Proventia Group Corporation's Business Review January-March 2024

President and CEO Jari Lotvonen: 

The net sales for the first quarter of 2024 were lower than in the comparison period, amounting to 11.0 (13.5) million euros. The decrease in net sales was largely due to the project-based nature of the Test Solutions business. As the projects were still in their early stages during the first quarter, no significant revenue was recognized. As a result of the net sales decrease, the profit for the period remained at EUR 0.1 (0.7) million with an operating profit margin of 3.3 (6.0) percent. The cash flow for the first quarter was strong, and the group’s cash reserves were 13.9 million euros at the end of March 2024, an increase of 2.6 million euros from the end of the previous fiscal year. 

In the Off-road Machinery Systems and Components business, net sales decreased by 4.4 percent to 10.5 million euros from the previous year’s 11.0 million euros. The decrease was due to delivery volumes of retrofit systems being lower than in the corresponding period last year. In the OEM customer segment, deliveries of emission control systems were slightly higher than in the comparison period, and the demand for thermal insulation remained at the previous year’s level. R&D and pilot projects for emission control and battery systems for customers proceeded as planned, and negotiations over new customers and projects have made good progress. In addition, we decided to expand our Czech plant by approximately 2,000 square meters, which ensures a sufficient production capacity for future needs. The expansion is expected to be completed in August 2025. After the review period, we signed a cooperation agreement with MAN Engines, a new engine manufacturer customer, for the development and manufacturing of emission control systems. 

In the Test Solutions business, several projects belonging to the Proventia EVA (Evaluate, Validate, Approve) product family are either ongoing or about to start and will be recognized as revenue at the end of 2024 and in 2025. During the first quarter, projects were still in their initial phases, and no significant revenue was recognized. As a result, the net sales for the Test Solutions business decreased by 81.2 percent from the previous year. After the review period, we received an order from a new customer for Proventia EVA Safe, a module designed for battery misuse tests. 

Geopolitical tensions and general uncertainty in the markets can be seen as caution in our customers’ estimated delivery volumes. However, the entry of new OEM products into serial production during the rest of the year will balance the situation. 

Key Figures

EUR 1,000	1-3/2024	1-3/2023	1-12/2023
Net sales	10,954	13,475	54,296
Change in net sales, %	-18.7%	- *	5.4%
Operating profit	366	802	6,134
Operating profit, %	3.3%	6.0%	11.3%
Earnings per share (EPS), undiluted, EUR	0.00	0.04	0.29
Earnings per share (EPS), diluted, EUR	0.00	0.04	0.27
Return on equity (ROE), %	16.6%	- *	20.9%
Equity ratio, %	64.2%	53.6%	62.9%
Return on capital employed (ROCE), %	23.4%	- *	27.4%
Interest-bearing liabilities	520	1,155	660
Net debt	-13,408	-7,491	-10,672
Investments	868	519	3,321

*The key figure is not available for the period 1-3/2023 as IFRS calculations have not been prepared for the comparative period 1-3/2022. 

Outlook

Although the short-term market outlook is characterized by caution, long-term megatrends are favorable for all Proventia’s business areas.  

Net sales are expected to increase slightly in 2024 from the 2023 level, while the operating profit is expected to remain at the 2023 level. In 2023, net sales were EUR 54.3 million, and the operating profit rate was 11.3%.