Second quarter 2021
Period 1 January - 30 June 2021
The second quarter brought a slight increase in orders received compared to the previous quarter, but we clearly see remaining effects of the pandemic in most parts of the world. We have not lost any tenders during the quarter, which is encouraging and again suggests that there is an unmet demand in the market. We do expect an increase in sales over the next six months, as the buyers become more active and the important demo sessions can be arranged safely again. Buyers in our industry will not buy an instrument they have not tested themselves and therefore they postpone procurement plans until they can physically meet with their suppliers.
In addition, many of our customer groups have been preoccupied with temporary, pandemic-related responsibilities over the last 12-15 months and have had less urgent need for Raman instruments. As the effects of the pandemic subside, we expect our customer groups to go back to their normal operations again.
The postponed tenders remain open and there have been numerous new ones being published in the second quarter, which bring our sales pipeline to new record levels. We do expect an increasing number of tenders to close as soon as the effects of the pandemic allow travel and physical meetings again. For most of this year so far, the activity level in China has been at the normal level and we can also see that sales meetings are becoming possible in the US again, even though our Swedish staff is still unable to travel there. Already in September, we will participate in exhibitions in the US and later in the fall also in Europe and in other regions, which have been more or less closed for business since the pandemic started.
The AGM in April decided to proceed with the rights issue as suggested by the board and as a result our cash balance was strengthened by approx. 22,5 MSEK in June. In addition to this, our cash flow was positive for the quarter (rights issue excluded) and our current cash balance is 30 MSEK, which will allow us to start the development of our next generation instruments according to plan. We expect to start the development during the second half of 2021 and have already started with the recruitment to our R&D team, which was reduced in size in 2020. We plan for the majority of the recruitments to be in Romania, since it is much easier and quicker to find qualified engineers in Romania than in Sweden. The costs and risks in hiring in Romania are lower compared to in Sweden and we expect that the average cost per team member will go down slightly in 2022 compared to 2021.
The Serstech Arx units that were launched in March 2021 have been very well received by the market and we have sold more units than we have been able to produce so far. The production is still in the ramp-up phase, and we have suffered from some component shortages, but we expect these to be sorted out during the third quarter. We expect to have full production capacity for deliveries of Arx units in the fourth quarter this year. For the Serstech 100 Indicator, which is sold both under our own brand and through several OEM agreements, we have been able to secure large quantities of components. Despite the global component shortage, we have complete sets of material to quickly produce Serstech 100 Indicators corresponding to a partner sales value of approximately 23 MSEK.
We expect the world to start getting back to normal over the summer and the prospects for the second half of the year are much better than they were for the first half. Despite the effects of the pandemic, we think that there is a good chance that we can reach our goal of 50% growth this year and then continue to grow rapidly in 2022.
For further information, please contact:
CEO, Serstech AB
Phone: +46 739 606067
Chairman of the Board, Serstech AB
Phone: +46 702 072643
or visit: www.serstech.com
This is information that Serstech AB (publ.) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above at 8:00 CET on July 26, 2021.
Certified advisor to Serstech is Svensk Kapitalmarknadsgranskning AB (SKMG), phone: +46 11 323 07 32, e-mail: firstname.lastname@example.org.
Serstech delivers solutions for chemical identification and has customers around the world, mainly in the safety and security industry. Typical customers are customs, police authorities, security organizations and first responders. The solutions and technology are however not limited to security applications and potentially any industry using chemicals of some kind could be addressed by Serstech’s solution. Serstech’s head office is in Sweden and all production is done in Sweden.
Serstech is traded at Nasdaq First North Growth Market and more information about the company can be found at www.serstech.com.
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