Fourth quarter 2023 (Q4 2022)

• Order intake amounted to SEK 117 million (107), up 9 per cent compared to the same period in the previous year
• Sales decreased 36 per cent to SEK 94 million (147)
• Operating profit totalled SEK -9 million (18)
• Adjusted operating profit totalled SEK -2 million (14)
• Profit after tax totalled SEK -9 million (15)
• Earnings per share amounted to SEK -0.09 (0.25)
• Cash flow from operating activities totalled SEK 27 million (-5)

Jan – Dec 2023 (Jan – Dec 2022)

• Order intake increased year-on-year by 3 per cent to SEK 456 million (445)
• Sales decreased 21 per cent to SEK 451 million (569)
• Operating profit totalled SEK 23 million (105), corresponding to 5 per cent (18) of revenue
• Adjusted operating profit totalled SEK 29 million (95)
• Profit after tax totalled SEK 13 million (81)
• Earnings per share amounted to SEK 0.22 (1.37)
• Cash flow from operating activities totalled SEK -7 million (113)

Key events in the fourth quarter of 2023

• On 19 December, Altor PC presented a public cash offer to the shareholders of Permascand. The Board of Directors of Permascand announced its recommendation to shareholders to accept the offer.

CEO comment

In 2023, we achieved strong growth in Electrification & Renewables and Industrial Solutions, while Water Treatment slowed significantly. During the year we also boosted our pipeline of hydrogen projects, and are well positioned for large-scale manufacture of components for the production of green hydrogen on a commercial scale.

Order intake for the fourth quarter totalled SEK 117 million and is mainly attributable to aftermarket services in Industrial Solutions. This is an increase of 9 per cent year-on-year. After a good start to the period, we experienced a slight slowdown in order intake towards the end of the quarter, mainly in Electrification & Renewables due to the postponement of major investment decisions for hydrogen projects.

Sales for the quarter totalled SEK 94 million. This is a decrease of 36 per cent year-on-year. The lower sales are attributable to reduced sales in Water Treatment, as well as the weak order intake at the beginning of the year.

Gross profit for the quarter totalled SEK 29 million, corresponding to a gross margin of 31 per cent. The gross margin in the quarter is in line with the previous year and is expected to increase as we achieve higher sales volumes and thus better capacity utilisation.

Our development projects in electrode development and manufacturing technology to strengthen Permascand for the future have proceeded according to plan. Our innovation centre – to be inaugurated in June – will play a key role in our ability to continue and also accelerate our efforts in technology development. These developments are necessary to produce and deliver products of even greater efficiency on a large scale.

Electrification & Renewables
Sales in Electrification & Renewables were SEK 25 million in the quarter, which is in line with the corresponding period last year. Although we received a commercial hydrogen order totalling SEK 17 million and a development order amounting to SEK 3 million during the quarter, several hydrogen customers postponed their investment decisions, with increased capital costs, delayed infrastructure and unclear investment support and subsidies referred to as the most compelling reasons. So while we are seeing the number of hydrogen projects announced globally continuing to grow, the timeline for their realisation is moving forward. We are seeing a clear trend of increasing demand for the highly efficient electrodes for advanced alkaline electrolysis that Permascand supplies. These high-performance, long-life electrodes are a necessity for our customers in terms of ensuring that they are able to remain within their budgets for investment and operations. We are well positioned for when the market takes off in this area. Within the segment, we are witnessing greater interest in electrowinning and electricity transmission. These areas are also central to the green transition.

Industrial Solutions
Sales in Industrial Solutions totalled SEK 67 million, which meant sales in this segment were also in line with the corresponding period last year. We are seeing our profitable aftermarket business continue to grow steadily, partly due to our success in increasing our market share in the North American market. In parallel, new projects for new installations, known as greenfield projects, are being negotiated.

Water Treatment
The significant decrease in order intake and revenue in Water Treatment is due to a decline in the global market linked to the installation cycle and customer stockpiling. With the exception of smaller supplementary orders, we are delivering existing orders, with the order book not expected to grow until after 2026, when the aftermarket business in the segment is expected to achieve more significant volumes.

Outlook
The order book amounted to SEK 373 million at the end of the year, of which it is planned that about 80 per cent will be delivered in 2024, while the second half of the year is expected to be stronger, with increasing sales. In terms of order intake, 2024 has started as cautiously as 2023 ended. Due to the postponement of hydrogen projects around the world, we do not expect to receive any commercial-scale hydrogen orders until the second half of 2024 at the earliest. These are likely to be small orders initially.

In terms of the next few years, we are well equipped with good production capacity for strong growth when the production volumes arrive. In line with the global green transition, our long-term ambition is to expand with our customers and follow their plans for establishment around the world so we can provide them with high-efficiency electrodes on a large scale for green hydrogen production. This will require us to meet customer needs for local manufacturing and support, as well as subsequent aftermarket services, no matter where they are located in the world.

In December, Permascand’s Board of Directors issued its recommendation to shareholders to accept Altor’s public cash offer. Altor announced on 5 February that the offer had been accepted by shareholders representing approximately 95 per cent of the total number of outstanding shares and votes in Permascand. The management team remains focused on developing the business and strengthening the company to ensure long-term, sustainable and profitable growth, as well as playing an important role in the green energy transition.

Peter Lundström, CEO Permascand

Link to report
The report is attached to this announcement and can be found at: https://permascand.com/investors/financial-reports/