Financial performance in October-December
• Sales increased by 4% to SEK 1,080 (1,038) million. Adjusted for acquisitions and currency effects, organic growth was -1%. Underlying organic growth was 4% (adjusted for extraordinary sales in the fourth quarter of 2022).
• Operating profit was SEK 118 (129) million. Adjusted operating profit was SEK 92 (111) million, adjusted for revaluations of operating assets and liabilities in foreign currency, and adjusted for items affecting comparability; cancellation of a contingent consideration from an acquisition and extraordinary doubtful debt in the quarter, and for the reversal of a provision for doubtful debt in the corresponding period of the previous year.
• The operating margin amounted to 10.9% (12.3%). The adjusted operating margin was 8.5% (10.6%), adjusted for currency revaluations, and adjusted for items affecting comparability.
• Profit after financial items was SEK 110 (123) million.
• Profit after tax amounted to SEK 91 (99) million, corresponding to SEK 3.15 (3.44) per share.
• Adjusted for acquisition-related payments made in the period, operating cash flow after investments was SEK 154 (39) million. Total cash flow after investments, including acquisitions, amounted to SEK 108 (23) million, or SEK 3.73 (0.79) per share.
Financial performance in January-December
• Sales increased by 15% to SEK 4,243 (3,687) million. Adjusted for acquisitions and currency effects, organic growth was 6%. Underlying organic growth was 11% (adjusted for extraordinary sales in 2022).
• Operating profit was SEK 430 (345) million. Adjusted operating profit was SEK 400 (372) million, adjusted for revaluations of operating assets and liabilities in foreign currencies, and for items affecting comparability; cancellation of a contingent consideration from an acquisition and extraordinary doubtful debt in 2023, and for a provision for doubtful debt in 2022.
• The operating margin was 10.1% (9.3%). The adjusted operating margin amounted to 9.4% (10.1%), adjusted for currency revaluations and adjusted for items affecting comparability.
• Profit after financial items amounted to SEK 390 (311) million.
• Profit after tax was SEK 320 (254) million, corresponding to SEK 11.04 (8.79) per share.
• Adjusted for acquisition-related payments made in the period, operating cash flow after investments was SEK 289 (2) million. Total cash flow after investments, including acquisitions, amounted to SEK 98 (-31) million, or SEK 3.38 (-1.07) per share.
Dividend
In order to ensure maximum financial freedom of action, the board intends to return regarding dividends, or share buybacks, for 2023 at the latest in connection with the notice to the annual general meeting for 2024.
CEO Comment - The market challenges some of our customers face pressurised sales in the quarter, which were below our estimates. We anticipate a progressive demand increase in 2024
"Short-term shifts in customer orders impacted growth for the quarter and sales came in below our estimates. In our broad customer portfolio, we have customers and customer projects that are developing extremely strongly. However, it could not sufficiently compensate for the short-term shifts in projects and inventory adjustments we saw with some of our other customers linked to market challenges. NOTE's sales during the fourth quarter of the year reached SEK 1,080 million, which corresponds to a growth rate for the quarter of 4%. For the full year, we achieved sales of SEK 4,243 million, corresponding to sales growth of 15%.
An underlying operating margin of 9.4% was achieved for the year and 8.5% for the quarter. Our ambitions for our operating margin are higher than that. The lower operating margin results from unusually large shifts in customer orders, which has affected resource utilization in our factories. The lower growth rate has also resulted in excess capacity in several of our factories. Adjustments, mainly to the workforce, have been carried out and today are judged to correspond to the sales pace we expect during the beginning of 2024.
The previously challenging situation in the market for electronic components has challenged our cash flow for several quarters and it is therefore gratifying to see that we have succeeded in breaking the inventory build-up in our factories and are now instead delivering positive cash flows from our operations. For the quarter, the operating cash flow (after investments) amounted to SEK 154 million and for the full year to a total of SEK 289 million.
We expect demand to gradually strengthen during 2024 with an ongoing strengthening of our margin. The previous guidance provided remains, which means a turnover for the full year 2024 of SEK 4.5-4.8 billion and a margin of 10%," says Johannes Lind-Widestam, president and CEO.
NOTE's Year-end Report for 2023 is now available in PDF format on the corporate web site, www.note-ems.com, and attached to this message. Today at 10.00 CET, NOTE organises a presentation for analysts, media and investors, where CEO and President Johannes Lind-Widestam presents the report. The Interim Report for January-March will be published on 18 April.
For more information, please contact:
Johannes Lind-Widestam, CEO and President, tel. +46 (0)70 541 7222
Frida Frykstrand, CFO, tel. +46 (0)70 462 0939
About NOTE
NOTE produces PCBAs, subassemblies and box build products. NOTE is a competitive EMS provider and stable business partner to customers with high standards. NOTE's products are embedded in complex systems for electronic control, surveillance and security, for example.
NOTE's business model builds on delivering high end manufacture, custom logistics solutions and consulting for the best possible total cost through long-term customer relationships and partnerships. Its customer offering covers complete product lifecycles, from design to after-sales. Primarily, its customer base consists of large corporations operating on the global market, and enterprises whose main sales are in northern Europe.
NOTE has a presence in Sweden, Finland, the UK, Estonia, Bulgaria and China. Sales over the last 12 months were SEK 4,243 million, and the group has approximately 1,500 employees. NOTE is listed on Nasdaq Stockholm. For more information, please go to www.note-ems.com.
This information is information that NOTE AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2024-01-29 08:30 CET.
