CEO’s review

Scanfil Group’s Financial Statement 2022

At the start of the year 2022, we had a strong customer demand which strengthened during the year. The year was record-breaking.

Petteri Jokitalo, CEO:

“I am satisfied with our performance in 2022. At the start of the year we had a strong customer demand which strengthened further during the year. The year progressed upward both in terms of turnover and operating profit and ended with a record-breaking last quarter.

Our focus was clear and we concentrated on organic growth and managing the risks of cost inflation and the operating environment. The operating environment was demanding and headwinds were brought by the availability challenges of electronic components, cost inflation, the corona situation especially in China. To meet the growing customer demand, we invested in production capacity at the factories in Suzhou, Malmö and Wutha. As a whole, we made strong progress! I would like to thank our dedicated employees for their good work and our customers for their support and trust.

The turnover for the fourth quarter increased by 15.3% from a year ago and was EUR 222.3 million. The component availability challenges partially eased towards the end of the year, which was reflected in reduced spot market purchases. The operating profit for the quarter increased by 40% compared to a year ago and was EUR 13.4 million. The positive development of the operating profit was influenced by the increase in turnover and the efficiency of operations resulting from the easing of challenges in the availability of components. The impact of exchange rate changes on the quarter’s operating profit was EUR 0.3 million positive.

The net cash flow from operations, which turned positive in the second quarter of the year, continued to strengthen and was EUR 13.9 million in the last quarter. Strengthening the net cash flow and related inventory management will continue to be a key development area.

Scanfil’s financial position and balance sheet are stable and enable the necessary investments and the implementation of the dividend policy. The board proposes to pay a dividend of 0.21 euros per share for 2022, which is a 10.5% increase compared to a year ago. If implemented according to the proposal, Scanfil’s dividend will increase for the tenth year in a row.

Scanfil’s customers’ demand outlook for 2023 continues to be strong and gives us a good base for organic growth and positive profitability development towards the target level of a 7% operating profit margin. The near-term risks of the business are mainly related to the development of the economy both in Europe and globally, and, despite the improved situation, the availability of semiconductors, which we believe will partly continue to be challenging.

We expect our turnover to be EUR 820–890 million this year and the adjusted operating profit will grow to EUR 49–55 million. We also believe that the number of spot market purchases will decrease significantly from 2022.

In the longer term, we aim for organic 5–7% annual growth and a 7% operating profit level. In 2023, key investments to increase production capacity are investments in electronics manufacturing lines for the Atlanta factory in the United States and the Sieradz factory in Poland. For both factories, the new production lines are expected to be in use in the third quarter of 2023. We have also started preliminary planning to expand the Sieradz factory with a production building of about 8,000 m².

In the longer term, we see the North American and Asian markets as interesting expansion areas.”