SCANFIL PLC INTERIM REPORT 24 APRIL 2020 8.00 A.M.
SCANFIL GROUP’S INTERIM REPORT 1 JANUARY – 31 MARCH 2020
Q1/2020: A robust start of the year; we keep our outlook for the year
January – March
– Turnover totalled EUR 144.1 million (Q1 2019: 129.9), increase of 10.9%
– Operating profit EUR 8.6 (6.8) million, 6.0% (5.3%) of turnover, increase of 26.1%
– Net profit was EUR 7.5 (4.8) million
– Earnings per share were EUR 0.12 (0.08)
Scanfil estimates that its turnover for 2020 will be EUR 590 – 640 million and adjusted operating profit will amount to EUR 39 – 43 million. The estimation is based on our existing understanding of impact of Coronavirus.
Scanfil update its definition of uncertainties related to the future outlook as following: “The 2020 guidance is subject to exceptional uncertainty due to the potential negative effects of the coronavirus pandemic on customer demand, supply chain capacity as well as the safety and operational capability of our own plants and personnel.”
The earlier definition of uncertainties was “The 2020 guidance is subject to exceptional uncertainty due to the potential negative impact of the Coronavirus epidemic on customer demand and, in particular, the situation in China.”
Long Term Target
Scanfil’s long-term target: In 2023, Scanfil is organically aiming for EUR 700 million turnover and 7% operating profit.
In addition, Scanfil is actively exploring acquisitions, especially in the Nordic countries and Central Europe.
|Turnover, EUR million||144.1||129.9||10.9%||579.4|
|Operating Profit, EUR million||8.6||6.8||26.1%||35.3|
|Operating Profit, Adjusted, EUR million||8.6||6.8||26.1%||39.4|
|Operating Profit, %||6.0||5.3||6.1|
|Operating Profit, Adjusted, %||6.0||5.3||6.8|
|Net Profit, EUR million||7.5||4.8||55.4%||28.1|
|Net Profit, Adjusted, EUR million||7.5||4.8||55.4%||32.1|
|Earnings per Share, EUR||0.12||0.08||53.4%||0.44|
|Earnings per Share, Adjusted, EUR||0.12||0.08||53.4%||0.50|
|Return on Equity, %||17.9||13.0||18.0|
|Return on Equity, Adjusted, %||17.9||13.0||20.4|
|Equity Ratio, %||48.8||46.4||49.1|
|Net Gearing, %||25.0||30.8||27.7|
|Net Cash Flow from Operations, EUR million||5.9||-0.4||35.9|
|Employees (Average)||3 522||3 443||2.3%||3 530|
The first quarter included no adjustment items.
Petteri Jokitalo, CEO of Scanfil plc:
Our turnover during the first quarter was EUR 144.1 million, showing an increase of EUR 14.2 million, or 10.9%, year-on-year. The development of sales was particularly strong in March, compensating for the slower February. Longer than expected, shutdowns of plants in China due to the coronavirus situation had a negative impact on realized sales in February. The delivery capacity of the supply chain did not set any major restrictions on our deliveries during the quarter.
Demand developed positively in the Communication, Energy & Automation, and Industrial segments. The acquisition of HASEC during the previous year attributed to two thirds of the growth.
The operating profit was EUR 8.6 (6.8) million, comprising 6.0% of the turnover, and increased by 26% from the previous year. Profitability developed as expected during the quarter.
In the first quarter of 2020, the net cash flow from operations, before investments and financial items, was EUR 5.6 (-0.4) million. Scanfil’s liquidity is strong: we had EUR 21 million in cash assets and an unused credit facility of EUR 37 million at the end of the quarter. The equity ratio was 48.8% and net gearing 25%. Scanfil’s financial position is strong, allowing our planned investments, providing safety in terms of short-term challenges and enabling flexibility for opportunities.
We have been determined to continue our investment program as planned. In 2020 we have invested, for example, in an electronics assembly line at the Sieradz plant and an automated storage system at the Åtvidaberg plant.
As a result of the coronavirus pandemic, Scanfil’s visibility for the rest of the year has decreased, and uncertainties have increased. Scanfil has risks related to customer demand, the delivery capacity of the supply chain, as well as the safety and capability of Scanfil’s plants and employees. We have already seen some of these risks materializing, and this trend will likely continue during the next months.
The health and safety of our employees is always priority number one. We always comply with the instructions of local health authorities, and we also share the best practices between our plants to minimize coronavirus risks. If necessary, we are also ready to take rapid and drastic measures to protect our employees.
We had in our Myslowice plant in Poland a two-week production stop due to coronavirus infections and related quarantine periods among employees. During the production stop, we revisited our plans and procedures to better avoid spreading of the COVID-19 virus in the factory and are ensuring normal operations after re-starting on Monday, April 27. The revisited plan will also be implemented in our other ten factories, where so far we have not experienced any similar disruptions.
Even we have seen some of our customers’ expected demand to drop during the second and third quarters, the big picture based on our customers’ forecasts for 2020 is still strong. We keep our guidance unchanged for the whole year, and we expect our turnover for 2020 to be EUR 590 – 640 million and our operating profit to be EUR 39 – 43 million. Uncertainties and risks are increasing, and we will update our guidance if this is necessary.
I am satisfied with our strong start at the beginning of the year. We are in good stroke now when we are heading to stormy times. I would like to thank all our customers and suppliers for your trust and support, and all our employees for a job well done.
The Group’s turnover for January – March was EUR 144.1 (129.9) million, increase of 10.9% compared to the corresponding period of the previous year.
Two thirds of the increase in turnover came from the acquisition of HASEC during the previous year, while one third comprised organic growth.
Turnover for the quarter was EUR 144.1 million, somewhat lower than we expected due to the longer-than-planned closure of Chinese facilities in February due to the corona epidemic.
The turnover of the Communication segment increased compared to first quarter of the previous year by EUR 4.4 million (24.7%). The biggest single growth driver was the demand for 5G network elements.
The Consumer Applications segment’s turnover decreased by EUR 4.8 million (-20.6%). The main reason for the decline in turnover in the first quarter is due to the timing of demand from a major customer, which is starting in the second quarter of the year, unlike last year. In addition, in this segment we experienced a softening demand from a few customers due to the corona epidemic.
The turnover of the Energy & Automation segment increased by EUR 5.0 million (19.5%). This increase came broadly from the segment’s customers and strengthened throughout the quarter.
The turnover of the Industrial segment increased by EUR 9.7 million (27.0%). This was mainly due to the acquisition of HASEC.
The turnover of the Medtec & Life Science segment remained at the previous year’s level.
The Group’s operating profit for January – March was EUR 8.6 (6.8) million, 6.0% (5.3%) of turnover. Operating profit increased 26.1% compared the corresponding period of the previous year. The increase in the operating profit resulted from the increase in turnover and improved operational efficiency. The net profit for the review period was EUR 7.5 (4.8) million.
Earnings per share for the review period were EUR 0.12 (0.08). Return on investment was 17.8% (14.0%). The improved return on investment resulted from results being higher than in the previous year.
Publication of financial releases
This stock exchange release is a summary of the Scanfil Group’s Interim Report 1 January – 31 March 2020 and includes the most relevant information of the report. The complete report is attached to this release as a pdf file and is also available on the company’s website at www.scanfil.com.
Webcast Q1 results
In conjunction with releasing our Q1 results, we arrange a webcast on 24 April 2020 at 10.00 am. You can follow the webcast https://scanfil.videosync.fi/2020-q1-tulokset. The presentation is in Finnish, and it will be held by CEO Petteri Jokitalo. On-demand recording from the webcast will be available on the company’s webpages later the same day.
The material presented in the webcast will be available around 10.00 am in Scanfil’s webpages http://www.scanfil.com/investors.
CEO Petteri Jokitalo
Tel +358 8 4882 111
Distribution NASDAQ OMX, Helsinki
Scanfil is an international contract manufacturer and system supplier for the electronics industry with over 40 years of experience in demanding contract manufacturing. Scanfil provides its customers with an extensive array of services, ranging from product design to product manufacturing, material procurement and logistics solutions. Vertically integrated production and a comprehensive supply chain are the foundation of Scanfil’s competitive advantages: speed, flexibility and reliability.
Typical Scanfil products include mobile and communications network devices, automation system modules, frequency converters, lift control systems, analysers, various slot and vending machines, and devices related to medical technology and meteorology. Scanfil services are used by numerous international automation, energy, IT and health service providers, as well as companies operating in the field of urbanisation. Scanfil’s network of factories consists of 11 production units in Europe, Asia and North America. The total number of employees is about 3,500.
Not to be published or distributed, directly or indirectly, in any country where its distribution or publication is unlawful. Forward looking statements: certain statements in this stock exchange release may constitute “forward-looking” statements which involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of Scanfil Oyj to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this stock exchange release, such statements use such words as “may,” “will,” “expect,” “anticipate,” “project,” “believe,” “plan” and other similar terminology. New risk factors may arise from time to time and it is not possible for management to predict all of those risk factors or the extent to which any factor or combination of factors may cause actual results, performance and achievements of Scanfil Oyj to be materially different from those contained in forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking information contained in this stock exchange release is current only as of the date of this stock exchange release. There should not be an expectation that such information will in all circumstances be updated, supplemented or revised, except as provided by the law or obligatory regulations, whether as a result of new information, changing circumstances, future events or otherwise.