Scanfil Q1'25 earnings preview: Ramp-up of project wins to burden figures in the first months of the year

Translation: Original published in Finnish on 4/23/2025 at 7:00 am EEST.

Scanfil will publish its Q1 report on Thursday at around 8.00 am EEST. Scanfil has ramped up production of new projects won last year, probably in several factories, which is likely to have depressed the company's growth and profitability in the first part of the year. As a result, we expect Scanfil's Q1 numbers to weaken slightly from a satisfactory comparison period, although the numbers are also organically supported by the SRX acquisition completed at the beginning of Q4'24. We anticipate Scanfil to reiterate its guidance in the Q1 report, although there may be downward pressure on at least the upper ends of the fairly wide ranges due to indirect negative impacts from global trade politics. Our recent extensive report on Scanfil is available here.

We expect revenue decline to have continued in Q1

We estimate that the underlying market sentiment for Scanfil has been broadly in line with the satisfactory comparison period, as there have still been limited signs of a clear pick-up in industrial activity. However, Scanfil won new projects with a cumulative annualized value of 189 MEUR last year, and in Q1 these projects have been ramped up in several factories. In the ramp-up phase, revenue generation is limited, so we expect the company's revenue to have declined by 2% to 195 MEUR in Q1. In organic terms, the decline is more pronounced, as the SRX acquisition added approximately 4 to 5 percentage points of inorganic growth. We expect the ramp-ups to be particularly noticeable in Central and Northern Europe, while reported growth in APAC will be strong due to the acquisition. In the Americas, the threat of US tariffs may even have had a positive impact on demand in the short term, although in the longer term and indirectly, the tightening global trade situation is bad news for Scanfil as well.

Earnings forecasts also at the level of the comparison period

We estimate Scanfil's adjusted EBIT for Q1 at 12.4 MEUR, roughly the same level as in the comparison period. The ramp-up of new projects has probably also weakened Scanfil's production efficiency and thus profitability, which is why we do not believe that the savings achieved during the year and the SRX acquisition will yet be sufficient to lift Scanfil to earnings growth and margin improvement in Q1. On the lower lines, our financial expense and tax forecasts are in line with Scanfil's normalized levels, although non-cash FX differences that are not material to the company as a whole could slightly impact financial expense and EPS. We expect Scanfil's EPS to have declined somewhat from the comparison period, which was supported by positive financial items, and to have been EUR 0.14 per share. On the cash flow side, the report is likely to be lackluster, as Scanfil typically commits working capital in the early part of the year on a seasonal basis in the contract manufacturing business.   

We expect the guidance to be repeated at this stage of the year

In connection with its financial statements at the end of February, Scanfil gave guidance for the current year, according to which the company's 2025 revenue will be 780-920 MEUR and adjusted EBIT 53-66 MEUR. We expect the company to repeat its guidance at this stage of the year, as the projects won last year and the SRX acquisition will act as buffers, even though the tightening of trade policies already seen has probably been enough to postpone the conditions for an economic recovery, and this is likely to put the brakes on Scanfil's investment-driven demand as the year progresses. In our view, the upper ends of the guidance ranges are starting to look optimistic given the current situation, and we therefore forecast that Scanfil will end up in the lower half of the ranges for the time being, pending a clearer improvement in the operating environment and given the high level of risk.