CEO’s review

Scanfil Group’s Interim Report for 1 January–30 September 2021

Robust customer demand supported record-high turnover growth. Healthy profitability despite challenges in material availability.

Petteri Jokitalo, CEO:

“The turnover for the second quarter of the year was at a record high level, EUR 212.9 million, with an increase of 23 percent compared to last year. Customer demand was generally strong in all customer segments. Individual customer products with a strong demand were, e.g., process automation systems, analyzers, frequency converters, reverse vending machines and indoor air products.

Operating profit in the second quarter was EUR 10.1 million. The operating profit was negatively affected by the exchange rate loss of EUR-1.4 million, mainly due to the strengthening of the US dollar. China’s corona lockdown measures affected the profitability of the Suzhou factory, especially in April, after which we have recovered to a normal level of operation and profitability in May-June. We expect the operating profit to develop positively in the second half of the year.

Scanfil’s financial position is stable, which enables planned investments to be implemented. The equity ratio at the end of the quarter was 40.5 percent, and the net debt ratio was 45.4 percent.

Our customers indicate further strengthening demand for the latter half of the year. The key near-term business risks are related to the availability of materials, especially semiconductors, the development of the corona pandemic, especially in China, and the effects of the war in Ukraine. Towards the end of the year, the first signals were received about the ease of availability of semiconductors.

We changed the turnover outlook due to increased customer demand and higher than expected spot market purchases and customer transitory invoicing. We expect spot market purchases to be at a high level at least in the third quarter of the year, but the use of the spot market and the resulting transitory invoicing will decrease rapidly as the availability of components improves. We now estimate Scanfil’s 2022 turnover to be EUR 800–880 million. Regarding the adjusted operating profit, we stick to the previous outlook of EUR 43–48 million.

To respond to the increase in customer demand, we acquired new production space at the beginning of the year at the Atlanta and Wutha factories. During the spring, we have also increased production space at Suzhou and Malmö factories. In total, we have increased production space by 11,000 m² in 2022.

I thank our committed personnel for their excellent work in challenging conditions and our customers for their support and trust”.