Good afternoon, welcome to follow DT's fourth quarter result webcast. My name is Hannu Martola. I'm the President and CEO. I'm pleased to report to you fourth quarter result. Fourth quarter, we reached EUR 28 million sales, 14% growth. EBIT of EUR 2.8 billion, which is about 10% of our sales. Looking inside. We had really nice and high growth in both industrial and security. Industrial grew 35%, security 41%. Medical actually had a decline, went back on 7%. Looking more closely what happened actually in industrial area, actually demand was quite strong in all areas of it within industrial. We had also much better delivery capability than before. We got some components in in December and were able then to meet customer requirements. In security sales, our growth was 40%. Actually, if we look inside, very much the security grew because of new customers. Quite a lot of the, let's say, legacy, aviation-related, even CT, we did not see that high growth there. Thanks to new customers, we had also were able to deliver nice growth. On the medical side, the market was a little bit sort of, the growth was came down and especially what we also anticipated before, there were supply chain topics, customers were quite critical on their net working capital and so on. There were these kind of like stock corrections. Also medical was still impacted because of the component shortages. Overall, I think we had a very tight situation in December in terms of China and corona restrictions. I mean, it was early December was quite exciting especially on our Beijing factory. Despite all the challenges and thanks to our great team, actually, we were able to proceed through these challenges without any effect into production capability. We were able to deliver everything that we had on materials for. Also on medical business, it was impacted a bit because of the customer payments. We had actually now getting back to the normal phase, we are a bit fat in our net working capital and we will put special emphasis on that. As part of these actions and managing it, we also have made more strict sort of policies on payments and so on. If according to these policies, if we don't reach certain payments in time, then we also hold the shipments. These kind of activities are more stringent in the company. Profitability, it improved quarter- and- quarter, but if we look the previous year quarter, we had a little bit decline there because of the spot purchases and some extra costs. Roughly, I think we had some EUR 1 million level of extra cost in the fourth quarter that affected the profitability. As here we see the this coming year or the year we are living now that 2023, we foresee that due to some tails also from last year and even despite the growth we foresee as double-digit growth for this year, we still see it quite probable that the profitability can be slightly below the target level 15. Well, we're getting close, closer there, but still it would be sort of quite probable that we would not reach 15 this year. On net sales, fourth quarter was highest so far. If we have to go back to the 2019 second quarter, I think that we've which we see there as a second sort of line there. We had 27.5%, and now we reached 28.2%. It's a good start for the year, having a strong fourth quarter and we expect the first quarter also to be better than last year first quarter. Reaching 14% growth. On operating profit, 10% for fourth quarter is not at the target yet due to these one-time effects and so on, but I think the trend is very good. Quite interesting here is if we look the sales split by business units, that we are getting both IB and SB which by the way historically have been about 60% of our sales and medical about 40%. That is now has started to change and SBU and IBU are now starting to pull the growth for the company. MBU was doing the, was the growth engine for the company through the pandemic. Also, the same kind of phenomenon we can see here that through the pandemics, actually, the Americas and European, Middle East, Africa sales have been fairly sort of small. Now, even 80% growth in Americas, that's percentage-wise is very big, but okay, the sales is small. Americas already were 12% of the sales. Also Europe, Middle East, EMEA, Middle East, Africa was 22%, and the Asia Pacific, which also through the past couple years has been very, very dominant now is at 67%. We see that this sort of also sort of scenario is quite good, having more balanced global business portfolio. Even though, of course, Asia Pacific is three-four-four-fourths of the global population, so that's very important for the growth. On total year, we reached 98.6%. We are a little bit shy from 100%. I mean, we would very much have liked to be there, due to this being more stringent with the payments and so on, that cut off a bit of our sales and we landed at 98.6%, which still is roughly double digit for the full year growth, which we see is to the circumstances is quite okay performance. If we look the full year profitability, that is not okay. It's far from okay. We had too many one-time issues on 2022 that affected our profitability and the result was single-digit EBIT. One full year then business unit-wise, I think actually the fourth quarter probably gives a better picture on what's going on for the years to come, but MBU full year was like 50% and the IBU, SBU less. Full year, both SBU and IBU delivered nice growth and MBU was staying flat. The split by region, Americas roughly 10, Europe, Middle East roughly 20, and Asia Pacific about 71%. As we remember a couple slides before, the EMEA and Americas were sort of even higher than here. Financial side, I think something to note here, if we pick up the single most positive item here is the cash flow. I mean, despite the fact that the cash flow was slightly negative for the full year due to especially the high growth in the net working capital, we still were able to deliver fourth quarter a nice cash flow of EUR 3.7 million. That's also is a good start for the 2023. R&D, full year R&D was quite much higher than last year in monetary terms, also slightly higher in the percentage. We spent 12.7% to R&D in 2022. During the fourth quarter it was 11%. That is a bit higher. This 12.7 is a bit higher what we actually see as coming in for the 2023 and beyond. Investments were quite small. Full year investments about EUR 1.6 due to the fact that we did fairly little investments and didn't have a need to do investments to production equipment and capacity increase. It was mostly maintenance topics there. Strategy highlights, good thing is that we roughly got actually 20 new customers. We have been very active. If you remember also during the 2020 and 2021, we were able to win new customers, that's very good promising growth for the company, for the future. We also announced late last year that we will do some capacity and production investments to Oulu, enabling us for the customers who wish to have more like European origin or Western origin products. We also then have possibility to do the final assembly, it will enable roughly 10%-15% of our sales to be manufactured in the rest of the world outside China. Some product releases, most important was the X-rays Computed Tomography product, then we did a lot of product modifications. That ate one third of our R&D capacity. We had to create more than 100 new products, replacing the FPGAs that we have had shortages before. On components, frontier, we see some small challenges still with the components. We also foresee to spend a little bit money into the spot purchases on first and second quarter, much less than last year. Roughly we spent EUR 3 million money into the spots on during last year to be able to survive and support our customers. Good news is that it's mostly over, but thanks to the redesigns and overall situation also which has improved, we don't see a heavy impact to 2023 any longer on that. Other events, we had some smaller items here. I think the big, big topic here is that despite all these challenges, we kept company going, and that's the most important thanks to the fantastic team. We had actually eight days our production team, 100 employees were locked into the factory. They were working 12 hours and sleeping and rest 12 hours for eight days in a row. Thanks to them, we are here celebrating that we had 14% growth for the fourth quarter, and they did it voluntarily. That's fantastic. We also included new Design for environment tools into our R&D processes, enabling us to have higher sustainable products. We did some internal surveys, started this kind of heartbeat pulse surveys. Values champion is something that we have started to celebrate for the company-- I mean following company values and awarding that. A very, I think, also fun event was that we celebrated the quality month as well as the United Nations Children's Rights Week, so that we had invited our employees' children to our workplace, and it was exciting to see them thrilled seeing what their parents are actually doing. What are we expecting for first quarter and first half, actually? We expect that all these business units should be able to grow double-digit. The reason really is that the growth barriers also have eased up. We are quite sort of excited to see, for example, that how China economy will really open up after China just spent their big annual holiday and event, the Chinese New Year last week. I mean, now they are coming back. Some are still on holiday, but coming back and it's, I think, for the global business, it's exciting to see how will China market open up and after the restrictions in China New Year. Therefore, we are actually guiding that DT as a group should grow double digit, probably something between 10%-20% for the first quarter and for the first half. On market growth, I must repeat what I have said before. It's still a bit early to say where really these markets stay as growth. I think the medical market, all let's say signals from the market is that it should be some mid-single, like 5-ish%. Also security, probably 5%, even though security has not jumped back to the level it was in 2019, so that's a bit question mark. It can grow faster. Industrial has been for some time between 5%-6%, about 6%. On this earnings per share and payout, so what the board of directors of DT is proposing to the AGM, to the annual shareholders meeting, is a dividend of EUR 0.20, which represents 57% of the net proceeds. That's roughly on the higher end of the range. We have 30%-60% as target. Regarding the financial targets for midterm, those remain the same, so the annual sales growth above 10%, operating margin at 15% or above, and then 30%-60% dividend policy. Thank you for viewing and listening, and I would be very pleased to answer any questions that there might arise. Nicklas, SEB. Thanks for taking my questions. Relating to your comments on profitability, I know that your business model is scalable and so the profitability should grow with sales growth. Now you are expecting somewhat below 15% margin in 2023. If you take into consideration the expected cost level in 2023, how much should you sell to be able to reach this 15% target? Well, higher than we've planned for 2023. I think if we take more on the cost side, there's still some, let's say, activities in the R&D relating to the redesigns. A little bit also, spot stuff is there. I mean, probably somewhere EUR 400,000- EUR 500,000 all together. These kind of will still be affecting. Also, we've had some, let's say, higher cost increases in fixed cost that they will be on longer term. This will mild it down compared to the sales. Those will be affecting most of this, like, extra logistic cost and so on. I think they already have come down to the more normal level. There's still some overall hassle that is affecting a little bit. I think the overtimes we had to do for fourth quarter to keep things running and so on, also those have come down very much. Those should not be affecting that much. All right. At what ballpark are we at in the inflation rates in your expenses if you leave the spot purchase aside? I think if we look, Really, if we look the Bill of Material, I think we were very successful to fight against the material cost in for the products. Also, we have done a little bit price increases, not very much, and also there is a little bit cost increases. If we look really on the, as we call it, the Throughput margin, which is the after material cost or the Sales Margin, which is after the direct cost including the labor. That level of profitability is about the same. There's we have not been sort of, let's say, losing on that margin. Then it's below sort of on the fixed cost side that there are some challenges and increases. All right. Understand. Thanks. One question on your medical demand. You already mentioned that there were some inventory reductions and everything happening in Q4 that affect your sales. There are some large X-ray players still that have commented that they will reduce their inventory sales during this year. Do you expect this phenomenon still affecting you, and for how long, and how long do you think that these events in China that affected your sales in Q4 will still affect medical sales? Well, we expect the medical, I mean, DT medical business still, I mean, be growing for 2023. That, that's in. I mean, in CT, I think the, let's say, the higher the premium segment probably is doing a little better than the, let's say, the lower segment. Also it is a bit company specific, so it depends who you have as a customer and so on. In big scale, if we take out this kind of like inventory correction and so on, everybody is fighting to, you know, to get thinner after the fat years of our pandemic. If we take this impact out, the end sale still is overall should be growing in the world. All right. Thanks. Hi. Felix Henriksson, Nordea. Just a clarifying question in the beginning related to the spot purchases and extra cost. Was it so that, 2022 you had EUR 3 million of extra cost, Q4 EUR 1 million, and now you're speaking about roughly EUR 400,000-EUR 500,000 for 2023? Yes. and thanks for asking. Actually, this EUR 1 million is altogether sort of the extra cost that we had. Spot probably was about EUR 600 out of that and so on. We did some reservation. There still was some extra. Esther has also a good approximation, is that altogether this impact was about EUR 1 million. Right. Thanks. Then, could you give us any further color on the magnitude of the postponed sales in medical due to these payment issues in China in Q4? It was payment issues overall, not just, I mean, but yes, for medical, it is not, let's say, huge, but, I mean, if I say that we probably would have been a bit over EUR 100 if there wouldn't have been any issues. I think it's sort of something that this is in a way, I hate to say normal in our business because it's, of course, it's a nice phenomena, but customers are playing with the sort of payments and if you don't really force them, I mean, nobody is paying to voluntarily things. It's always you have to be a little bit negotiating on shipments and so on that you make sure that you get your money to the cash box. Now, I mean, we have a project then relating to improve improving our Net Working Capital, and part of that also is that we are more careful and more strict on payments. Finally, based on your current visibility, what are you sort of expecting in your budgeting from some security sales? Do you think it's realistic for it to return to the pre-pandemic run rate levels during 2023? Are there any sort of updates in terms of aviation investments that you can share with us? Well, I think in our sort of, as we see, overall, I think it's expected that global traveling in monetary terms would this year be the same than 2019 was. Of course, I mean, there has been some inflation, so probably from traveling point of view, there's less, a little bit less travels. I mean, monetary terms globally, it should be about the same than 2019. That, I mean, at the end of the day, the airports get money from the, I mean, flying passengers. I mean, sometimes indirectly and so on, but, and at the end of the day. Of course, this kind of traveling is sort of, driving, these investments to the airports. Then on top of that, there's needs to, you know, increase the throughput, speed up the throughput and so on, and then we are talking of C omputed Tomography technology and that kind of sort of solutions, which have now started but has been proceeded slower what we have anticipated. Interesting is also that it will not be business traveling very much still this year because all of us we've been learning to meet people through remote, I mean, Teams and so on, but it's private people will be traveling more. Also relating to traveling, I just read beginning of this week there already was some news on China traveling and Chinese New Year is a big event. It's the biggest event in the world in traveling perspective. It still was only 50% what it was in 2019 Chinese New Year. China traveling, I think was it went up 70%-72% from last year, still was about one half. The reason is that people have been very careful of not to go back home or to their closest and risking the parents still and some elderly people to be sort of catching any diseases. That is now getting back. What I know from our own personnel in China is they're very happy. I mean, they feel like free birds, I mean, being able to move around and so on. The travel in China also will pick up quite fast. We hope also that that would also drive the China starting to invest into Computed Tomography CT technology in the aviation as well as some other programs they have planned, like green channel and so on, which would be very favorable for our security business. In a way, we have quite positive expectations of security business, it's a question mark that how fast will certain things open up. It's quite probable that they open up and so on, I mean, how quickly is something we need to wait and see. Thank you. Good afternoon. Matti Riikonen, Carnegie. Couple of technical questions. You said that the payment issues in China had a impact of roughly EUR 1.5 million, right? EUR 100 million would have been met without those transferred deliveries. Yeah. I emphasize, I think overall it's we have now more strict policies on sort of payments, so that's what it means. It's a change of DT behavior. Right. Do you expect that you will deliver these goods in Q1 this year? It's in our Q1 plans, yes. Basically when you talk about the overall demand, which is strong in your vocabulary in SBU and IBU and only good in medical, is this the difference that for the first quarter, you are guiding for double-digit growth in medical, but it's because of those transferred orders? It's in that, yes. Okay. I mean, the performance for SBU and IB also has been much stronger in all the quarters actually last year, so. Yeah. Do you think that the MBU business can grow by the double-digit regardless of the China kind of situation at the moment, so that is embedded in your estimates and you are certain that you can meet that? Well, would not like to go to very complex mathematics. I mean, simply if we look the fourth quarter sales and then what we look for the first quarter sales compared to the year before and what we are predicting is growth in MBU. Right. Should we kind of take into our estimates that Q1 in medical is still going to be fairly good, I mean double digit, but then do you expect some softening during 2023 as you said that? Uh, well- the outlook was a bit more soft in that segment? I think we have to. We still expect the medical overall global and then the Computed Tomography to grow in the world. Visibility for the second half still is not very good, so it's too early to say. What we are thinking here that the market should be growing 5%, and then if the market grows at that rate, I mean, we need to grow faster. All right. I think you last said that the component situation would be at least close to normal in Q2 this year. Do you still think that that's the case? Yes. Yes. There's still some, let's say restrictions. Luckily, it's more... less and less. What you also can see that in the spot markets, the availability, meaning the prices, have come down a bit. I mean, they are not hilarious, as before, but there's still work to be done. I mean, part of these FPGAs are used in military and due to the very unfortunate and terrible war in Ukraine, nobody could have foreseen that the demand for overall military is so high in the world and in the world's priority when governments need components, they get them. That is a bit affecting the situation. Still, like you said, we expect that, I mean, first quarter is much better than fourth and then it's sort of moving down from that, and thanks to the redesigns too. Basically you are not expecting any more redesign costs in Q2 this year? not to a significant level. Some still first quarter, but they are mildening down. Regarding the R&D cost, which is a bit elevated, at least when it comes to as a share of top line, but do you think that you will keep the absolute level of R&D cost going forward at the same level as it was in Q4? Do you think that the also the absolute level of R&D cost could come down this year? No, I don't think the absolute level. I mean, we intend to grow and that means that we have to put money into new technology and new product creation and so on. it should not grow at the same rate than the company grows. hopefully we are able to grow and that means that we're also able to then fund our future for faster growth also a little bit more than before. Okay. There's no basically a kind of extra element in the R&D costs that you could just take away. It's there, it's going to be there, and that's part of the fixed cost increase that you mentioned. Yes. Yes. Yes. Yes. R&D, I mean, you have to fairly long-term plan it, so you can't just cut it short-term. It's mostly salaries, by the way, and meaning that then, of course, the percentage is dependent on what is the top line. Sure. I mean, we don't expect that 12.7% that we had for 2022. I mean, it should come as percentage is a bit down. Right. When you say that the first half you expect to grow by double-digit, does it also mean that Q2 would be double-digit growth? Is there major difference between Q1? No, I mean, if we've strictly look what we are guiding is first quarter and first half. Okay. You're not taking a stand what's the difference between quarters, because now you have some shifting elements in the medical in Q1, which is supporting your top line, but you're not saying anything about Q2. Can it be extrapolated? Q1 + Q2 is first half. Yes, of course. I understand you want to fill your Excel for Q2, but, I mean, you have to use this sort of mathematics to figure it out. Sorry for that. Okay. All right. All right. The revenue share of from your five largest customers, that has been declining during a couple of years already. Have these five clients been the same during the past couple of years? Now, I mean, there has been some changes in so that, you know, it overall, like you said. Let's say that we've had quite a high concentration on the top, very top customers and so on, and then so there has been. I mean, like, number one customer has changed, I mean, during the past five years. I think overall it's an outcome of more, let's say, balanced business which is, which is good. The top five then share is, has come down a bit. Also, I think it's very important is this geographical sort of more balancing out. The rest, I mean, outside China markets also are now in good shape and growing. Right. How many of these 5 are non-medical customers? They are both. I mean, they're, I can say so that there's no industrial customer in there because typically industrial customers are much smaller. There are both, security and medical customers in this top five. Are there one or two? There are. Okay. That's all from my side. Thanks. Hi, it's Aris Herodotos from Evli. I have only two questions. First one relates to Gross margin, which has been below that of the previous years. How do you see the Gross margin development given that the product design program is ending and most of the spot component purchases are, you know, diminishing? Well, I think if we a little bit sort of piece this sort of down. Like I said, that the itself, the sales margin, I mean, from, you know, percentage of sales is has been about quite sort of constant, and that's good. We have been able to compensate the inflationary pressure. We also have certain electronics components have increased a lot, and now I'm leaving totally spot stuff out because that's not sort of normal. Relating to the fixed cost in production and factories and so on, for sure it will not grow at the level of sort of sales. If we take from that then and if we are talking of gross margin which is after the fixed cost, then it should be sort of scaling, meaning that it should be improving a little bit because of the this sort of top line growth. Okay. You mentioned that you have one new customer ships, about 20 during this year. Could you describe the profiles of these new customers and, you know, is there some large or strategic customers etc.? There are sort of some quite interesting. I mean, first of all, most of them are industrial customers. They are small and as typical, and they represent very much the same type of, let's say, businesses that we've had before even though there's couple that are, for example, in the battery manufacturing and so on. That's of course interesting industry from the point of view that it is going to be huge. Luckily there is need for X-ray in that industry. Most are industrial customer. There are also some quite interesting like security customers. Some actually helped us already fourth quarter, but some are, I mean, overall out of these new customers, some then are helping us later on. You have talked about the TSA Aviation bits coming in during the early 2023. Can you comment on that, has there been any new activity in from the TSA side? Well, let's say I think the situation has stayed the same, that the information is that during the first half they should be letting out the new tender. Also the fact is that a couple previous tenders and that have been announced, they have not been fulfilled. There is still business to be made and airports to be, you know, the X-ray machines to be replaced. Also globally I think there are some in the CT activity there are some tenders, but nobody knows when the action really and let's say, the sales can start and so on. Thank you. Thanks. Niklas from SEB again. I can ask you, one question. About your net financials, they were now quite much higher compared to previous quarters. Was this just an intra-year variation, or should we expect that your net financials would be higher also going forward? You mean on, in terms of? Just absolute levels. Your interest cost and so on. I guess those were now higher than earlier. I mean, on the debt side we have some working capital loans in as an example in China and so on, there should not be very big difference in that. All right. Thanks. Overall we are debt-free company, so it's more like a tactical on where does it make sense and so on. Yeah. Thanks. Hey, before closing this webcast, let's take few online questions. What are your main concerns at the moment? Main concerns. I, that's very good. I wish I would know, but I mean, Let's say if we think a bit risk side, I think the, of course the top line. I mean, could there be some things that could be hurting the demand? I mean, it can be anything, geopolitics or, I mean, Ukraine war something happening or so on. It's very much the success of 2023 lies on do we have demand, do we have sort of sales. I believe, I mean, we are in good shape in delivering. Our factories and personal are ready and so on. We believe also we can get materials much better than last year, it's quite much that could there be something that would hurt that. I mean, in our type of business in medical and security, for example, the recession and so on, risks relating to that, they should not have that big of an impact. It's top line is number one concern. Thank you. Another online question. China and its economy seems to be opening up quickly, how do you see this affecting DT's growth in different businesses in the coming years? Well, I think if we look at the China, which is the biggest security market, by the way, in the world, and also biggest medical market in the world, China was very strong in medical through the pandemics. But the China security was fairly silent through the pandemics. What we hope is that also the security would be opening up. I think overall what is, if you read Financial Times and so on, so, what is predicted and thought that the second quarter would be a big boost for China GDP growth and so on, then the question is that how will it sort of, continue. Indirectly also this kind of thing should also activate DT business in China. It's on the security and industrial sides. Medical has been so strong and also because of this inventory correction and so on, I think that's more of a global phenomenon so most probably also the affects the business, medical business in China. Thank you. All right. If there are no Oh, there's still one from Matti. Hi. Matti Riikonen, Carnegie. One mandatory question is the Chinese aviation standard. It's been kind of pushed forward for couple of quarters. What's the latest news? Do you have any insight into how that will pan out during 2023, or will it? Well, I hope it will, but unfortunately no further news on that. It's still on somebody's desk. It is there, we know, but it's not, it's not put into the active pile yet on execution. Overall I think China is, there's a lot of things that will also change in China and the economy will be sort of, let's say, put more emphasis on after the big party meeting and so on last fall. I would be quite, let's say, positive on Chinese economy development. Will it also bring these kind of events good things for us on this Computed Tomography? We'll see. That probably has no impact on your guidance for the first half, so it wouldn't have time to have. No. ...positive impact. not very much. Okay. Thank you. Okay. Thank you. I think we are at the end of this sort of webcast. I very much thank you for the patience and interest for DT Detection Technology, we'll be doing our best to also deliver and prosper through 2023. Thank you and goodbye.