SIEVI, FINLAND – Scanfil reported second quarter revenue of €155.6 million (US$183.4 million), up 9.1% year-over-year.
Net profit was €8.3 million, an increase of 80.4% compared to the second quarter of 2019.
Operating profit was €10.2 million, 6.5% of revenue, compared to €10.3 million, 7.2% of revenue, in the same period last year.
On June 29, Scanfil announced the sale of the entire share capital of Scanfil (Hangzhou) Co.
For the first six months of 2020, revenue totaled €299.6 million, up 10% year-over-year.
Net profit was €15.8 million, an increase of 68%. Operating profit for the first half of the year was €18.8 million, 6.3% of revenue, compared to €17.3 million, 6.3% of revenue, in the same period of 2019.
“The development of Covid-19 into a global pandemic affected Scanfil’s operations in many ways during the first half of the year,” said Petteri Jokitalo, CEO of Scanfil. “We prepared a plan and guidelines to prevent Covid-19 infections and ensure production and other operations across our organization. Apart from the infections and production shutdown at the Myslowice plant in Poland in April, there have been no disruptions, and our employees have remained healthy. The measures we have implemented have significantly reduced the risk of infection, which has given us more confidence about the future. We are more prepared for a second wave of Covid-19.
“To some extent, Covid-19 will change our operations permanently, and it will also offer new opportunities. The increased use of digital tools not only improves productivity but also increases employee satisfaction and the added value perceived by customers. Virtual plant and product audits reduce travel costs, the time spent on commuting, and accelerating decision-making and processes in general.
“Our second-quarter turnover was €155.6 million, representing an increase of €13 million, 9%, compared with the corresponding period last year. We expected sales to increase notably from the first quarter of the year, and the result shows we are heading in the right direction. Customer demand grew organically, particularly in the Communication and Energy & Automation customer segments. The HASEC acquisition, which was completed a year ago, represented a bit less than two-thirds of the increase in turnover, which is mainly reflected in the growth of the Industrial customer segment. For example, there was good demand for 5G network elements, camera surveillance systems and elevator products.
“The market situation proved difficult, especially for many of our customers in the Consumer Applications segment. For example, with the pandemic escalating, the use of self-service equipment for consumers decreased significantly, and customers responded quickly by cutting their forecasts and orders. However, we expect the situation to be temporary and believe demand will pick up during the second half of the year, provided the number of infections in Europe remains under control.
“The delivery capability of the supply chain did not set any significant restrictions on our deliveries during the second quarter.
“The operating profit was €10.2 million, or 6.5% of turnover. Covid-19 caused extraordinary costs and loss of productivity during the second quarter, and I am pleased with the level of operating profit we achieved in these exceptional circumstances.
“Scanfil has a strong financial position. The payment of dividends in May and the investments made in early 2020 have been financed from net cash flow from operating activities without increasing debt. At the end of the second quarter, we had around €19 million in cash assets and an unused credit limit of around €34 million. The equity ratio was 47.5%, and net gearing was 27%.
“Our investments continued according to the plan during the second quarter and were mainly related to the robotization and automatization of electronics manufacturing, as well as the surface treatment of mechanical products.
“At the end of June, we announced the sale of our Hangzhou plant in China. Scanfil’s focus on China will now be on the manufacture of electronics and integrated products at the Suzhou plant. At the beginning of July, we announced our plan to close down our Hamburg plant and continue production at Scanfil’s other plants in Germany and Poland. The aim of these measures is to secure and improve the performance and competitiveness of Scanfil’s network of plants in the long term.
“We have updated our guidance, and we expect our turnover for 2020 to be €580–620 million and our operating profit to be €38–42 million. Our estimate is based on our customers’ current demand forecasts, while it is clear this year continues to involve a great deal of uncertainty and risk.”
Scanfil now estimates 2020 revenue between €580 million and €620 million and adjusted operating profit of €38 million to €42 million.
Guidance is subject to exceptional uncertainty due to the potential negative effects of the coronavirus pandemic on customer demand, supply chain capacity, as well as the safety and operational capability of the firm’s plants and personnel.
Ed.: €1 = US$1.18