Aspocomp Posts 13% Sales Growth in Q3

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Aspocomp Group Plc announced net sales continued to increase, operating result improved further, and the order book remained strong in the third quarter.

Third Quarter 2022 Highlights

• Net sales EUR 10.4 (9.0) million, increase of 16%
• Operating result EUR 1.4 (1.0) million, 13.1% (11.5%) of net sales
• Earnings per share EUR 0.20 (0.15)
• Operative cash flow EUR 1.8 (-0.1) million
• Equity ratio 68.2% (63.2%)
• Orders received EUR 9.5 (13.9) million, decrease of 32%

January-September 2022 Highlights

• Net sales EUR 29.0 (22.4) million, increase of 29%
• Operating result EUR 3.8 (1.0) million, 13.0% (4.5%) of net sales
• Earnings per share EUR 0.54 (0.14)
• Operative cash flow EUR 3.4 (0.4) million
• Equity ratio 68.2% (63.2%)
• Orders received EUR 32.1 (33.8) million, decrease of 5%
• Order book at the end of the review period EUR 19.6 (15.8) million, increase of 24%

Outlook for 2022

Demand is expected to improve in all customer segments. However, a global shortage of components may limit growth in customer demand.

Russia’s war of aggression against Ukraine and the sanctions imposed against Russia are not expected to have any direct impact on Aspocomp’s business, financial position or cash flow.

Aspocomp reiterates the guidance that was published on July 14, 2022. Aspocomp estimates that its net sales for 2022 will increase and its operating result for 2022 will improve clearly from 2021. In 2021, net sales amounted to EUR 33.2 million and the operating result to EUR 2.2 million.

CEO’s Review

“Strong performance continued in the third quarter of the year. Net sales grew by 16 percent to EUR 10.4 million. Net sales for January-September amounted to EUR 29.0 million, a year-on-year increase of 29 percent.

The Semiconductor Industry continued to be the engine of growth in third-quarter net sales, as large investments in chip capacity in different parts of the world boosted the demand for printed circuit boards. In the Telecommunication segment, the usual lull in customers' product development work during the holiday season reduced net sales. Net sales in Security, Defense and Aerospace grew moderately, but measured by the number of requests for offers and product evaluations, the segment’s quarter was quite active.

Our order book grew to EUR 19.6 million. It is now scheduled for a slightly shorter period than before, which is due to the general improvement in the availability of production materials. Since the raw material market is now healthier and delivery times have return to normal, customers can place their orders in a shorter period of time.

The COVID-19 pandemic and the current geopolitical situation have increased the risks related to our customers’ global supply chains. Customers in all our segments are increasingly looking for manufacturers for their more technologically demanding circuit boards from places other than Asia. Our strategic investments to increase the technological capabilities and manufacturing capacity of our factory in Oulu are now bearing fruit. Thanks to our high level of competence and reliability, Aspocomp's position in the changing market situation is excellent.

The third-quarter operating result increased by 30 percent to EUR 1.4 million, amounting to 13 percent of net sales. The operating result was improved by the good development of net sales and, in line with our strategy, the increased share of more technologically demanding PCBs in the product mix. January-September operating result amounted to EUR 3.8 million. The operating result was 13 percent of net sales.

Increased inflation is reflected in Aspocomp’s costs, such as raw material purchases and energy. Even though we have always hedged our electricity pricing, the current situation is challenging in terms of our cost structure. We will continue to try to transfer the cost increases due to changes in the business environment to product prices.

We reiterate the guidance for 2022 that was updated in July, and we estimate that net sales for 2022 will increase and operating result for 2022 will improve clearly from 2021.”

Net Sales and Earnings

July-September 2022

Third-quarter net sales amounted to EUR 10.4 (9.0) million, a year-on-year increase of 16%.

The Semiconductor Industry customer segment’s net sales doubled to EUR 4.4 (2.1) million during the third quarter. The growth of the Semiconductor Industry customer segment was driven by ongoing global investments in significant increases in chip capacity.

The Industrial Electronics customer segment’s net sales decreased by 24% to EUR 1.7 (2.2) million during the third quarter. Upward pressure on prices and problems with the availability of components slowed down industrial investments.

The Security, Defense and Aerospace customer segment’s net sales increased by 3% to EUR 1.5 (1.4) million. The changing geopolitical environment increases the demand for manufacturing outside of Asia.

The Automotive customer segment’s net sales increased by 3% to EUR 2.2 (2.1) million. Growth in the Automotive segment was limited by a general shortage of components and extended delivery times.

The Telecommunication customer segment’s demand declined by 37%, with net sales remaining at EUR 0.7 (1.2) million. In the Telecommunication segment, the usual lull in customers' product development work during the holiday season reduced net sales.

The five largest customers accounted for 63% (51%) of net sales. In geographical terms, 85% (87%) of net sales were generated in Europe and 15% (13%) on other continents.

The operating result for the third quarter amounted to EUR 1.4 (1.0) million. The improvement in operating result in the third quarter was mainly due to the growth in net sales and the increase in the share of technologically more demanding PCBs in the product mix. Third-quarter operating result was 13.1% (11.5%) of net sales.

Net financial expenses amounted to EUR 0.0 (0.0) million. Earnings per share were EUR 0.20 (0.15).

January-September 2022

January-September net sales amounted to EUR 29.0 (22.4) million, a year-on-year increase of 29 percent.

The Semiconductor Industry customer segment’s net sales grew to EUR 11.4 (4.1) million. Growth in demand in the Semiconductor Industry customer segment is driven by ongoing global investments in significant increases in chip capacity.

The Industrial Electronics customer segment’s net sales decreased by 17% to EUR 4.4 (5.4) million. Upward pressure on prices and problems with the availability of components caused the segment’s demand to decline during the third quarter.

The Security, Defense and Aerospace customer segment’s net sales increased by 11% to EUR 4.5 (4.0) million. The changing geopolitical environment increases the demand for manufacturing outside Asia.

The Automotive customer segment’s demand declined by 6%, with net sales remaining at EUR 5.1 (5.4) million. Growth in the Automotive segment was limited by a general shortage of components and extended delivery times.

The Telecommunication customer segment’s net sales amounted to EUR 3.6 (3.5) million, a year-on-year increase of 3%. Growth was supported by customers’ increased PCB needs in product development and new customers.

The five largest customers accounted for 55 (46) percent of net sales. In geographical terms, 89 (86) percent of net sales were generated in Europe and 11 (14) percent on other continents.

January-September operating result amounted to EUR 3.8 (1.0) million. The operating result was 13.0 (4.5) percent of net sales. The improvement in operating result was mainly due to the growth in net sales and the increase in the share of technologically more demanding and profitable PCBs in the product mix.

Net financial expenses amounted to EUR 0.0 (0.0) million. Earnings per share were EUR 0.54 (0.14).

The order book at the end of the review period was EUR 19.6 (15.8) million. Growth in the order book was particularly supported by increased demand in the Semiconductor Industry customer segment. Of the order book, EUR 11.1 million has been scheduled for delivery this year and the remaining EUR 8.5 million next year.