NOTE Posts 32% Sales Increase in 1Q19

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NOTE's sales rose by 32% to SEK 405 (308) million. The impact of exchange rate fluctuations was positive at just below 4%. Approximately half of growth (16%) was from extra sales from UK company Speedboard Assembly Services, which was acquired in the fourth quarter of the previous year.

Demand progressed positively on all domestic markets. Adjusted for Speedboard’s sales, sales in Western Europe increased by 17%. Our plants in Finland and Sweden had especially high demand, mainly from customers within industry, medtech and communication. Sales from our plant in China, which are to local and global customers, progress robustly, with growth of 26%. The demand for electronics production at the plant in Estonia, whose customers are mainly in northern Europe, also progressed positively, with growth of 8%. 

NOTE sells to a large customer base, essentially active across industry, communication, medtech, defense and high end consumer electronics. Its customer base consists of global corporations active on the world market, as well as local enterprises whose primary sales are in northern Europe. Usually, customers outsource all their electronics manufacture to one or several EMS partners. Another clear trend is customers increasingly demanding box build.

NOTE endeavours to secure long-term customer relationships and partnerships. Sales growth in the period consisted partly of intensified partnerships on new product generations in NOTE’s already-strong customer base, and partly of batch production that has commenced for several new business customers secured recently.

Most of these new customers are SMEs in Europe and Asia. Several of these partnerships, which usually start with industrialisation services (service sales, prototyping and pilot series), have now resulted in batch production and higher volumes.

NOTE’s customer base is diverse, and the 15 largest customers in sales terms represented 49% (58) of group sales. No single customer (group) represented more than about 7% of total sales. The group’s order book, which consists of a combination of fixed orders and customer forecasts, indicated continued positive sales performance at the end of the period.

January–March Results

In order to keep improving competitiveness and create the potential for profitable sales growth, NOTE has been conducting methodical improvement work at all plants for several years. This work is conducted locally at each plant and through a number of group-wide projects. Over and above initiatives to expand and develop its customer offering, NOTE’s focus is on measures that improve delivery precision and quality, and on cost and working capital rationalisation.

Mainly as a consequence of increased sales and stable mar-gins on current customer assignments, gross margin expanded by 0.8 percentage points to 12.1% (11.3).

Sales and administration overheads for the period increased, mainly as a result of the acquisition of Speedboard, and were SEK 21 (18) million. As a share of sales, overheads were 5.2% (5.9)

Other operating expenses/income, which normally consist of the revaluation of assets and liabilities denominated in foreign currencies, were SEK -1 (0) million.

Operating profit in the first quarter increased by 58% to SEK 27 (17) million, and NOTE’s operating margin widened by 1.1 percentage points to 6.6% (5.5).

Net financial income/expense for the period was largely unchanged at SEK -2 (-2) million.Profit after financial items increased by 64% to SEK 25 (15) million, corresponding to a profit margin of 6.1% (4.9).

Profit after tax increased by 64% to SEK 20 (12) million, or SEK 0.70 (0.43) per share. The tax expense for the period cor-responded to 18% (18) of profit before tax.