NCAB Releases Year-end Report 2022

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NCAB Group published their Year-end report for 2022 today. “Despite a turbulent macro environment and a global economic slowdown, we are proud to report a stable quarter. Net sales continued to rise, as did margins, and in addition we also had a strong cash flow. This gives us an excellent starting position for 2023,” says Peter Kruk, President and CEO, NCAB Group AB.

October–December 2022

• Net sales increased by 5% to SEK 1,026.1 million (976.6). In USD, net sales decreased 15%. For comparable units, net sales increased 2%, but in USD the decrease was 16%.
• Order intake decreased 5% to SEK 1,009.2 million (1,067.1). The decrease in USD was 23%. Order intake was abnormally high in 2021 due to the increasing lead times. For comparable units, the decrease for order intake was 7% in SEK, and 24% in USD.
• EBITA increased 17% to SEK 141.0 million (121.0), representing an EBITA margin of 13.7% (12.4). EBITA includes a positive one-off item of SEK 9.6 million following the final calculation of an additional purchase consideration. Excluding this one-off item, EBITA margin was 12.8% (12.7).
• Cash flow from operating activities was SEK 189.4 million (19.8).
• Operating profit was SEK 129.3 million (113.7).
• Profit after tax was SEK 71.3 million (75.7).
• Earnings per share before and after dilution was SEK 0.38 (0.40).

January–December 2022

• Net sales increased 38% to SEK 4,457.7 million (3,219.5). In USD, net sales increased 17%. For comparable units, net sales increased 26%, and in USD 6%.
• Order intake increased 5% to SEK 4,227.2 million (4,039.0). In USD, order intake decreased 11%. For comparable units, the decrease of order intake was 6% in SEK, and 20% in USD. The decrease was mainly due to long lead times in 2021, which have since returned to normal levels.
• EBITA increased to SEK 630.9 million (406.1), representing an EBITA margin of 14.2% (12.6). During the year, EBITA was positively impacted, net, by SEK 1.6 million in acquisition costs and final additional purchase considerations. Excluding these items, EBITA amounted to SEK 629.3 million, representing an EBITA margin of 14.1% (12.5, excl transaction cost and PPP loan for 2021).
• On 8 April, NCAB divested its operations in Russia, which entailed impairment losses of SEK 43.2 million that did not impact EBITA.
• Cash flow from operating activities was SEK 568.1 million (48.3).
• Operating profit was SEK 546.4 million (387.2).
• Profit after tax was SEK 417.1 million (285.3).
• Earnings per share was SEK 2.23 (1.52).

Significant Events During and After the Quarter

• Benjamin Klingenberg, MD of NCAB Germany was appointed VP of NCAB Europe and consequently is a new member of Group management as of 1 November. Howard Goff, former VP NCAB Europe was appointed VP Sales.
• On 24 November, an agreement was signed to acquire 100% of the shares in Bare Board Consultants in Italy. The transaction was closed on 10 January.
• The Board of Directors proposes a dividend of SEK 1.10 (0.60) per share to be paid in May.

Message from Peter Kruk, President and CEO, NCAB Group AB

A stable quarter ended strong year for NCAB

Despite a turbulent macro environment and a global economic slowdown, we are proud to report a stable quarter. Net sales continued to rise, as did margins, and in addition we also had a strong cash flow. This gives us an excellent starting position for 2023.

After seven to eight quarters of very strong growth in the global PCB market, we saw some signs of a restraint during the quarter. Shortening lead times and increased focus on tied up capital among our customers and, in turn, their customers, have had a temporary negative impact on order intake. Supply chain problems in recent years have led to accumulation of inventory at several levels that are now being reduced.

The basic sentiment of our customer base remains positive with stable underlying demand. The majority of our customers are active in industrial applications, and we have very little exposure to consumer products and other more cyclical market segments.

We noted a continuing positive trend for net sales in our Nordic and Europe segments while North America and East were weaker. In the USA, the central bank began cooling down the American economy early in 2022 and this began to be reflected in customer demand in the fourth quarter. In East, demand remained weak, affected by COVID restrictions.

It is gratifying to see that the EBITA margin increased in all segments, which was made possible through close collaboration with our customers, and a high level of service and technology in deliveries as well as economies of scale resulting from our expansion. Our employees also were successful in reducing our working capital ensuring strong cash flow.

The weak economic development in China in 2022, led to lower utilisation levels in Chinese PCB factories, which together with a strong USD against the CNY resulted in lower prices in new projects. As China once again is opening up, we expect the Chinese economy to restart and utilisation levels to rise in factories.

We remain confident about the future. We have a strong financial position, an excellent result and good cash flow. Most of our customers are positive about their order situation and future growth opportunities. We have a good mix of countries, regions and industries and generally speaking, low market shares. We also have an active pipeline of acquisitions and were pleased to welcome Bare Board Consultants in Italy during the quarter.

Finally, I would like to extend my deep gratitude to our dedicated employees around the world who work tirelessly to deliver high value and good service to our customers.