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/

Interim report January-September 2022
Q3 2022 (Q3 2021)

• Order intake decreased 30 per cent year-on-year to SEK 143 million (203)
• Sales increased 57 per cent to SEK 120 million (76)
• Operating profit totalled SEK 11 million (14), corresponding to 11 per cent (18) of revenue
• Adjusted operating profit totalled SEK 6 million (14)
• Profit after tax totalled SEK 8 million (10)
• Earnings per share amounted to SEK 0.13 (0.18)
• Cash flow from operating activities totalled SEK 39 million (32)

Events during the third quarter of 2022
On 23 September, Permascand announced that the partnership with Verdagy for the joint development of a new electrochemical cell for the production of green hydrogen had reached an important milestone in the form of successful pilot tests that validate the technology’s durability and scalability.

CEO comment

We once again posted robust sales in the third quarter, delivering on our strong order book. It is gratifying to see that in just the first three quarters of 2022, our sales have already surpassed full-year 2021. This is further proof that we are continuing to deliver according to our growth ambition.

Order intake for the quarter totalled SEK 143 million. Despite lower order intake than in the year-earlier quarter, order intake is one of the strongest we have recorded in a quarter, and our order intake for the January to September period was greater than in the corresponding year-earlier period. We are pleased to see that order intake once again picked up speed after the lower level in the second quarter. An important reason for this is falling prices in the global market for materials and raw materials. The year-earlier quarter was an exceptional period, where the entire annual order intake from one of our largest customers was concentrated in one and the same quarter.

Sales totalled SEK 120 million during the quarter, up 57 per cent year-on-year. Sales were primarily driven by sales in Water Treatment, where we successfully delivered on our order book, primarily derived from the strong order intake in Q3 2021 and on an ongoing basis in 2022. Industrial Solutions also performed favourably while sales in Electrification & Renewables were in line with the year-earlier quarter.

The recent turmoil in the global market has led to a shift in market dynamics meaning that the time between order intake and delivery has become shorter. Now our customers place several smaller orders rather than fewer large ones, which can sometimes entail variations that result in misleading comparative quarterly figures. Permascand’s performance should be viewed in the context of longer cycles. There it is clear that we are demonstrating a positive trend over time.

Gross profit for the quarter totalled SEK 26 million. Changes in capacity utilization have temporarily affected the result and reported gross margin negatively. The gross margin in the quarter was also negatively impacted by increased pricing pressure in Water Treatment.
 
Furthermore, during the quarter we encountered some operational challenges that disrupted our normally efficient operations and production. These included delayed deliveries of spare parts for machinery, employee absenteeism and disruptions to the power supply from a failing switchyard. Increased costs resulting from the interruptions have, to a certain extent, been reflected in the somewhat lower profitability for the quarter. Despite these challenges, we delivered solid figures and profitable growth and we are continuously reviewing our processes to further strengthen our supply chain and create better stability and resilience against long lead times and volatile prices.

Electrification & Renewables
The level of activity remains high and new milestones are continuously being reached. One of these is our partnership with Verdagy, where we successfully worked together to develop a new electrochemical cell for producing green hydrogen. During the quarter, we could announce successful pilot tests that validated the technology’s durability and scalability, which is a precondition for taking the next step and reaching a commercial scale. We look forward to the first commercial order in hydrogen, which is expected to come in 2023. In the area of power transmission, we are seeing increased interest in our expertise in corrosion protection related to investments in green electricity supply.
 
Industrial Solutions 
In line with previous assessments, the activity level and demand remained high in Industrial Solutions, with a strong order intake and sales for the quarter as a result. We have a strong order book in the segment and several future new-build projects are being evaluated.
 
Water Treatment
We once again reported favourable order intake and strong sales in Water Treatment for the quarter, in parallel with the start of several new customer projects. We have an overall strong position in the market together with our customers, enabling us to continue to capitalise on the installations required in order for marine transport to meet regulatory requirements. It is also gratifying that we delivered our first order for industrial water treatment during the quarter.
 
Outlook
We are still experiencing a high level of activity among our customers and we have great expectations that ongoing projects will lead to order placements towards the end of the year and in the beginning of 2023. In line with the previous year, we expect stronger order intake in the fourth quarter for delivery next year, and negotiations involving several customer projects are in their final stage. With an impressive sales record on an annualised basis, robust order books and strong finances, we are continuing to develop on our profitable journey of growth and achieving our financial targets as we progress.

Peter Lundström, CEO Permascand

Report presentation
CEO Peter Lundström and CFO Linda Ekman will present the report in a conference call today 11 November 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-q3-2022

Phone number
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: 9111060#

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

Q2 2022 (Q2 2021)

• Order intake decreased 91 per cent year-on-year to SEK 4 million (41). Impairment of previous orders had a negative impact on order intake
• Sales increased 33 per cent to SEK 163 million (123)
• Operating profit totalled SEK 45 million (-3), corresponding to 28 per cent (-2) of revenue
• Adjusted operating profit totalled SEK 45 million (12)
• Earnings after tax totalled SEK 35 million (-5)
• Earnings per share amounted to SEK 0.58 (-0.1)
• Cash flow from operating activities totalled SEK 58 million (-39)

Events during the second quarter of 2022

• On 29 June, Permascand announced a write-down of one order, which decreased the value of the order backlog by approximately SEK 63 million. The order, which was placed in 2018, will not be delivered. The delivery of the order was previously estimated for the second quarter of 2023, which implies that sales for the current calendar year will not be negatively affected.

CEO comment

In the second quarter of the year, we once again achieved record sales alongside high levels of customer activity. We are still benefiting from streamlining and scalability in our production, which resulted in a gross margin of 38 per cent during the quarter.

The value of incoming orders amounted to SEK 67 million, an increase of 63 per cent over the year-earlier period. After the write-down of one order during the quarter, net order intake totalled SEK 4 million. Customer activity levels are generally high in all of our business segments. At the same time, we can note that there was a certain amount of passivity among some customers in the quarter in terms of placing new orders.

Sales totalled SEK 163 million, up 33 per cent year-on-year and approximately 17 per cent stronger than the previous record-breaking quarter, Q1 2022. Strong sales were once again driven primarily by the Water Treatment business segment, where we continued to deliver on our strong order book. While the other segments accounted for a smaller portion of sales in the quarter, the trend has been positive and sales met expectations. 

The gross profit for the quarter totalled SEK 62 million, an increase of SEK 31 million over the year-earlier period. We are following our growth plan and managed to deliver good profitability thanks to our efficient and scalable production. 

In large portions of our projects, our strong buffer inventory of raw material and materials provide flexibility and stability, as volatile prices for materials and raw materials or unpredictable supply chains otherwise can lead to uncertainty.

In the end of the quarter, we decided to write down parts of one order, which entailed an approximately SEK 63 million decrease in the value of the order backlog. A change entailing the cancellation of a project for our customer meant that the order, originally placed in 2018, would not be delivered. As previously announced, the delivery of the order was previously estimated for the second quarter of 2023, which implies that sales for the current calendar year will not be negatively affected. Otherwise, the order book remains stable and other orders will be delivered as expected.

Electrification & Renewables
The activity level remained high and our assessment is that several companies in green hydrogen are accelerating their processes and moving projects ahead of schedule to reach commercialisation. 
Our partnership agreement with Verdagy is based on development where we work together to develop a new electrochemical cell for producing green hydrogen. Like several other partners, Verdagy is accelerating its investments, which can be seen in the form of an intensified level of activity where the next step is to ramp up the demonstration facilities so they reflect the production capacity required in a commercial environment. When our partners then receive commercial orders from their customers, we are ready to do our part and deliver components that make these projects possible.

Industrial Solutions 
We noticed that customer activity also remained high in this segment and we expect it to begin to transition into major orders in autumn 2022. One of the high points of the quarter was an order for continued capacity expansion, which we expect to deliver before the end of the year. In addition to the expansion, demand is strong in maintenance of industrial facilities, where Permascand continuously supports customers in maximising production performance and efficiency. There are currently no signals that demand will slow down in this segment.

Water Treatment
Sales in the Water Treatment segment accounted for the majority of the company’s sales in the quarter. We broke a new sales record in a single quarter. Increased costs and falling prices for shipping, signs of a challenging global market, impact ship owners and put pressure on treatment equipment suppliers. At the same time, negotiations intensified concerning volumes and prices, indicating that there is uncertainty among our end customers. 
Furthermore, we see an opening in new use areas. For example, we have now received our first order in the water treatment segment within industry and public water distribution, where our electrochemical methods are effective. Growing regulatory requirements and expectations regarding sustainability mean that companies around the world are increasingly demanding efficient methods for treating water in these areas as well. This means that we can offer the same kind of technology we use for ballast water in new use areas in a growing end market.

Outlook
We are closing out the first half of the year with record sales and good earnings, while we also foresee continued high customer activity levels for the rest of 2022 that are expected to result in new orders. However, we can note that the global market has grown more difficult during the quarter, with increased caution among customers as a result. Thus, it is relatively more difficult to predict the market situation beyond the end of the year. Nonetheless, there are no signs that the global green transition will slow down – the reverse, in fact – and we are convinced that the companies that can enable this transition will benefit. Permascand is one of those companies. With strong financial earnings behind us and several exciting customer projects on the activity list, we look forward to continued strong development at the company during the second half of 2022.

Peter Lundström, CEO Permascand

Report presentation
CEO Peter Lundström and CFO Linda Ekman will present the report in a conference call today 18 August at 11:00 CEST. The presentation will be held in English and will conclude with a Q&A session.

Webcast
https://tv.streamfabriken.com/permascand-top-holding-q2-2022

Phone number
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: 2717689#

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

First quarter 2022 (Q1 2021)

• Order intake increased 238 percent year-on-year to SEK 191 million (57)
• Sales increased 86 per cent to SEK 139 million (75)
• Operating profit totalled SEK 31 million (-3), corresponding to 22 per cent (-4) of revenue
• Adjusted operating profit totalled SEK 31 million (2)
• Earnings after tax totalled SEK 24 million (-6)
• Earnings per share amounted to SEK 0.40 (-0.11)
• Cash flow from operating activities totalled MSEK 22 (-14)

Events during the first quarter of 2022

• On 11 February 2022, Permascand announced that the company had received two orders from a world-leading supplier of chlorate regarding delivery of electrochemical cells and correlated equipment for a Greenfield project in South America. The total order value of SEK 100 million was included in order intake in the first quarter of 2022, with start of delivery planned during the second half of 2022 and early 2023.

CEO comment

The start of the year was marked by high activity, with numerous customer inquiries and sustained interest in all business segments. The quarter’s strong sales and solid gross margin were enabled by the strategic initiatives and investments Permascand carried out – and continues to carry out – for efficient and scalable production.

Order intake for the first quarter of the year totalled SEK 191 million, corresponding to an increase of 236 per cent compared with the year-earlier period. Sales increased 86 per cent year-on-year to SEK 139 million, making the quarter the strongest in Permascand’s history when it comes to sales. The increase was driven primarily by the Water Treatment segment, where we successfully delivered from the robust order backlog we brought with us into the quarter. At the same time, Electrification & Renewables and Industrial Solutions developed steadily during the quarter. Gross profit totalled SEK 52 million, an increase from SEK 18 million in the year-earlier period. This means a stronger gross margin, which was a direct result of the scalability we have established in our production processes. I am particularly satisfied that we are starting the year strong, as the first quarter in previous years has been weaker than the other quarters of the year.

We are following our growth plan and successfully delivered good levels of profitability owing to our strategy, in which we proactively ensure robust production capacity and a buffer inventory of input goods and raw materials, and lock price levels in relation both to customers and to suppliers. In this way, we tie up capital over the short term but ensure control over the cost structure. This makes our operation flexible and relatively protected from volatile prices for input goods and raw materials as well as unpredictable supply chains as a result of turbulence in the world.

Electrification & Renewables
The testing and research efforts in Electrification & Renewables have generated increased interest from existing and potential future partners, including a Norwegian initiative named HYDROGENi. Our innovation initiative to enable largescale and cost-effective production of green hydrogen for energy storage has progressed in accordance with plans. This investment includes the construction of a technology and innovation center, investments in the company’s research teams, and advanced research and development in products and production methods.
After the end of the quarter, we signed a letter of intent with RES, an independent developer of renewable energy and energy storage, for joint development of a commercial research center at a new production facility for green hydrogen, for which RES is pursuing development and establishment in Ånge Municipality. Permascand sees its greatest commercial potential in the market for green hydrogen produced through electrolysis. Our long-term objective is to become the leading independent supplier of catalytic coatings, electrodes, and electrochemical cells.

Industrial Solutions
The level of activity and interest in Industrial Solutions has increased, which is reflected in events such as a major order for a Greenfield project in South America that was received during the quarter. We have reinforced the company’s organisation in North America by, for example, recruiting a new Director of Sales for the region. We consider North America to be the market with the greatest potential for growth and aftermarket business. The market conditions are favourable and there is a substantial underlying need for maintenance of industrial facilities, where Permascand’s solutions support maximum performance and durability in production.

Water Treatment
Shipping has for a long time been heavily affected by the market environment, where uncertainty as a result of the pandemic previously led to deferred investment decisions. We have now seen increased demand already in the first quarter, which is slightly earlier than we expected. This is reflected in our robust revenues in the segment as it accounted for the majority of the company’s sales in the quarter. Permascand is well positioned to meet demand for systems that can efficiently purify ballast water. Demand is expected to increase further in pace with normalisation of the market after the dampening effect that resulted from the pandemic.

Outlook
We will continue to benefit from our investments for more efficient and more scalable production. Moreover, the company’s investments in hydrogen development will positively impact product development in all segments, and further boost our capability to meet customer demand. With sustained interest from our customers and a robust order intake behind us, conditions are good for creating profitable growth not only over the rest of the year but over the longer term as well.

Peter Lundström, CEO

Report presentation
CEO Peter Lundström and CFO Linda Ekman will present the report in a conference call today 10 May at 10:00 CEST. The presentation will be held in English and will conclude with a Q&A session.

Webcast
https://tv.streamfabriken.com/permascand-top-holding-q1-2022

Phone number
To participate via telephone please dial-in on the numbers below.
SE: +46 8 5055 8366
UK: +44 333 300 9031
US: +1 64 6722 4903

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