Detection Technology - Result miss, but some light in end of tunnel
DT’s Q3 result clearly missed our and consensus expectations due to worse than expected performance in SBU. DT’s Q3 net sales were EUR 20.6m (-23.4% y/y) vs. EUR 24m/23.5m Evli/consensus estimates. SBU sales declined -43% to EUR 10.6m (EUR 13.5m our expectation) and MBU sales increased +20% to EUR 10.1m (EUR 10.5m our expectation). DT’s Q3 EBIT came in at EUR 2.6m vs. our estimates of EUR 4m (EUR 3.4m cons). On the positive, DT says it is cautiously optimistic that the worst may already be behind it.
- Group level results: Q3 net sales amounted to EUR 20.6m (-23.4% y/y) vs. EUR 24m/23.5m Evli/consensus estimates. Q3 EBIT was EUR 2.6m (12.6% margin) vs. EUR 4m/3.4m Evli/cons. R&D costs amounted to EUR 2.3m or 11% of net sales (Q3’19: 2.6m, 9.7%).
- Security and Industrial Business Unit (SBU) had net sales of EUR 10.6m vs. EUR 13.5m Evli estimate. SBU sales declined -43% y/y, mainly due the COVID-19 pandemic. SBU net sales are expected to decrease in Q4 y/y, but the company expects improvement in H1 of 2021.
- Medical Business Unit (MBU) delivered net sales of EUR 10.1m which was broadly in line with our estimate of EUR 10.5m. Net sales of MBU increased by +20% y/y due continued strong demand in medical CT imaging. DT expects MBU sales to grow in Q4 and to continue to grow in Q1 of 2021, albeit more slowly than in 2020.
- No change in medium-term targets; at least 10% net sales growth, EBIT margin at or above 15%.