Mölndal, May 8, 2020 – I-Tech AB (publ) (ticker ITECH) have published the interim report for the first quarter 2020.
Summary of the period
”A strong quarter despite uncertain times”
Net turnover for the period amounted to kSEK 13 525 (6 170), corresponding to an increase in turnover of 119% (62%). Operating profit/loss amounted to kSEK -984 (-4 435).
January to March 2020
· In March, the leading Norwegian paint manufacturer, Jotun, launched two new marine paints based on I-Tech’s proprietary antifouling active agent Selektope®.
· During March, Per Svensson was appointed Sales Director for I-Tech. Per comes most recently from Emerson Automation Solutions where he was Director of Global Sales and Aftermarket Marine Solutions.
· In the beginning of the year, the ongoing COVID-19 pandemic led to a temporary production stop at shipyards, primarily in China, which are now back in production. Furthermore, restrictions have been introduced in India where I-Tech’s production and deliveries are based. The production stoppage at the shipyards occurred during a period of normal low demand for I-Tech’s products. So far, I-Tech has not been negatively affected besides an increase in delivery cost.
Important events after the period
· No important events have occurred after the period
|All amounts in TSEK||2020Jan-Mar||2019Jan-Mar||2019Jan-Dec||2018Jan-Dec|
|Net sales||13 525||6 170||45 574||28 947|
|Operating result||-984||-4 435||-7 019||-13 625|
|EBITDA||1 004||-2 378||1 220||-6 392|
|Net result||-532||-4 469||8 427||-13 737|
|Operating cash flow||296||-573||-4 763||-11 945|
|Equity at end of period||110 876||98 512||111 408||102 981|
|Cash and cash equivalents at end of period||38 993||45 802||38 940||46 538|
Although the first quarter was characterized by lockdowns in several key markets in Asia, we managed to increase our sales by 119 percent to SEK 13.5 million (6.2) compared with the corresponding quarter last year. The improvement is partly due to activities in key markets gaining momentum again in March, and partly because our customers expect relatively high activity in shipyards around Asia and the Middle East in the coming months. However, uncertainty about how the ongoing pandemic will develop and how it may affect the market for the rest of the year remain high. It is positive that the shipbuilding industry in China, Japan and Korea has returned to a fairly normal level of industrial activity, and that our largest customer, Chugoku Marine Paints, is optimistic and has managed to maintain production in important markets despite the circumstances. At the same time, from an operational perspective, it has been a turbulent time with, for example, the lockdown in India affecting our deliveries from sub-contractors. However, despite this, we managed to satisfy our customers’ demand and, although we experienced increased transportation costs, we managed to keep the gross margin up and on par with the same quarter last year. For the first quarter, the gross margin was 45% (44%) and operating activities again showed a positive EBITDA of SEK 1.0 (-2.3) million. The operating profit for the period was significantly improved and amounted to SEK -1.0 (-4.4) million, which means that we are approaching a positive operating profit in line with our plans.
Besides successfully navigating a challenging quarter, I am also very pleased that Jotun, the world’s leading marine paint manufacturer, announced during the period that the launch of two products containing Selektope®. With this launch, Jotun intends to offer the best possible protection against marine fouling on vessels with longer idle periods, especially during the outfitting period. The launch of the SeaQuantum Pro Ace and SeaForce Active Ace products means that Selektope® is used in two technology platforms at different cost levels, which opens up a wider customer base. The products will primarily be available in Korea and in China, where they are now being marketed. We hope to see rising demand as Jotun secures new business.
Three of the world’s largest paint companies have now officially launched Selektope®-containing products on the market. This contributes positively to our quarterly results. In addition, we have continued to supply an unnamed customer with approximately the same demand as in previous quarters. This means that we now have a good base on which to grow the business. The recruitment of our new sales director, Per Svensson, during the quarter will also help us to further develop our business and I-Tech’s commercial operations.
Although the year has started well financially, despite the challenges and concerns relating to COVID-19, the global pandemic continues to give rise to widespread uncertainty. As such, we are implementing some measures to mitigate potential downturns in the business climate. We have, for example, postponed non-businesscritical
investments and we are well on the way to securing our inventory to reduce the risk of supply interruptions due to further lockdowns.
Through establishing commercial relationships with four of the six largest paint manufacturers in the world, delivering a strong financial quarter and with sustained liquidity, I see good opportunities that we will navigate through the current situation in a good way and that we are well positioned when growth accelerates again.
Philip Chaabane, CEO
M: +46 73 910 37 08