SIEVI, FINLAND – Scanfil reported first quarter revenue was €196.6 million (US$210.7 million), an increase of 20.4% year-over-year.

In the first quarter, the largest customer accounted for about 17% of revenue, and the top ten customers accounted for about 55%.

Net profit was €8 million, up 5.6% compared to the first quarter of 2021. Operating profit was €10.3 million, 5.3% of revenue, an increase of 3.6%.

Operating profit was positively affected by the continuation of good customer demand. During the period, exchange rate changes had a slight negative impact on material expenses. In addition, material shortages caused lower productivity, especially in the biggest electronic factories.

“The turnover of the first quarter of the year was at a record high level, reaching €196.6 million, with an increase of 20% compared to the year before,” said CEO Petteri Jokitalo. “In general, customer demand has been strong in all customer segments. To mention some individual customer products with the robust demand parcel locker solutions, elevators, reverse vending machines for collecting drinking containers, lithium battery solutions, and indoor air quality systems.

“In addition to strong customer demand, turnover was affected by increased material prices. To secure component availability, we purchased semiconductors at a significantly higher price from the spot market. The excess price we invoiced our customers, but generally without material margin. In the first quarter, we had €17 million in our turnover, this above mentioned transitory invoicing in our books. Excluding this revenue, our turnover was €179 million.

“The operating profit of €10.3 million was in line with our expectations. Challenges in material availability caused us additional work, an increase in inventories, and decreased the productivity of our resources, especially in our largest electronics factories. We expect operating profit to develop positively toward the end of the year.

“Russia’s attack on Ukraine and continuation of the state of war is condemned and a massive catastrophe for the people of Ukraine. War has also generated cost inflation and negatively affected economic growth expectations in Europe. Since the war began, we have replaced our material suppliers in Russia and Ukraine with other suppliers, and, for now, the war has not had a significant impact on Scanfil’s business.

“The Covid-19 epidemic is not over yet. In January-February the number of infections increased in our European factories. In March the situation weakened in China, and authorities have ordered local restrictions and lockdowns. So far, we have been able to keep our factories running without breaks in production.

“Cash flow from operations in the first quarter of the year was €13.6 million negative, mainly due to the increase in receivables attributable to higher turnover and material inventory. The increase in inventories was affected by rising customer demand, higher material costs, and a slowdown in inventory turnover, which was caused by the challenges in material availability. Inventory management will remain our focus area in 2022.

“Scanfil has a strong financial position, enabling the execution of all planned investments. At the end of the period, equity ratio was at 45.4% and net gearing at 36.9%.

“Our customers are indicating a strong demand for 2022. Key business risks are related to materials, especially in the availability of semiconductors, the continuation of the corona pandemic, particularly in China, and the impacts of war in Ukraine.

“We changed our outlook because of the higher-than-expected spot market purchases and transitory customer invoicing. We expect our spot market purchases to be on a high level, at least during the second and the third quarter of the year. The use of spot markets and the transitory invoicing caused by it will decrease when the availability of the components improves, and the situation normalizes. We estimated our turnover for 2022 to be €750–820 million. Concerning the adjusted operating profit, we reiterate the original outlook of €43–48 million.

“I want to thank our committed personnel for the good work done in these demanding circumstances and our customers for the support and trust.”

Ed.: €1 = US$1.07