Aspocomp Reports Weakened Demand Due to Decline in 3Q Net Sales

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Aspocomp, Inc., a PCB manufacturer and supplier in Finland, reports that the COVID-19 pandemic and the weakened economy are having a broad impact on the supply chains of the electronics industry and on customer orders. Due to the major uncertainties related to customer demand, the outlook for 2020 involves a significantly higher risk than normal. The European car industry is in an especially difficult situation.

The company’s full-year guidance, announced on July 16, 2020, remains unchanged.
Aspocomp estimates that its net sales and operating result for 2020 will fall significantly short of 2019. In 2019, net sales amounted to EUR 31.2 million and the operating result to EUR 3.4 million.

CEO’S Review
“Third-quarter net sales decreased by 12 percent to EUR 5.9 million. Demand varied greatly between different customer segments. The Semiconductor Industry segment grew to become the largest customer segment in the quarter.

During the COVID-19 pandemic, increased use of remote access devices will increase demand for semiconductor components. Likewise, the rapid development of digitalization is leading to the renewal of artificial intelligence and 5G semiconductor components and increasing their testing needs. Net sales of the Semiconductor Industry segment amounted to EUR 1.6 million, a year-on-year increase of over 80 percent.

Net sales of the Telecommunications segment amounted to EUR 0.9 million. Sales decreased in the Telecommunications segment by approximately 60 percent, mainly due to the timing of customers’ product development projects during the summer vacation months. In addition, Asian PCB mass suppliers have still had overcapacity due to the weaker market situation, which allowed them to exceptionally respond to changing customer needs. The oversupply situation is expected to ease, but not completely disappear before the COVID-19 pandemic subsides and the economy recovers.

The Automotive segment continued to face difficulties, and net sales decreased by approximately 30 percent to EUR 1.1 million. In addition to the weakness of the European car market, the segment was burdened by high customer component inventories. Adjustments to inventory levels are expected to continue until the end of the year.
Net sales of the Industrial Electronics segment amounted to EUR 1.1 million. In the Industrial Electronics segment, demand declined by approximately 15 percent, mainly due to the market situation, which has weakened as a result of the COVID-19 pandemic.

In the Security, Defense and Aerospace segment, demand continued to grow, and net sales amounted to EUR 1.1 million. Sales rose by about 60 percent. The drivers of growth were new customers and increased general demand for security products.

The operating result decreased significantly in the third quarter and amounted to EUR 0.1 million. The operating result was particularly burdened by the decline in net sales and the lower share accounted for by quick-turn deliveries. The operating result for January-September is still EUR 0.1 million in the red, including a EUR 0.3 million loan loss provision.

The COVID-19 pandemic and the weakened economy continues to make it difficult to assess customer needs, and visibility into demand for the rest of the year is limited. Despite the exceptional circumstances, we have continued to invest in capacity and increased our product development investments in new products and more challenging technologies.”

Impact of the COVID-19 Pandemic

Due to the COVID-19 pandemic and the resulting decline in general demand, as well as for financial reasons, some customers have had to postpone or even cancel their orders. Asian PCB mass suppliers have had overcapacity due to the weaker market situation, which allowed them to exceptionally respond to changing customer needs. In the Automotive segment, demand has continued to decline as customers have reduced their inventory levels in line with the slowdown in demand.

Despite the COVID-19 pandemic, Aspocomp has been able to purposefully expand and grow its customer base and product offering. In the Security, Defense and Aerospace segment, demand has doubled and in the Semiconductor Industry segment, demand has grown over 80 percent despite the exceptional situation.

The company’s production at the Oulu plant has continued normally and delivery capacity has been good. The company has continued to invest in new capacity and increased its product development investments in new products and more challenging technologies.

The pandemic has not affected the company’s liquidity. The cash situation has remained good and the credit facilities have not been used. The company has had no need to recognize write-downs of goodwill.