Third quarter 2023 (Q3 2022)

• Order intake increased year-on-year to SEK 154 million (143)
• Sales decreased 35 per cent to SEK 78 million (120)
• Operating profit totalled SEK 7 million (11), corresponding to 10 per cent (9) of revenue
• Adjusted operating profit totalled SEK 5 million (6)
• Profit after tax totalled SEK 4 million (8)
• Earnings per share amounted to SEK 0.07 (0.13)
• Cash flow from operating activities totalled SEK 43 million (39)

January–September 2023 (January–September 2022)

• Order intake totalled SEK 340 million (338) compared with the year-earlier period
• Sales decreased 16 per cent to SEK 357 million (422)
• Operating profit totalled SEK 33 million (87), corresponding to 10 per cent (13) of revenue
• Adjusted operating profit totalled SEK 31 million (82)
• Profit after tax totalled SEK 23 million (66)
• Earnings per share amounted to SEK 0.38 (1.12)
• Cash flow from operating activities totalled SEK -34 million (119)

Events during the third quarter of 2023

• On 18 September, Permascand announced that it had received two orders from one of the world’s largest commodity trading companies regarding aftermarket services in electrowinning.
• On 12 September it was announced that Permascand had joined Hydrogen Europe, a leading organisation in the world of hydrogen. The membership will enhance Permascand’s presence in the European green hydrogen ecosystem.

Significant events after the end of the reporting period

• On 25 October, Permascand announced that the company had signed a letter of intent with a leading green hydrogen technology provider concerning high-performance electrodes for advanced alkaline electrolysis.
• On 2 November, Permascand announced a SEK 17 million order for advanced electrodes for hydrogen production.

CEO comment

The third quarter of the year was characterised by a stronger order intake and progress in our Electrification & Renewables segment, which is continuing its robust growth and where we have advanced our positions in our hydrogen gas offering.

Order intake for the quarter totalled SEK 154 million, mainly consisting of two orders in Electrification & Renewables that we announced in September. These orders pertain to aftermarket services in electrowinning and confirm that our customer focus is leading to strong, long-term customer relationships. The orders will be delivered at regular intervals during 2024.

Sales for the third quarter totalled SEK 78 million. This is a decrease of 35 per cent year-on-year, which is attributable primarily to the sharp decrease in sales in Water Treatment in line with our forecasts. Sales were driven by deliveries in both Electrification & Renewables and Industrial Solutions, both of which grew compared with the year-earlier period.

Gross profit for the quarter totalled SEK 26 million, corresponding to a gross margin of 33 per cent (22). The main reason for the stronger gross margin is the product mix for the quarter in Industrial Solutions’ aftermarket business. We can also state that we have a positive cash flow of SEK 43 million from operating activities during the quarter, as a result of lower trade receivables and advance payments from customers in conjunction with new orders.

To stay on the leading edge and strengthen our offering, Permascand will continue to invest in research and development. Developing the market’s most efficient, high-quality products with energy efficiency, extended life cycle and stability as our areas of focus. These factors are increasingly in demand, are central to Permascand’s core technology offering as well as being necessary components in being able to reduce the costs of producing green hydrogen.

Electrification & Renewables
In Electrification & Renewables, sales increased 77 per cent to SEK 23 million. Sales comprise mainly of development projects with the long-term ambition to start serial production resulting in improved margins. We leave the quarter with a strong order book while the level of activity remains intensive in all areas: hydrogen, electrowinning and electricity transfer. In green hydrogen, we recently signed a letter of intent with a leading supplier of green hydrogen technology, with Permascand’s product and production offering being central to achieving future levels of ambition. After the end of the quarter, we won a commercial order of SEK 18 million for hydrogen from an unnamed customer. It pertains to high-efficiency electrodes for advanced alkali electrolysis of water, with planned delivery in 2024. We are seeing increased volumes of electrodes as an initial sign that hydrogen projects are nearing the commercialisation phase.

Industrial Solutions
Industrial Solutions accounted for the majority of sales, which increased 20 per cent to SEK 49 million. In the quarter, sales consisted mainly of aftermarket services, after having also delivered orders for major greenfield projects in the first half of the year. The gross margin performed positively because of this larger share of aftermarket business. The order intake varies between quarters, just as sales do. After the end of the quarter, a large aftermarket order of SEK 52 million was placed for delivery in 2024.

Water Treatment
The sharp decrease in the levels of order intake and revenue in Water Treatment was due to a decline in the global market linked to the installation cycle and stockpiling among customers. We are now delivering from our existing order book, which is not expected to grow substantially until after 2026 when the aftermarket business in the segment is estimated to achieve meaningful volumes.

Outlook
As regards order intake, the fourth quarter has gotten off to a good start with a commercial order for hydrogen as well as aftermarket business in Industrial Solutions, which strengthens Permascand’s order book for 2024 and beyond.

In line with previous assessments, sales for full-year 2023 are expected to be lower than in the preceding year as a result of the decrease in sales in Water Treatment. Over the short term, sales performance will be adversely impacted by the downturn within Water Treatment, but over time it is expected to be fully offset by Industrial Solutions and Electrification & Renewables.

We are experiencing a continued high level of activity and advanced dialogues with many of our customers, which means we see a favorable outlook for the order intake in the months ahead – including in the form of larger commercial orders in hydrogen, where we are pursuing far-reaching discussions with several operators, as well as in the form of aftermarket services in Industrial Solutions.

We enter the final quarter of the year with yet another profitable quarter of positive cash flows behind us. With a strengthened order book and commercial advances in hydrogen while Industrial Solutions is continuing its stable growth over time, we look forward with confidence to the end of the year and the quarters immediately following.

Peter Lundström, CEO Permascand

Report presentation
CEO Peter Lundström and CFO Linda Ekman will present the report in a conference call today at 10:30 CET. The presentation will be held in English and will conclude with a Q&A session.

Webcast
https://ir.financialhearings.com/permascand-top-holding-q3-report-2023

Registration
To participate via teleconference, please register via the link below. After registration, you will be provided with telephone numbers and a conference ID to access the conference. You can ask questions verbally via the telephone conference.

https://conference.financialhearings.com/teleconference/?id=5003308

After the presentation, a recording of the webcast will be available on the webcast link and on the company’s website www.permascand.com

Link to report
The report is attached to this announcement and can be found at: https://permascand.com/investors/financial-reports/