Comments by the CEO from Interim report Q1 2021
Comments by the CEO
We have continued to strengthen the Management team during Q1 2021. We appointed a new Director of Aftersales and Service, Mikael Bornandersson to strengthen our focus on supporting the end-user of our product as well as intensifying the focus on this part of our business. Additionally, it was decided by the Board that our Chairman of the Board, Anders Berg, will increase his operational focus on the company by assuming a supportive operational role with the Management team. Anders’ extensive commercial experience will no doubt strengthen the business processes we have in place.
Additionally, we focused on upgrading our Product Centre in Ängelholm, to create a flexible facility, to conduct tests on the first OXE300, handle aftermarket product upgrades as well as the ability to build prototypes for the innovation pipeline.
During Q1, we commenced production of the OXE300 with our assembly partner PanLink at their facility in Poland. We have had a cautious start with some short-term disruption due to COVID related issues affecting the facility, suppliers and training. Despite the disruptions, we still produced engines during the quarter, gaining momentum in March. All early units from Poland, are then sent to Ängelholm for further testing on the sea to ensure thorough quality checks are in place. Once a steady-state is achieved, this testing will be conducted in Poland and shipped directly to customer from there.
Post-quarter-end, we continue to build capacity to deliver more units against our Order backlog. Ensuring quality is our overriding principle which increasing our production run-rate.
As a result of the slower ramp-up our turnover for Q1, amounted to SEK 10.1m (SEK 10.3m). We achieved a gross profit of SEK 2.7m (SEK 2.4m) with a gross margin of 27% (23%). This was the highest gross profit margin for a quarter in the company’s history as a result of the higher margin OXE300 as well as favourable revenue mix as a result of large spare parts and accessory orders during the quarter.
We continue to see strong demand for the OXE products, with an increase in Order Intake of SEK 5.8m during the quarter. At the end of the quarter the Order Book amounted to SEK 141m - all of which are targeted to be delivered during 2021 - see bar chart below in respect to order book development in the last 15 months.
We initiated the start of assembly of OXE200 series in January 2021 at the chosen facility based in Albany, Georgia in the South East of the US with Outboard Network Manufacturing (ONM) as our assembly partner. Our start-up activities were impacted, however, by COVID restrictions on travel to the US. We have one OXE employee currently on-site and we make use of virtual training facilities to continue training and validation from a distance with a focus on assembly quality as well as product knowledge transfer.
The Company has continued to monitor its distribution network and are working to develop closer cooperation and better successful outcomes in both sales as well as a reduction in the accounts receivable balance.
We increased our marketing activities during the quarter, as can be seen on our new website with increased content of our product range, customer cases and 3D rendering of our products. We see that many investors continue to be interested in our company and products and we continue to engage with the public via social media and other media channels.
We continue with our preliminary assessment of BMW’s 4-cylinder two-litre turbo diesel engine for marine application. We continue to develop the prototype version for sea trials – this is expected to be delivered during the year.
Other development work continues in accordance to plan especially with electric outboard solutions where we have delivered our lower leg for testing with a number of electric outboard manufacturers. The lower leg has the potential to be a key solution for power transmission to this new segment.
The Board and Management remain confident of the future and look forward to growing the business in a sustainable and profitable manner.
This will likely be my last report as CEO and I look forward to working with our new CEO, Magnus Grönborg, in my new role as EVP Business Development, Sales and Marketing, in the near future.
We are driven by the ambition to transform the outboard motor; impacting the journey towards a more sustainable and ecologically positive marine environment.
We are engineering the future. Our future.
Myron Mahendra, Chief Executive Officer