Good morning. Welcome to Scanfil's Q3 2026 interim report call. Together with me here is our CEO, Mr. Christophe Sut, and our CFO, Iiris Heiskanen. As usual, you can ask questions through the chat box, so type in the questions and we will take the questions at the end of the presentation in the Q&A section. Now, handing over to Christophe, please.
Thank you, Pasi. Welcome to Scanfil Q3, and let's get started. Starting with a couple of news related to what happened during the quarter. We continue our expansion with new customer and customer contract, which is also driving the expansion of our facilities. We were pleased during the quarter to announce that we will increase the size of our facilities in Poland, in Mysłowice. The expansion will actually bring the overall size of the factory to 36,000 sq m, which will make it our biggest operation in Europe. This site is focusing on system integration, and has shown on a very consistent basis, strong performance and we've been rewarded by our customers and confidence and trust from our customers. So, very pleased that we can support the growth of our customers in that operation.
In the same time, I felt it was good timing to update you on the progress we are doing in Suzhou. We announced in the spring the need we had for an expansion of our Suzhou operation to support our customers in China. As you can see on the picture, this is going well and moving forward. We are now in full speed at preparing for the go live date. At least the building is growing and building up. The plan is to have the building ready by mid next year. So moving forward as planned and as expected. On another note, when it comes to news in Q3, we had the Capital Markets Day where we adjusted our long-term target. Two adjustment were made towards the long-term target.
One was the growth number that we moved up to 15%, as well as the debt level that we modified to have a corridor between one and two in order to support our growth and continue our expansion. As you can see, driven by customer acquisition, quite a few number of project going on in Scanfil to continue to prepare the future. But let's go back to what happened and how Q3 unfolded. Q3 was a very strong quarter for Scanfil. We landed at EUR 252.2 million, which was a growth of about 32%, which was including an organic growth of 8.5%, which was definitely a strong number, and showing a very positive trend and development. In terms of profitability, EBITA was EUR 17.8 million, growing 26% and at 7.1% within the corridor we are aiming for. So, a continuous positive development.
And then finally, our earning per share also strong, growing 25% at EUR 0.18, which was the outcome of, I would say, a solid quarter. When we look at the revenue trend, we continue the expansion driven by both a mix of organic and acquisitive growth. I will get back to it a bit later, but we continue to see in Q3 a strong performance from the acquired entity, which contributed to the growth, as we were also ramping up project, that on that side, contributed to the organic growth. When it comes to the profitability was obviously benefiting from the growth, moving up to the range of almost EUR 18 million, which was in line with what we were expecting from the quarter. Looking now at the different region. Americas region is continuing to gain speed, reaching soon 10% of the total revenue of Scanfil.
We had a record quarter, with growth of 74% of the overall revenue, 5% of it being organic. We have, in North America, a strong development of our acquired entity, ADCO, and also a strong development of two customer segment, Aerospace & Defense, that is developing very nicely, as well as Energy & Cleantech, that is also seeing a positive development. What was also pleasing to see is that we continue to deliver consistent good level of margin. The third quarter of what is 8.7%, which was the outcome of all those new project that we had launched end of last year that are now getting in maturity and contributing positively to the profitability of the region. All in all, following the growth trajectory we have drawn for Americas and positive APAC region, a very strong growth in the quarters.
We are talking about above 16% of growth in the quarter. It was a lot of happening in that quarter for APAC. As you saw on the picture, first of all, we are fully busy expanding Suzhou, which can create some disturbances on the operational level, but moving forward, at least, in a very good speed. At the same time, we have also a significant amount of project that are ramping up in Suzhou, which was positive to revenue but negative to the margin, which is quite common, and we had the same story a few quarters ago with North America, and then it unfolded in a very nice way. So yeah, we are at the same step. A lot of new project coming in Suzhou operation.
At the same time, another area where we have also the same type of happening is our SRX operation, where we have a quite strong change of mix in those factories, which also was having a negative impact on profitability, but all in all, a positive impact on revenue. So I will say this quarter was, in many ways, pleasing for APAC because those new projects that are coming in and that are building the speed and the momentum of the growth will pay back in the coming quarters. As we have seen before for Americas, we foresee already that Q4 will see a continuous development and growth of the region, but a return to normality on profit levels. So good development in APAC. Central Europe, also saw a positive development.
We had, in Central Europe, a development of 57% versus last year, which was driven both by a continued good performance from acquired entity MB Elettronica in Italy, but also by a strong organic growth above 8% in the quarter, which obviously was positive. I think we should remember that now Central Europe weight is the biggest region in Scanfil, almost 40% of the total revenue. That quarter is a quarter that is disturbed by a vacation period. Our operation in that region had between two amounts of closing, and therefore, delivering this level of profitability and this level of growth during that quarter was a very good surprise in the sense that it means that they managed the situation and did a good work. What was also pleasing to see is that now we have gone out of the restructuring time in Wutha.
We have an operation that is healthy again, and that can, from that new point, grow and contribute to the overall group. So overall, a positive picture for Central Europe, but also paving the way for Q4, because as you can imagine, to deliver this quarter with vacation period in July and August, it meant that the quarter ended at a very strong speed. Finally, closing on Northern Europe. Northern Europe was, I will say, in line with what we see on that market, a little bit slower growth, 2%. At least Aerospace & Defense is the one driving the positive momentum in the region when other customers are more flattish. We were still having very consistent delivery when it comes to margins in the range of 6.7%, which is more or less where they have been for many quarters already for the last three quarters.
Continuing to deliver at a good level. It was slightly below the comparable of last year, but last year it was some one-off that we mentioned at the time that bumped that quarter in the region. So I will say 7% is a level that we can expect from that region. So I would say no drama, consistent delivery was the sign of this quarter and of this region that has now become the third region of Scanfil behind Central Europe, behind APAC. When it comes to our customer portfolio, we continue to rebalance the customer portfolio. I will say now the first customer is in the range of 10%-11% still. When the 10 following customer are in the quarter weighing only 42%. What it means, it means that our portfolio become more diverse and the 10 to 20 is significant and has a very positive development.
I think it's pleasing to see that and to see how that rebalance the risk of the company. Energy & Cleantech remain the biggest, I would say, specific customer group we have, if you consider industrial being much broader in its definition, and remain very strong. Very pleased to see quarter after quarter, our Aerospace & Defense gain speed. It's now 11%, if you look at the year-to-date performance of the company. Medtech & Life Science, where we also see a very positive development, but a positive development to come as well. I will get back to that a bit later. Aerospace & Defense. We can see obviously a very strong momentum. We have now moved to a revenue in the quarter of EUR 30.9 million, which was characteristic of both organic growth, obviously, but also the acquired entity.
We continue to have a strong development on that segment and a strong momentum. Energy & Cleantech had a very solid quarter, growing 14% in the quarter, which is the outcome of the project we have won. We mentioned that many times that we were seeing development and new project to come live during Q3 and Q4. This is what has happened during that quarter already, where we can see that the project we won in the past are now beginning the stage of manufacturing. This segment, as a growth, is above market average very clearly. I would say in line with our expectation. Finally, industrial. Industrial development was mainly supported by acquisition, obviously, in the acquired entity. We have also industrial customer, and they are growing. The level of sales was still significant below last quarter, but still significant.
It is a customer group where the expectation of growth are slightly lower than overall. Finally, Medtech & Life Science, where we are reaching new level in sales, passing EUR 46 million. We continue to gain customer project. In this quarter, it was another EUR 11 million that came up. We have seen between EUR 11 million and EUR 15 million for quite many quarters now. That is positive. We can see that most of the customer are having a positive dynamic in that segment. The good news, however, is most of the growth is not captured yet, because many of those new projects we have won the last four or five quarters are just starting to kick in. Quite a few of them were just starting to move to manufacturing during the last part of the quarter.
I would say, on that one, the growth is in front of us. Thank you. I will hand over to Iiris for the financials now.
Thank you, Christophe, and good morning on my behalf as well. If I start with turnover and comparable EBITA. Our turnover increased 31.8% to EUR 252.2 million. It was a strong contribution from acquisitions, EUR 40 million in the quarter. Also organic growth, which was 8.5%, so EUR 16 million. Positive across all of our regions. We also had a positive impact from exchange rate of EUR 4 million, mainly in our APAC region. Comparable EBITA increased 26.1% to EUR 17.8 million. Margin was 7.1% compared to last year, 7.4%. As we can see, it was largest contribution from Central Europe and also Americas, and both of them had solid margins. With APAC, the higher volumes kept EBITA broadly stable year-on-year, despite their having a lower margin level.
In Northern Europe, it was a strong prior year comparison, but they have had very stable performance quarter to quarter. Turning on to cash flow and net working capital. Our operating cash flow was EUR 10 million January, September. In the third quarter, EUR 4.1 million compared to EUR 7.4 million previous year. We have strong revenue growth, and that is increasing our working capital. Our working capital increased to EUR 254 million. It was EUR 180 million last year, and that increase is explained by the acquisitions. Quarter- to- quarter, the increase is coming from higher inventories. We have higher business volumes, receivables increased, we have higher sales levels. If we look at the net working capital in relation to sales, it has been stable quarter- to- quarter, in first quarter, second quarter, and now in the third quarter.
We continue to focus on our working capital management and cash generation going forward. On our financial position, our net debt was at EUR 141 million at the end of the third quarter, compared to EUR 10 million last year, and that increase is coming, of course, from the acquisition financing. Quarter to quarter, some movement from working capital increases. Net debt/EBITDA was 1.5x, so right in the middle of our corridor, one-to-two. We have a strong financial position, available liquidity, strong over EUR 150 million in unused credit limits and loan facilities. We do have financial flexibility also going forward. A couple of words about key figures on balance sheet and shareholder returns. Equity ratio was 41.3%, last year, 55%, and net gearing 42.2%, last year, 3.5%. That is showing the higher leverage, as we discussed in the previous slide.
Return on equity increasing to 13.3%, last year, 12.7%. Earnings per share now EUR 0.18 compared to EUR 0.14 last year, showing steady development. With that, I think I will now hand over back to you, Christophe.
Thank you, Iiris. Outlook, as we have said many times, we are still in the corridor we gave at the beginning of the year. Obviously, I can say that we have now reached a point where we are very confident with that corridor, and probably in a better shape than we were hoping when we gave that corridor at the beginning of the year. All in all, I think this third quarter, both by its performance, was positive, but also by the outlook it leaves in terms of opportunity, but also in terms of backlog and how we foresee Q4 and 2027. Pleasing to see that the choice we have made in terms of customer segment are driving momentum and organic growth. We see a positive development and opportunity with the acquired entity.
We continue to have good cost control and hard work on managing supply chain that allow us to run the business in a smooth way. With that one, I think I will hand it over to you, Pasi, and thank you.
Thank you. Heading to the Q&A, please type in questions in the chat box and I will read out those questions here. All right. We already have some questions from [Marcus]. Firstly, about the Q3 and finishing that and momentum. You mentioned a strong finish to Q3. Has this momentum continued into Q4? Could you give some color on that?
Yeah. First of all, it is obvious that when you consider Q3 is July, August, and September, July, August is vacation first in the Nordic and in Central Europe, then August in Italy, obviously September has to be strong. It is also the time where we start usually to ramp up new projects. That is, I would say, a normal dynamic, but when you see the number, it obviously means that it was a very strong dynamic. As I said in my conclusion, we foresee that to continue. We have a strong expectation on Q4, and we start to have a very positive outlook for 2027.
Okay. Continuing now with [Marcus]: Can you share some more details what is driving the strong growth in APAC?
Yeah. I would say on our APAC region, there are several factors. Obviously, the reason why we announced the expansion of Suzhou was because we have in our pocket new contracts that are to expand our revenue. The new contracts, they are driven by two types of customer mainly. It is Energy & Cleantech and it is Medtech . It is mainly international companies that are requesting manufacturing from us on the APAC region. So those are the main driver for the growth. Then, step by step, we are starting also to see traction on our Malaysian site. So where we are starting to move there in with some of our global customers. But the Energy & Cleantech and Medtech are strong drivers in our APAC regions.
Yeah. Now continuing actually with the APAC region. On APAC margins, you actually touched about this already in the presentation, but maybe good to repeat it. On the margin in APAC affected by NPI cost, should we expect this to also weigh on Q4?
I think what you should expect is that it will normalize. It will go back. You have seen a bit same trajectory for America. So you get the quarter that gets hit because of the volume of new project, and then it starts to normalize the following quarter. So you should see an incremental improvement on that.
All right. Okay, thanks. Now heading to the customer groups, and [Marcus] actually still continues in here. A&D sales were very strong, but order intake was low than this has been actually if you look to the past. Any guidance what we should expect? Continuing on that, are you seeing any signs of defense slowing down?
I think that the challenge with those contracts is they are very long, long-term contracts, so they don't come very often. That's one of the elements. But what we can see is that we continue to see growth in that segment, and we continue to be positive to that segment. Then some of the customer grow 70%, 80% during the year. Probably they don't grow 70% - 80%, but that's not what we count on the long term. I think we remain positive. Business is moving in a nice way. But yes, we don't count 70%, 80% growth, and I've never counted on it, if you remember what we presented in capital markets.
Okay. Thanks a lot, Christophe. Now [Pasi] from Nordea: Could you offer a breakdown for volume and price related to organic growth in Q3?
Yeah. I think I can take that one. What we consider is that the impact of price growth is 1.5% in the quarter.
Yeah. Maybe that's enough. Sufficient. All right. [Antti] from Inderes: How much price increases had impact on organic growth in Q3? I think that that was actually that. What do you expect in terms of pricing in coming quarters and inflationary pressures seems to be picking up?
Mm-hmm. Yeah. I think that we have had that already in that quarter, where there is obviously some of the components that are seeing price increase. It is the case for PCBs, it is the case for memory. But that we continue to adjust to the contract we have with our customers. That is something that is, in a way, going through the normal process. And we believe that it will continue during the third quarter, but we do not expect a change in dynamic. We expect a continuation, so we will manage it as we have managed it. We also working very closely with our supplier for supply. That is something that we just got to keep working on.
Okay. Now maybe, again, about the expectations going forward. Have you seen any changes in demand environment or in customer forecasts in the fall compared to H1? The first half of the year, have we seen any changes?
Yeah. It is a good question. I think we have seen two things. We have seen, obviously the expectation we were having on growth have materialized, meaning that the positive environment of the segment we were targeting has materialized. I will say also that another element is that the visibility of that growth has also evolved to be better. Meaning that I would say nowadays, we are getting a more long-term forecast from our customer, which from our perspective is also a sign that they have confidence in their growth and in their development. So it is also helping our operation and our way to run the business.
Okay, thank you. [Johan], about the M&A market; how does the M&A market look right now? Are there any attractive targets available at a sensible price?
Yeah. I would say the M&A market remains positive in the sense that there is still many companies that are potentially available for sale, many companies that could be a target. I think that the price level has, in a way, landed in a reasonable level. I think that we can expect that M&As will remain in the agenda and things to happen in the sense that that market is still at the level that allows to close deals.
Okay, thank you. About the net working capital, [Antti] asked, do you expect seasonal net working capital release in Q4?
Yeah, if I think about our net working capital now being higher level due to the business growth and organic growth, and we do have many actions ongoing, how can we improve the efficiency? Some actions come with a bit of a delay, but we are expecting them to start showing some better development now in Q4. If I look at historically our cash flow and net working capital, typically, we have had a good, strong cash flow in the last quarter.
Q4. Thank you. [Pasi], continuing about component prices and passing them to the customers, can you always, well, always, a bit harsh there, but always pass on higher component prices to your customers? Or do you have some profitability risk related to component prices?
No, but I think it's very simple. We are in a business where material cost is an extremely big part of the company. So obviously for us to move forward, we need to pass those costs, and those costs go through the customer, so those things are covered by contract. Obviously, that's a normal process, and that has to be that way. That's the only way for a company in EMS to exist, I would say.
Yeah. Thank you. We still have some time for questions, so please type in questions if you have any. I'll just go once more through. One more about the SRX factory's capacity utilization. How do we see that development going?
Yeah. I would say Malaysia still has a big potential of growth. I think we probably are in 50%-60% of the capacity in Malaysia. Australia, slightly higher, but still also room for growth and improvement. I think that Malaysia, we know we have done a significant investment to enable that. So there is room for growth, and projects start to flow in, but there is still room for growth.
Yeah. Thank you. Still give you 30 seconds. All right. There are no further questions, but you can always actually email me or call me, so we'll take the questions then. Now handing back to Christophe for the closing.
Thank you, Pasi. Just to summarize on the quarter, as you could see, growth did accelerate during the quarter, 32%. Strong performance organically, 8.5%. It obviously impacted earnings, that also kept a positive trend, reaching EUR 17.8 million, 7.1% margin, which was overall positive as well. All of it is also supported by customer wins that were also strong in the quarter. They are very strong year- to- date. We are already at EUR 172 million of new project we have won, which is a positive when we look forward. If you remember one and a half, two years ago, when we started to gain speed in customer win, those are the things you see happening now. Happy to see that we are not, in a way, falling asleep, but we continue also to work on things that will drive our future in the right direction.
Obviously, this dynamic of the market and this long-term dynamic of the market has pushed us to drive up our long-term ambition and increasing to 15%. Happy that this quarter is delivering towards that, but also that the long-term indicators are giving us a positive picture. Thank you for listening to us today.
All right. Thank you.
Thank you.