Q&A Financial Performance

Nov 11, 2024 – Can you shed some light on the company’s finances and especially cash management?

Bittium plans its financing and working capital in accordance with the requirements of the business. Needs change and therefore it has recently been decided to reduce debt. The company is taking typical measures to ensure a sufficient level of working capital, which aims for optimal business development.

We actively monitor the development of business prospects and their effects on the result, balance sheet and financial position through various forecasting processes, and we are prepared to react to significant changes.

Sep 23, 2023 – Can you comment on the background of the profit warning in more detail? Based on the wording of the stock exchange release, the root cause of the profit warning is the component shortage that has been affecting Bittium for a long time, so apparently some important component batch for H2’s deliveries has not arrived yet?

The profit warning is not directly related to the component situation, but to the prolongation of certain orders and delivery schedules. The schedules are made together with the customers to meet their needs. The impact of the component shortage on the business has decreased significantly since the beginning of the year, and our ability to deliver products is currently at a good level, so the ability to deliver has not negatively affected the demand for our products.

The durations of customer projects in the Defense & Security business can last years, even decades, and we aim to predict the number of orders and deliveries related to the projects on an annual basis as well as possible. In this case, company’s previously anticipated deliveries moved somewhat forward. In the big picture, nothing has changed. Naturally, when the timing of product deliveries has been changed, it affects the increase in inventory value and cash flow.

June 23, 2023 – The company’s CEO Hannu Huttunen told the company’s goals for 2024 are based, among other things, to the expected start of some new rollouts of new products in 2024 (Financial Report Bulleting 2022 Webcast). So what is the basis for your estimate from 2024?

At the press conference, Hannu Huttunen refers to the new Bittium Tough SDR radios, whose actual rollout to the Finnish Defense Forces we expect to begin in 2024. Tough SDR customer pilots are also underway outside of Finland, from which we expect possible new product deliveries to begin in 2024.

We have said that we aim for an average annual net sales growth of more than 10 percent and an operating profit level of 10 percent, and we estimate that we will achieve these goals in 2024. The achievement of these goals will be affected by the normalization of the component market, which we expect to take place during the current year, when in 2024 we will be able to deliver products to our customers at full volume. In addition, future investments in focusing our operations and thus improving efficiency and ability to generate results will strengthen our organization and operations for future growth.

April 23, 2023 – What is the calculated payback period for the Veturi program? How much is the project expected to generate profit and on what timeline? How is this profit concretely generated? (Bittium Corporation Launches Seamless and Secure Connectivity Program That Has Received EUR 10 Million Development Funding Granted by Business Finland)

In the Veturi project, the company’s own product line can exceptionally be developed simultaneously up to a certain stage, and the R&D investments are also acceptable for self-financing, so the project basically includes both research-oriented and product development-oriented parts. Therefore, the IPRs created in the project in question are basically the property of the company. Also in co-innovation projects, the company’s own IPRs are typically kept by the companies, and at the same time, the right to use the jointly created IPRs is also created in the ways defined in the agreements.

Regarding grants, it should be noted that the company’s own R&D investments (research, development and innovation) are also acceptable for the self-financing portion. In addition, themes are developed in the project’s ecosystem, and the companies and research institutes involved also receive support from Business Finland separately through co-innovation projects. At the same time, researchers contribute with companies to the themes defined in Vetur.

In Veturi projects, the amount of additional personnel bound by the project is smaller than if the project were a purely separate project, because in the Veturi project, it is exceptionally possible to simultaneously develop one’s own product range related to the theme up to a certain stage. So in this case, the project does not require a lot of “extra” personnel.

Unfortunately, we cannot give a direct answer regarding the payback period of the research project investment. The profit of the project will be generated through the expansion of the portfolio of products or their features in accordance with the strategy. In the role of a locomotive company, we will report on the project as it progresses on the website to be established for the project.