which should reduce costs. Kontron had already reduced the number of its contract manufacturers from 25 to 5 in the last three years. Ennocon is one of them, supplying around 10% of orders to date. Now more production orders are to be transferred to Ennocon. "That will take about a year," says Kontron CEO Rolf Schwirz. "And if we are already a partner of Foxconn, then we think it will also be easier for us to get orders from the huge Foxconn Group, which has an enormous need for equipment for production automation." This should also help to land more orders from the industrial segment.

For the current 2016 financial year, Schwirz expects turnover of between 460 and 480 million euros with an operating result of between 3 and 5%. "Our analysts have classified this as very conservative," admits Schwirz, "but it is also based on the business expectations of our customers, on whose success we are dependent as a supplier."