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Scanfil reports solid performance in exceptional year in fourth quarter and full year 2020. Customer demand picked up towards year end.
October - December
- Turnover totalled EUR 154.1 million (Q4 2019: 154.7), decrease of 0.4%
- Adjusted operating profit* EUR 10.4 (10.0) million, 6.8% (6.5%) of turnover, increase of 3.9%
- Operating profit EUR 4.3 (10.0) million, 2.8% (6.5%) of turnover, decrease of 56.9%
- Net profit was EUR 3.1 (9.8) million
- Earnings per share were EUR 0.05 (0.15), adjusted earnings per share EUR 0.14
January – December
- Turnover totalled to EUR 595.3 (1-12/2019: 579.4) million, increase of 2.7%
- Adjusted operating profit** EUR 39.1 (39.4) million, 6.6% (6.8%) of turnover, decrease of 0.7%
- Operating profit EUR 44.4 (35.3) million, 7.5% (6.1%) of turnover, increase of 25.8%
- Net profit for the review period was EUR 36.9 (28.1) million
- Earnings per share were EUR 0.57 (0.44), adjusted earnings per share EUR 0.50
- The Board of Directors proposes a dividend of EUR 0.17 (0.15) per share to be paid for year 2020, increase of 13.3%
* The operating profit includes a total of EUR -6.1 million of adjustments, consisting of costs arising from the shutdown of the factory of German subsidiary Scanfil GmbH.
** The operating profit includes a total of EUR 5.3 million of adjustments, consisting of the aforementioned costs arising from the shutdown of the factory of German subsidiary Scanfil GmbH and the sales gains of EUR 11.4 million of Chinese subsidiary Scanfil (Hangzhou) Co. Ltd.
Scanfil estimates that its turnover for 2021 will be EUR 600 – 640million and its adjusted operating profit will be EUR 40–44 million.
The guidance for 2021 involves uncertainty arising from the potential negative impact of the availability of certain materials, especially semiconductors, and Covid 19 pandemic on customer demand and the delivery capability of the component supply chain.
Long Term Target
Scanfil’s long-term target: In 2023, Scanfil is organically aiming for EUR 700 million turnover and 7% operating profit.
Petteri Jokitalo, CEO:
"The turnover for the fourth quarter was EUR 154.1 million. The growth was mainly driven by the Medtec & Life Science, Energy & Automation and Consumer Applications” customer segments. Also, demand among several customers, affected negatively by the Covid-19 pandemic earlier in the year, recovered during the fourth quarter.
The adjusted operating profit for the quarter was EUR 10.4 million, comprising 6.8% of turnover. Our countermeasures to coronavirus were successful and the performance of our personnel and factories remained high.
The year 2020 was an operationally strong year for Scanfil despite exceptionally challenging circumstances and proof of Scanfil's personnel's capability and the flexibility of the company cost structure. Covid 19 pandemic shaped the year, and the operative focus stayed on employees' safety and ensuring customer deliveries continuity. Our turnover in 2020 was EUR 595.3 million, and our adjusted operating profit was EUR 39.1 million, or 6.6% of turnover.
The sale of Hangzhou factory was realized in July, and now Scanfil's focus in China is on the manufacture of electronics and integrated products at the Suzhou factory. In December, we decided to close the Hamburg factory and continue its production at other Scanfil factories in Germany and Poland. Production is expected to be transferred, and the plant to be closed, by the end of the third quarter of 2021. The arrangement is expected to result in annual cost savings of approximately EUR 2.5 million. These measures aim to secure and further improve the long-term performance and competitiveness of Scanfil's factory network.
The reported operating profit for 2020 of EUR 44.4 million includes sales gains from the Hangzhou factory and adjustments related to the Hamburg factory's shutdown.
The Board of Directors proposes that EUR 0.17 per share be paid in dividends for 2020. If the Annual General Meeting to be held this spring approves the dividend proposal, Scanfil increases its dividend for the eighth year in succession. At the same time, the dividend distribution ratio has remained at the targeted level, approximately one-third of earnings per share.
Our strategic goal is to expand our customer base and increase our market share, especially in Germany and more broadly in Central Europe. The region has a highly attractive contract manufacturing market, offering large growth potential for Scanfil. The idea is to provide our customers both a local manufacturing partnership with our Wutha factory in Germany and Scanfil's global partnership, factory network and service range. We made positive progress with our strategic goal during the year; our turnover developed positively in Central Europe, and we signed new global agreements with our current local customers in the region.
We enter 2021 with confidence. Our customers' forecasts for the year are mainly showing growth, and we target for growth in both sales and operating profit. However, it is clear that the year also includes uncertainties: the coronavirus pandemic is still here, and there are also signs of risks associated with the availability of certain materials. We have identified these risks and defined as well as launched appropriate actions to mitigate.
Our long-term target for 2023 is to achieve a turnover of EUR 700 million and an operating profit rate of 7%. We are also actively investigating acquisition opportunities, especially in the Nordic countries and Central Europe.
Overall, I am satisfied with our performance in 2020. I want to thank our committed personnel and our customers and other stakeholders for your trust."
The Group’s turnover for January – December was EUR 595.3 (579.4) million, increase of 2.7% compared to the previous year. The turnover increased mainly due to the acquisition of the operations of HASEC during the second quarter of 2019.
Turnover by customer segment developed as follows: The turnover of the Communication segment increased by EUR 12.0 million (15.0%) as a result of positive demand for base station products at the beginning of the year. Furthermore, the divestment of the Hangzhou plant in July had no significant impact annually on the Communication segment’s turnover, because customers transferred their orders partly to other Scanfil units. This sale was mainly intermediate sales, which had not significant impact on result.
The Consumer Applications segment’s turnover decreased by EUR 19.5 million (18.1%) year-on-year. The negative impact of the coronavirus pandemic was particularly reflected in this segment’s full-year demand, even though demand picked up clearly during the final quarter.
The Energy and Automation segment’s demand increased by EUR 15.4 million (13.8%). The growth came broadly from the segment's customer base.
The turnover of the Industrial segment increased by EUR 8.8 million (5.1%), primarily as a result of the HASEC business acquisition completed during the second quarter of 2019.
The turnover of the Medtec & Life Science segment remained annually at the previous year’s level.
The Group’s operating profit for January – December was EUR 44.4 (35.3) million, 7.5% (6.1%) of turnover. The net profit for the review period was EUR 36.9 (28.1) million. Earnings per share for the review period were EUR 0.57 (0.44). Return on investment was 19.5% (17.0%). The increase in the key figures is mainly attributable to the adjustments described below.
The operating profit includes a total of EUR 5.3 million of adjustments, consisting of sales gains from the divestments of all shares in Chinese subsidiary Scanfil (Hangzhou) Co. Ltd and costs arising from the closure of the Hamburg plant of German subsidiary Scanfil GmbH.
The divestment of the Hangzhou subsidiary was completed on July 14, 2020, and its positive impact on the operating profit was EUR 11.4 million, of which EUR 7.9 million consisted of equity translation differences.
The consultation process concerning the personnel of the Hamburg factory was completed on December 17, 2020, and Scanfil GmbH decided to close the Hamburg plant. Production will be transferred to the Wutha factory in Germany and the Sieradz factory in Poland. This arrangement is expected to result in non-recurring expenses of approximately EUR 6.1 million, recognized for the final quarter of 2020. The arrangement is expected to result in annual cost savings of around EUR 2.5 million. These steps are expected to be completed by the end of the third quarter of 2021.
The previous year’s operating profit includes a total of EUR -4.0 million of adjustments, consisting of expenses related to the acquisition of HASEC-Elektronik GmbH (EUR -4.0 million) and a write-down of goodwill (EUR 3.6 million) related to Scanfil GmbH’s business operations.
The adjusted operating profit was EUR 39.1 (39.4) million, or 6.6% (6.8%) of turnover. The adjusted operating profit decreased by 0.7% year-on-year. As a result of the divestment of the Hangzhou subsidiary, part of the Communication segment’s turnover consisted of intermediate sales with low profitability, which reduced total profitability.
In addition, the Covid 19 pandemic reduced productivity and resulted additional costs. These are described in more detail in the “The Impact of Covid-19 Pandemic during the Review Period” section.
The Group’s low effective tax rate of 11.6% primarily results from the low tax on sales gains from Chinese subsidiary Scanfil (Hangzhou) Co., Ltd and tax relief related to investments in the Polish Special Economic Zone.
The Group’s turnover in October–December was EUR 154.1 (154.7) million and its operating profit was EUR 4.3 (10.0) million, 2.8% (6.5%) of turnover. The adjusted operating profit was EUR 10.4 million, or 6.8% of turnover. The operating profit for the fourth quarter includes expenses of EUR 6.1 million from the closure of the plant of German subsidiary Scanfil GmbH. The result for October–December was EUR 3.1 (9.8) million.