Aspocomp’s Q1 Net Sales and Operating Result Decreased YoY

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Aspocomp Group Plc, releases interim report for first quarter 2024.

FIRST QUARTER 2024 HIGHLIGHTS

• Net sales EUR 6.2 (8.9) million, decrease of 30%
• Operating result EUR -1.6 (0.3) million, -25.9% (3.8%) of net sales
• Earnings per share EUR -0.24 (0.04)
• Operative cash flow EUR -2.0 (1.6) million
• Orders received EUR 7.5 (13.7) million, decrease of 45%
• Order book at the end of the review period EUR 11.8 (19.1) million, decrease of 38%
• Equity ratio 64.5% (72.9%)

OUTLOOK FOR 2024

Inflation and interest rates, weak economic development, the uncertainties posed by Russia’s war of aggression and the situation in the Middle East, and global trade policy tensions will affect the operating environment of Aspocomp and its customers in the 2024 fiscal year. The company estimates that the demand in the Semiconductor segment will gradually recover starting from the first half of 2024, while at the same time unloading high inventory levels in various parts of the value chain. In order for investments to pick up in several of Aspocomp’s customer segments, consumer demand must improve, and interest rates decline, among other factors. Demand for Aspocomp’s products is expected to recover gradually during 2024.

Aspocomp reiterates the guidance that was published on March 14, 2024. Aspocomp estimates that its net sales for 2024 will increase from 2023 and its operating result will improve from 2023. In 2023, net sales amounted to EUR 32.3 million and the operating result was a loss of EUR 1.7 million.

CEO’S REVIEW

“January-March net sales decreased by 30 percent year-on-year and amounted to EUR 6.2 (8.9) million. Net sales development was depressed especially by weak demand in the semiconductor industry and a weaker product mix than in the comparison period.

Although the decline in net sales in the Semiconductor Industry customer segment was strong in the first quarter, market data indicates that its business cycle has already turned around. For example, according to the Semiconductor Industry Association, which follows the semiconductor industry, global sales of semiconductors grew by 15-16 percent in January-February compared to the reference period of 2023, and the association predicts that growth will continue at a similar level throughout 2024. However, the positive development of the semiconductor market is not immediately reflected in PCB sales, as inventory levels are still high in various parts of Aspocomp’s customers' value chain. When inventory levels gradually return to normal, the recovery of the semiconductor cycle is expected to be gradually in the demand for Aspocomp’s products as well. Even in the longer term, the semiconductor industry's growth prospects are strong.

Of the other customer segments, Industrial Electronics developed the best in the first quarter. The active sales work of the Security, Defense and Aerospace customer segment was reflected in net sales, which increased from the comparison period. The Telecommunication customer segment continued to be weighed down by the weak demand situation among end customers.

First-quarter operating result remained a loss, at EUR 1.6 (+0.3) million. The operating result was burdened by a decrease in net sales, the weakened product mix and higher material costs caused by a process failure that continued since the end of last year. The process failure is not expected to affect Aspocomp's financial development in the second quarter of 2024.

Inflation and interest rates, the economic recession, the uncertainties posed by Russia’s war of aggression and the situation in the Middle East, and global trade policy tensions will affect the operating environment of Aspocomp and its customers in the 2024 fiscal year. Demand for Aspocomp’s products is expected to recover gradually during 2024. We reiterate the guidance that was published on March 14, 2024, that Aspocomp’s net sales will increase from 2023 and its operating result improve from 2023. In 2023, net sales amounted to EUR 32.3 million and the operating result was a loss of EUR 1.7 million.

My ten-year journey in Aspocomp’s management will come to an end on May 20, 2024, when Manu Skyttä will take the helm as the CEO of the company. I would like to warmly thank the staff, shareholders and our customers for these years.”

NET SALES AND EARNINGS

January-March 2024

First-quarter net sales amounted to EUR 6.2 (8.9) million. Net sales decreased year-on-year by 30%. The development of net sales was impacted especially by muted demand in the semiconductor industry and a weaker product mix than in the comparison period.

The Semiconductor Industry customer segment’s first-quarter net sales decreased year-on-year by 71% to EUR 1.1 (3.7) million. The customer segment still suffered from high inventory levels in the value chain.

The Industrial Electronics customer segment’s first-quarter net sales increased year-on-year by 44% to EUR 1.2 (0.8) million. Net sales increased due to a slight recovery in demand.

The Security, Defense and Aerospace customer segment’s first-quarter net sales increased year-on-year by 14% and amounted to EUR 1.6 (1.4) million. The active sales work of Aspocomp was reflected in the increase of requests for offers and orders.

The Automotive customer segment’s first-quarter net sales decreased by 10% year-on-year and amounted to EUR 1.8 (2.0) million. The uncertain market situation slowed down deliveries.

The Telecommunication customer segment’s first-quarter net sales decreased year-on-year by 41% and amounted to EUR 0.6 (1.1) million. End customers’ weakened demand situation limited the growth of the customer segment.

The five largest customers accounted for 58% (61%) of net sales. In geographical terms, 83% (85%) of net sales were generated in Europe and 17% (15%) on other continents.

The operating result for the first quarter amounted to EUR -1.6 (0.3) million and operating result was -25.9% (3.8%) of net sales. The decline in the operating result was due to the decreased net sales caused by muted demand, the weakened product mix and the significant rise in material costs. Material costs were increased by a process disruption that continued from the fourth quarter of 2023.

Net financial expenses amounted to EUR 0.0 (0.0) million. Earnings per share were EUR -0.24 (0.04).