OULU, FINLAND – Scanfil posted revenue for the third quarter up 18.5% year-over-year to €167.8 million (US$194.6 million).

Net profit was €5.1 million, down 71.7% compared to the third quarter of 2020. Net profit was negatively impacted by a non-recurring tax item of €1.7 million.

Operating profit was €9.5 million, a decrease of 55.2%, 5.7% of revenue.

For the first nine months of 2021, revenue was €504 million, an increase of 14.2% year-over-year.

Net profit was €21.3 million, down 37%. Operating profit was €30 million, down 25.2% year-over-year, 6% of revenue.

Scanfil estimates 2021 revenue of €670 million to €710 million and adjusted operating profit of €41 million to €44 million.

The guidance for 2021 involves uncertainty arising from the potential negative impact of the availability of certain materials, especially semiconductors, and the Covid-19 pandemic on customer demand, as well as the delivery capability of the component supply chain.

in 2023, the company is organically aiming for €700 million revenue, with 7% operating profit.

“The third quarter turnover was €167.8 million, an increase of 18.5% compared to the previous year,” said CEO Petteri Jokitalo. “Record-high turnover growth was boosted by robust customer demand and also rising material prices. Customer demand was especially strong in the product groups within energy efficiency, indoor climate, automation, recycling, and elevators.

“Turnover growth of 18.5% includes €11.7 million of transitory separately agreed non- or low-margin customer invoicing. This was due to material constraints and the use of often more expensive spot market in order to secure customer deliveries. Turnover excluding these transitory customer invoiced items increased by €14.5 million, 10.2% compared to the previous year.

“The operating profit for the quarter was a healthy €9.5 million, 5.7% of turnover, but below our 7% operating profit margin target level. The main negative impacts on the period’s operating profit came from challenges in material availability and costs related to the Hamburg factory production transfer and closure.

“The production transfer from Hamburg to our factories in Poland and Germany was finalized by the end of September, and production ended in Hamburg. We continue to have a small team left in Hamburg until the end of the year to support the production in other factories and customer communications.

“Material constraints were negatively impacting the operating profit in two ways: factories’ productivity decreased due to continuous changes in production based on material availability and ensuring required materials by more expensive spot market purchases, which the customers compensated for mainly on a no-margin basis.

“The negative impact on the quarter’s operating profit caused by material constraints and the Hamburg factory closure was about €2 million, or about 1.2% of the turnover. This is the operating profit potential we are determined to realize in the coming quarters.

“Scanfil’s balance sheet remains strong and enables all necessary investments, as well as the seizing of business opportunities. The equity ratio was at 46.8% and net gearing at 25.2%.

“Strong inventory growth has impacted our cash flow from operations during the quarter. We have increased our inventories to ensure materials for strong customer demand, and at the same time, material shortages have decreased the rotation of our inventories. Actions to slow down and finally stop the inventory growth have been started, and results are already expected during the fourth quarter.

“We expect strong customer demand to continue for the remainder of the year. Key risks are related to the availability of certain materials, especially semiconductors, where we believe circumstances will continue to be challenging with no quick recovery in the foreseeable future. We need to consider the material situation as a new normal where deep cooperation with customers and suppliers make a difference. We are also confident we can gradually increase our material margins back to the normal level.

“The situation with the pandemic has improved in most of our geographic areas of operations, and we have continued to reduce our preventative actions in our factories.

“The year has been exceptional. Strong customer demand, challenges with material availability, the fight against Covid-19, and the Hamburg production transfer have required a lot from our staff. I want to thank our dedicated employees for a good job and our customers for their support and trust.”

Ed.: €1 = US$1.16