OULU, FINLAND -- Scanfil reported second quarter sales rose 23.2% year-over-year to EUR 212.9 million ($217 million).

Operating profit was EUR 10.1 million, down 4.1%, while net profit was EUR 7.1 million, a decrease of 17%.

The EMS company reiterated its Jul. 13 guidance for 2022 revenue of EUR 800 million to 880 million and adjusted operating profit will be EUR 43 million to 48 million. The outlook involves uncertainty especially arising from the availability and price level of semiconductors and the delivery capability of the supply chain. In addition, the war in Ukraine and Covid-19 might create risks and uncertainties.

Scanfil is striving for 5% to 7% annual organic sales growth and a 7% operating profit.

In a statement, CEO Petteri Jokitalo said, “The turnover for the second quarter was at a record high level. Customer demand was generally strong in all customer segments. Individual customer products with a strong demand were, e.g., process automation systems, analyzers, frequency converters, reverse vending machine and indoor air products.

China's corona measures in April-May and the poor availability of electronic components caused challenges during the quarter. In order to meet customer demand, we had to buy, especially semiconductor, components at a significantly higher price than the normal price on the spot market. We invoiced our customers for the additional costs that arose from this, but in general without a material margin. This kind of transitory invoicing affected the turnover of the second quarter by EUR 29.5 million. Without this transitory invoicing, the turnover for the second quarter was EUR 183.4 million.

Operating profit in the second quarter was EUR 10.1 million. The operating profit was negatively affected by the exchange rate loss of EUR-1.4 million, mainly due to the strengthening of the US dollar. China's corona lockdown measures affected the profitability of the Suzhou factory, especially in April, after which we have recovered to a normal level of operation and profitability in May-June. We expect the operating profit to develop positively in the second half of the year.

The net cash flow from operations turned positive in the second quarter and was around EUR 2 million. Strengthening net cash flow and the related halting of inventory growth will remain a key focus area in the second half of the year.

Our customers indicate further strengthening demand for the latter half of the year. The key near-term business risks are related to the availability of materials, especially semiconductors, the development of the corona pandemic, especially in China, and the effects of the war in Ukraine. Towards the end of the year, the first signals were received about the ease of availability of semiconductors.

We changed the turnover outlook due to increased customer demand and higher than expected spot market purchases and customer transitory invoicing. We expect spot market purchases to be at a high level at least in the third quarter of the year, but the use of the spot market and the resulting transitory invoicing will decrease rapidly as the availability of components improves.

To respond to the increase in customer demand, we acquired new production space at the beginning of the year at the Atlanta and Wutha factories. During the spring, we have also increased production space at Suzhou and Malmö factories. In total, we have increased production space by 11,000 m² in 2022.

 EUR = 1.01840 USD

PCB West: The leading technical conference and exhibition for electronics engineers. Coming Oct. 4-7 to the Santa Clara (CA) Convention Center. pcbwest.com

• Prev
• Next