Scanfil Oyj Ord

Good morning. Welcome to Scanfil's Q4 2025 report. My name is Pasi Hiedampaa. I'm the Director of Investor Relations and Communications at Scanfil. Together with me, here are our CEO, Mr. Kristoff Sutt and Mr. Kai Valo, our CFO. Now handing over to Kristoff. Kristoff, please.

Thank you, Pasi. Welcome and happy to start to give you some feedback on how 2025 ended. A few key events for 25 years and Q4 was a very active quarter, very active in many ways with our customers. We had the significant development project that we agreed with our customer Valmet that is a long-term historical customer that we are very happy to serve. We also had very good development in our partnership with Tomra, as you have I'm sure seen, they won a significant deal in the Polish market, which obviously we had to produce for them after that. So exciting project and good development from that side. Continuing on the expansion of the company in an organic way, we have also had the solid development for quite a long time in our operation in Suchu and came to the conclusion that it was now time to expand the facility. So we have now initiated a project that will basically double our capacity in China and in our soju plants that we are very proud about. So all those things were in Q4 preparing to fuel continuous organic growth. Then in the same time, we had two acquisitions that were completed. Actually, the second one was completed just after the closing of Q4, but the first one, ATCO, was completed just before Christmas, and we have now a second operation in North America which offers also an alternative to our customers, so very happy to have ADCO part of Scanfield. And then the second one that we completed this time just passing the new year, but that we worked on during the whole 25, is MB Electronica that is now part of Scanfield and with MB we have the chance to have a very modern facility in South Europe, a lot of competence in medtech and aerospace and defense and very valuable customers. So a few activities that were really important in our world journey towards a more stable global and sustainable company. When we look at the number, I will say that the end of the year was solid. We posted organic growth of 7.6%, almost 8%, which is definitely even in line with our long-term expectation, even a bit lower. higher, and we managed to keep a level of profitability at a solid level, 7.3% of comparable EBITDA, which I'm very proud of because when you deliver this level of growth, it means that we had quite a lot of projects that were in an NPI phase, starting phase, where you have a level of cost that can be important. So balancing that with the profitability. was, I think, a very good performance from the team. We continue to develop our customer base. We signed deals for a value of 59.2 million euros during the quarter, and you will see later it gives us a very good development when you look at the full 25. And we had also a very solid development in the two segments that we have identified as key for Scanfield Futures, meaning energy and cleantech as well as medtech. And then in parallel we had strong momentum in North America where we continue to grow organically at a very high pace and where we also started a second line of electronic manufacturing that will basically double our capacity so we will support our future growth. So I will say the number were solid, the number of activities were quite important and quite numerous, and that's, I think, a good combination for the quarter and for preparing the future. All in all, it resulted in earning per share development positive, it was 40% above what it was last year, and which allowed us to propose an increased dividend to 0.25. that will be decided during the AGM later in the year. So many happenings, but a positive and solid development in the quarter. I mentioned the development of the revenue and the profit. I think that, as I said, I think what is important is to see that we have managed to build the base and the stability level for now many quarter in our profitability that makes us both predictable and solid and robust, which I appreciate. So I think that, for me, that's something that I keep with those curves and these quarteries. We manage to be where we are supposed to be quarter after quarter. And that, I think, is positive for Scanfield. When we look at our regions, starting with North America, North America had a positive development in revenue. We had 13.9 million in the quarter, 19.6% organic growth for the quarter, which is a strong development. And the quarter full of activities. I mean, we had in November the start of our new SMT line in Atlanta. which will now be able to start to increase the production, which was, in a way, bringing some disturbances on the line. I mean, at least cost-wise, we had to take some costs to be able to increase the capacity and to train people and to bring new people on board. And also, we had our ATCO friends that joined us at the mid of December, which was a time of the year where you don't really get costs. don't really get revenue, you mainly get cost. So as an impact of that, the profitability was a bit lower than average, but it was mainly due to those two elements. And I will say for Atlanta operation in December, we were already back to a good level of profitability and a new line up and running that was creating growth. And for ADCO, I think that's nothing strange in that. I mean, they just came and we had just the last two weeks of the year, which are not weeks where you get a high level of revenue. So I will say all in all, very pleased with the development in America. Momentum, good momentum with customers, significant win in energy and clean tech that are now materializing in our operations, and a good perspective for the future. APAC region had a quite stable ending of the year, an organic growth of 2.7% and a strong margin with 8.7%. That was very stable. I think there, I mean, we have a good positioning with our strategy of China plus one, where we can now offer an alternative to China in Malaysia, where we get good interest. And we are starting to ramp up our Malaysian operation after we inaugurated the new capabilities in Q3. And we foresee a positive development there, and that's why we have decided to expand our Suchu facility. I mean, we are coming to a point where we need more space to support the needs of the business. which is a positive element. So I would say a solid quarter that was delivering to our expectation and that is allowing us to continue the development of the region. Moving to Central Europe, we had the quarter with 9.6% organic growth, which was positive, and a solid EBITDA, comparable EBITDA of 9%. It was also a very transformational quarter because MB Electronica will belong and will be from the next quarter reporting within Central Europe. So, obviously, quite a lot of activity there to finish and to close that transaction and to prepare also for the integration. In the region, we have also initiated a plan to do some restructuring and adjustment, and here it's just a matter of keeping ourselves up to speed in terms of efficiency, and we believe that it will produce positive effect on the second half of this year. So, I will say all in all, a solid market where we see the growth of our energy and clean tech segment materializing step by step, and also a region where we will have a transformation effect with ENB joining. Northern Europe, we had also a positive development in the quarter, an organic growth of 7.2%, which was driven by mainly two I will say two sectors. One is energy and clean tech. And I have one of them mentioned. I mean, the development with Tomra that was positive with the Poland rollout. But also our defense business was also very positive in the quarter and driving growth. And we kept a level of profitability that is good for the region. So all in all, I think it was a solid quarter for Northern Europe and a solid performance. Looking at the impact on our customers, I mean, we can clearly see that our top 10 customers, and I have spoken many times about how Scanfield is trying to be a good partner for global leaders that want to expand across the globe. And we can see that this is materializing more and more. I mean, the weight of our top 10 customers increased a little bit during the quarter, which is the outcome of long-term collaboration and development that we see materializing into new businesses. So from that perspective, positive. If we now look at our different segments, we had a slightly negative development year-on-year in terms of revenue for our industrial segment, which is obviously a difficult segment to read through. It's many different types of customers, but I would say it's a slightly negative development on revenue. based on mainly customer market condition. Then in terms of winning deals, I think that the quarter was at a 17 million level, which was slightly below last year. But when we look at year on year, we had a positive development in that segment with a growth of about 15%. which is mainly due to the development of new global customers that we have brought on board and worked with over years and that are now starting to materialize. So I would say we can have a more positive perspective for the coming years than what we had last year for that segment. Looking at energy and clean tech, in terms of revenue, we had a positive development year on year in the range of 8%, which was good. And in the same time, we had a very strong level of loan deals with 28 million, which was an increase versus a record Q1. So it was a very strong development and an increase versus last year. I mean, if we look year on year, we have loan deals for about 12% more. this year, which I think is showing the momentum we have and we can see that in particular in energy and clean tech we have built strong relationship with our customers and they are now getting closer to us and really looking at us and how we can help them in developing their business. So I think both the growth in revenue and the growth in deals that we won during the year are a positive signal to the strategy choice we made, but also positive signals towards prospective for the coming year. Then medtech and life science. Medtech and life science had very strong quarters in terms of wins. I mean, for the second time, we passed the bar of 10 millions of wins during the quarter. It has not materialized yet in terms of revenue. Obviously, it's a long-term effort. When you win a deal, it takes six to 18 months, depending on the deals you win, to materialize. But very positive development. And if you look at this year, we have 35% growth in deals win in that segment. which I think is also a good encouragement for us that have decided to develop our skill set and competence in medtech and life science. So that's something positive to see that our customers are seeing that. We are also developing certification in many of our sites. China and Poland will be the leading site for that segment. And it's materializing now. So positive that things go hand in hand and materialize together. Finally, giving you a picture on ESG development. We set target a few years ago for how we want to land in 2030. The first one was about CO2 emission. We closed 25 at a level that is far below even our expectation for 2030, which means that we will, during this year, rework our target to something realistic. I think that it's very pleasing that we can be an efficient sustainable company and that sustainability also brings us efficiency. And I think it's also very pleasing when you know our customer portfolio to see that the journey we are making is the journey they are making and all end in end we can move forward. I think we won quite a few awards from our customers for sustainability development. And then with the CO2 emission, the share of fossil-free energy has also reached the 2030 target, so will also have to be revised. We believe there is still progress to be done on both of it. And then employee satisfaction was also increasing this year to 72 from the 70 last year. So in the journey of making the company a more sustainable and respectful company to its stakeholders and environment, We are both very excited by the outcome, but also very excited by all the activities we make every day. And I'm also very proud to see that we do that in a way that is economically sustainable as well. So I think it's a nice feature and a good development for us and inspirational for us. With that, I will hand over to Kai.

Thank you, Christoph. Good morning. I will start with and go back to the profitability and comparison to the previous year. This is Q4 comparable EBITDA. Q4 25 is on the right side and the previous year is on the bar on the left side. And like Christoph mentioned, turnover organic growth was very strong, 7.6% and 16 million in euro. In addition, we got turnover increase from M&A, from ADCO, which was mentioned that we closed in the middle of the month and therefore not that significant number, but being included, good all in all. But have a bit like a headwind with the foreign exchange rate when we translate the local currencies to our reporting currency, euro, especially coming from US dollar and Chinese yuan. We lost 5 million euro in the translation in comparison to the previous year, and that is equal to over 2%, 2.3%. Also, last year we had one time in invoicing regarding the consignment inventories, 14.5 million, which is not a repeatable turnover and therefore showing that also as a negative here. 14.5 million, 6.8% percentage-wise impact. Besides the turnover organic growth, we also have some growth in the inventory, 2 million equal to 1%, and that is basically in products which are produced and more likely shipped on the way, but based on the delivery terms, it's not. not considered as revenue even if it would be in invoiced already so the production volume was even a bit further higher in comparison to the previous year one percent more so in that sense when looking the expenses it's a very moderate increase very low increase in the depreciation and other expenses so we ended up to 15 and a half million of of comparable EBITDA 7.3 percent which is very strong coincidentally very same as last year which also was very very strong year compression year so but Stepping to the full year view, same principle here. Organically, we grow 2.6% in the full year last year, over 20 million, and that was generated in practice in the second half, like Q3 was in the same level roughly than Q4. Turnover from acquisitions was 3.4%, SRX still generating inorganic growth for part of the year and then this short period of ADCO being included. In the full year level, we had the same impact in coming from the dollar and Chinese yuan in the full year level impacting almost 16 million negatively in the turnover and 2% of revenue. And also we had the same consignment inventory in invoicing which happened in the Q4 and 2% negative impact in this comparison as well. Same as what I mentioned, the inventories were increasing and then expenses in relation to the production volume. So we finished the year at the target level 7.1% and 56.5 million of comparable EBITDA. A bit value-wise higher than last year and same in the percentages. Balance sheet is no big changes. Inventories were growing a bit, but organically the inventories were declining some millions. Goodwill increased with the acquisition. We had very good end of the year in terms of cash and for that reason the cash is actually quite high, 75 million of cash in hands and a bit higher than a year ago. Also preparation for the MBE closing which happened right after the year end. Interest-bearing debt in total is 84 million, but that's including the leasing liabilities. So excluding those, we have about 60 million, a bit less than 60 million of debt, and practically we are debt-free without these leasing liabilities. Equity is representing five million, five euro per each share, so it's quite good level. Cash generation, like I said, the year end was good with the cash flow, and we ended up with the full year cash, then over 64 million, very strong from the cash point of view. We were able to... Generate from working capital, about 10 million. It's a bit less than, and that's basically the difference to the previous year, that it's a bit less than what we were able to do in the previous year. But now also we had a very positive turnover development in the second half, so it makes it a bit more challenging to take the cash out there. I think it was a good result. From that perspective in the three years it has been totally like 220 million of positive cash flow generated and that has been able to make possible also them to finance them acquisitions what we have Generated more with them more more less with the incoming cash Like mentioned the debt ratio is very very low still at year end it will be increase a bit when when reporting next time but now at the level of 0.012 and 10 million of net debt and it's when looking a bit back in comparison to q3 of 24 we are now at the lower level in net debt than over a year ago, and considering that during that time we have executed two MTAs acquisitions in Q4-24 and then Q4-25, so we have been able to finance that with the incoming cash flow. Liquidity level is good, 250 million of liquidity and we have unused credit facilities, 180 million and then 75 million cash in hands. Key figures, no big changes. Equity ratio remains relatively high, 54%, and return on equity is quite the same as the previous year. Net gearing naturally lowering still, and then earnings per share 4 euro cent higher, 0.63 in comparison to 0.59. Like mentioned by Kristoff, then is also contributing for the growing dividend, 25 cents to be proposed to the annual general meeting. And this is year number 13 with the growing dividends. All right, I will keep it. Back to you, Christoph.

Thank you. So, outlook. We, a few weeks ago already, gave our guidance for 26, where we see a revenue going between 940 million and 1 billion 60 million euros, and a comparable EBITDA between 64 and 78 million. We have, during the last years, prepared and built a solid operational execution, and we believe that that will obviously allow us to deliver those numbers during 26. We have the integration of ADCO and MB that are focus area for us to be successful during 2026 and then also continue to drive the good momentum on organic growth that we have seen during all 25 on the order book that have come in and that have started to translate already during Q3 and Q4. So all those elements give us a positive view on 26 and allow us to come with this level of outlook. So with that, I think that we'll hand over to you, Pasi, for the Q&A.

Heading for the Q&A. A lot of questions already in, so starting with Jyrki and MB Electronica. MB Electronica's growth was exceptionally high during 2025, over 20%. Do you expect it to continue in 26 or to be moderate into more normal Scanfil's organic growth level?

Yeah, I think that we were very pleased. First, I would say we were very pleased, obviously, to see the level of performance of MBAY during 2025 because it confirms our choice to have MBAY joining us as it could be a driver for growth. And I mean, also one of the reasons we bought MBAY is for the portfolio we have in aerospace and defense that we all believe can be driving a higher level of growth than average in the coming years. So from that perspective, we have a perspective of continuous high level of growth in MB during 26, which should be higher than the average organic growth in scan fields.

That was a good preach to follow up question actually regarding the aerospace and defense, because ADCO and MB are actually giving us a lot of aerospace and defense customers. And the question follows, do we expect to report aerospace and defense separate customer group in the near future?

We will do that from Q1. We will give you visibility on the development of aerospace and defense, as we have indicated before.

So the answer is yes. Thank you. Quite many questions regarding the NPIs, because it brought some volatility to the EBITDA margin. Which regions saw the most NPI activity in Q4?

I would say we have a high level of activity in NPI right now. The regions that have the highest exposure are obviously Central Europe, where we have our big Polish operation. as well as North America, where we have a high level of growth that of course comes from NPI implementation. Then there is also activities in our APAC region, where I would say I have mentioned it, our Suchu site keeps developing in a good way, which includes a high number of NPI, but also our Malaysian site has a big activity on implementing new projects.

Okay, thank you. Will the NPI number increase or decrease in Q1, Q2? So trying to get a bit of a flavor about forthcoming NPIs.

I think that what we can see is that we have still win a significant number of deals. If you look at the last two quarters, I mean, the number of deals we have won is important. In terms of load of our factories, I think it keeps it quite linear that we manage to have a level of implementation of NPI versus level of manufacturing that is equivalent. So I think there is no dramatic change to foresee in the coming quarters in the level of cost and activities related to that. We are on a trend and we just keep working with it and are stable on that from that perspective.

Will 2026 be a year of integration focus or will you be able to complete one to two acquisitions this year too?

I think that obviously the integration of MB and ADCO is an important step for Scanfield, so we have a focus on that. In the same time, we continue to monitor the market, and I will say, if we find a company that will fit our purpose and our strategic goals, and that are the right price, we will eventually add acquisition. Then it's a bit early to say, but there is no stop. even if the focus is obviously integrating the one we have got.

Thank you. Pasi asks about organic growth. Organic growth was 8% in the fourth quarter. What is the split between volume and price-related growth?

I would say the majority in the fourth quarter is volume-related. I think there is very little price-related growth on that one. It's mainly volume-related.

Additional question from Pasi. You decide to expand Suzhou. Is the end demand coming from Chinese market or Western markets for this site in Suzhou?

I mean, Suzhou today is... high majority delivering to the Chinese market. So the demand that we have there is for the Chinese market. I mean, we mainly deliver product that we had consumed on the Chinese market in a big majority, I would say.

Maybe the next one goes to Koi about the PPA amortization in 2026. Can you give some kind of an estimate of flavor on that?

Of course, there will be naturally a bit of growth with the MB, but maybe I'm not going with the numbers yet. Let's do that in Q4. But of course, MB will naturally increase, but ADCO, not that huge impact on that.

Maybe after Q1 report, it gives a bit more flavour about that.

Okay.

Laura Suonen from Carnegie. After the recent acquisitions, do you think you need time to digest? Okay, this is actually the same as the previous one. I will not ask it. Antti-Villakainen from Inderes. Do you see demand environment improving in Europe compared to the six months ago?

I think that we see two things. We see a slight improvement in demand, but we mainly see the payback of our effort in winning new projects. So I would say the European market is maybe slightly better, but it is not something that I would say is fantastic. However, we see that the new projects we have won are translating into sales.

Thank you. On the continuous, what are the key variables that will determine whether you end up to the upper or lower end of your guidance this year?

The key variables, they are very simple. There is one element that is about the performance of the acquired entity. I think we have expectation of a high level of growth that maybe can be even higher than what we expect. And then the second element is the organic growth we generate. I mean transforming those NPI projects into revenue and sales in a timely manner. So those are elements that, in a way, we have in hand to deliver. Okay, thank you.

Actually, going back to Laura's question, because there was a bit of a twist into it, so about the M&A, what are the availability of targets in the M&A market at the moment?

I think that if you look at the world of EMS, it's a world that is in the segment we operate, which is... mixed, low volume, industrial, still extremely fragmented. I mean, there is a type of company in every country in the world. So the availability is big. Many of those companies are family companies. So there are deals that show up, but there are also companies that might be open to a discussion. So I don't believe that there is a shortage of targets. On the opposite, I think that We are in an industry that can carry an M&A journey for extremely many years, so obviously at least 26 when I say that.

Okay, thank you. About SRX when it comes to the acquisitions, SRX and earn-out, Antti has a question. What were the main reasons in SRX performance that resulted earn-out not to be paid at all?

I think I have said it before, as I said, there is a numerous company for sales. We have a philosophy that we want to pay a fair price for the business at the moment we acquire it. And then we are absolutely open to pay extra for a fantastic performance. Then in the SRX case, unfortunately for the seller, it has been a timing issue with some of the deals not materializing or in manufacturing during 26, which has impacted the earn out. But I think that from our perspective, we are very pleased with the SRX acquisition. It is still a very healthy company. It has offered us a platform for Malaysia that we are starting to capture. And in a way, those things that did not materialize in 26, at least started to materialize, and we believe will materialize, or in 25, will materialize in the future time.

Okay, thank you. Aerospace and defense has been under discussion, and also organic growth. Cinder has a question about our margins. Organic growth is returning, and aerospace and defense exposure is growing. Are you aiming to increase margins towards 8%?

I think that we have a corridor there of 7% to 8%, which obviously when we go in an organic growth mode or when we have a growth of volume, could head towards the higher part of the corridor. However, what we have tried to balance as well is to fuel the growth. So if you look at the quarter, for example, I mean, we have in a way 8% organic growth, but a stable margin. And what is making the difference is the effort we put to prepare the future. And I think that for now, our focus is to remain in that corridor and make sure that we fuel the growth because we see the opportunity. So we will remain in the corridor and we will grow the business. That's the plan. Thank you.

Still time for questions if you have any. I see it already quite many. If not, you can always approach me, for example, to post questions separately. Ah, one more. How do you feel about adding ROCE target to your financial targets? return on capital.

I mean, for now, we have not discussed to change our long term targets. So that's always something to consider. That's something we follow, even if we don't talk about it. But for now, we have no plan to change our financial target. But we can always think about it.

Okay. Thank you. Good question. All right. Handing over to Kristo for closing.

okay thank you so uh if i uh for closing i mean maybe a few key takeaways from 24 25 so nq425 we believe that for us it was a transformational quarter in in many ways first because we have two acquisitions that were happening that are changing in a way the scope of the company both in size but also bringing a strong portfolio in aerospace and defense we have been looking for It was also an important quarter because we once more materialized a strong level of organic growth, as we had already done during Q3, which is a proof of the development of our focus strategy in terms of market segment, and that was very pleasing. And we had a business pipeline that remained strong. So from that perspective, we see it as a solid quarter that ended up with a solid level of margin of 7.3%. So from that perspective, we see this quarter as important in the life of Scanfield because it anchors the effort we did over the past years and it pushes us towards 26 in a good way. From that, we have two significant acquisitions that should allow us to increase our revenue during 26 and that should also have a positive development and in the same time we have a solid customer base and solid customer portfolio and pipeline and backlog entering 26. So we believe that our balance sheet is strong, our business perspective is positive, so all in place to deliver the guidelines we have shared with you. With that, I want to thank you for joining us and wish you a good day. Thank you.