Good morning. It's 10, 10:00 A.M. already, let's kick off the Scanfil's Q1 results call. Good morning. My name is Pasi Hiedanpää. I'm the Director of Investor Relations and Communications at Scanfil. You're warmly welcome to Scanfil's Q1 results call. It has been arranged as a Teams meeting for the first time. A couple of practicalities before our CEO, Petteri Jokitalo, presents our results. You may use the chat box for asking questions during the presentation. Questions are answered in a Q&A session. At that time, you may also ask questions verbally if you like. Recording of this meeting will be available later today at www.scanfil.com. Thank you. Petteri. Thank you, Pasi. Good morning, everybody, also from my side. Welcome to Scanfil Q1 result call. Pasi, may I ask you if our presentation is visible? It's visible. Yes, it is. ... on the screen? Thank you. Let's go. We got a good start for the year. Record sales, record OP, record net profit. Sales EUR 224.6 million, was strongly driven by good customer demand, growing volumes, but also easing component situation, improving components availability. And also we have increased our capacity quite strongly since last year and is also allowing higher volumes right now. Easing components availability of course is impacting positively in very many ways. It's decreasing heavily the spot market purchases we have been forced to do during the past almost two years, and also impacting positively our operating profit margins. Operating profit EUR 15.1 million, grew 46% year-on-year. Drivers behind, of course, increased sales volumes but also good capacity utilization, improved productivity also coming from easing component situation. Also we have been quite successful when managing the cost inflation. I'm especially satisfied with operation, operating margin, 6.7%. Should I say finally approaching our 7% target level and it's the best operating margin in two years, that we can be satisfied with that, definitely going to right direction. Last but not least, EUR 18 and EPS good level. About the customer demand, segment sales numbers you see here are including spot purchases. By the way, the spot purchases in the quarter are EUR 7.9 million. Just to understand the reduction that last year Q1 we had EUR 17 million spot purchases, that reduction of EUR 9 million. These segment numbers here are now including our spot purchases, but you can see that real nice growth numbers in four of our five customer segments. close or about 20% year-on-year. Pretty much the growth is driven by Energy & Cleantech, where we see really great demand, especially in Europe. Automation & Safety, also Medtech & Life Science and Connectivity, which is then bit smaller sales wise. Advanced Consumer Applications, we see some negative growth, but if we clean spot purchases out, we also saw some slightly positive growth in Advanced Consumer Applications. We had lot of spot purchases in that segment one year ago. Major products and investments, what we have done this year, we are investing continuously to all our factories, but especially we are now investing in Atlanta, United States, and Sieradz, Poland. We are adding electronics manufacturing line, completed line starting from inventory to and ending to testing phase in Atlanta. There, the aim is to serve mainly our global customers today, support the operations in United States. That factory is pretty much to United States. The electronics manufacturing line is available and ramp-up phase during Q3 this year. Sieradz, Poland. We have already invested a lot and more will come. Next new electronics manufacturing line will be installed in coming months and also available and in production in Q3 this year. We are also pre-planning a new building, like 8,000 square meter new building. The decision to be done later this year and if the decision is to go, then building is available early to 2025. Sieradz Poland, again, is a factory. We are mainly serving our global customers in Europe. To help our customers in their efforts in Europe. Our key numbers are mainly positive on most of them. We already went through the sales, 14.2% growth. Operating profit even 46%. Net profit close to 47%. Return on equity was improved from 15% last year to above 20% this year. Good level. Equity ratio slightly improved to 46.5%. Net gearing, net cash flow is something I'm not fully satisfied. Net gearing even slightly weakening. Net cash flow slightly negative. Of course, driven by network, networking capital development. Our inventory rotation was quite stable. Inventories were growing with growing sales in absolute terms as well as our customer receivables. With receivables there are nothing abnormal. Our receivables were growing in line with our growth, our sales growth. Inventories, I wouldn't say that. Petteri, just a sec. Petteri, just a second. I see actually your screen in a different way now. I cannot see the presentation. Was it okay so far? Yeah, until now. Now you cannot see? No. Can you re-share it? Okay. I can take it. Yeah. Now it's there. It's okay? Thank you. Yeah. It is. Okay. Very good. Yes, networking capital, what was driven by increased customer receivables as well as stable inventory rotation and absolute terms slightly improved. As said, I'm not fully satisfied, especially with inventory. We have potential to reduce our inventory and increase our inventory rotation. That work need to be continued there. If taking a look for our quarter sales past two years, you see steady growth since Q3 2021. Maybe more interesting thing is to see the sales grow without spot purchases. Here we can really can illustrate it that amount of spot purchases reducing quite quickly. Actually our growth if we are cleaning the spot purchases away from Q1 this year, Q1 last year was a bit above 20%. A very, very positive trend. Same matter with the operating profit that we have finally see somewhere here. I say that it is quite frustrating to see that we really believe that our EBIT, we have a lot of potential to improve our EBIT and so during two years, quite stable EBIT. Now finally we were able to realize the potential and nice to see also that operating margin is now improving and approaching our 7% level finally. What we believe that is fully realistic. Maybe other point here is that if we are taking the year 2021, what was like more normal year with not so much spot purchases either. You can see a kind of cycles where we are living in a year that normally Q1 is bit lower, impacted by Chinese New Year and that kind of drivers. Q2 normally very good. Same matter with sales, of course. Q3 again bit lower, mainly driven by summer holidays and holiday periods. normally Q4 is strong as Q2. normally Q2, Q4 are the strongest quarter per year and Q1 and Q3 bit lower. even that point of view, it's very good to see and we can clearly see that we got very strong start for the year 2023. If moving forward our revised outlook, couple of weeks ago we revised our outlook upwards. Now new guidance is that we believe that this year our sales will be somewhere between EUR 880 million and EUR 940 million and our operating profit between EUR 56 million and EUR 64 million. That change, of course, was driven by the drivers as we went through positively developed and strong customer demand. Also easing material, quickly easing material situation is helping us to meet and make and meet the customer demand. We also got a good, like, upward trend in Q1. February already strong. March especially strong month and also customer forecasts were updated upwards that time. It was relevant to update our guidance even we are still quite early stage of the year. Still the focus areas this year, securing and driving organic growth. There are a lot of potential for that. Even component situation has improved. We still have some issues here and there. Even we could say that the bottleneck we had in material availability is bit now moving to capacity and really motivating us to speed up our investments to increase our capacity. Especially in factories where we see so. Profitability improvement still stay in focus. We still have a potential to improve that. Then I said networking capital and inventory is something we are not fully satisfied with the situation. We have potential to improve, especially our inventory and release some money out of that. What is, of course, behind our short and also longer term success, of course, is our customer base. Customer base is very strong, very proud about our customers and segments, customer segments we are able to serve. Energy, Cleantech, Automation, Safety, Medtech, Life Science is getting very strong tailwind right now. Our largest customer during Q1 was making like 13% of our total sales. One three. 13% of our total sales. Top 10, 55%. Also calculated top 30, about 80%. It's quite diversified customer distribution and not high risk. Also, there are quite limited amount of competition between our key customers. They are in different segments and not directly competing normally. Time for your questions. Pasi, have we received questions from audience? Not yet. I put it in the chat box. You can use actually questions anonymously via menti.com, so you can actually post questions via that by using the code 29731541, or you can ask verbally at this point as well questions if you like. You can raise your hand if you would like to ask a question as well. Pasi Väisänen, please go ahead. Just unmute yourself and jump in. Great. Thanks. This is Pasi from Nordea. Just to look at your figures, which were extremely strong. Could you please elaborate or give us a couple of examples? What are the concrete products and practically segments you are now kind of been very strong, especially in Europe? Hmm. Just to understand, what's driving your performance currently? Yeah. Yeah. Of course, it's good to see. You remember more than 20% growth in all these segments. Automation & Safety, Connectivity, Energy & Cleantech and Medtech & Life Science, very close to 20%. You can see first starting with Energy & Cleantech, very strong momentum, especially in Europe, driven by the clean energy transformation, what's ongoing here and we believe that that will continue. It's not over in one or two years, but continue much longer. Here you can recognize quite many brands for sure. Danfoss, NIBE, ABB, all somehow very deeply involved. NIBE, big supplier of heat pumps. Danfoss, very much energy sector as well. Drives, frequency converters, increasing energy efficiency, as well as ABB. We have customers who are dealing with electricity networks, that is easy to understand the drivers. What we are doing for this company is that we are manufacturing different kind of electronics. Normally that starting from PCBAs and entering to modules, box build kind of products. TOMRA in recycling business, collecting bottles and we see first as legislation is driving TOMRA business in Europe that more and more countries are implementing legislation what is them supporting and even forcing actors to start to use that kind of collecting technology. Key driver. Just to mention few things. Yeah. Can I actually continue with your kind of solution areas and customers? I guess if I read right, TOMRA had some problems in Ireland. Have you actually seen any kind of effects coming from that? I guess Danfoss or Vacon also makes drives for KONE elevators. Are you now kind of having a KONE as a customer in several segments? Is this 13% including Danfoss drives also for KONE? Actually, we are not commenting so deeply in individual customers for what we are providing. Generally, we could say that not only commenting KONE or specifically KONE, but one customer is not like typically or normally part of different segments. One customer is could say always counted in one segment. There may be that kind of course situation that one of our end customer is selling their products to other our end customer. Yes. That kind of things can happen. Of course, we don't know exactly what is the volume of and how our customers are and to who our customers are selling their end products. Yeah, I hear you. Have you heard anything regarding the TOMRA as kind of, I would expect? No, nothing specific and spit even, nothing specific and, Nothing. We didn't hear anything specific related to that. Yeah. Fully understood. That was at least all for now from my side. Okay. Thank you, Pasi. Thank you. We have a question regarding M&A activities. What kind of an outlook for mergers and acquisitions Scanfil within the EMS space in 2023 and going forward to 2024? Mm-hmm. Mm-hmm. How do you see that? Yes. I repeat my message what has been that now we have been. I think that we made the right decision to focus on organic growth. Some extraordinary good situation to grow organically and have been focusing on that during the past years. But definitely as a next step, as I said earlier, our factory network is mainly in Europe, that seven out of nine factories located in Europe. We are, as you see there, we are serving global customers who are selling and operating globally. We want to be excellent supplier for these customers also in the life science. It's quite clear that we need wider factory network also outside of Europe. That means then that likely and very sure we need to consider having more factories in Asia, outside of China as well. Then thinking countries and markets like India, Vietnam, Malaysia could be like examples about possible factory locations. Also North America. We have only even we are investing in Atlanta, believing in the future about this big continent. Also Mexico is one area to be considered to be strong enough in North America and strong enough partner for our customers there. In order to widen our net-factory network in these regions, I think that acquisitions is very relevant alternative. On top of that, of course, mid- and long-term, we could consider the having acquisitions in Europe, in Central Europe to widen our customer bases and so mainly. Why not in mid or long term also considering East Europe to widen our positions there. I think that the priority is sort of definitely we have a good factory network in Europe. We have great additional capacity investments ongoing East Europe that we are quite confident that we have capacity enough in Europe to serve our customers and support the growth here. We need to strengthen our factory network outside of Europe. Okay. Thank you, Petteri. Additional question from Antti Viljakainen and from Inderes. How would you describe your product mix in Q1? Again, we see here the segments. We see where the growth was and was specific taking Energy & Cleantech. I say that we are providing electronics, basically everybody, but not necessarily completed products to everybody that we have customers like TOMRA, where we are providing fully integrated, fully tested products, fully completed. Then I said customers is more like electronics basis, PCBAs and box builds. We have not made officially that kind of like a split that how much we are selling electronics and how to make that division between electronics and box build and integrated products. I would say that the product portfolio, that point of view that how much we supplied electronics only and how much we supplied integrated products didn't change much during Q1 to last year. Here you see the segment changes that we could say that Advanced Consumer Applications even we are producing and supplying our customers as well, completed products as well as electronics in some cases. We're not, even if we are taking spot purchases away, was not growing or were growing very slightly. Then we saw very strong growth with all other customer segments. Was that, Antti Viljakainen, somehow answering your question? I hope so. There is an additional question from Antti Viljakainen actually regarding gross margins of different segments. Are Energy and Cleantech related customers carrying structurally higher gross margin than Scanfil's and average customers? Of course, the gross margins are not the same between customers. What may impact the gross margin mainly it's maybe not so much customer specific, but it's maybe more related to what is our scope, service scope what we are providing. If we are supplying our customers fully integrated, completed products including also sometimes expensive buy materials, then the gross margins tend to be a bit lower than supplying only electronics. It's not so straightforward that we could say immediately that, hey, that also the EBIT or OP is then lower for those integrated products. It's not necessarily so. Gross margins can be a bit lower because material content is high and there may be some expensive components what we are buying from market. Okay. Thank you. Jonas from Evli. I gather you would do M&A more in order to offer additional capacity for existing customers instead of or further diversifying the customer base? No, of course, we have new customers in the pipeline as well. Now would like to go back to our strategy and factory strategy that we have factories mainly serving our global customers. These factories, as we are calling these located close to customer markets. In our terms, these factories are located in East Europe, Asia or China and United States. There we are mainly serving existing customers and helping them to grow existing global customers. Then we have factories located close to customer RD. These factories located in Finland, Sweden, Germany. They, one centric task is to hunt new customers. Get new customers on board. Then help these customers to grow. When these customers are global and large enough, then transfer the products and then help customers to further grow by serving these customers and moving production to factories located close to customer markets. East Europe, Asia, United States, and support customers to grow further. We have new customer hunting done especially in Finland, Sweden and Germany. But it takes time, of course, and not all are, like, so successful cases that we are able to see these customers to be served one day by our East European, Chinese or Atlanta factories. Yes, Enics is there also for to help organic growth by acquisitions. Thank you, Petteri. Any other? If not, then, maybe it's good to end the session to somehow summarize some key takeaways, go through key takeaways. Good start, strong start for the year. Especially satisfied to see finally operation margin to approach 7% target level, which we believe that is really reasonable next step and target. Spot market purchases decline quickly, helping us in very many ways, including inventory management. Inventory management still remains as a centric focus area. Continuous strong investments to increase our capacity and support and realize the sales potential what we see organically right now. Strong customer outlook for 2023. Feeling very confident with the year. Thank you very much. Thank you. Just, as a reminder, there will be a recording of this meeting on our website, in couple of hours. Okay. Thank you very much, and, have a good day. Thank you. Goodbye. Bye.