Aspocomp Releases Half-Year 2023 Report

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Aspocomp Group Plc announces its half-year and second quarter 2023 results. 

SECOND QUARTER 2023 HIGHLIGHTS 

• Net sales EUR 9.5 (9.6) million, decrease of 1%
• Operating result EUR 0.4 (1.6) million, 4.2% (16.6%) of net sales
• Earnings per share EUR 0.05 (0.23)
• Operative cash flow EUR -0.6 (0.9) million
• Orders received EUR 5.4 (9.6) million, decrease of 43%
• Equity ratio 67.9% (67.1%)

JANUARY-JUNE 2023 HIGHLIGHTS

• Net sales EUR 18.4 (18.6) million, decrease of 1%
• Operating result EUR 0.7 (2.4) million, 4.0% (12.9%) of net sales
• Earnings per share EUR 0.09 (0.35)
• Operative cash flow EUR 0.9 (1.6) million
• Orders received EUR 19.1 (22.6) million, decrease of 15%
• Order book at the end of the review period EUR 15.0 (20.5) million, decrease of 27%
• Equity ratio 67.9% (67.1%)

OUTLOOK FOR 2023

Inflation and interest rates, the risk of recession and the uncertainties posed by Russia’s war of aggression will affect the operating environment of the company and its customers in the financial year 2023. The cycle of the Semiconductor Industry segment is expected to return to growth at the end of the year or the beginning of 2024.

Aspocomp reiterates the guidance that was published on July 17, 2023. Aspocomp estimates that its net sales for 2023 will be below the 2022 level and its operating result for 2023 will be clearly below the 2022 level. In 2022, net sales amounted to EUR 39.1 million and the operating result to EUR 4.5 million. 

CEO’S REVIEW

“Aspocomp’s net sales for the second quarter of 2023 amounted to EUR 9.5 million, remaining at the same level as in the comparison period. The slowdown of the semiconductor cycle and high inventory levels in various parts of our value chain slowed down net sales. In addition, all our customer segments were burdened with uncertainties arising from the operating environment. Order intake was below the level of the comparison period and amounted to EUR 5.4 million. The order book decreased to EUR 15.0 million as customers, particularly in the Semiconductor Industry, liquidated their stocks.

A temporary slowdown in the semiconductor cycle is a typical phenomenon in the industry. It is expected to turn to growth again in late 2023 or early 2024, that is, a quarter or two later than we previously estimated. However, the industry's long-term growth prospects are still strong. The continuous development of technology - a current example of which is the proliferation of artificial intelligence applications - directly supports the company's core business.

The segment-specific variation in the company’s operating environment continued in the second quarter as well. Measured by net sales, our largest customer segment, the Semiconductor Industry, suffered from the slowness of the cycle and high inventory levels. The net sales of the Telecommunications customer segment also decreased. On the other hand, the net sales of our Automotive Industry customer segment clearly increased. In the Security, Defense and Aerospace customer segment, in which order cycles are long, our proactive sales efforts generated higher net sales in the second quarter. The segment's outlook is positive, and the number of requests for offers and new customers received by the company has developed favorably.

Aspocomp’s operating result for April-June decreased significantly from the exceptionally good level of the comparison period and amounted to EUR 0.4 million. The operating result was burdened by the temporary emphasis of net sales on lower-margin customer segments and the low share of profitable quick-turn deliveries. In addition, the lower-than-normal utilization rate of our factory increased the relative unit and personnel costs.

Inflation and interest rates, the risk of recession and the uncertainties posed by the Russian war of aggression affect the operating environment of the company and its customers in the financial year 2023. The cycle of the Semiconductor Industry segment is expected to return to growth at the end of the year or the beginning of 2024. We reiterate the guidance that was published on July 17, 2023, and estimate that Aspocomp’s net sales for 2023 will be below the 2022 level and its operating result for 2023 will be clearly below the 2022 level. In 2022, net sales amounted to EUR 39.1 million and the operating result to EUR 4.5 million.”

NET SALES AND EARNINGS

April-June 2023

Second-quarter net sales amounted to EUR 9.5 (9.6) million. Net sales decreased by 1% compared to the previous year due to the slowdown of the semiconductor cycle, increased inventory levels in the value chain, and uncertainties arising from the operating environment that burden all customer segments.

The Semiconductor Industry customer segment’s second-quarter net sales decreased year-on-year by 16% to EUR 3.6 (4.2) million. The customer segment suffered from a slowdown in the semiconductor cycle and high inventory levels in the value chain.

The Industrial Electronics customer segment’s second-quarter net sales remained at the level of the comparison period and amounted to EUR 1.1 (1.1) million. Inflation and the threat of recession are slowing down customers’ investments.

The Security, Defense and Aerospace customer segment’s second-quarter net sales increased by 14% to EUR 1.7 (1.5) million.

The Automotive customer segment’s second-quarter net sales grew to EUR 1.9 (1.2) million, up 61% year-on-year thanks to the increase in deliveries of volume products.

The Telecommunication customer segment’s second-quarter net sales decreased by 25% to EUR 1.1 (1.5) million. The decrease in the customer segment’s net sales was due to the timing of the customers’ product development projects.

The five largest customers accounted for 64% (56%) of net sales. In geographical terms, 84% (92%) of net sales were generated in Europe and 16% (8%) on other continents.

The operating result for the second quarter amounted to EUR 0.4 (1.6) million. The operating result decreased from the comparison period because net sales were focused on lower-margin customer segments. The share accounted for by profitable quick-turn deliveries was lower than usual, and on the other hand, the result of the comparison period was higher than usual. Preparing for growth increases personnel costs, and the utilization rate of the Oulu factory was at a lower-than-normal level, which increased unit costs.

Second-quarter operating result was 4.2% (16.6%) of net sales.

Net financial expenses amounted to EUR 0.1 (0.0) million. Earnings per share were EUR 0.05 (0.23).

January - June 2023

First-half net sales amounted to EUR 18.4 (18.6) million, a year-on-year decrease of 1 percent.

The Semiconductor Industry customer segment’s net sales grew by 3% to EUR 7.3 (7.1) million.

The slowdown of the semiconductor cycle and high inventory levels in the value chain slowed down growth.

The Industrial Electronics customer segment’s net sales decreased by 32% to EUR 1.9 (2.8) million.

Inflation and the threat of recession slowed down customers’ investments.

The Security, Defense and Aerospace customer segment’s net sales increased by 3% to EUR 3.1 (3.0) million. The number of customer contacts in the customer segment increased, but the order cycles are long, and the results are visible with a delay.

The Automotive customer segment’s net sales increased by 36% to EUR 3.9 (2.9) million. Sales of the Automotive customer segment turned to growth as the component shortage eased.

The Telecommunication customer segment’s net sales amounted to EUR 2.2 (2.7) million, a year-on-year decrease of 23%. The decrease in net sales was due to the timing of the customers' product development projects.

The five largest customers accounted for 60 (60) percent of net sales. In geographical terms, 85 (91) percent of net sales were generated in Europe and 15 (9) percent on other continents.

The first-half operating result amounted to EUR 0.7 (2.4) million. The operating result decreased from the comparison period, because net sales were focused on customer segments with a lower margin, the share of profitable quick-turn deliveries was lower than usual, and preparation for growth increases personnel costs.

First-half operating result was 4.0 (12.9) percent of net sales.

Net financial expenses amounted to EUR 0.1 (0.0) million. Earnings per share were EUR 0.09 (0.35). 

The order book at the end of the review period was EUR 15.0 (20.5) million. The order book decreased due to lower order intake. Of the order book, EUR 12.9 million has been scheduled for delivery this year and the remaining EUR 2.1 million next year.