CEO’s review

Q4/20 and 2020: Solid performance in exceptional year. Customer demand picked up towards year end.

Overall, I am satisfied with our performance in 2020. I want to thank our committed personnel and our customers and other stakeholders for your trust.

Petteri Jokitalo, CEO:

The turnover for the fourth quarter was EUR 154.1 million. The growth was mainly driven by the Medtec & Life Science, Energy & Automation and Consumer Applications” customer segments. Also, demand among several customers, affected negatively by the Covid-19 pandemic earlier in the year, recovered during the fourth quarter.

The adjusted operating profit for the quarter was EUR 10.4 million, comprising 6.8% of turnover. Our countermeasures to coronavirus were successful and the performance of our personnel and factories remained high.

The year 2020 was an operationally strong year for Scanfil despite exceptionally challenging circumstances and proof of Scanfil’s personnel’s capability and the flexibility of the company cost structure. Covid 19 pandemic shaped the year, and the operative focus stayed on employees’ safety and ensuring customer deliveries continuity. Our turnover in 2020 was EUR 595.3 million, and our adjusted operating profit was EUR 39.1 million, or 6.6% of turnover.

The sale of Hangzhou factory was realized in July, and now Scanfil’s focus in China is on the manufacture of electronics and integrated products at the Suzhou factory. In December, we decided to close the Hamburg factory and continue its production at other Scanfil factories in Germany and Poland.  Production is expected to be transferred, and the plant to be closed, by the end of the third quarter of 2021. The arrangement is expected to result in annual cost savings of approximately EUR 2.5 million. These measures aim to secure and further improve the long-term performance and competitiveness of Scanfil’s factory network.

The reported operating profit for 2020 of EUR 44.4 million includes sales gains from the Hangzhou factoryand adjustments related to the Hamburg factory’s shutdown.

The Board of Directors proposes that EUR 0.17 per share be paid in dividends for 2020. If the Annual General Meeting to be held this spring approves the dividend proposal, Scanfil increases its dividend for the eighth year in succession. At the same time, the dividend distribution ratio has remained at the targeted level, approximately one-third of earnings per share.

Our strategic goal is to expand our customer base and increase our market share, especially in Germany and more broadly in Central Europe. The region has a highly attractive contract manufacturing market, offering large growth potential for Scanfil. The idea is to provide our customers both a local manufacturing partnership with our Wutha factory in Germany and Scanfil’s global partnership, factory network and service range. We made positive progress with our strategic goal during the year; our turnover developed positively in Central Europe, and we signed new global agreements with our current local customers in the region.

We enter 2021 with confidence. Our customers’ forecasts for the year are mainly showing growth, and we target for growth in both sales and operating profit. However, it is clear that the year also includes uncertainties: the coronavirus pandemic is still here, and there are also signs of risks associated with the availability of certain materials.  We have identified these risks and defined as well as launched appropriate actions to mitigate.

Our long-term target for 2023 is to achieve a turnover of EUR 700 million and an operating profit rate of 7%. We are also actively investigating acquisition opportunities, especially in the Nordic countries and Central Europe.

Overall, I am satisfied with our performance in 2020. I want to thank our committed personnel and our customers and other stakeholders for your trust.