Image credit: Screenshot, Detection Technology PLC, Business Review Jan-Mar 2020
On the 27th October, Detection Technology PLC published its financial results for Q3 2020. These results show that overall group sales revenue contracted significantly during the quarter, similar to the contraction in Q2 2020. During the quarter, overall sales revenue reached €20.6m, compared with €26.9m during Q3 2019, a decrease of approximately -23% year-on-year. This took cumulative 2020 sales to €61.7m, compared with €77.5m during 2019, a decrease of approximately -20% year-on-year.
The company has two reportable segments, it’s security and industrial business unit (SBU) and it’s medical business unit (MBU). The contraction in sales during the third quarter was driven by lower sales from the SBU, partially offset by higher sales from the MBU. During the quarter, sales revenue from the MBU reached €10.1m, compared with €8.4m during Q3 2019, an increase of approximately +20% year-on-year. This took cumulative 2020 sales to €28.3m, compared with €25.0m during 2019, an increase of approximately +13% year-on-year.
The medical business continued to achieve strong sales growth, driven by higher demand for computed tomography (CT) solutions. Some of this increased demand is related to the Coronavirus pandemic although the Q3 report notes that the “demand for CT applications in each product category normalized [during Q3]” and that the demand for higher-end devices, such as the companies X-Tile solution, increased during the quarter. The X-Tile is an industry first, off-the-shelf, tileable CT detector module which is easily scalable, resulting in lower costs and quicker routes to market for CT system OEMs. As CT imaging is one of the modalities used to detect pulmonary changes caused by the Coronavirus, these latest results could be signalling that the surging demand for basic CT imaging devices driven by the Coronavirus has begun to normalise. The Q3 report also notes that the sales of x-ray panel detectors (FPDs) have been “slowed down” by the Coronavirus pandemic, driven by the dental market. That said, the global market for dental products begun to show signs of recovery during Q3. Following DT’s entry into the CMOS x-ray detector market during 2018, the company began production of its X-Panel 2301 during H1 2020, which is targeted specifically toward dental applications. The dental market is anticipated to be an increasingly significant segment for the company as sales activity normalises. It’s X-Panel series of products also includes the X-Panel 1511 which is designed to meet the needs of C-arm systems used in surgical operations.
Investments into new Chinese and French facilities
The company has recently been investing in new facilities in France as well as Wuxi, Greater Shanghai. The facility in Wuxi has both production and service capabilities with the first product deliveries taking place during the first half of 2020. The Wuxi site has been designed to retain flexibility for future production and customer service needs and the company intends to gradually transfer products to the facility, which have progressed as planned throughout 2020. The move to a new location in France progressed as planned which enables better support around product development and production of multi-energy (ME) based detector products. The company has recently launched the X-Scan ME product family which is an important milestone in the commercialisation of ME technology, which is currently targeted toward industrial imaging. At the end of June 2020, the company employed 481 people, of whom 372 (77%) were in China, 86 (18%) in Finland, 18 (4%) in France, and 5 (1%) in the US.
Outlook for the remainder of 2020
The company is anticipating that the medical business will remain on a solid growth path for the remainder of 2020 as well as into Q1 of 2021, supported by continued demand for CT solutions. Hannu Martola, President and CEO, commented that “in our view, this trend will continue in Q4, both in terms of product mix and sales. The global dental markets showed signs of recovery, but the demand has not yet normalized, and therefore we have moderate expectations regarding X-Panel sales“. The weaker demand for FPDs within medical markets, particularly dental, is anticipated to result in slower growth overall for the medical business, although this remains highly dependant on how the recovery from the pandemic evolves. These forward-looking statements are caveated by the fact that the Coronavirus pandemic is creating extraordinary uncertainty in the global economy, and the predictability of the market is lower than usual.