SCANFIL PLC          INTERIM REPORT                          25  OCTOBER 2019       8.00 A.M.
 
SCANFIL GROUP’S INTERIM REPORT   1 JANUARY –  30 SEPTEMBER  2019

Q3/2019: Positive sales development with strong profitability. HASEC integration progress in schedule.
 
July -  September

- Turnover totalled EUR 152.3 million (Q3 2018: 131.5), increase 15.8%
- Operating profit EUR 12.1 (8.8) million, 7.9% (6.7%) of turnover, increase 38%
- Net profit was EUR 8.8 (6.9) million
- Earnings per share were EUR 0.14 (0.11)
 
January –  September
 
- Turnover totalled to EUR 424.8 (1-9 2018: 422.8) million, increase 0.5%
- Adjusted operating profit EUR 29.3 million,  6.9% of turnover
- Operating profit EUR 25.3 (30.3) million, 6.0% (7.2%) of turnover
- Net profit for the review period was EUR 18.3 (22.5) million
- Earnings per share were EUR 0.28 (0.35), adjusted earnings per share EUR 0.35

Future outlook
 
Scanfil changes its outlook for 2019 and expects the full-year turnover to be EUR 570 - 590 million and the adjusted* operating profit to be EUR 39 – 41 million in 2019.

Earlier Scanfil estimated, that its turnover for 2019 will be EUR 580 - 610 million and the adjusted* operating profit will amount to EUR 39 - 42 million.

*The adjustment items during January-September include expenses related to the acquisition of HASEC-Elektronik GmbH (EUR 0.4 million) and the impairment of Scanfil GmbH’s goodwill (EUR 3.6 million)

Key figures

Petteri Jokitalo, CEO of Scanfil plc:
 
The turnover in the third quarter was EUR 152 million, showing an increase of EUR 21 million, 16%  from the previous year. More than half of the growth was organic, and the rest from the acquisition of HASEC-Elektronik GmbH made in June. The turnover growth was particularly strong in the "Industrial" and "Medtec" segments.

The quarter was operationally strong: operating profit increased 38% year on year to EUR 12.1 million, 7.9% from the turnover. Strong profitability was driven by the factories' overall good performance and high utilization rate as well as the favorable product mixes. Net cash flow from operations for the quarter was EUR 7.3 million. At the end of the period, Scanfil's equity ratio was 43.3%, and gearing was 40.5%. Scanfil's financial position is stable.

The integration of HASEC-Elektronik GmbH, a German contract manufacturer acquired in June, is well underway. Building common business models and strategy for 2020 is progressing on schedule.
Scanfil has been received well by HASEC customers. Customers are clearly positive about Scanfil’s resources and potential that Scanfil brings as a global manufacturing partner. The received feedback fully supports our view that Scanfil has an excellent opportunity to grow business with Central European customers not only locally but also globally, especially from the factories in Eastern Europe, China, and the USA. Customers are in demand with our service offering and factory network; now, we need to show our ability to realize customer potential into sales!

Based on customer forecasts, we expect demand to continue to strengthen towards the end of the year and fourth-quarter sales to be strongest in the year. We also expect sales to continue at a strong level in the first quarter of 2020. We believe so, despite the fact that many of our customers have lowered their end-of-year demand forecasts due to general market uncertainty or purely customer-specific reasons.  Based on the changed outlook, we update our financial guidance for 2019 and estimate our turnover for 2019 to be in the range of EUR 570-590 million and the adjusted operating profit of EUR 39 - 41 million.

In a situation of growing uncertainty, we focus on the things that are in our own hands. We keep costs under control and increase cost flexibility. We also accelerate and invest in sales, where in addition to Nordic countries the focus is on Central Europe, and increasing sales activity in the US.

I am pleased with Scanfil's development in the third quarter. Thank you, our customers and suppliers, for your support and trust, and our employees for your successful work.
 
Financial Development
 
The Group’s turnover for January – September was EUR 424.8 (422.8) million, increase of 0.5% compared to the corresponding period of the previous year. In the Industrial customer segment, turnover grew by EUR 27.0 million, while turnover decreased by EUR 21.6 million in the Customer Applications customer segment.

The Group’s operating profit for January – September was EUR 25.3 (30.3) million, 6.0% (7.2%) of turnover. The operating profit includes adjustment items of EUR 4.0 million, which consists of expenses related to the acquisition of HASEC-Elektronik GmbH (EUR 0.4 million) and a write-down of goodwill (EUR 3.6 million) related to Scanfil GmbH’s business operations.

The business operations of Scanfil GmbH, a German subsidiary acquired in 2014, have not developed as expected, which is why the company has recognised a write-down based on impairment testing. The adjusted operating profit was EUR 29.3 million, or 6.9% of turnover. The adjusted operating profit decreased by 3.0% year-on-year This decrease was mainly due to a different product mix early in the year. The net profit for the review period was EUR 18.3 (22.5) million.
 
Earnings per share for the review period were EUR 0.28 (0.35). Return on investment was 16.2% (21.2%). The weaker key figures are mainly due to the adjustment items mentioned above and a decrease in the operating result in comparison with the previous year.

The Group’s turnover in July–September was EUR 152.3 (131.5) million and its operating profit was EUR 12.1 (8.8) million, 7.9% (6.7%) of turnover. The third-quarter operating profit does not include adjustment items. The result in July-September was EUR 8.8 (6.9) million.

The business operations of HASEC-Elektronik GmbH have been consolidated with the Scanfil Group since June 17, 2019. This had an effect of EUR 10.3 million on the Group’s turnover and an effect of EUR +0.4 million on its net result during the review period January-September.  The purchase price was EUR 10.3 million, from which EUR 3.8 million was preliminarily allocated to long-term customer relationships, where net deferred tax liabilities were EUR 1.1 million and EUR 1.6 million was recognised in unallocated goodwill. Information on the acquired net assets is provided in the tables of the interim report.

Publication of financial releases
 
This stock exchange release is a summary of the Scanfil Group’s Interim Report 1 January – 30 September 2019 and includes the most relevant information of the report. The complete report is attached to this release as a pdf file and is also available on the company’s website at www.scanfil.com.

SCANFIL PLC


Petteri Jokitalo
CEO

Additional information:
CEO Petteri Jokitalo
Tel +358 8 4882 111


Distribution         NASDAQ OMX, Helsinki
                           Major Media
                           www.scanfil.com

Scanfil is an international contract manufacturer and system supplier for the electronics industry with 40 years of experience in demanding contract manufacturing. Scanfil provides its customers with an extensive array of services, ranging from product design to product manufacturing, material procurement and logistics solutions. Vertically integrated production and a comprehensive supply chain are the foundation of Scanfil’s competitive advantages: speed, flexibility and reliability.
 
Typical Scanfil products include mobile and communications network devices, automation system modules, frequency converters, lift control systems, analysers, various slot and vending machines, and devices related to medical technology and meteorology. Scanfil services are used by numerous international automation, energy, IT and health service providers, as well as companies operating in the field of urbanisation. Scanfil’s network of factories consists of 11 production units in Europe, Asia and North America. The total number of employees is about 3,600.

Not to be published or distributed, directly or indirectly, in any country where its distribution or publication is unlawful. Forward looking statements: certain statements in this stock exchange release may constitute ‘forward-looking’ statements which involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of Scanfil Oyj to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this stock exchange release, such statements use such words as ‘may,’ ‘will,’ ‘expect,’ ‘anticipate,’ ‘project,’ ‘believe,’ ‘plan’ and other similar terminology. New risk factors may arise from time to time and it is not possible for management to predict all of those risk factors or the extent to which any factor or combination of factors may cause actual results, performance and achievements of Scanfil Oyj to be materially different from those contained in forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking information contained in this stock exchange release is current only as of the date of this stock exchange release. There should not be an expectation that such information will in all circumstances be updated, supplemented or revised, except as provided by the law or obligatory regulations, whether as a result of new information, changing circumstances, future events or otherwise.

Attachment

• Scanfil Q3 2019 Interim Report