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Detection Technology - Heading towards better times

DT’s Q1 result was broadly in line regarding net sales, but EBIT clearly missed ours and consensus expectations, although EBIT improved somewhat y/y. Most importantly, DT is seeing early positive signals in the security market. DT believes that worst challenges in SBU are behind and company will head toward growth starting in Q2 of 2021. DT expects total net sales to grow double-digit in Q2 and in H2 of 2021 driven mainly by the strong medical demand.
  • Q1 result: Q1 net sales amounted to EUR 18.3m (-8% y/y) vs. EUR 19.2m/19.2m Evli/consensus estimates. Q1 EBIT was EUR 1.4m (7,5% margin) vs. EUR 2.2m/1.94m Evli/cons. R&D costs amounted to EUR 2.4m or 13% of net sales (Q1’20: 2,6m, 13%).
  • Security Business Unit (SBU) net sales decreased 37,7% to EUR 5.8m vs. EUR 6.0m Evli estimate. Decrease was mainly due to COVID-19 situation affecting demand. Despite international passenger travel still stagnating, DT sees that domestic air transport has recovered in many countries close to the pre-pandemic levels and cargo transport is increasing. DT expects SBU sales will start to increase in late Q2 and continue to grow in H2, but demand is characterized by uncertainty.
  • Industrial Business Unit (IBU) net sales increased 11% to EUR 2.4m vs. EUR 2.7m Evli estimate. IBU sales is expected to be flat in Q2 and to grow in H2, but demand may fluctuate.
  • Medical Business Unit (MBU) net sales increased 20% to EUR 10.1m which was broadly in line with our estimate of EUR 10.5m. Growth was driven by good demand for medical CT applications, especially in China. DT expect demand in medical CT applications to increase and MBU sales to grow even more in Q2 and H2 than in Q1.
  • No change in medium-term targets; at least 10% net sales growth, EBIT margin at or above 15%.
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