Scanfil Oyj Ord

Welcome to Scanfil's financial statements report webcast presentation. My name is Pasi Hiedanpää. I'm responsible for investor relations and communications at Scanfil. As a practicality, you can type in the questions in the chat window and we will address all the questions later during the presentation. Together here with me is our CEO, Mr. Kristoff Sut and CFO Kai Valo. Now handing over to Kristoff Soot, please.

thank you Pasi and wishing you welcome for this q4 report let's start first of all i wanted to go on a few key events that we had during the quarter it was a very eventful quarter and on the customer front we started to see a very dynamic market on the medtech and life science which translated both in increase of customers during 2024 but also a return to growth if we compare this quarter to the same quarter of last year so from that perspective a very positive quarter for medtech and life science On the internal side of the company, we announced just before, just at the end of Q3, an evolution of our organization and the creation of four regions. That has been implemented during the quarter and has been running full speed from the beginning of this year. So here as well, things have been delivered on time and delivered as planned. The last quarter was also very active on the sustainability front. We continue to implement our plan and have also been working on our CSRD reporting that you will discover in a few weeks from now. So there as well, good development. Looking at the last point, which is acquisition and investment, we announced at the beginning of first quarter the acquisition of SRX Global that gives Canfield now presence in Malaysia and Australia and also a new portfolio of customers. That's an acquisition that was very welcomed by our customers and we have, following the first month, taken the decision to increase the capability in our Malaysian site where we have secured additional manufacturing space. And we have also announced the investment of a new SMT and THT line that should be up and running during this year. And this investment is now already starting to be under implementation. So as you can see, just taking a few elements of it, a few transformational activities have been going through during this quarter for Scanfield. If I go back to the change in organization, it means that we have now three new members in the management team and at least four persons that have new positions. Annette Mulis joined us during Q4 as the chief people officer and she has a long-standing experience in human resources and will help us in our goals journey to make sure that we are able to grow talent and attract talent. very happy to get Annette as part of the team during that quarter. On the other side, you can see that we have now three new regional presidents. All of them actually come from the company, starting with the first one on the list, Steve Kreutz. that is now VP of Nurse in Europe. He has a long-standing experience, has been running our Audvideberg site in a very successful way, has a strong commercial background, which we believe is is what is needed for our northern europe region so very happy to have steve part of the team and and that he accepted the challenge on the epac region since now we have suchu but also srx global being part of it christian kesten that has been for quite a few years now running our suchu facilities he has accepted the challenge to run the impact region and is now full speed continuing the development of Suchu that is clearly a top notch facility for Scanfield, but also bringing the SRX global team alive and as new members of the Scanfield community. So very pleased to have Christian on board. And then last but not least, Marko Kosonen, that has a longstanding experience already in our management team, has been running operation in the past, has been running also supply chain, has accepted the challenge to run our central European region, which is a key region. We have a country like Poland, where we have two very significant facilities, but also Germany. And his broad experience and understanding of the company will help us to continue the development in that region that is strategic for us and our customers. So things went well and things went as planned. Now going to the number and to some more fact-based elements or tangible elements. First quarter was 212 million euros, negative 4% compared to last year, and organically negative 8.8%. It was a solid quarter, we believe, in execution. Profit margin was 14 million, which was the highest level of profit margin this year. and the 6.6 percent the quarter was impacted by some material cells that in a way diluted the percentage of margin so if you will shave that out you will realize that the the underlying profitability based on our operation was in the range of 7.3 which is in the corridor we aim at So it was a positive development there. On the business side, it was a very active quarter. We won deals, and I will get back to it a bit later, for 61 million euros, which makes it a very dynamic and very active quarter, bringing new customers and also new projects from existing customers, which is a good mix. and then as we have done for the rest of the year we focused on efficiency and making sure that we were adjusting our size to the size of the business we were facing as you can see the quarter in revenue was rebounding against a previous quarter so ended up a little bit stronger than the previous quarter of this year which was a positive development and obviously had the positive impact on our margin as well where as I mentioned before we had actually in value the highest quarter with 14 million which was also a positive development for the company. When we look at the customer base, we have a stable customer base, even if there are movements in it in terms of growth or slight decline from some customers related to the development of their business. But we keep having very good spread in our customers. The biggest customer is now landing around 13%. And after that, we have our top 10 customers that are in the range of 50% of the total revenue, so quite spread. And within those customers, it is usually big names, which means that it's usually several companies that are building that portfolio. So I think there, I would say no big surprise, a continuous improvement and continuous development has been mainly the word with the customers. Looking now at the development of our different segments, the industrial segment declined 5% year on year, but had very positive development in terms of won deals in the quarter. I mean, as you can see, 31.6 million was definitely the highest quarter in the year in terms of winning deal for that segment. We had the pleasure to win a couple of deals for the mining industry, which will come in manufacturing in the coming year, which actually made the difference for the quarter. So pleased to see that the long-term effort we have seen building relationship with customers are paying off and translating into a deal that we can win. Energy and clean tech rebounded from previous quarter to about 20 million euros. And there it was mainly a spread of new contracts that we are acquiring with existing customers in terms of loan deals. In terms of revenue, we were negative about 8% versus last year. It's a segment that has been, as you have seen, suffering the most this year from the correction. But we still see very dynamic development in terms of number of projects and opportunities. And our portfolio of clients there is getting stronger and stronger quarter after quarter. And then finally, as I mentioned, one quarter that we were very satisfied, one segment we were very satisfied with is actually MedTech and AliveScience that grew over last year by about 8% in terms of revenue. And that's obviously something that is pleasing. It shows the long-term commitment we have with our customer and the good quality of service we can provide to them. but also grew in terms of deals we won since this quarter we were very close to 10 million euros of new deals which was a record quarter for this year in terms of new deal bought in the company so that's a segment that we are happy to see that the effort we have put during the year both in getting new certification making sure that we beef up the teams in terms of sales and get close to our customers. Those efforts pay off again during this quarter. on the esg development we have a reduction of our co2 emissions since we started the journey by 52 percent we which was positive we are also reducing the share of increasing sorry the share of fossil fossil free energy i mean we did last year a significant investment for our suit shoe facilities where we have installed solar panels that is slowly starting to help the development since it came late in the year. Then on employee satisfaction, we remain at the high level. We are a little bit down versus previous year. I would say the main challenge was actually our Polish operation where we have had actually quite a lot of resizing because of size of the business, which will obviously affect a little bit the employee satisfaction in here, but something we are working on. Obviously, new projects coming in will create a different dynamic there and are creating a different dynamic. Finally, I would like to give you the picture of 2024. 2024 was a challenging year when you look at the market and you all know that. But in many ways, I'm very satisfied and very pleased to see the work the team has done. We reached 779 million euros, which was an organic growth negative of about 15%. But despite those circumstances, we managed to deliver operating margin level that was in line with previous year and in value 53.1 million, which was a challenging year to go through, but in many ways good because we could also work on our productivity and how we improve our company in those difficult times. So very pleased to see. Then in the same times we kept moving forward with our strategic initiative and it translated in new deals that we won. 187 million euros we believe is a significant number even if it will take time to implement but it's a good number. And we also acquired SRX Global, which was something we mentioned at the beginning of the year was important for us to be active again on the M&S front. So that was also a positive element. And all of this brought us to and the board to suggest a dividend of 0.24 per share, which then allow us to continue our journey to move upward in terms of the dividend level we can offer to our shareholders. So I will say in many ways, a year that was positive and that was building the company in a good direction. With those words, I will for now hand over to Kai, our CFO.

Thank you. I will deep dive a bit further in the P&L and the balance sheet, cash flow and the key figures. And starting from the Q4 operational expenses and operating profit, on the left side you can see the operating profit of the last quarter of 2023, and then on the right side you can see the operating profit of the last quarter of last year. And the improvement, like mentioned, 0.6 million improvement in the operating profit. How we end up from one figure to another turnover? like mentioned, was still declining 4% and almost 9 million. But what we did good is that we were able to improve our operational costs and operational efficiency and almost cover that with the lower expenses, almost the same amount lower expenses than we declined with the turnover. there was also chains of inventories nearly two million finished goods inventories at year-end which are then related to the year-end deliveries of whether they are recognized as revenue or inventory and inventory were a bit growing and not not recognized in the revenue so means that the production volume at the end of the day was two million two million uh higher or or less less lower than than what what the turnover would look like And as a result, the operating margin increased from 6.1% to 6.6% year on year in the last quarter. Looking at the full year in the same manner, left side we have full year of 2023 and then on the right side bar is the full year of 2024. And from 61.3 million operating profit, we declined to 53.1, about 8 million lower. But how we end up there is, looking to turnover, turnover dropped by more than 120 million and about 13% decline in the revenue. And again, we were able to mostly cover that with our operational cost improvement. Of course, that in a full year level, things are happening gradually and you are not able to do the improvements in the day one. And for that reason, it's not like a totally same effect as in Q4, but very good result. And operating margin was actually then ending up to be exactly the same 6.8% with significantly lower volumes. from the operational efficiency point of view very good result A few highlights about the balance sheet. First of all, inventory is 170 million roughly, 40 million less inventories than a year ago. And that is including some increase, 6 million increase at year end for SRX and some foreign exchange rate differences. And from the cash flow point of view, then the inventory reduction was more than 50 million euro which is probably more correct figure in my mind very good improvement and that was like strengthening the balance sheet we can see part of the effect we can see in the cash which we had 50 million at year end and actually 50 million is higher than our like financial debt loans because 70 million of interest-bearing debt is also including about 27 million of leasing liabilities. So we have more cash than we have like financing debt. Fixed asset, slightly growing part of that, maybe half coming from SRX and then half is investments in operational efficiency and customer needs and requirements. Equity, nearly 300 million out of 540 million of the total balance sheet. And if looking at the equity, And per share we have now 4.5 million if hypothetically would like sell all the assets and then pay all the debt you would have 300 million left and then 4.5 million per share which is quite good. Then net cash and more looking on the full year level. So the last year we generated cash flow. I have been asked what are the possibilities to generate cash in our business, but obviously we have been doing quite fine, 92 million last year. Like I said, about half of that is coming from the, or more than half, 50 million is coming from the inventories and then the rest from the profitability. um and then then the year before we have a high growth year but still still 70 million of of increase and and or cash and then then then the year before which was 22 and very very challenging year from the component market point of view still was 10 10 million positive in in cash so there is no no in the near past any negative years with the cash flow and vice versa very good year the last year Net debt we ended up to 21.2 and like mentioned that excluding the leasing liabilities then we would be basically no net debt at the moment It increased a bit from the previous quarter due to the SRX acquisition acquisition was more than 20 million or 30 million as a total but then the net debt is due to the good last quarter it's increased by 10 million from the previous so and we have liquidity level of 140 million million euro and then then why is that important is that we need to have certain level of liquidity to be prepared for working capital needs or be prepared for investments and and and also some some level of acquisitions with with this of course we need also some like fuel in the in the engine all the time so that then all 140 million is not available for investments or other purposes but but then a big big part of that could can be can be used and then then 90 million is unused credit facilities and 50 million is is in cash and Key figures, equity ratio strengthening by increased equity and then balance sheet, actually total balance sheet increasing a bit less than equity because we reduced inventory significantly. Net gearing is a bit like opposite of equity raiser Depth lowering and then total equity growing so then the raiser is very low Return on equity lower from the last year quite naturally because of the lowering Euro value of operating profit and the net profit And also that increasing equity value. But still not too bad level for the challenging year. And then earnings per share 0.6 and previous year 0.74 out of which then 0.6 we have decided to or we are proposing to pay the dividends of 24 cents. That's all from my side and I hand over back to Kristoff.