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/

Third quarter 2023 (Q3 2022)

• Order intake increased year-on-year to SEK 154 million (143)
• Sales decreased 35 per cent to SEK 78 million (120)
• Operating profit totalled SEK 7 million (11), corresponding to 10 per cent (9) of revenue
• Adjusted operating profit totalled SEK 5 million (6)
• Profit after tax totalled SEK 4 million (8)
• Earnings per share amounted to SEK 0.07 (0.13)
• Cash flow from operating activities totalled SEK 43 million (39)

January–September 2023 (January–September 2022)

• Order intake totalled SEK 340 million (338) compared with the year-earlier period
• Sales decreased 16 per cent to SEK 357 million (422)
• Operating profit totalled SEK 33 million (87), corresponding to 10 per cent (13) of revenue
• Adjusted operating profit totalled SEK 31 million (82)
• Profit after tax totalled SEK 23 million (66)
• Earnings per share amounted to SEK 0.38 (1.12)
• Cash flow from operating activities totalled SEK -34 million (119)

Events during the third quarter of 2023

• On 18 September, Permascand announced that it had received two orders from one of the world’s largest commodity trading companies regarding aftermarket services in electrowinning.
• On 12 September it was announced that Permascand had joined Hydrogen Europe, a leading organisation in the world of hydrogen. The membership will enhance Permascand’s presence in the European green hydrogen ecosystem.

Significant events after the end of the reporting period

• On 25 October, Permascand announced that the company had signed a letter of intent with a leading green hydrogen technology provider concerning high-performance electrodes for advanced alkaline electrolysis.
• On 2 November, Permascand announced a SEK 17 million order for advanced electrodes for hydrogen production.

CEO comment

The third quarter of the year was characterised by a stronger order intake and progress in our Electrification & Renewables segment, which is continuing its robust growth and where we have advanced our positions in our hydrogen gas offering.

Order intake for the quarter totalled SEK 154 million, mainly consisting of two orders in Electrification & Renewables that we announced in September. These orders pertain to aftermarket services in electrowinning and confirm that our customer focus is leading to strong, long-term customer relationships. The orders will be delivered at regular intervals during 2024.

Sales for the third quarter totalled SEK 78 million. This is a decrease of 35 per cent year-on-year, which is attributable primarily to the sharp decrease in sales in Water Treatment in line with our forecasts. Sales were driven by deliveries in both Electrification & Renewables and Industrial Solutions, both of which grew compared with the year-earlier period.

Gross profit for the quarter totalled SEK 26 million, corresponding to a gross margin of 33 per cent (22). The main reason for the stronger gross margin is the product mix for the quarter in Industrial Solutions’ aftermarket business. We can also state that we have a positive cash flow of SEK 43 million from operating activities during the quarter, as a result of lower trade receivables and advance payments from customers in conjunction with new orders.

To stay on the leading edge and strengthen our offering, Permascand will continue to invest in research and development. Developing the market’s most efficient, high-quality products with energy efficiency, extended life cycle and stability as our areas of focus. These factors are increasingly in demand, are central to Permascand’s core technology offering as well as being necessary components in being able to reduce the costs of producing green hydrogen.

Electrification & Renewables
In Electrification & Renewables, sales increased 77 per cent to SEK 23 million. Sales comprise mainly of development projects with the long-term ambition to start serial production resulting in improved margins. We leave the quarter with a strong order book while the level of activity remains intensive in all areas: hydrogen, electrowinning and electricity transfer. In green hydrogen, we recently signed a letter of intent with a leading supplier of green hydrogen technology, with Permascand’s product and production offering being central to achieving future levels of ambition. After the end of the quarter, we won a commercial order of SEK 18 million for hydrogen from an unnamed customer. It pertains to high-efficiency electrodes for advanced alkali electrolysis of water, with planned delivery in 2024. We are seeing increased volumes of electrodes as an initial sign that hydrogen projects are nearing the commercialisation phase.

Industrial Solutions
Industrial Solutions accounted for the majority of sales, which increased 20 per cent to SEK 49 million. In the quarter, sales consisted mainly of aftermarket services, after having also delivered orders for major greenfield projects in the first half of the year. The gross margin performed positively because of this larger share of aftermarket business. The order intake varies between quarters, just as sales do. After the end of the quarter, a large aftermarket order of SEK 52 million was placed for delivery in 2024.

Water Treatment
The sharp decrease in the levels of order intake and revenue in Water Treatment was due to a decline in the global market linked to the installation cycle and stockpiling among customers. We are now delivering from our existing order book, which is not expected to grow substantially until after 2026 when the aftermarket business in the segment is estimated to achieve meaningful volumes.

Outlook
As regards order intake, the fourth quarter has gotten off to a good start with a commercial order for hydrogen as well as aftermarket business in Industrial Solutions, which strengthens Permascand’s order book for 2024 and beyond.

In line with previous assessments, sales for full-year 2023 are expected to be lower than in the preceding year as a result of the decrease in sales in Water Treatment. Over the short term, sales performance will be adversely impacted by the downturn within Water Treatment, but over time it is expected to be fully offset by Industrial Solutions and Electrification & Renewables.

We are experiencing a continued high level of activity and advanced dialogues with many of our customers, which means we see a favorable outlook for the order intake in the months ahead – including in the form of larger commercial orders in hydrogen, where we are pursuing far-reaching discussions with several operators, as well as in the form of aftermarket services in Industrial Solutions.

We enter the final quarter of the year with yet another profitable quarter of positive cash flows behind us. With a strengthened order book and commercial advances in hydrogen while Industrial Solutions is continuing its stable growth over time, we look forward with confidence to the end of the year and the quarters immediately following.

Peter Lundström, CEO Permascand

Report presentation
CEO Peter Lundström and CFO Linda Ekman will present the report in a conference call today at 10:30 CET. The presentation will be held in English and will conclude with a Q&A session.

Webcast
https://ir.financialhearings.com/permascand-top-holding-q3-report-2023

Registration
To participate via teleconference, please register via the link below. After registration, you will be provided with telephone numbers and a conference ID to access the conference. You can ask questions verbally via the telephone conference.

https://conference.financialhearings.com/teleconference/?id=5003308

After the presentation, a recording of the webcast will be available on the webcast link and on the company’s website www.permascand.com

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

Second quarter 2023 (Q2 2022)

• Order intake increased year-on-year to SEK 154 million (4)
• Sales increased 3 per cent to SEK 167 million (163)
• Operating profit totalled SEK 17 million (45), corresponding to 10 per cent (28) of revenues
• Adjusted operating profit totalled SEK 17 million (45)
• Profit after tax totalled SEK 12 million (35)
• Earnings per share amounted to SEK 0.21 (0.58)
• Cash flow from operating activities totalled SEK -40 million (58)

January–June 2023 (Q2 2022)

• Order intake decreased 5 per cent year-on-year to SEK 185 million (195)
• Sales decreased 8 per cent to SEK 279 million (303)
• Operating profit totalled SEK 25 million (76), corresponding to 9 per cent (25) of revenues
• Adjusted operating profit totalled SEK 25 million (76)
• Profit after tax totalled SEK 18 million (58)
• Earnings per share amounted to SEK 0.31 (0.37)
• Cash flow from operating activities totalled SEK -77 million (80)

Events during the second quarter of 2023

• On 12 May, Permascand announced that the company was strengthening its presence in North America by signing a collaboration and supply agreement with Chemetry. Permascand is also investing in the company as a growth partner.

CEO comment

The second quarter of the year was characterised by continued changes to the revenue mix, with growth in the Electrification & Renewables and Industrial Solutions segments that successfully offset a decrease in sales in Water Treatment.

Sales for the quarter totalled SEK 167 million, up 3 per cent year-on-year. Sales were driven by robust growth in both Industrial Solutions and Electrification & Renewables. Successfully setting a new sales record for a single quarter, despite the changes to the revenue mix with a sharp decrease in sales in Water Treatment, is quite an achievement.

Order intake for the quarter totalled SEK 154 million, driven primarily by Electrification & Renewables, our future pillar, and Industrial Solutions, our stable industrial business. One of the highlights of the quarter was the order in Electrification & Renewables, under which the company will supply cells for the construction of a new lithium extraction facility, expected to be delivered in 2025. Customer activity levels continue to be high, but we are still experiencing cautiousness from customers in their orders caused by the uncertainty brought about by the situation in the global market.

Gross profit for the quarter totalled SEK 45 million. That corresponds to a gross margin of 27 per cent, which is lower than the 38 per cent achieved in the year-earlier period. We achieve a lower gross margin due to changed product mix where we in the quarter have a smaller series of manufacturing in Electrification & Renewables, and a price pressured water treatment business.

Permascand's three segments are in three different phases. Industrial Solutions is a very stable aftermarket business with good visibility and profitability. The Water Treatment business has during the period 2018-2022 gone through a strong growth phase with new installations. In total, we delivered around 5,500 cells before installations declined from the first quarter of 2023 and we expect the aftermarket business to reach significant levels after 2026 with the refurbishment of systems installed before 2018. Thus, after 2026, two out of three segments are expected to be in stable aftermarket phases. Permascand's next growth engine is Electrification & Renewables where we have an ambition to reach 5GW capacity for green hydrogen manufacturing in 2030.

Electrification & Renewables
The segment posted one of the strongest quarters in its history in terms of sales, while we experienced a high level of activity and increasingly intensive customer dialogues within all parts of the segment, electrowinning, power transmission and hydrogen. The electrowinning orders received in lithium extraction are a success in line with our strategic focus on winning business in new construction. The recoating cycle is estimated at between two and five years, which presents opportunities for attractive and recurring aftermarket business.

In green hydrogen, it is clear that our customers’ investment decisions are largely governed by the global market and financing opportunities. Owing to the investments in our production capacity over the last few years, we are ready to do our part – delivering on orders for components for production of green hydrogen on a commercial scale. We currently have over ten active customers with orders, sales and ongoing development and qualification processes. At the same time, we have another ten customers with ongoing dialog and exchange of information.

Industrial Solutions
The Industrial Solutions business area is driven by a stable and profitable aftermarket business and has potential for growth through new construction and capacity increases. The segment is our engine for the quarter. In May, we could announce that we had signed a collaboration and supply agreement with California-based Chemetry, which boosts the company’s presence in North America. The partnership pertains to commercialisation of a more efficient and sustainable process technologies for commodity chemicals. The development is proceeding in accordance with plans, with expectations that the demonstration facility at Braskem will be in full use in the first half of 2024.

Water Treatment
In water treatment, we are delivering on our existing order book. We believe that orders will not grow appreciably until after 2026, when it is expected that the segment’s aftermarket business will generate increased revenue. We are continuing to work on our offering in the area of water treatment in industry and public water supply. This is an area where we see continued potential for growth, and the possibility for our technology to be developed in a new area of application.

Outlook
Visibility in the short term remains low on how the market and customer orders will develop in the near future. It is clear that the situation in the global market is leading to restraint and caution among our customers – and their customers – in their investment decisions, which is expected to continue into the second half of the year. Given the patterns in customer orders and deliveries, we believe that sales for the full-year 2023 will be lower than that of 2022. Owing to the market environment we expect an unchanged level of our gross margin in the coming quarters.

However, the underlying long-term demand among our customers remains strong. For example, customers postponing investments in new and existing facilities result in increased operating costs, due to lower performance and higher energy consumption, which creates a pent-up need that must be met in the future. Further on, we expect that Electrification & Renewables and Industrial Solutions will continue to grow and even better offset the decrease in sales in Water Treatment. We see good chances that the first order for hydrogen on a commercial scale will be made before the end of the year. This is an area that is expected to gain in momentum in 2024 before a major breakthrough is expected in 2025.

Permascand has a strong position in the market, with our technology and solutions meeting customer expectations for quality and performance. All together, we feel positive about the long-term market outlook driven by the global green transition.

Peter Lundström, CEO Permascand

Report presentation
CEO Peter Lundström and CFO Linda Ekman will present the report in a conference call today at 10:30 CEST. The presentation will be held in English and will conclude with a Q&A session.

Webcast
https://ir.financialhearings.com/permascand-top-holding-q2-2023

Registration
To participate via teleconference, please register via the link below. After registration, you will be provided with telephone numbers and a conference ID to access the conference. You can ask questions verbally via the telephone conference.

https://conference.financialhearings.com/teleconference/?id=200910

After the presentation, a recording of the webcast will be available on the webcast link and on the company’s website www.permascand.com

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

First quarter 2023 (Q1 2022)

• Order intake decreased 84 per cent year-on-year to SEK 31 million (191)
• Sales decreased 20 per cent to SEK 111 million (139)
• Operating profit totalled SEK 8 million (31), corresponding to 8 per cent (22) of revenue
• Adjusted operating profit totalled SEK 8 million (31)
• Profit after tax totalled SEK 6 million (24)
• Earnings per share amounted to SEK 0.10 (0.40)
• Cash flow from operating activities totalled SEK -37 million (22)

Events during the first quarter of 2023

• On 14 March, Permascand announced that the company had appointed Nariman Askarieh as interim Global Chief Commercial Officer (CCO)

CEO comment

This quarter, we focused on strengthening our operational capacity for the future. The shift in our revenue mix is increasingly evident driven by continued strong development in Industrial Solutions while Electrification & Renewables continues to grow. The trend is positive, but our growing segments did not manage to reach levels that compensate for Water Treatment, which is performing at a lower level than historically. Even though our activity levels remained high and our customer dialogues intense, the quarter was characterized by a turbulent global situation where customers are cautious in their investment decisions.

We made several operational advances during the quarter, and we are continuing to invest for growth. This includes issues such as continued automation of parts of production for electrodes and electrochemical cells, new coating technology, and continued work on the completion of our technology and innovation center to strengthen our position in the field of hydrogen. These efforts in products and product development, combined with the cutting-edge competence we recruited during the year, will be key to ensuring a leading position and increasing efficiency in our processes and working methods for the future. The investments increased our workforce by 10 per cent, mainly in sales and research and development, and led to costs increasing SEK 9 million compared with the year-earlier period.

We can confirm that several customers have been cautious about placing orders with regard to conditions in the world market and therefore postponed their orders. Order intake for the first quarter totalled SEK 31 million, attributable primarily to Electrification & Renewables, a segment with great potential.

Sales totalled SEK 111 million, down 20 per cent from the year-earlier quarter. Primarily, this is an effect of a changed revenue mix, where Industrial Solutions and Electrification & Renewables are continuing to grow, though not to the degree that they will yet compensate for the weak market performance in Water Treatment.

Gross profit for the quarter totalled SEK 32 million, corresponding to a gross margin of 29 per cent. During the quarter, we had a production mix consisting of smaller production series and Greenfield orders, which were sold with lower profitability than in normal aftermarket business. We are also experiencing continued price pressure within Water Treatment. Our flexible and scalable production ensures positive margins even at lower production volumes.

Electrification & Renewables
Both the order intake and revenue increased compared to the year-earlier period, albeit from lower levels. The activity level remains high and we are making continual progress within the development and partnership agreements we have entered in the segment. The segment was characterized by intense business development and partnership with new customers – particularly in green hydrogen and lithium extraction. As part of our Technology and Innovation Centre for green hydrogen, we are adding personnel and equipment, and are entering into several international partnerships with universities, research institutions, customers and partners. Completion of the Centre is planned for 2023.

Industrial Solutions
Industrial Solutions continued to perform strongly, and during the quarter, we achieved nearly record-high revenue from delivering on the robust order intake from earlier quarters, mainly due to delivering of greenfield orders. We continue to see growing interest from both new and existing customers, driven by the green transition. Still, we are feeling the effects of the short-term world market situation.

Water Treatment
As previously communicated, we have been experiencing a weaker and more volatile market in Water Treatment driven by customer inventory build-up. During the quarter, we experienced challenges in leveraging economies of scale in our production as a result of smaller production series and production of new products. Combined with the price pressure in the market, it weighed down our gross margin for the quarter. Efforts are progressing to strengthen our offering in industrial water treatment, which is a field where we see potential for growth and aftermarket business.

Outlook
Even if it is relatively difficult to predict how global conditions will impact our customers’ willingness to invest going forward, we can confirm that we have a stronger quarter ahead of us. It is reassuring that we have Industrial Solutions, a stable and profitable business, and Electrification & Renewables which represents a promising area for the future that we are investing in with our own cash flows. We have ongoing constructive customer dialogues and expect that the postponed investment decisions will lead to order intake in the future. Moreover, we are experiencing continued high levels of customer activity. We are noting increasing demand both in Electrification & Renewables and in Industrial Solutions which is expected to lead to orders that will compensate for the slowdown in Water Treatment, where the installation cycle in ballast water treatment has peaked. These orders include the first commercial order within hydrogen business, which is expected to come in before the year is finished.
We are sure that customers' willingness to invest returns, and we see no reason to revise our view of our continued journey of growth. Permascand is well positioned in the global green transition thanks to our technology. With continued investments for the future and operational advances in the quarter, we have favorable conditions for long-term, sustainable, and profitable growth.

Peter Lundström, CEO Permascand

Report presentation
CEO Peter Lundström and CFO Linda Ekman will present the report in a conference call today 10 May at 10:30 CEST. The presentation will be held in English and will conclude with a Q&A session.

Webcast
https://ir.financialhearings.com/permascand-top-holding-q1-2023

Registration
To participate via teleconference, please register via the link below. After registration, you will be provided with telephone numbers and a conference ID to access the conference. You can ask questions verbally via the telephone conference.
https://conference.financialhearings.com/teleconference/?id=200746

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

Q4 2022 (Q4 2021)

• Order intake increased 43 per cent year-on-year to SEK 107 million (74)
• Sales increased 13 per cent to SEK 147 million (130)
• Operating profit totalled SEK 18 million (30), corresponding to 12 per cent (23) of revenue
• Adjusted operating profit totalled SEK 14 million (32)
• Profit after tax totalled SEK 15 million (21)
• Earnings per share amounted to SEK 0.25 (0.35)
• Cash flow from operating activities totalled SEK -5 million (33)

Jan–Dec 2022 (Jan–Dec 2021)

• Order intake increased 35 per cent, totalling SEK 508 million (377). Taking into account the write-down of a previous order, net order intake amounted to SEK 445 million.
• Sales increased 41 per cent to SEK 569 million (405)
• Operating profit totalled SEK 105 million (38), corresponding to 18 per cent (9) of revenue
• Adjusted operating profit totalled SEK 95 million (60)
• Earnings after tax totalled SEK 81 million (20)
• Earnings per share before and after dilution amounted to SEK 1.37 (0.37)
• Cash flow from operating activities totalled SEK 113 million (11)

Events during the fourth quarter of 2022

• On 15 December, Permascand announced the signing of a master supply agreement to deliver service and refurbishment of electrochemical cells to a significant client. The estimated value of the agreement is in the range of SEK 30–45 million per year for a period of two years.

CEO comment

The strength of Permascand’s business clearly showed through in the fourth quarter of 2022, where profitable growth and robust order intake were the result of broad and growing demand for the company’s products and solutions in combination with flexible, efficient production capacity.

2022 added up to a record-setting year where we increased sales by 40 per cent compared with full-year 2021. At the same time, we took some key strategic steps on our journey of growth, including through attractive partnership agreements and exciting customer projects.

Order intake for the fourth quarter totalled SEK 107 million. This is an increase of 43 per cent year-on-year. Order placement was primarily in Electrification & Renewables and Industrial Solutions.

Sales totalled SEK 147 million during the quarter, up 13 per cent year-on-year. Sales for the quarter were driven primarily by Industrial Solutions, where we successfully delivered on the robust order intake in late 2021 and early 2022. During the quarter, new patterns in our business segments emerged, as decreased sales and order intake in Water Treatment were offset by a strong quarter in Industrial Solutions, and Electrification & Renewables picked up momentum. This is a sign of strength showing that with efficient, flexible, and scalable production we can meet reduced demand in a segment by switching over and meeting increased demand in other segments.

Gross profit for the quarter totalled SEK 45 million, corresponding to a gross margin of 31 per cent. It is gratifying to once again report stronger profitability after lower capacity utilisation and disruptions to operations temporarily burdened profitability in the third quarter.
 
Electrification & Renewables
Electrification & Renewables returned one of its strongest quarters in the company’s history, with good sales and a robust order intake as a result of the high level of activity in previous quarters. We enter 2023 with a strong order book, demand that continues to increase, and an excellent outlook in the segment.

Our initiative to establish a technology and innovation hub to develop, and be a leader in, the field of hydrogen gas made tremendous steps during the quarter and continues to develop in accordance with plans. Completion of the research center, and the facility where we are introducing a new coating method, is estimated for the summer. As part of this same strategic plan, this spring we will be launching a research partnership with Umeå University and the Swedish Foundation for Strategic Research (SSF in Swedish) with a focus on producing green hydrogen without or with the reduced use of precious metals, with lowered production costs and reduced climate impact as goals. We are continuing to invest in the organization and in our plant to secure our leading position and to enhance the efficiency of our processes and working methods. Naturally, this will have some impact on our profitability over the short term, but this way we will be ready for commercial orders for hydrogen – the first of which is expected to come in during the year. The partnership with RES was strengthened during the year after signing a declaration of intent in April on the joint development of a commercial research center in a new production facility in the town of Alby in Ånge Municipality. This partnership strengthens our prospects for building up a customer portfolio in Sweden and the Nordic region – a welcome contribution to the base of international customers we have today.

Industrial Solutions 
The green transition pushed the growing demand in Industrial Solutions at a faster pace than previously expected. Here, we have won new customers while demand grows among existing customers. One successful advance was the two-year framework agreement for service and recoating of electrochemical cells that we signed with a major existing customer. The agreement is estimated to be worth between SEK 30–45 million per year, with an option to extend for an additional two years.
 
Water Treatment
We experienced a slowdown in Water Treatment during the quarter. The order pattern in marine transport has changed, as order placement today is more frequent at shorter notice and with less scope than in previous years when customers often placed orders on an annual basis. This, combined with a more competitive market with increased price pressures, gave rise to some challenges that we are meeting with the next generation of water purification cells so as to best confront the final phase of the installation cycle, which is expected to reach its peak in 2024.
 
Outlook
Given a high level of activity, we expect the robust order intake in Industrial Solutions to continue and an increase in Electrification & Renewables. We therefore expect that these segments will offset the slowing growth in Water Treatment for ballast water until the segment’s aftermarket business is expected to achieve significant revenue after 2026. We are also seeing growing interest in industrial water purification, though levels remain low. The total ballast water treatment market is expected to remain the same size as before, and our market shares unchanged. In our opinion, orders for remaining installations will be placed at shorter intervals before installation compared to previously. So far, production for Electrification & Renewables is generally in smaller series compared with production in Water Treatment, which initially requires larger production adjustments with lower efficiency as a result. Over the short term, this could lower profitability before larger orders come in and production can take place in larger series and thus with stronger profitability.

We leave a year with record-setting sales, strong profitability, and several key strategic successes behind us. We enter 2023 with confidence owing to the high level of activity with more customer inquiries as well as a strong order book that is more equally divided among our business segments. In conclusion, I would like to extend a warm thanks to all our customers, suppliers, partners, and especially our fantastic employees for their impressive efforts that allow Permascand to continue to develop and facilitate the global green transformation.

Peter Lundström, CEO

Report presentation
CEO Peter Lundström and CFO Linda Ekman will present the report in a conference call today 9 February at 10:30 CET. The presentation will be held in English and will conclude with a Q&A session.

Link to presentation: https://ir.financialhearings.com/permascand-top-holding-q4-2022

To participate via telephone please dial-in on the numbers below:
SE: +46-8-5051-6386
UK: +44-20-319-84884
US: +1-412-317-6300 , Pin code: 0469191#

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