Good afternoon, everybody, and welcome to Detection Technology Q4 2021 financial statements review. My name is Hannu Martola, and I'm the president and CEO of Detection Technology and pleased to inform you of how we performed during the Q4 . Q4 in general, we had nice growth, 24% growth and reached the sales of roughly EUR 25 million, quite much more than last year, but actually a little bit less what we expected. As we announced, we had some postponements because of the component shortages and so on, roughly about EUR 3 million of sales were postponed to the further quarters because of not being able to get enough semiconductors active components mostly. We made operating profit or EBIT, EUR 3 million.
That's up about 0.7 from last Q4 and then reached an operating profitability of 12%. One factor here when we are looking at the comparable numbers is that actually last year we had fairly recognizable subsidies because of corona that we got during the Q4, and they were estimated like EUR 400,000 last year. Clear improvement, but actually the sales, some extraordinary costs affected that we did not yet reach the 15% target level of the EBIT. If we look at what happened in our various businesses, I think excellent thing is that all business units grew strong. The percentages were starting from with a two.
Industrial was 22%, medical 24%, and security even 27% to the comparable quarter. As a company, we are back alive from corona and looking more excited than what's going on and what can we reach during 2022. In industrial segment, actually the demand was quite unchanged. Industrial sales was specifically hit because of the component shortages, so we have had fairly long lead times to our customers and that is then hurting the sales. Overall, I think we strengthen our position in the strategy execution of beyond hardware. Medical sales, the strong boost in computed tomography in the global healthcare space continued. We enjoyed a nice growth there.
Some deliveries also in medical business were postponed due to the shortages and overall, I think our market position in the healthcare computed tomography segment actually remained unchanged. Security sales, I mean, security is getting back on track. This business actually we dropped to 50% what we had due to the corona. Now it's starting to grow and demand for Q4 still was very much driven by the non-aviation application, but also aviation took a positive turn. Security so far has been less impacted by these component shortages, but unfortunately also in 2022 that will a little bit change, and we foresee some challenges there.
Well, out of the, let's say, new opportunities in the security, this Green Channel that we talked about, this is relating to that in China, they are planning to build an infrastructure of scanning stations that are scanning trucks carrying all kinds of food and so on. These then are exempted from the highway tariffs. This is something that for some years will bring some new business opportunity for us. The profitability improved year-on-year. It was a little bit below the Q3 level due to some fixed cost one-timers and increases that affected a little bit for the Q4.
On the risk side, I think we all know what's going on in the geopolitics that remains the same, but actually this semiconductor shortage intensified during the Q4, and that's something that we must note as a risk. On sales by quarter, here you see that we practically reached the same level that we had in Q4 2019. 2019 was the best year in DT's history and if we think that the mix now is more medical heavy thanks to the medical growing so fast that when we get back security and industrial back on track, then we really should be able to provide some nice growth in the coming quarters.
The profitability, it was still under the target level of 15%, so we made 12% and that is for the full year it's below the set 15% threshold and we believe that then during this year for the full year, we should be getting back on the sort of roughly on the targeted level. On the sales split, the NBU is fairly sort of heavy here, 55% still out of the full Q4 sales, reaching roughly EUR 14 million. Security's a bit less than 1/3, should be getting higher in the future.
Now I think IBU is already 14%, so that's very good news that we are starting to get a new strong third leg into our business portfolio. The annual growth as mentioned earlier, all businesses performed excellent on above our 10% target. On sales by region, here we see that it's fairly strong in APAC. Even 33% in Asia Pacific. Europe, Middle East were still negative growth affected by corona. Americas, okay, it's a smaller sales. The percentage is fairly big, but also Americas grew sort of nicely and we should be getting back on track there. On the full year, we were roughly EUR 90 million.
It is, let's say, a slight disappointment for us, I must state. I mean, due to these component shortages, we were looking for a stronger performance at the beginning of the year. Still, I think due to these conditions and especially the growth that we have, we have sort of been able still to execute and achieve. We should be fairly happy for last year even though the sales was not what was expected. Double-digit growth of 10% and EBIT of roughly 12% for the full year. For the full year then sales split by businesses, medical a bit over 50%, growing 25%, so that's a nice annual growth.
IBU, 10% growth, the same as the full company, and SBU, due to the fairly weak first half, we were still negative and that's something that will be fixed this year. On sales split, APAC also for the full year is strong, about a bit over 70%. SBU a bit less than 1/5, and IBU. Asia about a bit above 70%, Europe a bit less than 20%, and then Americas, a bit less than 10% for the full year. Americas and Europe, clearly we can see the, let's say, corona effect here so that both declined for the full year and hopefully then things get back to normal during this year.
A little bit more precisely on the financials, I think couple things that could be noted here so that R&D costs were roughly 12%. R&D costs were a little bit higher for Q4 affecting the profitability. Cash flow from operating activities for Q4, it was positive. Also, full year, EUR 7 million. This could have been better. We have increased a little bit our net working capital actually, due to this component shortage and the situation. That has included and tied up in capital, which I think in a way is even a bit positive in this if we think what's going on in the world today.
As I use the sort of word that we're a little bit fat in here and probably remain a bit fat until we get more normal in this supply chain topics. Investments were fairly low. I mean, compared to our normal running rate, we were at 1.3 for the full year or EUR 1.4 million and about EUR 700,000 for the Q4. We basically did the necessary maintenance investments. We did not increase the capacity. Looking forward, we will then do some capacity increase investments during this year. Also the investment side, we get back on the level that is sustainable and supporting the growth.
Earnings per share, that increased from last year to 64 euro cents. Last year was 47. The return on investment, I mean, it's we have fairly heavy balance sheet on the asset side, so that's affecting on the ROI. It's a bit lower than historically. On strategy highlights, I would want to point out two product families. There is the DT standard computed tomography products for medical healthcare space. We have both the 16-slice X-ACE 16 and 32-slice X-ACE 32 that we launched during last year. Also for this, an addition to our CMOS product portfolio, we launched an X-Panel 2222s, which is a new product for the mini C-arms and surgical applications in medical space.
Due to various, I mean, also challenges relating to getting top talent for firmware software in Beijing in this megapolitan area. We decided to establish a new talent hub, which is managed by, I mean, by Beijing R&D, and we established it and have even the first employee recruiting has started already working there so that we should be able to also have our network and nets open to the talent in this Jiangsu province, Nanjing area. Nanjing has played very important role in the history of China, and it's quite conveniently between Shanghai and Beijing, also easy to access through a high-speed train. On this, then what we expect from this year. This is the sales expectation for various business units.
In industrial, we expect a strong double-digit growth. We call it boosted double-digit growth. In medical grew quite much, I mean, 25% last year. We expect the nice demand to continue, but the growth would be single-digit level. Then security boosted double-digit growth for first half. All these, I mean, industrial security businesses should be growing on strong double-digit for first and Q2s 2022. Medical single-digit for Q1 and Q2 in 2022. There are some risks related here relating to component shortages and so on, but also we have taken into account some buffer that in these numbers.
What it then means for the full company, so what we are now guiding as official guidance and business outlook as we call it, we are expecting the DT group to grow double-digit both Q1 and Q2s. Again, sort of a disclaimer relating to the component shortages. Overall market growth outlooks, we keep them same. Actually, there's very little, let's say, reliable information available due to this, let's say, discontinuity that we are going through, also in our industry. Sort of we think this logically, I mean, security went so much down so that most probably security won't, now it's starting to recover. The growth is a little bit faster also for market-wise. Medical probably did grow a little more than 5% just during last year.
Industrial, probably 5% is quite good, a good sort of estimate on industrial growth. On earnings per share and payouts, our guidance is 30%-60% of the net proceeds are the targeted dividends. There's a proposal for the annual general meeting, AGM, that there would be 55% of net proceeds paid as dividends, which would amount to EUR 0.35 per share. On financial targets, these remain the same, at least 10% growth, at or above 15% EBIT, and dividend or return capital between 30%-60%. I would like to thank you for your attention, and I would be ready and very pleased to answer any questions that might arise.
Hi, it's Matti Riikonen, Carnegie. Couple of questions. First about the one-timers, the costs that you said that were slightly higher than normal in Q4. Could you explain what they were and how much, and is that really a one time that we should expect to happen only in Q4 and not going forward?
Okay. Thanks, Matti, for the question. I think it's a bunch of things, a little bit here, a little bit there. A little part is, let's say can be considered as one time. Part is probably sort of a more like structural. Areas are like a little bit more spending on R&D, a little spending more into the actual ramping up of the pixelation process in Wuxi, and then some personal related items and so on. It was as a monetary number that no, not that big, but of course, I mean, compared to the sales and the percentages, probably altogether 1%, a bit over 1%.
1% of sales?
A bit over 1% of sales, yes, in altogether.
Okay. Regarding your guidance, when you say or talk about the boosted growth, and in Finnish, you say basically acceleration of growth, what is the starting point? So are you comparing the growth in Q4, which was 24%, that you would expect acceleration to happen from that level? Or what exactly do you mean by the acceleration?
Well, when we talk of the growth, we talk on year-on-year. I think one thing that you also, I mean, you see in our history, especially the Q1 has been typically the smallest in sales, actually. Due to the fact one big item for that is the new year that they spend in Asia, especially China, but also other areas, so that affects right now. Actually, the Year of the Water Tiger is being sort of celebrated this week, and for example, our employees are on holiday and also many customers in other Asian countries than just China, so that affects. When we talk of this growth, we talk of year-on-year, compared to the year-on-year, not consecutive.
If it's consecutive, then specifically we mention it.
Right. If you now grew 24% in Q4, and that was year-over-year growth, you're basically saying that in the first half this year, you would be expecting year-over-year growth to be higher than that 24% or something else?
No. Actually, If we look now, I turned in this business outlook and what the guidance really is that for the full company, DT Group, we expect double-digit growth for Q1 and Q2, meaning that also the first half would be double-digit. It's something that 1x in clear numbers.
Right. You are using the boosted term there to basically say that compared to your previous expectations, you are a bit slower on growth on medical and a bit faster perhaps growing on industry and security. Is that?
I mean, I must now refer to this, what is the official guidance is that we have a double-digit for the full company for first and Q2. If we go back to this, and this is now the let's say expectation for business units for first and Q2. We are talking here, single-digit for medical and we are talking double-digit. That can be understood strong double-digit for this both security and industrial. This would in all together count as a double-digit growth for the full DT group.
Okay. Could you explain why you kind of downgraded the growth in medical? I mean, earlier you talked about also medical growing by double digit in the first half this year. Now you're saying that it would be single digit. Is it due to component shortages or something else?
Actually, risks have increased. It's not only us getting the semi, I mean, the components and all, it's also our customers getting to other areas. Of course, they cannot make the end product if they don't have stuff and materials from other suppliers. In medical, we see clearly challenges both because of indirect reasons, that's our customers not getting other parts they need or materials, plus also we have some challenges getting sort of active semiconductors to our products.
Right. Good. Now when you think about the component shortage and the impacts, do you think that you will miss some revenue permanently or is it going to be delays and you will eventually get the orders that you were supposed to deliver to your customers at some point?
That's a good question, and I mean, it's a little bit of this answer also is common sense. Of course, if there's sales that is delayed, it's always, I mean, time is not good. So it is a little bit at risk. I mean, meaning that it might be that the end business doesn't happen because some reasons. It could be that there's some competitor who can catch faster if they happen to have material better, or it can mean just that things are, let's say, postponed or delayed. I mean, putting it all together, I believe that most of it is postponements.
Meaning that we had a little spill from Q3 to Q4, and we will have some spill to Q4 further for this year. Industrial area probably there could technically be also because the clock speed is faster and there are no regulatory approvals. Industrial, theoretically they could be if there's some competitor faster, they could be able to grab it for a little bit. But mostly security and medical, the regulatory authority and approvals actually make it that it's not easy to get products from anybody else unless you have a two supplier, you have a very big customer and they have two suppliers and then they can choose whoever is able to supply. I repeat. Mostly it, we believe it will be postponing sales.
Right. Have you so far seen that any of your competitors would have taken some volumes from you because of the better delivery capacity?
We have seen some threats in industrial, but not, I mean, not to any sizable sort of effect so far.
All right. Fair enough. Thank you.
Thank you.
[audio distortion] from SEB. Could you elaborate a little bit whether the increased component prices have affected your profitability and have you been able to transfer those to your prices? Then also whether you have included some price hikes in your guidance.
We have participated actually in Q4 a little bit more into this what can be called the spot market, meaning that there's components in the spot market that much higher prices than the actual, if I call the virgin components from the suppliers would be. That has a little bit affected our cost base not so far to any sort of significant level. Out of these we have a little bit been able to agree with some of the customers that, hey, they share the pain or they pay the extra. That's the situation. We believe that the need to buy spot market components a little bit increases now Q1. Q2, we don't know yet.
That can a little bit affect and increase our cost. We of course try to push those into our customers, but sometimes it's so fast and so on that you don't have time to agree with the customers. It's then the components are gone. It's very a two-market economy, this spot market. Relating to this kind of like price increases and so on, I think it's we have been able to a little bit increase our prices. We also have some threat and some true cases on increasing material costs and some we still are negotiating for this year both on the material side and customer side.
It looks right now that it should not have big impact on our sort of profitability level in larger extent. I'm more actually worried than for 2023 what the probable situation will be a little bit changing for 2023. It might also be that this kind of a shortage is totally ironed out and that affects. There are inflationary pressures as everybody knows also on
Yeah. Thank you. Despite the supply chain challenges, you believe that it would be possible to reach your operating margin target already next year?
Yes. I mean, this year, I mean, we have the target is 15%. That's what we are hunting, and I don't see any. I mean, in our business and how it goes, it's we need, you know, the top line to grow, I mean, so the business model scales. At EUR 90 million level, we can't still yet make 15%. I mean, we expect growth for this year if we get enough components, and that should help on our path to get to the target level.
Yeah. Thanks. Another question on the Nanjing talent hub. How big cost do you expect from that side annually? Or-
I mean, it's a fairly small office that we have rented. By the way, it's right in the downtown, right in the center of the city, so that there's close distance. I mean, actually the main railway station is beside. It is not big. I mean, this kind of like probably the salary levels actually are higher in Beijing, so what we probably lose in, let's say, rents and so on for the small office, there can be some. It's at least offset because of the salary differences and so on.
It's more like a way of getting the talent and the, let's say, impact and results of using these talents to our R&D efforts really really exceed whatever the pay is and the extra cost is very minimal.
Okay. Thank you. One last question from me. You said that the component shortages have affected the SBU the least. Is that the decision you have made to prioritize its rebound or is there some other reason for that?
No, this is a good question. It's not sort of our own decision in a way. Of course, there's some components are shared, but actually typically we use different type of semiconductors in medical than we use in security. Security has not, you know, the sales have been fairly low. The products that have grown the most in security, we have not had issues so far with these components. We foresee that for the coming sort of quarters, the situation is getting also in security challenging. One reason really is that, as we said, hey, we were prepared for this growth even during the corona times.
We also told it that, "Hey, we have higher stock than normal. We are prepared to buy more materials so that we have stock." We never thought that there will be total shutdown. I mean, for Q4, certain components just were not available. We have consumed that stock now, and now it's also hurting security.
Okay. Thank you.
Hi. Arttu Heikura from Inderes. Could you open up the situation of the price competition in the medical markets? Has the competition increased? How DT is positioned and to answer the competition?
That's a good question. Thank you. The question is that how is the competition in medical? I think in broad scale it has stayed about the same. There has not been increase we see. There is still heavy competition, but let's say it's more on the normal level. One must also note that actually the demand, the growth has been very strong overall in healthcare. Typically in this kind of situation, customers do not want to so much sort of play the suppliers against each other and so on because everybody's wanting to and fighting for getting the products.
Okay. Another question. Could you comment on the progress of the aviation standards, where they are going and,
The aviation standards, the use of especially computed tomography at the airports, I mean, it's going forward. U.S. is, to my knowledge, are preparing some new sort of a request for quotation rounds and that is going forward that U.S. installing to their airports this computed tomography. China still, it's the same thing than after Q3, so that our information is that they come out with a standard during first half. Europe is doing some installation, new installations, but nothing, let's say, drastic and in a way big size. It's airport by airport.
U.S. is running these with through a central organization which is under U.S. President, part of the Department of Homeland Security, an organization called TSA and Transportation Security Administration, and they are centrally buying for full sort of U.S. When Europe, it's country-specific, even though there's an organization that is specifying the standards, but then it's more like country and airport specific, these.
Okay. Last question. This is straight quote from the report: "We have also strengthened our position in new areas in line with our beyond hardware principle." Could you open up this comment? Do you mean that bids and orders in the IBU business have seen some growth, or is it just concerning the Nanjing talent hub or internal capabilities?
Oh, yeah. That's a good question on IBU. I think, I mean, we reached the level of 370 active customers last year. We got some over 30 new customers. Most of these are in the IBU area. We have been actively now working with various customers and also various opportunities. Also thinking that could there be a position for new business models and so on. We've established the IBU organization. I mean, there's now more software competence and also these kind of things also in the IBU plus then what we have in our R&D.
From that point of view, we are going forward with this beyond hardware strategy. There's a lot of, let's say, unmet needs, but let's say, the offerings by our customers to the end customers is not always so clear and so on. There's a lot of this kind of business development need to be done there.
Okay. Thank you.
Ville Savolainen from EVLI. Good afternoon. Matti touched a bit upon the kind of customer demand, let's say. Maybe could you give an idea about postponements, let's say, looking at the past year or past half year? Firstly, maybe how much is kind of due to the customer and how much is due to lead time? Second, in terms of maybe, let's say, revenue and delay times, how has this changed during the past period of time?
Well, if we compare Q3 and Q4, first of all, I think the net, let's say, postponement, because of course, I mean, Q3 we got something the Q4 would spill further. It's very important that you don't double count the same demand. If we take this kind of like take a consolidated look to that, I think we were talking Q3 a bit like EUR 3 million, up to EUR 3 million. It's a little bit more for Q4. I still use EUR 3 million but a little more than Q3. That's what's postponing further. Then regarding our lead times to our customers also due to this shortage. The lead times are getting longer.
Especially on that is challenging if we think that, what is the situation for security business. It was very like at standstill after drop to the, due to the corona. Companies they were, mid-sized companies, small companies that were really, I mean, they didn't see, let's say, when it will turn, when they start to get orders and so on, and they were quite, mentally, in a way, paralyzed and so on. Now they are coming back and they're seeing some business opportunities, and they have not been able to forecast anything before. They have two challenges then where do they get their detectors because of this long lead times.
Of course, if we have no forecast from our customers and so on, and we can't just in broader scale to guess due to that there's no sort of a supply. That might, let's say, in my opinion, it slows down the overall security sort of business to get back to its level where it was.
Okay, maybe a quick follow-up. Have you seen any kind of project cancellations?
No, not to this. I'm just thinking. Not something that I. I've not heard any of that. It's very much discussing on, you know, negotiation on lead times and so on. Especially the customers that, you know, have had tough times and now they can't understand that, "Hey, we have no orders. Why can't you know, supply?" It's a bit. Of course, bigger customers don't have that. They have been forecasting through the sort of pandemic time, even though some have forecasted a bit too conservative, in my opinion.
I think that's a surprise that I guess it's overall that how we run companies and even societies being able to see through this, so that when things are dark, there's always a sunrise coming.
Yes. Thank you.
Hi. It's Matti Riikonen, Carnegie again. Coming back to the aviation security demand, you say that it is now picking up. Could you explain in which areas you see the most picking up at the moment? Is it in the U.S. or is it in Europe or elsewhere?
I think it's a bit both Europe and U.S. U.S. probably is more probable because it's more, let's say, visible due to the central organization. If we try to guesstimate on Q4, probably the aviation sales out of the security sales was a bit over 1/3. Historically, that's fairly still low number. We expect this share of the sales increase in 2022.
1/3 of security sales in Q4 was from aviation?
A bit over 1/3.
Okay
aviation.
In normal circumstances, that has been around 50%, I guess.
50. Of course, on quarterly basis, you have a lot of these orders and affecting it's not. I mean, in balance, a bit over 50 probably is a good number.
Right. Now that TSA has ordered the second round of equipment, when do you expect that those will be delivered?
We expect to get business from our customers to install CT equipment in the U.S. during this year. That's in our forecast and part of this sort of expected SBU sales for 2022.
Right.
First half even. End of first half.
Good. If U.S. is kind of more predictable because it's based on TSA's orders, what has been your experience so far with the European airports and their kind of capacity and willingness to invest?
Oh, that's a tough one because the passenger quantities have been fairly down. Last year, 2020 especially, also last year it was much less. Airports typically get their money through travelers. When there's less flights, there's less cash for the airports. How are they subsidized by the governments, local governments and governments and how does it affect their activity on investing into new technology? It is a question mark.
There's both forces on the positive forces that's why they want to and why they should, like, touch free sort of scanning and capacity increases and productivity improvements, et cetera, especially in these tough labor times. Also there's this cash constraint or budget money and investment constraint. It's I would think that it recovers but sort of slowly. We expect to have a fairly strong position in all these in Asia, China markets, also in Europe and also in U.S. for this.
All right. Good. You mentioned the heavy traffic, kind of, improvement or investments in China. Could you kind of discuss what kind of demand opportunity is that for you? Are we talking about multiple locations? Is it starting from small and then gradually developing into more places where you are doing those routines? What kind of revenue potential that presents for you?
It's a decision by Chinese authorities. It's a country-wide decision, so it will be implemented nationwide in China. What is the rate? I mean, we don't know. They have not published it. It should start, I mean, second half. The equipment and also the detectors are verified and approved, so there's this kind of like approval over there. It's very much dependent on the local governments, how they are actually implementing the equipment. It is. Of course, it's much less than aviation. I mean, the aviation market is huge, but it is a sizable market.
We have a good position right now and let's see how we can hold on to that. This is also all this new business unfortunately is related to this component challenges that we are able then how much are we able to supply to that we can actually conquer otherwise. It helps the SBU growth and also that's one reason that we can be fairly positive on the SBU outlook, aviation and also this opportunity.
Right. Did that come as a surprise to you? I mean, this was the first time that you started to talk about it.
This is a quite innovative idea and it is a sort of a. From that point of view, it is a surprise. We didn't have any. Of course, I mean, we've heard of it some quarters ago, but I mean, it was still at that level that we were not able to talk about it because it was not so sure. There's all kinds of ideas in the world going on. From that point of view, I mean, if you look a year ago and so on, we could not foresee that this kind of thing would be coming, and probably nobody could.
Okay. Is the technology that Chinese are using there, is it pretty much the same as you would be using at normal customs-
It's, yeah, if you talk-
in Western countries.
Customs, yeah, for cargo and for heavy sort of. We—it's a bit heavy energy side. It's on the side of the heavy energy. We have a, let's say a version of our cargo type of technology, what is our solution to that. The energy levels that they're using for scanning are higher than they would be at aviation or some other critical infrastructure. It's closer to this kind of cargo truck, train, at customs, for example.
What kind of chances do you think that you will have in that particular market space? Do you have better products than your competition, or have you already done quite a lot of those so that you can basically expect that the technology is pretty much what you already know, and then it's up to the local standard-
I-I-I-
Buying processes?
If the market stays as we see it right now, if it's a fair game for everybody and if we are able to get components, we have a pretty strong position there.
All right. Thank you.
Thank you.
Hello. It's [audio distortion] from SEB again. You have launched some new products and expanded to some price levels you have had smaller coverage before. Does this affect your gross margins in any way?
We actually have a wide portfolio of products and fairly also wide differences on margins per product and so on. In big scale, we believe that we can hold on to our margins if we look that way. There's of course both positives and negatives, but as a total, we should be able to also through these inflationary pressures and so on, we should be able to hold on to this gross margin. If we really I mean, if we look the production fixed cost and so on, part of this gross profit above gross profit, of course, that's very much then the scales with the volume. We expect the volume to increase.
We have this double-digit growth for Q1 and Q2, so that should sort of help to keep also the fixed costs under control.
Okay, thank you. About Green Channel, you a little bit elaborated already. How big impact do you expect it to have to the whole market if it goes on?
For the whole market, it's for the global security market. It's probably fairly small. For DT, it should be bigger impact than in comparison to the market.
Okay, thank you.
Okay. Hey, let's take some online questions. As the company doesn't give any guidance regarding the profitability, so could you please provide us some rough estimate about the possible development of your cost structure? How much pressure there is, in personnel and other fixed costs?
The question is about the cost structures. I think I touched a little bit on that, but I mean, looking then more into the fixed cost and also the profitability. We have a target of reaching the 15% EBIT or operating profit, and that target is valid also for the 2022. If we look then at the years behind us, I mean, typically, like the Q1 has been a little bit less, I mean, smaller sales than the other quarters, and that also affects on the profitability just for the Q1. The profitability actually increases toward the end of the year, and for the full year, we have the target is 15%.
There will be some pressures on salaries, for example, due to the things that are going on, especially in Asia and so on. I mean, overall, we also look forward to the double-digit growth, and that should help reaching closer to the target.
Do you think that you're well positioned to meet your financial targets in 2022?
That's what it looks like.
Yeah.
Like, from today's point of view, that's the target for this year.
Mm-hmm.
From that point of view, I don't think the situation is any different than it was, for example, after Q3.
Yeah. Okay. How do you think the growth rates are likely to increase towards the end of year due to improving security demand and then again, easing in component supply?
Oh, the growth profile for this year, of course, it's very much up, also down to what is the underlying quarter, and there might be some changes. Of course, there can be changes between the quarters with no reason. Some sales might spill over and so on. Basically, it's the growth outlook. I think it's if we look last year, the first half was the sales was less and especially security went down, so making nice percentage is a little bit easier, for example, for this first half. On the other side, then first half, we have hopefully the situation so that this component shortage is getting less severe for the second half.
In a way, we have a little more challenge for the first half to offset this, let's say, easier to make growth point of view. Second half, even the underlying numbers are a lot better, but then hopefully we have better availability of components. We'll see.
Okay, thank you. We have another question about Intel chips and assumption that the company is utilizing quite a lot of Intel chips. Do you have any update on your visibility to this issue improving going forward or you being able to cope with other suppliers? What are the measures that the company is taking to tackle the supply issue?
It's relating to this component shortage, overall semiconductors. One area that is especially difficult is actually the Intel FPGAs, so the programmable logic circuits. We are using in our sort of products also Intel, and that has been a big constraint on getting those. I mean, visibility, what will happen. I mean, we know as much as basically the market knows. I mean, if you go to media and look what various large semiconductor players' CEOs talk about the market, I think it's quite confusing because there's very conflicting opinions and so on, and it depends on what type and who gets where and so on.
Basically, big players all buy from these large foundries who are the contract manufacturer for them, like TSMC in Taiwan and so on. Actually, it's fairly few amount, and politicians also have been surprised how concentrated that manufacturing base is. It's then up to also that who gets the capacity, I mean, which of the semiconductor players get capacity from the fairly few sort of fabs. Now there's big subsidies, there's decisions in the U.S. to subsidize semiconductor, I mean, manufacturing fabs. There's also talks that Europe should do it. Japan has decided, South Korea has decided, Taiwan is also doing. Everybody seems to be boosting up their capacity and, I mean, for full fabs it takes time, but also there's a lot of investments for bottlenecks and buying various equipment to increase the capacity.
The situation very much, it's up to what happens to the demand and how much can the supply grow and even can the companies, also us, I mean, how can we change and replace, you know, designing new stuff and so on. It's a lot of things affecting. We think the situation is for DT our point of view still is very difficult Q1 and even Q2. Beyond that it's we have more hopes than visibility.
Thank you.
One clarification still. When you said that in Q3 you basically had some EUR 3 million revenue loss due to...
Hi. Matti Riikonen again. One final question. When you in Q3 said that there was some EUR 3 million sales being postponed because you couldn't get deliveries to take place, were you able to deliver those orders in Q4?
Yeah, that's. I mean, I don't have earmarked sort of information in my head, but part yes were delivered Q4 and part then also the fresh demand from Q4 is then moved into the sort of this year, so Q1 and even beyond. It sort of goes layer by layer. I mean, when I was talking of roughly EUR 3 million and a bit more than EUR 3 million for Q4, that's sort of the net impact, so that has taken into account that there's no double, let's say, counting and so on. That's the net spillover for the Q1 and beyond.
Sure. In practice that also would mean that the lag to revenue would not be more than one quarter.
That is partly. There's also fresh. I mean, even though we were able, there's also fresh. The lag is actually in putting it the other way around. We would have made more than, like, let's say EUR 6 million revenue last year in the normal conditions. EUR 90 plus the Q3 and Q4 loss because of component shortages.
Yeah. Okay. Good. Thanks.
Thank you, everybody. Thank you for very, very interesting questions and I would like to conclude and this Q4 announcement and wish everybody a very happy start of the year and happy Year of the Water Tiger. I think at DT we look, despite all these challenges and risk, we are very confident that we can have a nice growth this year and look forward to the new opportunities that we will be also getting into our businesses. Thank you, everybody, and goodbye.