NCAB Group Reports Strong Growth in the Jan-March 2021 Quarter

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NCAB Group, a global supplier of printed circuit boards has presented its Interim report for the first quarter of 2021. The first quarter was intensive for NCAB. Sales grew by 28 percent despite the weaker USD. In USD, which is the currency used for most of their transactions and best reflects the true development, net sales rose by a full 47 percent. For comparable units, the increase in USD was 18 percent. He also added that it is gratifying to see that so many of their segments and countries are now picking up at the same time and that their new acquisitions are delivering according to plan.

Earnings also trended positively, with an EBITA margin for the quarter of 9.7 percent, compared with 7.8 percent in 2020. Compared with 2020, costs for travel and customer activities were lower due to the remaining coronavirus restrictions in many countries, even if there are some signs of easing. They welcome greater interaction with their customers, in addition to virtual meetings, and they took part in the Electronica China trade fair in Shanghai in April.

Particularly positive during the quarter, and also promising for the future, was their highly robust order intake – which grew more than 70 percent in SEK and 100 percent in USD. There is an overall positive rise in customer requirements and trends that are driving growth in electronics production. They can also see that many customers appreciate NCAB’s close relationships with factories, with their on-site professional Factory Management team at factories to ensure quality and deliveries in this time of uncertainty. The strong order intake was also in part a result of the current situation with shortages and erratic deliveries for some components. This led to a tendency among their customers to at least ensure the availability of other materials, such as PCBs, by ordering early. How large this effect on the order intake is, is hard to estimate but it is not an insignificant part of the total order intake for the quarter. The exceptionally strong order intake will therefore not result in a sales increase of the same magnitude but rather the backlog of orders from the first quarter will be converted into deliveries over several quarters in the future.

Their Nordic segment noted stable development when adjusted for currency effects. The Norwegian market has grown sharply and now accounts for an increasing share of the segment. As previously announced, growth was strong in charging unit projects for electric vehicles.

They achieved their highest growth in the Europe segment, with many positive signals. Germany is developing well with many new projects and growing market shares. Their investments over the past two years in sales and the organization are beginning to pay off. The Netherlands has also performed well, led by their new acquisition Flatfield. Their main customers in the UK have begun returning, generating an increase in demand. In Italy, they are pleased to have completed the acquisition of PreventPCB. Together with their existing company in Italy, they have strengthened their position and have already received a positive response from their customers and noted rising order intake.

In North America, operations performed well, both in their earlier operations and Bare Board Group (BBG), which was acquired in 2020. The integration between the companies has been completed and synergy effects will gradually improve the margins.

In the East segment, Russia had a good quarter following a difficult period of lockdowns. They noted more interaction with customers and improved sales. Work in China has returned to full capacity and they have many new and interesting projects. Margins in the segment remained healthy.

Their latest acquisitions during 2020 and 2021 are all delivering in line with their plans, and are at different stages of integration with NCAB’s operations. Flatfield, which was acquired in March 2020, is well integrated with NCAB Europe and is making a strong contribution to the segment. The integration of BBG has also made great progress. Employees in their latest acquisition, PreventPCB in Italy, have shown very robust engagement and are working at full speed. Here, they have also been able to offer customers more good suppliers and better conditions. They see more opportunities for future acquisitions and are building a pipeline of interesting targets.

Overall, this is a very exciting time for NCAB. It is clear that their unique business model, with high quality in local support for their customers and their Factory Management team in Asia, is helping them to gain market shares. Like so many others, they have also learned to communicate digitally with customers and suppliers by using alternative and highly effective platforms. They will continue to use these, even if they are longing to return to physical customer meetings.

JANUARY – MARCH 2021

• Net sales increased by 28% to SEK 617.1 million (483.1). Acquisitions continue to drive growth. In USD, net sales increased 47%. For comparable units, net sales increased by 2%, and in USD the increase was 18%.
• Order intake increased 74% to SEK 978.9 million (563.4). In USD, the increase was 100%. For comparable units, order intake increased by 41%, and in USD the increase was 62%. The strong order intake is a result of partly a robust recovery in NCAB’s markets and partly customers’ concerns about the shortage of components, which prompted many customers to place orders of PCBs early. The estimated value of orders placed early is not an insignificant share of the total order intake for the quarter.
• EBITA increased 54% to SEK 58.4 million (37.9), representing an EBITA margin of 9.5% (7.8).
• Operating profit was SEK 55.4 million (37.0). The operating margin was 9.0% (7.7).
• Profit after tax was SEK 40.7 million (40.4). Profit for the first quarter of 2020 was positively impacted by foreign exchange gains of SEK 15.0 million.
• Earnings per share were SEK 2.17 (2.40).

Significant events during and after the quarter

• On 22 February, an agreement was signed to acquire 100 percent of the shares in PreventPCB in Vergiate, Italy.
• The Board of Directors proposes a dividend of SEK 5.00 per share to the 2021 Annual General Meeting.

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