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:

“Turnover for the second quarter of the year was at a record high level, EUR 243.4 million, with an increase of 14.3 percent compared to last year’s comparison period. Customer demand was especially high in Energy & Cleantech and Connectivity customer segments. The strongly developed customer demand, further improved electronics components availability and investments in production capacity have enabled higher production volumes and turnover.

I am especially satisfied with the strong development of operating profit. The operating profit for the second quarter was at an all-time high, EUR 17.5 million, and our operating profit margin, 7.2percent, is at our target level. The positive development of operating profit was affected by the high production volumes, high utilization rate of production capacity, increased operations efficiency, and successful management of the effects of cost inflation.

To respond to the increase in customer demand in North America, we are significantly investing in the electronics production capacity in our Atlanta factory. The equipment installations of the production line are currently ongoing, and according to the schedule, we will be able to manufacture the first production batches in the third quarter of the year. The customer interest and demand for the new capacity have been strong and have even exceeded our pre-expectations.

During the summer, we will also introduce new production capacity at the Sieradz factory. In addition, the Board of Directors made a decision on August 3, 2023 about a significant expansion of the factory building in Sieradz.

Working capital and inventory management has been a key focus area in previous years. The long-term work is now bearing fruit and I am satisfied with the positive development of the second quarter. Despite the increased turnover, inventory value decreased by EUR 7.5 million and net cash flow from operations was EUR 25.2 million. The equity ratio at the end of the quarter was 45.8 percent, and the net debt ratio was 36.5 percent. Scanfil’s balance sheet is strong and enables the necessary growth investments.

Scanfil’s customers’ demand outlook for 2023 has strengthened over the course of the year and continues to be strong. In particular, the demand outlook for technologies that increase energy efficiency and drive the green transition is excellent, especially in Europe. The near-term risks of the business are mainly related to geopolitics and economic development in Europe and globally, and as well as their potential effects on our customers’ demand and business environment.

As we have previously announced, I will be stepping down as the CEO of Scanfil, and Christophe Sut will start as the new CEO at the beginning of September at the latest. The process to transfer CEO’s duties has already started, and I am convinced that Christophe fits well to Scanfil’s operating culture and is the right person to lead Scanfil’s growth and internationalization journey from now on. I will continue working for Scanfil, to support Christophe and as an advisor to the Board of Directors, until the end of this year.

For me, working 15 years at Scanfil, of which 10 years as the CEO, has been great time in every way. Scanfil has grown, and internationalized, and electronics manufacturing has become the core of our business. We have reached the size category and level of operation that enables us to be a global production partner even for the most demanding customers. My deepest thanks to all who made this possible: customers, suppliers and above all, all Scanfilians.

I am very satisfied with our performance at the beginning of the year, and I am confident with the strong outlook for the rest of the year. I would like to thank our committed personnel for their excellent work and our customers for their support and trust”.