CEO’s review

Solid performance in exceptional environment

I am pleased with Scanfil’s solid performance in the third quarter.  We succeeded well in our COVID-19 countermeasures, and our profitability development was strong in exceptional circumstances. I am also delighted of the results of the customer satisfaction survey which show that also our customers think we have succeeded in our development work, and Scanfil can even better meet their expectations.

We also proceeded as planned in the transformation of our factory network: the Hangzhou factory was divested in July. In Hamburg, the negotiations were started with the personnel concerning the factory’s possible closing and continuing operations at other Scanfil factories.
Our turnover for the third quarter decreased by 7% from the last year’s strong reference period and was EUR 141.6 million. Turnover mainly decreased in the Industrial and Consumer Applications segments. July and August were quiet, while demand started to pick up in September. The delivery capacity of the supply chain set no significant restrictions on our deliveries.

The adjusted operating profit for the third quarter was EUR 9.9 million, comprising 7.0% of turnover. The achieved result is a solid indication of Scanfil’s flexibility and the capabilities of Scanfil’s personnel. The COVID-19 situation caused rapid changes in customer demand, which could be mitigated by reacting fast and managing costs tightly. Net cash flow from operating activities during this year was EUR 25.9 million, EUR 11 million better than a year earlier.The sales gains of the divestment of the Hangzhou factory were reported during the third quarter. The sales gains of EUR 11.4 million increase our reported operating profit for the quarter to EUR 21.2 million. The Hamburg factory’s planned closure is expected to result in a one-time cost of approximately EUR 6 million, estimated to occur in either the fourth quarter of the year or 2021, depending on the process’s progress.

The Hangzhou factory’s divestment in July had no significant impact on our turnover for the third quarter as the factory’s major customers have transferred their orders to other Scanfil units for now.  However, these sales mainly consist of intermediate sales that have no significant impact on profit.

Scanfil has a strong financial position. At the end of the third quarter, we had around EUR 20 million in cash assets and an unused credit facility of around EUR 56 million. The equity ratio was 53.3%, and net gearing was 14.4%.

Our outlook for the rest of the year has been specified and we estimate the turnover for 2020 will be EUR 590 – 610 million and adjusted operating profit EUR 38 – 40 million. Our estimate is based on our customers’ current demand forecasts.

The COVID-19 pandemic is not over, and it is clear that many uncertainties characterize the future. When times are challenging, it is even more important to focus on the essential: our customers’ needs and the good leadership of our employees. Scanfil’s strong balance sheet withstands these exceptional circumstances in sight and enables the required investments. I believe in Scanfil’s and also our customers’ ability to come out from this situation and become even stronger than before. I am proud of the contribution of our employees and grateful for customers’ trust.