Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Scanfil PLC (FRA:S0A, Financial) maintained an operating profit of EUR13.9 million, achieving a 7.1% margin despite challenging market conditions.
- The company saw signs of recovery in the Medtech and Life Science segments, indicating potential future growth.
- Scanfil PLC (FRA:S0A) successfully reduced inventory levels, positively impacting their cash position.
- The company won a significant EUR40 million project, showcasing its ability to secure new contracts.
- Scanfil PLC (FRA:S0A) maintained a high on-time delivery rate above 98%, reflecting strong operational efficiency.
Negative Points
- Revenue declined by 19.7% to EUR195.5 million, reflecting a challenging market environment.
- The Energy & Cleantech segment saw a significant decline of 26.1%, indicating sector-specific challenges.
- The Industrial segment experienced a 19.6% decline in revenue, highlighting volatility in this area.
- Earnings per share decreased to EUR0.17 from EUR0.22 a year ago, indicating lower profitability.
- The company faced a volatile quarter with fluctuating customer demand, making it difficult to predict future performance accurately.
Q & A Highlights
Q: What do you see in your American operations during the quarter? And how do you view the demand situation going forward?
A: We have started to fill the factory with existing customers needing manufacturing in the US, and this is ramping up positively. We are also gaining local contracts that will ramp up in the second part of the year. The demand outlook remains volatile, but we see signs of recovery in some segments, particularly Medtech.
Q: Scanfil won new projects with an annualized value of EUR40 million in Q2 and EUR84 million in H1. Can you elaborate on whether this is adding value or how it went?
A: We estimate that we need 10% of our revenue in new contracts annually to maintain our position, with additional wins contributing to growth. EUR84 million in the first half is a strong start, and if this pace continues, it will be a very good year.
Q: Besides volumes returning as the market recovers, what do you see as the most important lever to keep improving the margin?
A: We aim to maintain our margin corridor between 7% and 8% while winning market share. Improvements will come from modernizing our factories, particularly through digitization and automation, which enhance efficiency and profitability.
Q: What was the price/mix effect in revenue growth in Q2? Or is the decline in net sales mainly volume-driven?
A: The decline in revenue is primarily due to lower product delivery. Despite this, we have managed to maintain efficiency and profitability, indicating room for growth in our factories.
Q: How do you see your European market share developing in the quarter?
A: We have maintained our position well and gained momentum in subsegments like Energy & Cleantech and Medtech. Overall, we believe we are gaining market share in these areas.
Q: Is the outlook for end demand now weaker than it was on June 10 when the new guidance was given?
A: The outlook remains volatile, and it's difficult to comment on changes between June and August due to the summer period. However, we have seen signs of recovery from some customers.
Q: Is it fair to assume that there are still some EUR10 million to release in inventories going forward for this year?
A: It is fair to assume that we will continue to improve our inventory position, and we are working towards that goal.
Q: Do you expect the desired inventory level to be reached before the end of the year?
A: We believe that inventory levels will continue to improve towards the end of the year, but we are not providing a specific number at this stage.
Q: Do you expect Medtech and Life Science to recover first? How do you see the recovery in Industrial and Energy & Cleantech segments?
A: We expect Energy & Cleantech to have the highest potential for recovery due to a dynamic portfolio and significant new projects. Industrial recovery will be more gradual, with some subsegments already showing signs of improvement.
Q: What have you seen from your clients within climate solutions such as heat pumps during Q2?
A: The Energy & Cleantech segment was slow due to high comparables and destocking effects. However, we continue to see interest in new projects, indicating a belief in future demand recovery.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
