Translation: Original published in Finnish on 02/21/2025 at 09:12 am EET

Scanfil released its Q4 report this morning. The surprise element related to the Q4 figures was very small due to the narrowed guidance in December, and the development in late 2024 was practically in line with our expectations. Scanfil plans to raise its dividend for the 12th year in a row, although the increase is in practice the smallest possible. For this year, Scanfil's guidance ranges indicate revenue and earnings growth, both our and consensus forecasts lie within these ranges. Thus, at first glance, we believe Scanfil's Q4 report met expectations and we do not initially expect that the report will cause major changes to our or consensus estimates for the near term. 

Organic revenue contraction slowed down

In Q4, Scanfil's revenue decreased by 4% to 202 MEUR from a relatively good comparison level. Organically, we estimate revenue declined by just under 10%, as the SRX acquisition supported revenue from the beginning of October. However, revenue development was slightly better than our forecasts in the latter part of the year, driven by somewhat better-than-expected traction in all three customer segments. However, the company sold almost 15 MEUR of its customer inventory in Q4, so the outperformance was not solely due to better-than-expected demand. Of the businesses, MedTech&Life Science turned to growth as expected in Q4, while Industrial and Energy&Cleantech still declined slightly in Q4.
   

A fairly good operating performance continued in Q4

Scanfil’s adjusted EBIT improved in Q4 by some 4% to 14.0 MEUR driven by the SRX acquisition and the company’s efficiency measures. The result settled around the lower end of the guidance, practically in line with out estimate. Profitability (EBIT %) was at a reasonable level on Scanfil's scale at 6.6%, considering the dilutive impact of low-margin inventory sales on profitability (cf. in the comparison period, the margin was burdened by non-recurring costs related to restructuring). The company has alleviated the pressure on earnings caused by the decline in revenue relatively well through savings and efficiency measures. 

On the bottom line, Scanfil recorded marginal adjustment items for Q4 related to the SRX acquisition, and financial expenses were higher than our expectations, probably mainly due to currency-based and non-cash reasons. The tax rate was also slightly above our expectations. Thus, Scanfil’s EPS decreased clearly in Q4 from the comparison period to EUR 0.14 per share and was also below our forecast, which expected a more moderate decline. From a cash flow perspective, the report looks quite good at first glance, and net debt at the end of last year was roughly in line with our expectations. 

Forecasts are roughly in the middle of the guidance ranges

Scanfil gave guidance for the current year, according to which the company's 2025 revenue will be 780-920 MEUR and adjusted EBIT 53-66 MEUR. Prior to the report, we expected Scanfil's revenue to grow by 9% to 844 MEUR and adjusted EBIT to grow by 11% to 59 MEUR. We also suspect that consensus forecasts were roughly similar. Thus, we believe the current year outlook is sufficient to meet expectations, although the relatively wide ranges reflect, in our view, the uncertainty still related to the near-term outlook, especially regarding external factors. This year, Scanfil's revenue and earnings growth will be supported by the SRX acquisition and new projects won last year (a total of 188 MEUR, no comparison figure available). In addition, the general demand situation should slowly recover with the global and European economies. Based on the comments, the company still has an appetite for acquisitions, so we would not be surprised if the support from inorganic growth on the figures strengthens further during the year. The balance sheet also offers plenty of capacity to continue acquisitions.