Excellent development continued in the fourth quarter. Full-year net sales grew 22 percent, rising to their highest level since 2006. Our growth was clearly faster than the PCB market as a whole, which is expected to grow by approximately 5.5 percent (Custer Consulting, February 2019). The customer segments selected in the strategy all posted strong growth, with the exception of the security and defense segment. In the telecommunications network segment, demand was strengthened by the development of the next generation of 5G technology and the launch of the first commercial networks and equipment. The segment has over 10 significant customers and total growth was 42 percent. Development was slightly more moderate in both the automotive industry and industrial electronics segments, about 17 and 15 percent, respectively. The semiconductor testing segment grew by as much as 54 percent and its net sales amounted to EUR 2 million. In the security and defense segment, sales decreased by almost a fifth due to strong performance in the reference year and delays in the startup of certain projects.
In 2018, net sales rose to EUR 29.1 million. Performance was clearly strongest in the fourth quarter, with sales reaching EUR 8.5 million, representing growth of 36 percent. In the fourth quarter, sales were boosted particularly by strong demand in the telecommunications network segment.
Full-year operating result amounted to EUR 2.9 million and rose to 10 percent of net sales. Profitability developed well and exceeded the target level set in the strategy. The target level was at least 7 percent by 2022. The extremely strong earnings trend is the result of the focus on technologically more demanding printed circuit boards (PCBs) in our sales and manufacturing as well as higher net sales. In addition, we have been able to provide end-to-end service for our customers’ high-volume orders by utilizing our strong partner network.
The operating result for the fourth quarter tripled compared to last year’s reference period and amounted to EUR 1.2 million. Operating margin was exceptionally high, 14 percent of net sales. In the fourth quarter, the Oulu plant managed to increase its delivery reliability to a record level and at the same time reduced production losses by raising yields. New investments in capability are starting to deliver results.
The ongoing EUR 10 million investment program focuses in the first stage on enhancing the capabilities of the Oulu plant, while the main focus in the second stage is to increase its capacity. Most of the first stage equipment has been ordered and installation will be completed in 2019. With the start-up of new equipment depreciation, total depreciation will increase faster than net sales, and relative profitability is estimated to decline slightly in the early stages. At the same time, we estimate that net sales of our volume production service will grow faster than our own production, which also puts pressure on relative profitability.
Espoo, February 28, 2018