Detection Technology, Q4 2020, Sales Results

Image credit: Screenshot, Detection Technology Q4 2020 Webcast

On February 2nd, Detection Technology published its financial results for Q4 2020. These results show that overall group sales continued to contract significantly during the quarter, driven by the negative effects of the Coronavirus pandemic. During the quarter, overall sales reached €19.9m, compared with €25m during Q4 2019, a decrease of approximately -20% year-on-year. This took cumulative 2020 sales to €81.6m, compared with €102.5m during 2019, a decrease of approximately -20% year-on-year.

The company has two reportable segments, it’s security and industrial business unit (SBU) and it’s medical business unit (MBU). The contraction in sales during the quarter as well as full-year was driven by lower sales from the SBU, partially offset by higher sales from the MBU. During the quarter, sales from the SBU reached €9m, compared with €16.4m during Q4 2019, a decrease of approximately -45% year-on-year. This took cumulative 2020 sales to €42.3m, compared with €68.9m during 2019, a decrease of approximately -40% year-on-year. In contrast, sales from the MBU reached €10.9m, compared with €8.6m in Q4 2019, an increase of approximately +28% year-on-year. This took cumulative 2020 sales to €39.3m, compared with €33.6m in 2019, an increase of +17% YoY.

The sales growth from the medical business has predominately been driven by higher demand for products related to computed tomography (CT). In the Q4 financial results, Hannu Martola, President and CEO, commented:

“MBU sales grew strongly as demand for medical CT applications remained at a good level, driven by investments in healthcare. After the increase in sales at the beginning of the year characterized by COVID-19, CT sales focused on more advanced devices, and the demand for our standard X-Tile product also held its ground. Demand for dental applications has almost normalized in China, and recovery continued in other parts of the world, too, although the full recovery of global demand will take time. This is also why X-Panel sales have had a slow start. We are in a good position to face 2021 in the medical market, thanks to our increased number of customers and expanding our product portfolio.”

The X-Tile is an industry first, off-the-shelf, tileable CT detector module which is easily scalable, resulting in lower costs and quicker routes to market for CT system OEMs. Following DT’s entry into the CMOS x-ray detector market during 2018, the company began production of its X-Panel 2301 during H1 2020, which is targeted specifically toward dental applications. The dental market is anticipated to be an increasingly significant segment for the company as sales activity normalises. It’s X-Panel series of products also includes the X-Panel 1511 which is designed to meet the needs of C-arm systems used in surgical operations.

Investments into new Chinese and French facilities

The company continues to invest in its new facilities in France as well as Wuxi, Greater Shanghai. The facility in Wuxi has both production and service capabilities with the first product deliveries taking place during the first half of 2020. Throughout 2020 the company has successfully transferred production to this facility as well as investing in added-value production processes which are anticipated to deliver material cost and margin benefits. In addition, the company has recently relocated its French operation which enables better support around product development and production of multi-energy (ME) based detector products. During 2020, the company launched its X-Scan ME product family which is now in small-series production at this new facility. At the end of December 2020 Detection Technology employed 444 people (496). The change is attributed to the decrease in the number of production personnel due to reduced production volumes. A total of 340 people worked in China, 83 in Finland, 17 in France and 4 in the US.

Tax break for Beijing subsidiary

During 2020, the companies Beijing subsidiary was granted the High and New Technology (HNTE) classification. This status will significantly reduce the subsidiary’s corporate income tax rate and offers a number of other commercial benefits.

Outlook for 2021

At a Group level, the company is projecting total net sales to decrease in Q1 2021 and return to growth in Q2 2021, resulting in higher sales for H1 of 2021. This is driven by continued softness in demand for industrial and security products which is projected to decrease during Q1 but grow during Q2. This demand is “still subject to uncertainty” due to the Coronavirus pandemic, as critical infrastructure and rail transport projects may progress slower than expected. The company is anticipating continued strong demand for its medical CT products and it projecting double-digit sales growth in Q1 and Q2 2021. In addition, Hannu Martola commented: “although vaccinations against COVID-19 have made progress and markets have shown positive signals, visibility in the security segment remains limited. Consequently, our business has been hit by a high level of uncertainty. We will continue strengthening our competitiveness, and at this point leave our medium-term growth and profitability targets unchanged.”

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