Detection Technology Plc company announcement 6 August 2024 at 09:00 (EEST)
DETECTION TECHNOLOGY PLC HALF-YEARLY REPORT JANUARY-JUNE 2024
Detection Technology Q2 2024: Strong result, record industrial sales
April-June 2024 highlights
- Net sales increased by 3.5% to EUR 26.1 million (25.2)
- Net sales of Industrial Solutions Business Unit (IBU) increased by 42.6% to EUR 5.3 million (3.7)
- Net sales of Medical Business Unit (MBU) decreased by -25.3% to EUR 9.3 million (12.4)
- Net sales of Security Business Unit (SBU) increased by 26.7% to EUR 11.5 million (9.1)
- Operating profit (EBITA) was EUR 3.3 million (1.4)
- Operating margin (EBITA-%) was 12.7% of net sales (5.4%)
January-June 2024 highlights
- Net sales increased by 1.7% to EUR 48.8 million (48.0)
- Net sales of IBU increased by 24.8% to EUR 8.9 million (7.2)
- Net sales of MBU decreased by -23.1% to EUR 18.8 million (24.5)
- Net sales of SBU increased by 28.8% to EUR 21.1 million (16.3)
- Operating profit (EBITA) was EUR 5.6 million (2.8)
- Operating margin (EBITA-%) was 11.4% of net sales (5.9%)
UNAUDITED (Figures in parentheses refer to the corresponding period of the previous year.)
President and CEO, Hannu Martola:
"Our Q2 result strengthened both year-on-year and when compared to Q1. Our total net sales were slightly better than expected, thanks to strong sales in security and record sales in industrial applications. Sales in the medical market were weak as expected, but market signals are encouraging.
The positive trend in the industrial market continued and our industrial application sales soared, which resulted into record quarterly sales. Better-than-expected demand in TFT (thin-film transistor) flat panel detectors in Asia and growth in our legacy business were the underlying factors of this positive turn. Demand improved in all main applications, including the applications for the food industry. We expect growth to continue in Q3, too.
Demand in the medical market was particularly poor, and our sales remained modest, as anticipated. Sales were negatively affected by the same factors as in Q1, including, in particular, the measures by the Chinese government to reform its healthcare sector and the related anticorruption campaign targeted at healthcare end operators. However, it was delightful to see some positive signals from the market indicating the easing of the anti-corruption campaign towards the end of the year. Our order book and sales prospects have improved, and we, therefore, expect medical sales to increase from Q3 onwards.
Robust growth in our security application sales continued. Sales in computed tomography (CT) applications for the aviation industry in the Western market were strong, but demand was also good for line scanner applications. Our view on the accelerated growth in the global security market strengthened. We have an advantageous position to meet increasing demand in particular in the CT segment, and we expect our security application sales to continue growing.
Our Q2 result improved both year-on-year and when compared to Q1. Improved productivity, sales mix, and growth in sales from Q1 were the cornerstones of our good result. Good results and strong cashflow allowed the early repayment of the long-term loan used for the acquisition of Haobo Imaging. We are confident that we will be close to our medium-term operating margin target of 15 percent this year.
We have made progress in the development of our Indian business and founded a subsidiary in the New Delhi area. Our goal is to build a local service and manufacturing unit for the growing Indian market. India is spending big on infrastructure, and we want to participate in these projects.
The first EU Origin products were delivered from our Oulu unit during the review period, and our modular production will allow us to flexibly increase our production capacity. This has enhanced customer experience and improved our competitiveness and risk mitigation. Nearly 10 percent of our products sold will be manufactured in Finland by the end of the year.
The factors that have negatively impacted business due to the healthcare reform in China and the related anti-corruption campaign are estimated to gradually ease towards the end of the year, and we expect our medical sales to grow in Q3. Robust growth will continue in our other main markets, and both our security and industrial application sales will experience double-digit growth in Q3. We expect our total net sales to have double-digit growth in Q3 and H2 of 2024."
Key figures
| (EUR 1,000) | 4-6/2024 | 4-6/2023 | 1-6/2024 | 1-6/2023 | 1-12/2023 |
| Net sales | 26,093 | 25,219 | 48,799 | 47,972 | 103,794 |
| Change in net sales, % | 3.5% | 10.8% | 1.7% | 11.4% | 5.3% |
| EBITA excluding NRI | 3,306 | 1,351 | 5,570 | 2,827 | 9,656 |
| EBITA excluding NRI, % | 12.7% | 5.4% | 11.4% | 5.9% | 9.3% |
| Non-recurring items (NRI) | 0 | 0 | 0 | 0 | -873 |
| EBITA | 3,306 | 1,351 | 5,570 | 2,827 | 8,784 |
| EBITA, % | 12.7% | 5.4% | 11.4% | 5.9% | 8.5% |
| R&D costs | 3,049 | 3,079 | 5,560 | 6,041 | 11,702 |
| R&D costs, % of net sales | 11.7% | 12.2% | 11.4% | 12.6% | 11.3% |
| Cash flow from operating activities | 3,911 | 2,426 | 6,827 | 1,941 | 9,672 |
| Net interest-bearing debt at end of period | -14,744 | -18,530 | -14,744 | -18,530 | -12,665 |
| Investments | 352 | 376 | 1,485 | 828 | 14,426 |
| Return on investment (ROI), % | 13.9% | 6.5% | 13.9% | 6.5% | 9.9% |
| Gearing, % | -19.9% | -27.2% | -19.9% | -27.2% | -17.4% |
| Earnings per share, EUR | 0.15 | 0.03 | 0.26 | 0.09 | 0.38 |
| Earnings per share (diluted), EUR | 0.15 | 0.03 | 0.26 | 0.09 | 0.38 |
| Number of shares at the end of the period | 14,655,930 | 14,655,930 | 14,655,930 | 14,655,930 | 14,655,930 |
| Weighted average number of shares outstanding | 14,655,930 | 14,655,930 | 14,655,930 | 14,655,930 | 14,655,930 |
| Weighted average number of shares outstanding, diluted | 14,661,754 | 14,662,206 | 14,658,842 | 14,665,894 | 14,660,912 |
Business outlook
Detection Technology expects its total net sales to grow double-digit in Q3 and H2 of 2024.
Geopolitical situation, U.S.-China relations, global economy, the measures taken in China to reform its healthcare, price competition especially in China, the indirect impacts of the war in Ukraine, and events in the Middle East create uncertainty.
Detection Technology aims to increase its sales by at least 10% per annum and to achieve an operating margin (EBITA) of 15% in the medium term.
Q2 2024 webcast
Hannu Martola, the President and CEO of Detection Technology, will present the Q2 and January-June 2024 financial performance and events to analysts, investors, and media at a webcast. The live webcast in English will begin on 6 August 2024 at 13:00 (EEST).
A link to the webcast is available on the company's website at https://www.deetee.com/reports-and-presentations/webcasts/. A recording of the webcast will be accessible later on the same page.
This release is a summary of Detection Technology's half-yearly report January-June 2024. 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, +358 9 5300 6774
Detection Technology is a global provider of X-ray detector solutions and services for medical, security, and industrial applications. The company's solutions range from sensor components to optimized detector subsystems with ASICs, electronics, mechanics, software, and algorithms. It has sites in Finland, China, France, India, 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
