Detection Technology Plc half-yearly report January–June 2021
Detection Technology Plc company announcement 3 August 2021 at 09:00 (EEST)
DETECTION TECHNOLOGY PLC HALF-YEARLY REPORT JANUARY–JUNE 2021
Detection Technology Q2 2021: Return to growth, improved outlook
April-June 2021 highlights
- Net sales increased by 11.5% to EUR 23.5 million (21.1)
- Net sales of Industrial Solutions Business Unit (IBU) decreased by -10.4% to EUR 3.1 million (3.4)
- Net sales of Medical Business Unit (MBU) increased by 37.4% to EUR 13.6 million (9.9)
- Net sales of Security Business Unit (SBU) decreased by -11.7% to EUR 6.9 million (7.8)
- Operating profit (EBIT) was EUR 3.0 million (2.6)
- Operating margin (EBIT-%) was 12.6% of net sales (12.3%)
January-June 2021 highlights
- Net sales increased by 2.0% to EUR 41.9 million (41.0)
- Net sales of IBU decreased by -2.0% to EUR 5.5 million (5.6)
- Net sales of MBU increased by 29.4% to EUR 23.6 million (18.3)
- Net sales of SBU decreased by -25.8% to EUR 12.7 million (17.1)
- Operating profit (EBIT) was EUR 4.3 million (3.8)
- Operating margin (EBIT-%) was 10.4% of net sales (9.2%)
UNAUDITED (Figures in parentheses refer to the corresponding period of the previous year.)
President and CEO, Hannu Martola:
”Our growth was double-digit, thanks to excellent demand in medical computed tomography (CT) applications. Security market remained subdued, although our security sales started to grow at the end of Q2. Industrial demand experienced a normal fluctuation but overall market remained stable. It was gratifying to note the upward turn and that all of our businesses are now anticipating double-digit growth for H2.
MBU sales grew strongly, thanks to the same market drivers as in Q1. Investments in healthcare infrastructure, globally and in particular in China, as well as the demand in higher-end CT equipment, boosted our sales to grow strongly. The demand of our next-generation products remained at a good level and, for example, our X-Tile standard solution has sold well. The dental market is recovering and, in our view, commercial X-Panel deliveries will start later this year.
The demand for imaging solutions in the food and pharmaceutical industries remained stable, and the demand in other industrial segments is recovering. There were no significant changes in the industrial market at a general level during the review period. IBU sales continue to grow although year-on-year sales decreased due to a quarter-over-quarter fluctuation.
The security market is recovering slowly, and SBU sales decreased at the beginning of Q2, but took an upward turn at the end of the review period. We have received a good number of orders from our customers, in particular in security CT applications. During the review period, sales mainly focused on applications used by customs and, in our opinion, demand will also grow in aviation security check applications as the number of passengers return to the growth path in H2.
Our profitability improved from the beginning of the year, and our cash flow improved despite the fact that most sales were generated at the end of the review period. The expected increase in sales in H2 will support profitability going forward.
We have continued to develop our business in order to secure our competitiveness and future growth by expanding our product portfolio. Our Aurora product family expanded to cover basic X-ray imaging devices at the lower price range. Aurora XS, launched in May, is designed for line-scan applications used in train and underground stations, public buildings, sport arenas, hotels and other critical infrastructure. Aurora XS is unique in its class, because it enables dual energy imaging by using one detector. The innovation is based on a combination of algorithms, application-optimized ASIC and mechanics. Its simplified structure and imaging quality make Aurora XS competitive in this segment. We expect Aurora XS sales to start towards the end of the year.
Other significant events during the review period included the expansion of the TDI-based (Time Delay Integration) X-Scan T product family with new variants. The product family, designed for demanding industrial applications, now covers most system configurations and standard production line widths of the target segment. We have succeeded in offering a solution that promotes the efficiency of imaging systems, takes cost factors into account and underlines the increasingly important environmental aspects.
Our business outlook for the end of the year has improved, and we expect double-digit growth in all our business units in H2. Medical CT demand will strengthen and MBU sales are expected to grow even stronger in H2 than in H1. We anticipate double-digit growth in IBU sales in Q3 and H2. Demand in security applications has also taken a turn, and SBU sales turn for growth in Q3 and are expected to grow double-digit in H2.
Although demand has taken an upward turn and the management of the COVID pandemic has progressed, our business still faces uncertainties especially in security segment. Despite the fact that material shortages did not affect sales in Q2, risks related to the availability of special materials and electronic components have increased. Challenges in availability and longer delivery times may have an impact on our ability to meet the growing demand. We have taken measures to mitigate risks and we will keep our medium-term growth and profitability targets unchanged.”
Key figures
| (EUR 1,000) | 4-6/2021 | 4-6/2020 | 1-6/2021 | 1-6/2020 | 1-12/2020 |
| Net sales | 23,533 | 21,108 | 41,856 | 41,025 | 81,561 |
| Change in net sales, % | 11.5% | -23.2% | 2.0% | -18.8% | -20.4% |
| Operating profit | 2,954 | 2,589 | 4,336 | 3,770 | 8,714 |
| Operating margin, % | 12.6% | 12.3% | 10.4% | 9.2% | 10.7% |
| R&D costs | 2,562 | 2,688 | 4,968 | 5,306 | 9,827 |
| R&D costs, % of net sales | 10.9% | 12.7% | 11.9% | 12.9% | 12.0% |
| Cash flow from operating activities | 2,168 | -1,218 | 3,875 | 2,169 | 7,522 |
| Net interest-bearing debt at the end of the period | -22,869 | -16,082 | -22,869 | -16,082 | -19,364 |
| Investments | 223 | 314 | 653 | 1,009 | 3,081 |
| Return on investment (ROI), % | 14.5% | 20.5% | 13.6% | ||
| Gearing, % | -35.9% | -29.1% | -35.9% | -29.1% | -33.1% |
| Earnings per share, EUR | 0.16 | 0.12 | 0.25 | 0.19 | 0.47 |
| Number of shares at the end of the period* | 14,375,430 | 14,375,430 | 14,375,430 | 14,375,430 | 14,375,430 |
(*Number of shares has been 14,578,430 as of 1 July 2021.)
Business outlook
Prior to the outbreak of the COVID-19 pandemic, industry experts estimated that the global market in medical X-ray imaging equipment would grow at an average rate of about 5% per annum, the security segment by 6% and the industrial sector by about 5%. In Detection Technology’s view, the medical and industrial markets are growing in line with the estimates by the experts. The market disturbance caused by the pandemic in the security market is passing, and the segment will slowly head towards growth in H2 2021.
Detection Technology expects double-digit growth in its total net sales in Q3 and H2 2021. The company anticipates growing demand in medical CT applications, and MBU sales to grow double-digit in Q3 and stronger in H2 than in H1. Double-digit growth is expected in IBU sales in Q3 and H2. SBU sales are estimated to turn for growth in Q3 and experience double-digit growth in H2, but there is some uncertainty in the demand.
Due to the pandemic, the global economy and the company’s business have faced exceptional and temporary uncertainty, in particular in the security market. The predictability of the company’s target markets is still lower than usual, and risks related to the availability of materials have increased.
Detection Technology aims to increase sales by at least 10% per annum and to achieve an operating margin at or above 15% in the medium term.
Q2 2021 webcast
Hannu Martola, the President and CEO of Detection Technology, will present the Q2 and January–June financial performance and events to analysts, investors and media at a webcast. The live webcast in English will begin on 3 August 2021 at 13:00 (EEST).
A link to the webcast is available on the company's website at https://www.deetee.com/investors/reports-and-presentations/webcasts/. A recording of the webcast will be available later on the same web address.
This release is a summary of Detection Technology’s half-yearly report January–June 2021. The complete report can be found attached to the release and on the company's website.
Board of Directors, Detection Technology Plc
Further information
President and CEO Hannu Martola will be available for interviews and further information on the release date at 9:00-11:00 (EEST).
Hannu Martola, President and CEO
+358 500 449 475, hannu.martola@deetee.com
Nordea is the company’s Certified Advisor under the Nasdaq First North GM rules.
Detection Technology is a global provider of X-ray detector solutions for medical, security, and industrial applications. The company’s solutions range from photodiodes to optimized detector subsystems with ASICs, electronics, mechanics, software, and algorithms. The company has sites in Finland, China, France, and the US. The company’s shares are listed on Nasdaq First North Growth Market Finland under the ticker symbol DETEC.
Distribution: Nasdaq Helsinki, key media, www.deetee.com