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SCANFIL EMS Achieves 44% Sales Growth in Q1
April 29, 2011 |Estimated reading time: 4 minutes
January – March
- Turnover and operating profit for the first quarter were significantly higher compared with the corresponding period of the previous year.
- Turnover totaled to EUR 58,8 million (1-3 2010: 40.8), up 43.9%.
- Operating profit EUR 3.7 (1.5) million, 6.2% (3.6%) of turnover.
- Profit for the review period was EUR 2.1 (2.0) million.
- Earnings per share were EUR 0.04 (0.03).
The growth in turnover was particularly due to improved demand among Scanfil EMS Oy's professional electronics customers. The development of production and sales processes and increased sales volumes contributed to the increase in operating profit. Scanfil plc increases its turnover estimate for 2011, estimating the turnover will increase from the level of 2010. Previously, the company estimated that its turnover would increase slightly on the level of 2010.
Harri Takanen, President of Scanfil plc:
"Scanfil plc has continued to actively survey new capital investments that meet the investment criteria and suit the Group's company structure. Scanfil plc is interested in both industrial companies that have already established a profitable operating model and growth companies that can be grown into profitable and international companies in the long term. Financial investments have been distributed across different asset types, and Scanfil plc aims to achieve a yield that is clearly higher than the costs of debt on the assets. Ensuring sufficient liquidity is also important. Favourable demand continued in contract manufacturing operations during the first quarter, especially with regard to professional electronics customers. Sales to professional electronics customers were the highest in the company's history during the first quarter. The strong development of financial results shows that the production and sales development measures have succeeded. The commitment and input of all employees has been absolutely necessary to achieve these results.
The crisis in Japan may impair the availability of electronics components in the future and constrain the development of sales. Scanfil has acted and will act actively to manage these risks, even though this has resulted in an increase in component inventories."
Development of Operations
Scanfil plc
No new capital investments were made during the period under review. Financial investments were made according to the investment policy, and of the EUR 40 million credit raised at the end of 2010, a significant part was invested in targets other than bank deposits at the end of the period under review. The allocation on March 31, 2011 was: money market investments 57%, ETF and equity investments 10% and capital investments 33%.
During the period under review, the company was notified that the General Meeting of Ojala-Yhtymä Oy had decided not to execute the merger of Scanfil plc's subsidiary Scanfil EMS Oy and Ojala-Yhtymä Oy. Due to the decision of Ojala-Yhtymä Oy, the merger will not be realised according to the merger agreement signed on November 1, 2010.
Scanfil EMS Subgroup
Demand in the contract manufacturing market has been considerably higher than during the corresponding period of the previous year. The growth in sales compared to the first quarter of the previous year was 44%. Demand picked up in particular with regard to professional electronics customers, but the demand by telecommunications customers developed positively as well.
Increased demand by professional electronics customers accounted for 65% of the growth in sales during the period under review. Professional electronics customers accounted for 56% of total sales in January-March (53% during the corresponding period in 2010) and telecommunications customers for 44% (47%).
Scanfil EMS Oy's activity in securing new customers has decreased industry- and customer-specific risks. Professional electronics customers operate in various industries, such as the energy industry, mechanical engineering and elevator technology. The company aims to continue to expand its customer portfolio in strongly developing fields of professional electronics, such as those associated with improving energy efficiency and renewable energy solutions.
Problems with the availability of electronics components did not affect the company's production much during January-March. The March earthquake in Japan has, however, changed the availability of components for the worse after the period under review. Scanfil aims to prepare for any problems with the availability of critical component categories, which will result in an increase in inventories.
The relocation of the electronics and integration plant of Suzhou subsidiary in China was carried out during the first quarter. The modern premises of approximately 21,000 square metres are better suited for plant operations than the current leased facilities, and enable the growth of operations. The production capacity of the plant was increased considerably through acquisitions of equipment; for example, the surface-mount assembly capacity of electronics components was doubled. The official inauguration of the plant took place after the period under review on April 6, 2011.
About Scanfil Group
Scanfil Group comprises the investment and parent company Scanfil plc, and a subgroup called Scanfil EMS Oy, which is engaged in contract manufacturing for international telecommunications technology and professional electronics manufacturers. The objective of the investment activities is to make the management of the company’s funds more effective and productive by diversifying the risks and finding new growth potential. For more information, visit http://www.scanfil.com/.