CEO’s review

2023 was a challenging year for Aspocomp. Full-year net sales decreased by 17 percent to EUR 32.3 million. In the last quarter of the year, net sales decreased by 42 percent. The development of net sales was affected by sluggish demand in several of Aspocomp’s customer segments, weakened product mix and, in the last quarter, a temporary process disruption in the company’s production. The weak demand situation was particularly reflected in the Semiconductor Industry, Telecommunication, and Industrial Electronics customer segments. In the Automotive customer segment, full-year net sales increased when the industry’s component shortage eased and customers could be provided with the order book deliveries they had been waiting for. In the Security, Defense and Aerospace customer segment, net sales decreased from the comparison period, but active demand in the segment was reflected at Aspocomp as an increase in the number of requests for quotations and orders. Order cycles are typically long in the Security, Defense and Aerospace customer segment

Aspocomp’s loss-making operating result for the last quarter, EUR 1.8 million, pushed the full-year 2023 operating result to a loss of EUR 1.7 million. The decrease in the operating result was caused by a decline in net sales due to muted demand, the weakened product mix, the recognition of EUR 0.5 million in design costs not included in the usual business in the third quarter, and a significant rise in material costs. Material costs were increased by a temporary process disruption in production in the last quarter. Material use is estimated to normalize during the first quarter of 2024. Aspocomp carried out temporary personnel layoffs in the third and fourth quarters in order to adjust costs.

As the financial year’s result remains loss-making, Aspocomp’s Board of Directors will propose to the Annual General Meeting that no dividend will be paid for the financial year 2023 (EUR 0.21 per share for the financial year 2022).

There are already visible signs that the semiconductor market cycle is turning to growth, but the release of high inventory levels in different parts of the value chain is happening in stages. Therefore, the demand for the company’s products is also expected to recover gradually during 2024. In the longer term, the semiconductor industry’s growth prospects are still strong as digitization progresses, for example with the spread of artificial intelligence applications.

Inflation and interest rates, the economic recession, the uncertainties posed by Russia’s war of aggression, and global trade policy tensions will affect the operating environment of Aspocomp and its customers in the 2024 fiscal year. Demand for Aspocomp’s products is expected to recover gradually during 2024. We estimate that Aspocomp’s net sales will increase from 2023 and its operating result improve from 2023. In 2023, net sales amounted to EUR 32.3 and the operating result was a loss of EUR 1.7 million.

I would like to express my warm thanks to the company’s personnel for their valuable contribution and especially for the flexibility and perseverance they have shown in the challenging year of 2023.

Espoo, March 14, 2024
Mikko Montonen