Scanfil’s second profit warning of the year was as expected

Translation: Original published in Finnish on 12/12/2024 at 08:00 am EET

Our forecasts are within the new guidance range, so we make no changes to Scanfl’s forecasts or outlook for the time being. Scanfil’s profit warning was not a surprise from the market viewpoint either, although consensus was a smidge above our estimates. We believe that the uncertainty related to Scanfil’s short-term demand outlook remains high, even if Q4 is by far the best quarter of the year for the company.  

The company downgraded its guidance ranges slightly

Scanfil announced yesterday that it will downgrade its revenue and EBIT guidance for 2024. Scanfil now expects its revenue for 2024 will be 770-780 MEUR (previous 780-840 MEUR) and its adjusted EBIT will be 53-54 MEUR (previous 54-61 MEUR). According to the company, challenges related to a few customer deliveries in the availability of materials in late Q4 and the slight weakening of demand reduced revenue and EBIT. Q4 will, however, be strong for Scanfil.

Our estimates were in line with the new guidance ranges

The profit warning was not surprising at all, as the lower limits of the previous guidance required an excellent (and the upper limits even a historically good) Q4 from the company. Our forecasts compiled in connection with the Q3 report expected Scanfil to generate an adjusted EBIT of 53 MEUR this year with a 778 MEUR revenue, both of which are within the new guidance ranges. Therefore, we maintain our forecasts unchanged for the time being despite the profit warning. However, the profit warning was a slight disappointment to the market, as consensus estimates for the current year were slightly higher than our expectations. The impact of the fairly expected profit warning on the stock was limited, as Scanfil’s price remained unchanged yesterday.

According to the guidance, Scanfil has generated a revenue of 202-212 MEUR and an adjusted EBIT of 14.2-15.2 MEUR in Q4. This corresponds to a decrease of 4-9% in revenue and an increase of 6-13% in adjusted EBIT from the comparison period, as well as a fairly good adjusted EBIT margin of approximately 7%. Scanfil's Q4 revenue and adjusted EBIT were supported by approximately 5 percentage points from the SRX acquisition completed in October. For Scanfil, Q4 is clearly the best quarter of this year, also in purely organic terms. In our view, the recovery of the MedTech&Life Science segment in particular, as well as new projects won last year transitioning into production, have supported revenue and profitability in Q4.

However, in light of the comments in the profit warning (incl. a slight weakening in demand at the end of Q4) and the guidance issued by the peer Kitron this week, Scanfil’s Q4 development, which is positive as such, does not necessarily reflect a sustained pick-up in demand and performance, but uncertainty, especially in terms of short-term volumes, is still elevated. Scanfil's earnings should, nevertheless, be bottoming out, as comparison figures will also ease starting from Q4.