Aspocomp Releases Financial Statement Release 2020, Outlook for 2021

Estimated reading time: 5 minutes

The COVID-19 pandemic and the restrictions it has caused 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 2021 involves a significantly higher risk than normal.

Aspocomp estimates that its net sales for 2021 will increase and its operating result for 2021 will improve from 2020. In 2020, net sales amounted to EUR 25.6 million and the operating result to EUR -0.1 million.

CEO’s Review

“The decline in net sales continued in the last quarter of the year, when demand was lower than expected, especially in the Telecommunications and Automotive segments. Net sales for 2020 amounted to EUR 25.6 million, a year-on-year decrease of 18 percent in total. A balance was achieved in full-year sales between different customer segments.

In the Telecommunications segment, net sales decreased by 60 percent to EUR 5.4 million because customers had lower PCB needs in their product development projects than in the previous year. 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 not expected to ease before the COVID-19 pandemic subsides and the economy recovers.

In the Automotive segment, sales decreased by 27 percent to EUR 5.4 million. The decline in net sales was mainly due to the weak market situation in the European automotive industry at the beginning of the year and the consequent increase in PCB inventories. Inventory levels are expected to return to a normal level at the beginning of the year, but the availability of semiconductor components may weaken and affect the development of the automotive industry.

In the Security, Defense and Aerospace segment, sales increased by 107 percent to EUR 5.1 million. During the year, we continued to make significant R&D investments in the segment’s product development and customers’ special requirements. The first phase of the development project to achieve AS9100 defense and aviation quality certification was successfully approved at the Oulu plant. The development project and final certification will be completed in the early months of the year.

The strong growth in the Semiconductor segment leveled off in the last quarter of the year. In 2020, sales of the Semiconductor segment increased by 65 percent to EUR 5.1 million. Growth has been driven particularly by the increased use of remote access devices. Likewise, the rapid development of digitalization is leading to the renewal of artificial intelligence and 5G semiconductor components and increasing their testing needs.

Sales of the Industrial Electronics segment decreased by 9 percent to EUR 4.4 million because COVID-19 restrictions delayed industrial investment.

The year-end order book was at the same level as a year earlier and amounted to EUR 4.4 million.

The operating result in the fourth quarter was clearly lower than in the previous year and amounted to EUR 0.0 million. The operating result was particularly burdened by the decline in net sales and the weaker demand for quick-turn deliveries. The operating result for 2020 remained EUR 0.1 million in the red, including a EUR 0.3 million loan loss provision.

The COVID-19 pandemic and the weakened economy continue to make it difficult to assess near-term customer needs. 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 weakened 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 65 percent.

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.

Net Sales And Earnings

October-December 2020

Fourth-quarter net sales amounted to EUR 5.9 (8.2) million, a year-on-year decrease of 27 percent.  Net sales decreased particularly due to lower demand in the Telecommunication and Automotive segments.

The five largest customers accounted for 43 (59) percent of net sales. In geographical terms, 89 (98) percent of net sales were generated in Europe and 11 (2) percent on other continents.

The operating result for the fourth quarter amounted to EUR -0.0 (0.7) million. Fourth-quarter operating result was -0.8 (8.1) percent of net sales. The operating result was burdened by the decline in net sales and the weaker demand for quick-turn deliveries during the fourth quarter.

Net financial expenses amounted to EUR 0.1 (0.1) million. Earnings per share were EUR 0.02 (0.19).

The order book at the end of the review period was EUR 4.4 (4.4) million, which is at the same level as a year earlier.

Financial year 2020

Net sales amounted to EUR 25.6 (31.2) million, a year-on-year decrease of 18 percent. During the financial year, sales between the different customer segments were balanced and each segment accounted for about one-fifth of net sales. In the Telecommunications segment, net sales decreased by 60 percent because customers had lower PCB needs in their product development projects than in the previous year. In the Automotive segment, sales decreased by 27 percent mainly due to the weak market situation in the European automotive industry at the beginning of the year and the consequent increase in PCB inventories. In the Security, Defense and Aerospace segment, net sales increased by 107 percent. Significant R&D investments in the segment’s product development and customers’ special requirements supported the segment’s positive development. The strong growth in the Semiconductor segment leveled off in the last quarter of the year and full-year net sales were up 65 percent. Growth in demand has been driven particularly by the increased use of remote access devices. In addition, the rapid development of digitalization is leading to the renewal of artificial intelligence and 5G semiconductor components and increasing their testing needs. Sales of the Industrial Electronics segment decreased by 9 percent because COVID-19 restrictions delayed investment.

The five largest customers accounted for 41 (58) percent of net sales. In geographical terms, 85 (98) percent of net sales were generated in Europe and 15 (2) percent on other continents.

The full-year operating result amounted to EUR -0.1 (3.4) million, including a EUR 0.3 million loan loss provision. The operating result was weakened by lower net sales and weaker demand for quick-turn deliveries.

Net financial expenses amounted to EUR 0.3 (0.1) million. Earnings per share were EUR -0.01 (0.59).

Investments

In 2020, investments amounted to EUR 2.0 (3.5) million. The investments were mainly focused on upgrading the capabilities of the Oulu plant, improving automation, and increasing production efficiency. The first phase of the EUR 10 million investment program launched in 2017 was completed in early 2020. The first two years of the investment program focused on enhancing the capabilities of the Oulu plant, particularly in the Semiconductor Industry segment. The goals of the project were successfully achieved: the customer base was strengthened, and the planned technological improvements were implemented.

The investment program continued with its second phase of investments in the spring of 2020. The company was granted a total of EUR 1.35 million in development support by the ELY Center for the implementation of the second phase of its Oulu plant investment, corresponding to about 25 percent of its total cost. No additional plant space will be built; all of the new equipment will be installed in an existing plant building. The second-phase investments will be carried out in the period between 2020 and 2022. The second phase of the investment program aims in particular to increase the capacity of the Oulu plant, improve automation and increase production efficiency. With these investments, the company aims to further strengthen its position as a strategic partner to leading companies in the semiconductor, automotive, defense and aerospace, and telecommunications (5G) industries.