Bittium Corporation
Half Year financial report
Bittium Corporation's Half-Year Financial Report January-June 2024
Bittium Corporation, Stock Exchange Release, August 9, 2024, at 8.00 am (CEST+1)
Net Sales Grew and Operating Result Improved Significantly during the First Half of 2024. Strategy Implementation Proceeds as Planned.
As of January 1, 2024, Bittium Corporation has started segment-based financial reporting. This financial report is the second report based on the new segmentation. There are four reportable segments: the company's three business segments; Defense & Security, Medical, and Engineering Services, and Group Functions segment.
Unless otherwise mentioned, the figures in brackets refer to the corresponding period in the previous year.
Summary April-June 2024
- Net sales were EUR 19.8 million (EUR 20.7 million), representing a 4.4 percent decrease year-on-year.
- Product-based net sales were EUR 11.9 million (EUR 13.3 million), representing 60.1 percent of the total net sales.
- Services-based net sales were EUR 7.9 million (EUR 7.3 million), representing 39.9 percent of the total net sales.
- Operating result was EUR 1.9 million (EUR 0.3 million), representing 9.6 percent of net sales (1.4 percent).
- The result for the period was EUR 1.6 million, and earnings per share were EUR 0.045 (result for the period EUR 0.1 million and earnings per share EUR 0.003).
- Cash flow from operating activities was EUR -2.3 million (EUR -5.7 million).
- Net cash flow was EUR -5.7 million (EUR -10.6 million).
- Implementation of the strategy and measures to improve the profitability of the company continued as planned.
- The Finnish Minister of Defence Antti Häkkänen authorized the Finnish Defence Forces to negotiate and sign a partnership agreement with Bittium.
- Bittium and BAE Systems signed a frame agreement on Bittium's tactical communication products, services, and systems.
- Uncertainties in the operating environment are created by the medical device approval schedules in the Medical business, timing of product deliveries in the Defense business, and customer cost-saving pressures in the Engineering Services business.
Summary January-June 2024
- Net sales were EUR 37.9 million (EUR 35.6 million), representing a 6.5 percent increase year-on-year.
- Product-based net sales were EUR 22.6 million (EUR 21.4 million), representing 59.6 percent of the total net sales.
- Services-based net sales were EUR 15.3 million (EUR 14.2 million), representing 40.4 percent of the total net sales.
- Operating result was EUR 2.9 million (EUR -3.2 million), representing 7.7 percent of net sales (-9.1 percent).
- Result for the period was EUR 2.3 million, and earnings per share were EUR 0.064 (result for the period EUR -3.6 million and earnings per share EUR -0.102).
- Cash flow from operating activities was EUR 3.0 million (EUR -4.6 million).
- Net cash flow was EUR -2.8 million (EUR -12.2 million).
- The order backlog was EUR 33.8 million (EUR 23.1 million)
- Personnel at the end of the period was 502 employees (616 employees).
| GROUP (MEUR) | 4-6/2024 | 4-6/2023 | 1-6/2024 | 1-6/2023 |
| 3 months | 3 months | 6 months | 6 months | |
| NET SALES | 19.8 | 20.7 | 37.9 | 35.6 |
| Change of net sales, % | -4.4 % | -8.8 % | 6.5 % | -13.2 % |
| EBITDA | 4.2 | 2.6 | 7.4 | 1.6 |
| EBITDA, % of net sales | 21.2 % | 12.7 % | 19.5 % | 4.5 % |
| OPERATING PROFIT / LOSS | 1.9 | 0.3 | 2.9 | -3.2 |
| Operating profit / loss, % of net sales | 9.6 % | 1.4 % | 7.7 % | -9.1 % |
| RESULT OF THE PERIOD FROM CONTINUING OPERATIONS | 1.6 | 0.1 | 2.3 | -3.6 |
| CASH AND OTHER LIQUID ASSETS | 5.5 | 6.8 | 5.5 | 6.8 |
| EQUITY RATIO (%) | 70.3 % | 69.5 % | 70.3 % | 69.5 % |
| EARNINGS PER SHARE (EUR) | 0.045 | 0.003 | 0.064 | -0.102 |
Bittium's CEO Johan Westermarck
The second quarter of the year developed as expected. Net sales in the Defense & Security Business Segment grew significantly, resulting especially from the increased number of Bittium Tough SDR deliveries and from the number of service projects. Net sales in the Medical Business Segment were lower compared to the corresponding period last year. The decrease in the net sales was affected by the delays in the medical device sales approvals caused by the stricter regulatory requirements, and by the exceptionally strong net sales in the corresponding period last year that resulted from the cumulated net sales from the first quarter. The Engineering Services Business Segment's net sales decreased due to the challenging market situation in R&D services markets. In total, the group net sales in the second quarter decreased by 4.4 percent year-on-year and was EUR 19.8 million.
The measures taken to improve efficiency and profitability have had a positive effect on the development of the operating result. The operating profit of the second quarter was EUR 1.9 million, representing 9.6 percent of net sales. The development of the operating result was also influenced by the lower R&D costs compared to the previous year.
The net sales of the first half of the year grew by 6.5 percent from last year and was EUR 37.9 million. The increase in the net sales was influenced by the good start of the year in the Defense & Security Business Segment. The net sales decreased in the Medical and Engineering Services Business Segments for the previously mentioned reasons. The profitability improved significantly, and the operating profit was EUR 2.9 million, representing 7.7 percent of net sales. Operating result in the first half of the year was positive in all Business Segments.
The implementation of the strategy progressed well in the Defense & Security Business Segment. Close cooperation with the Finnish Defense Forces continued and the preparation of the partnership agreement progressed with the aim of signing the agreement during the current year. The partnership agreement enables more systematic planning of cooperation. We continued the deliveries of tactical communication system products and radios, and field tests of the radios and preparation for their deployment continued as planned. We concluded two significant international cooperation agreements with the world's largest defense industry players. The framework agreement with BAE Systems significantly increases our chances to succeed and grow in the international market alongside a major player. The start of the indirect industrial cooperation related to the F-35 fighter procurement with Lockheed Martin offers us the opportunity to develop our already strong expertise in tactical data transfer in cooperation with players in the international defense market. Cooperation is an important step for us and the entire consortium we lead.
The stricter regulatory requirements and schedules for medical device approvals are causing a delay in building growth in the Medical Business Segment. We have strengthened our organization and focused on the development of efficient operations that ensure us the quality needed for the stricter regulatory requirements in the medical industry. As part of operational development, we have started prioritizing those projects that are the most critical to obtain the sales licenses. In the future, we will invest in building sales channels and thus increasing the sales. A significant part of the net sales in the Medical Business Segment was generated from ECG measuring devices sold to our US customer Boston Scientific Cardiac Diagnostics, with whom the cooperation continued well.
In the Engineering Services Business Segment, customer projects progressed well, and we won new deals from the Telecom and construction industry markets, for example. However, the net sales decreased from the previous year as the number of product development projects decreased. Our customers' cost-saving pressures in a challenging market situation have affected the schedules of customer projects, and the starts of new development projects have been postponed. We expect the market situation to continue to be challenging for at least this year. In the R&D service business, the visibility is very short and fluctuations in the market situation can cause significant changes in a short time frame.
Efforts being made to turn the company from R&D house to sales-oriented product house have progressed well. We will continue to systematically implement the strategy, invest strongly in serving our existing customers, acquire new customer sales and improve the operational efficiency in order to build future profitable growth.
Outlook for 2024 (unchanged)
Financial Outlook 2024
Bittium expects the net sales in 2024 to be EUR 85 - 95 million (EUR 75.2 million in 2023) and the operating result to be EUR 7.0 - 9.5 million (operating loss of EUR -4.3 million in 2023).
More information about Bittium's market outlook is presented in this report under the Business Segment chapter, as well as on the company's internet pages at www.bittium.com.
Invitation to a Press Conference
Bittium will hold a webcast regarding the Half-Year Financial Report January-June 2024 for media, analysts, and institutional investors on Friday, August 9, 2024, at 9.00 am (CET+1). The conference will be held in English.
Link to the webcast: https://bittium.videosync.fi/q2-2024
Recording the webcast and the presentation will be available after the conference on Bittium's website at www.bittium.com/investors.
Oulu, Finland, August 9, 2024
Bittium Corporation
The Board of Directors
Further Information:
Johan Westermarck
CEO
Tel. +358 40 344 2789 (group communications)
Karoliina Malmi
Vice President, Communications & Sustainability
Tel. +358 40 344 2789
Distribution:
Nasdaq Helsinki
Major media
Bittium
Bittium specializes in the development of reliable, secure communications and connectivity solutions leveraging its over 35-year legacy of expertise in advanced radio communication technologies. Bittium provides innovative products and services, customized solutions based on its product platforms and R&D services. Complementing its communications and connectivity solutions, Bittium offers proven information security solutions for mobile devices and portable computers. Bittium also provides healthcare technology products and services for biosignal measuring in the areas of cardiology and neurophysiology. Net sales in 2023 were EUR 75.2 million and operating loss was EUR -4.3 million. Bittium is listed on Nasdaq Helsinki. www.bittium.com
