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Q4 2021: Continued strong profitability despite supply chain disruptions

Year-end report 2021

Fourth quarter 2021 (Q4 2020)

  • Order intake decreased 10 percent, totaling SEK 74 million (82)
  • Sales increased 10 percent to SEK 130 million (118)
  • Operating profit totaled SEK 30 million (22), corresponding to 23 percent (19) of revenue
  • Adjusted operating profit totaled SEK 32 million (27)
  • Earnings after tax totaled SEK 21 million (13)
  • Earnings per share before and after dilution amounted to SEK 0.35 (0.26)
  • Cash flow from operating activities totaled SEK 33 million (32)

Jan–Dec 2021 (Jan–Dec 2020)

  • Order intake decreased 20 percent, totaling SEK 377 million (470)
  • Sales decreased 3 percent to SEK 405 million (415)
  • Operating profit totaled SEK 38 million (60), corresponding to 9 percent (15) of revenue
  • Adjusted operating profit totaled SEK 60 million (65)
  • Earnings after tax totaled SEK 20 million (33)
  • Earnings per share before and after dilution amounted to SEK 0.37 (0.65)
  • Cash flow from operating activities totaled SEK 11 million (53)

Events during the fourth quarter of 2021

  • On October 15, 2021, Permascand announced that the company had signed a framework agreement with one of the largest global players in chloralkali and diaphragm technology. The value of the agreement is estimated at between SEK 30–50 million per year during the three-year contract period.

CEO comment: Continued strong profitability despite supply chain disruptions

The fourth quarter of 2021 is testament to the fact that we are on the right path in our continued journey of growth, in which we will continue to deliver profitable growth by capitalizing on rapidly growing markets being driven by megatrends in environment and sustainability.

During the quarter, we continued to be affected primarily by a volatile supply chain that affected customers' decision-making processes in the short term. We thus found many of our customers holding off on placing orders during the quarter. We still displayed strong total figures for the quarter. Sales increased 10 percent to SEK 130 million, and once again we achieved a robust gross profit of SEK 47 million, which corresponds to a gross margin of 36 percent. This is proof that the investments we made in automation has resulted in improved production processes. We delivered an adjusted operating profit of SEK 32 million during the quarter, compared with SEK 27 million in the year-earlier period. This, despite a larger cost base as a result of the investments we made for future growth.

We are experiencing a historically high level of activity, with several customer inquiries in all three of our business segments. The high level of activity is a prerequisite for a strong commercial order intake and sales in the future, which is originating from smaller project orders. To maximize performance and sustainability, Permascand’s solutions are to a great degree tailored to the end customer through dialogue, testing and adaptation. There is no doubt that the underlying demand in the market remains high, given the significant interest from customers looking to initiate discussions and partnership agreements.

Our ambitions in green hydrogen – a sub-segment under Electrification & Renewables – are high. Our largest innovative effort, the construction of a full-scale technology and innovation center and investments in the company’s research team, proceeded according to plan during the quarter. There are strong opportunities in the market for green hydrogen produced via electrolysis, a market in which Permascand has delivered electrodes for electrolysis for over 20 years.

The level of activity in Industrial Solutions remains healthy, and numerous interesting dialogues are in progress. This indicates a strong underlying demand driven by increased awareness of the climate gains that are generated by the use of dimensionally stable anodes. We have also been working intensely on a new type of high-efficiency coating technology that is planned to be put into operation in the second quarter of 2022. The higher efficiency leads to lower costs and a more sustainable production.

Water Treatment was relatively unchanged during the quarter. The pandemic continued to have a short short-term dampening effect on the shipping industry and the growth in the field. The need for systems that can efficiently purify ballast water remains, and we believe that market conditions beyond the pandemic remain unchanged.

Using a flexible approach, we have been highly successful in adapting our operational activities to the prevailing situation. In combination with improvements in automation and robotisation, we will continue to increase our efficiency in the various parts of our operation so that we will be ready when the market situation returns to normal. We look forward to the remainder of 2022, where we will be well positioned to capture additional market shares and strengthen our profitability to increase our lead over our competitors.

Peter Lundström, CEO

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

Link to the presentation: https://tv.streamfabriken.com/permascand-top-holding-q4-2021

Telephone numbers for the conference call:
SE: +46 8 5055 8368
UK: +44 3333 009 031
US: +1 631 913 1422 (Pin: 27301922#)

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