Serstech Group, First Quarter 2022
Internet gross sales: KSEK 2 054 (11 459)
Revenue for the interval: KSEK -6 575 (3 024)
Earnings per share SEK -0.08 (0.04)
Earnings per common variety of shares: SEK -0.08 (0.04)
Message from the CEO
All through 2020 and 2021, our gross sales pipeline was kind of at a relentless stage, with many tenders being postponed many times. Since December 2021, we now have seen a dramatic improve in our pipeline and in the course of the first quarter in 2022, a number of tenders have lastly began to proceed in direction of finalization as an alternative of being postponed. Primarily based on the knowledge we now have collected from the market in Q1, we imagine that the overall demand in 2022 and 2023 might be considerably increased than earlier than the pandemic and dramatically increased than it was in 2020 and 2021. Because of the lengthy gross sales cycles within the business, we anticipate that it will likely be one other few months earlier than orders are positioned, however it’s evident that the shoppers are going again to regular operations and that they’re on the point of begin shopping for once more.
The primary quarter historically has a extra unfavourable money movement than different quarters, each attributable to seasonal results and extra funds, a few of that are associated to prices for the entire yr. Additionally in Q1 2022, we noticed a disproportionally unfavourable money movement, which was affected by our patent functions and bills for accounting, inventory market itemizing and comparable. There’s a threat of working low on money in Q2 or Q3 and we now have due to this fact put in place preventive measures in order that we are able to proceed to construct product inventory and spend money on gross sales, even when the forecast gross sales volumes can be delayed to the later elements of the yr. Primarily based on the above, the gross sales forecast and present price stage, we don’t anticipate a necessity for a rights challenge at current.
There are a number of components which are at present converging to drive up demand to the best ranges we now have seen to this point;
- In the course of the pandemic, legislation enforcement and border management brokers needed to concentrate on journey restrictions and comparable, placing drug enforcement on the backburner. Any funding not associated to the pandemic was postponed, cancelled or shriveled
- The above together with an elevated demand for narcotics in the course of the pandemic, is now forcing legislation enforcement and border management organizations to spend money on new expertise at an expedited tempo
- For 2 years, lots of our buyer teams have postponed buying choice outdoors the covid space, which implies that they’ve a pent-up demand that must be met throughout the close to future. In some instances, buy departments have been forbidden to purchase something not associated to the pandemic, even when budgets had allocations for it
- Most of the devices right now in use around the globe are first-generation Raman gadgets, which implies that they’re above ten years outdated and due to get replaced. Replacements haven’t been finished for 2 years, however in 2022 this work is resumed
- The deteriorating safety state of affairs in Europe and the world is growing safety and protection budgets in virtually each area. Amongst different issues, we see a big improve within the variety of requests for identification of chemical warfare brokers, one thing our merchandise are superb at.
One of many many indications that the demand is far stronger than earlier than is that the common measurement of at present open tenders is a number of instances bigger than earlier years. In the course of the interval 2018-2021, the everyday gross sales alternative was as much as 1-1.5 MSEK, however now a big portion is above 10 MSEK per alternative. There are additionally some tenders which are considerably bigger than 10 MSEK scheduled to shut the approaching quarters, however our expertise is that such massive tenders are usually postponed or shriveled earlier than they shut. In our business, nothing is definite till the order has been positioned and at the very least partially paid, however chances are high that 2022 and 2023 can permit for extraordinary development.
Not all markets are open for enterprise but, however a number of are. We’re focusing our advertising and gross sales efforts on the open markets and might be taking part in additional than 30 tradeshows in the course of the yr. In Q2 alone, we’ll be at 12 tradeshows in Europe, South America, USA and Asia.
In April, we’re lastly beginning the mass-production of our new product, Serstech Arx. The part scarcity has made the ramping up of manufacturing cumbersome, with a number of redesigns wanted to accommodate for part availability. In Could, we even anticipate to have the ability to construct some inventory of merchandise for fast supply. Because of the excessive variety of gross sales alternatives the approaching yr, we now have elevated our forecasts and are actively engaged on constructing part inventory. Many essential semiconductor parts have 52 weeks supply time, which implies that we have to purchase a number of the parts at vital markups from buying and selling corporations which were hoarding parts for a while. Fortuitously, the costlier parts in our merchandise are optical and these haven’t been a lot affected by the shortage-driven worth inflation, so comparatively talking, our price improve remains to be reasonable, however this may change because of the excessive volatility on the spot market.
We now have now six native salespeople working immediately for Serstech. In March, we added one particular person for the Center East and North Africa and one for South America. Because the markets open up, we would like as a lot native presence as doable to catch each gross sales alternative along with our associate community. Each new salespeople have been working with competing merchandise prior to now and know the market, the shoppers and lots of of our present companions. We now have native salespeople in USA, China, South-East Asia, India, South America and Center East.
All through 2021, sure items throughout the US Division of Protection have been testing and evaluating our Serstech Arx product in laboratory settings and the outcomes of their evaluations are optimistic. As the subsequent step, they may in Q2 purchase just a few items to do subject testing and if additionally the sector testing runs properly, we anticipate to see at the very least one first order by the tip of the yr. DoD would then turn into each an vital buyer and an important reference in North America and globally.
In March, I spent two weeks within the Washington, DC space and in south Texas and I met many potential clients, each at their areas and at two tradeshows. Each potential buyer I met additional bolstered my conviction that Serstech Arx is a superb match for our buyer teams in legislation enforcement, border management, sure army items and fireplace departments. The mixture of the decisive return of the market and our skill to mass-produce our new merchandise makes us assured that we are going to obtain sturdy development once more already throughout the coming quarters.
For additional data, please contact:
Stefan Sandor,
CEO, Serstech AB Telephone: +46 739 606067
E mail: ss@serstech.com
or
Thomas Pileby,
Chairman of the Board, Serstech AB Telephone: +46 702 072643
E mail: tp@serstech.com
or go to: www.serstech.com
Licensed advisor to Serstech is Svensk Kapitalmarknadsgranskning AB (SKMG), cellphone: +46 11 323 07 32, e-mail: ca@skmg.se.
About Serstech
Serstech delivers options for chemical identification and has clients around the globe, primarily within the security and safety business. Typical clients are customs, police authorities, safety organizations and first responders.The options and expertise are nonetheless not restricted to safety functions and probably any business utilizing chemical compounds of some sort might be addressed by Serstech’s resolution. Serstech’s head workplace is in Sweden and all manufacturing is finished in Sweden.
Serstech is traded at Nasdaq First North Progress Market and extra details about the corporate may be discovered at www.serstech.com
