Interim Report January–September 2023


> Net sales decreased 14% to SEK 1,005.4 million (1,168.3). Both net sales and order intake were negatively impacted by lower prices and customers’ inventory adjustments. In USD, net sales decreased 16%. For comparable units, the decrease for net sales was 27% in SEK, and 28% in USD.
> Order intake decreased 9% to SEK 924 million (1,011). The decrease in USD was 9%. Order intake levelled off and was in line with the second quarter. Order intake for comparable units decreased 15% in both SEK and USD.
> EBITA decreased 4% to SEK 176.0 million (183.5), representing an EBITA margin of 17.5% (15.7). EBITA was positively affected by SEK 21.0 million resulting from dissolved additional purchase consideration. Adjusted EBITA amounted to SEK 155.0 million (183.5), corresponding to an EBITA margin of 15.4% (15.7).
> Cash flow from operating activities was SEK 260.4 million (212.2), with a contribution from continued improvements in working capital.
> Operating profit was SEK 160.5 million (172.3).
> Profit after tax was SEK 110.4 million (138.5).
> Earnings per share before and after dilution was SEK 0.59 (0.74).


> Net sales decreased 6% to SEK 3,209.3 million (3,431.6). In USD, net sales decreased 12%. For comparable units, net sales decreased 12% in SEK, and 18% in USD.
> Order intake decreased 11% to SEK 2,878 million (3,218). In USD, order intake decreased 16%. For comparable units, the decrease in order intake was 17% in SEK, and 22% in USD.
> EBITA increased to SEK 527.9 million (489.9), representing an EBITA margin of 16.4% (14.3). EBITA was positively impacted, net, by dissolved additional purchase consideration and acquisition costs totalling SEK 11.6 million. Excluding these items, EBITA amounted to SEK 516.3 million (498.0), representing an EBITA margin of 16.1% (14.5). Earnings also included SEK 26 million in development costs for new IT systems.
> Cash flow from operating activities was SEK 615.0 million (384.7).
> Operating profit was SEK 487.6 million (417.1).
> Return on equity was 32.4% (42.4).
> Profit after tax was SEK 336.6 million (345.8).
> Earnings per share before dilution was SEK 1.80 (1.85). After dilution SEK 1.79 (1.85)


NCAB hosted its first Capital Markets Day on 4 September.
> On 13 September, Per Hesselmark left his seat on the company’s Board of Directors.
> On 31 October, it was announced that an agreement was signed to acquire 100 per cent of the shares in Electronic Advanced Circuits S.L in Spain and that a company was established in Portugal.


Strong finances despite a weaker market

Despite the weak market, we are satisfied that we continued to deliver strong financial figures and cash flow. We also successfully offset the falling prices and lower prices to customers through a higher gross margin. Our strong cash flow and solid balance sheet enable sustained investments in long-term growth. With our flexible business model, we can quickly capitalise on growth opportunities when the market recovers.

Since mid-2022, we have witnessed a slowdown in the global market for PCBs. Initially, a slowdown was noted in order intake, as the earlier exceptionally long lead times began to normalise. In a second step, the stable global supply chains enabled customers to begin reducing the extra inventory that they had accumulated during the pandemic. In parallel, the strong demand began to fall as central banks launched activities to curb inflation. In recent years, PCB factories in Asia have invested in increased capacity and with the lower order intake utilisation levels fell in 2023 to record-low levels. This in turn has led to falling prices as factories compete for the available volumes, which has had a direct adverse impact on market prices and sales figures. Taken together, this resulted in a global sales decline for the PCB industry of approximately 20 per cent during the first half of the year. NCAB also experienced the market decline, though we saw less organic decline than the market as a whole and have therefore grown our market share even without the effects of our acquisitions.

However, the long-term outlook remains positive. Drivers such as the Internet of Things (IoT) and demand for greater energy efficiency are pushing developments towards smart and connected products, which is also fueling demand for advanced PCBs. It is positive that order intake has levelled off. Seasonally, the third quarter is usually weaker than the first and second quarters due to holidays in Europe, but we can see that our order intake in the third quarter was at the same level as the second quarter. However, we are not expecting a rapid rebound as demand remains at a low level, even if the effects of inventory adjustments by customers is gradually beginning to slow down.

All our segments noted a distinct decrease in demand, and the North America segment continues to be more affected than other segments. During the third quarter, demand in the Europe segment slowed while in East the market decline is showing signs of bottoming out with opportunities for renewed growth as we move forward. We continue to have a healthy inflow of new projects and customers, which bodes well for growth in market share in the medium term. In Nordic, we noted continued positive demand for EV charging and also in Aerospace & Defence. We can also see growing interest among customers outside the Nordic region and are expanding sales activities to additional markets. This is another example of how we can reap the benefits of the global expertise present in the Group and we are constantly developing our global offerings for specific industrial sectors.

Acquisitions have continued to make good progress. Following the acquisition of Phase 3 Technologies and db electronic in the second quarter, we announced in October an acquisition in Spain that will help to strengthen our position in the Spanish market. Together with the establishment in Portugal, this offers us a good platform for continued growth on the Iberian peninsula. We are conducting a number of active discussions with potential acquisition targets. These concern both Europe and North America.

“With our flexible business model, we can quickly capitalise on growth opportunities when the market recovers.”

Peter Kruk
President and CEO, NCAB Group AB