SIEVI, FINLAND – Scanfil Group reported first quarter revenue of €144.1 million (US$156.2 million), up 10.9% year-over-year.

Revenue was somewhat lower than expected due to the longer-than-planned closure of Chinese facilities in February as a result of the coronavirus epidemic.

Net profit was €7.5 million, an increase of 56.3% compared to the first quarter of 2019. Operating profit was €8.6 million, 6% of revenue, up 26.1%.

“Our turnover during the first quarter was €144.1 million, showing an increase of €14.2 million, or 10.9%, year-on-year,” said CEO Petteri Jokitalo. “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. Operating profit was €8.6 (6.8) million, comprising 6% of the turnover, and increased 26% from the previous year. Profitability developed as expected during the quarter.

“In the first quarter of 2020, net cash flow from operations, before investments and financial items, was €5.6 (-0.4) million. Scanfil's liquidity is strong. We had €21 million in cash assets and an unused credit facility of €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 restarting on Monday, Apr. 27. The revisited plan will also be implemented in our other 10 factories, where so far we have not experienced any similar disruptions.

“We have seen some of our customers' expected demand 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 €590-640 million and our operating profit to be €39-43 million. Uncertainties and risks are increasing, and we will update our guidance if this is necessary.”

Revenue in the Communication segment increased €4.4 million (24.7%) year-over-year. The biggest growth driver was the demand for 5G network elements.

The Consumer Applications segment’s revenue decreased €4.8 million (20.6%). The decline in revenue was a result of the timing of demand from a major customer, which starts the in the second quarter of the year. In addition, this segment experienced softening demand from a few customers due to the coronavirus. Energy & Automation increased €5.0 million (19.5%).

Scanfil estimates 2020 revenue of €590 million to €640 million and adjusted operating profit of €39 million to €43 million.

“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.”

In 2023, Scanfil is organically aiming for €700 million revenue and 7% operating profit.

In addition, the company is exploring acquisitions, especially in the Nordic countries and Central Europe.

Ed.: €1 = US$1.08

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