Half Year 2026 Detection Technology Oyj Earnings Call

August 6, 2026

Speaker #1: Good afternoon. Welcome to Detection Technology's second quarter results announcement. My name is Hannu Martola. I'm the President and CEO of Detection Technology, and I'm pleased to present.

Hannu Martola: Good afternoon. Welcome to Follow Detection Technology Q2 result announcement. My name is Hannu Martola. I'm the President and CEO of Detection Technology, and I'm pleased to present. Q2, we reached sales of EUR 25.6 million, which is a 5.1% growth year-on-year. Reached EBITDA of EUR 1.8 million, which is slightly better than last quarter, EUR 1.7 million year-on-year. EBITDA percentage yielding out to 7.1%, again, slightly better than a year before year-on-year. Where did it come from? The growth continued. It was very much driven both by medical applications and TFT. Good news is that the TFT growth now started also in the Western markets. In total, China weighed on both our security and industrial sales. Total industrial sales was -6%. Sales of line-scans in APAC, China declined, TFT sales grew in APAC, but also in all geographical markets for industrial.

Speaker #1: In the second quarter, we reached sales of €25.6 million, which is a 5.1% growth year on year. We reached EBITDA of €1.8 million, which is slightly better than last quarter and €1.7 million year on year. The EBITDA percentage came out to 7.1%, again slightly better than the year before, year on year.

Speaker #1: Where did it come from? So, the growth continued; it was very much driven both by medical applications and TFT. The good news is that the TFT growth has now started also in the Western markets, but then in total, China weighed on both our security and industrial sales.

Speaker #1: Total industrial sales were negative 6%. Sales of line scans in APAC China declined, but then TFT sales grew in APAC, as well as in all geographical markets for industrial.

Speaker #1: Medical sales showed strong growth of 21%, driven by global CT demand, but the TFT deliveries for medical—I mean, we started to deliver those. Security sales were down 8%, and this is a bit controversial, because we had good growth both in Europe and the Americas—in Western markets—as well as good growth in APAC outside China, but the China security sales declined.

Hannu Martola: Medical sales, strong growth of 21%, driven by global CT demand. The TFT delivers for medical. We started to deliver those. Security sales, -8%. This is a bit controversial because we had good growth both in Europe and Americas, in Western markets, good growth also APAC outside China, the China security sales declined. The total outcome is -8%. Despite this, globally, our market share unchanged. We are a little bit stronger in the Western markets and in China markets, a little bit. Some of our customers also are making products for themselves, so that they are using two sources, us, and in-house. Net sales by quarter. We see here the past three-year or four-year, including 2026 impact. Q1 and Q2 this year is up about 9% together. EBITDA, slightly better than last time on the reference, which was 7%.

Speaker #1: The total outcome is minus 8. Despite this, globally our market share is unchanged. We are a little bit stronger in the Western markets, and then in the China markets, a little bit—I mean, some of our customers also are making products for themselves.

Speaker #1: So, they are using two sources: us, and then in-house. Net sales by quarter—we see here, over the past three or four years, including the 2026 impact. The first and second quarters this year are up about 9% together.

Speaker #1: Also, EBITDA was slightly better than last time on the reference, which was 7. Then, going into the regional business units, Americas, representing 7% of our sales, grew a nice 15%.

Hannu Martola: Going into the regional business units. Americas, representing 7% of our sales, grew nice 15%. That was quite much driven by security. This is, I think, also now good news that Americas, we've had some decline in history there and some structural changes. Now it's starting to grow. APAC, representing 72% of our sales, grew 2%. China declined, overall, our outside China growth. EMEA, representing 21%, nice growth of 15%. EMEA also was very much driven by security. I must note here also that actually we have some shift here on security sales from Europe into outside China in Asia. That is also affecting these numbers. By applications, industrial, -6% altogether, medical, 21%, EUR 13 million, and security, which is representing 20% of our sales, is -8%, all counted together.

Speaker #1: That was, this is, I think, also now good news that in Americas we've had some decline in history there, and some structural changes. Now it's starting to grow.

Speaker #1: APAC, representing 72% of our sales, grew 2%. China declined, but overall, outside China, there was growth. EMEA, representing 21%, saw nice growth of 15%, and EMEA was also very much driven by security.

Speaker #1: And I must note here also that actually, we have some shift in security sales from Europe into Asia outside of China. So that is also affecting these numbers.

Speaker #1: Then by applications: industrial, minus 6% altogether; medical, 21%, €13 million; and security, which is representing 20% of our sales, is minus 8%. All counted together.

Speaker #1: Looking first six-month numbers, I think nice 9.1% growth. EBITDA 8.2% and 4.2 million euros. And first six months regional business unit split. Americas 21% growth, APAC 6% growth, and Europe, Middle East, India, and Africa 18% growth.

Hannu Martola: Looking H1 numbers, I think nice 9.1% growth, EBITDA 8.2% and EUR 4.2 million. H1, regional business unit split. Americas, 21% growth, APAC, 6% growth, and Europe, Middle East, India, and Africa, 18% growth. The same H1 by application, industrial growth of 6%, medical growth of 19%, and security flattish -1.5%. Looking at the key results and numbers, a couple of things that I would like to highlight. I think the profitability here, 7.1%, is very much explained to the product mix. That's something that must be noted. It was quite heavy on medical, and that is affecting the numbers. We also have highest fixed cost due to the fact of building the India factory, Oulu factory, and so on, enablers for future growth. On investment side, that sticks out. Investments, EUR 3.3 million.

Speaker #1: And the same six-month by application, industrial growth of 6%, medical growth of 19%, and security flattish minus 1.5%. Then looking at the key results and numbers, a couple things that I would like to highlight.

Speaker #1: I think the profitability here—7.1%—is very much explained by the product mix. That's something that must be noted. It was quite heavy on Medical, and that is affecting the numbers.

Speaker #1: We also have the highest fixed costs due to the building of the India factory, the Oulu factory, and so on—these are enablers for future growth. On the investment side, that sticks out.

Speaker #1: Investments: €3.3 million. We made long-term investments into R&D capabilities and competencies. Then, cash flow was negative €600,000 for two reasons. One is the long-term investments, and the other is the increase in stock.

Hannu Martola: We made long-term investments into R&D capabilities, competencies, cash flow EUR -600,000. Two reasons. One is the investments, long-term investments. The other thing is increasing of stock. Return on assets. Net assets is still quite nice, 19.9%. I expect that for the future, we can improve that. What I want to a little bit go through is what have we done in our strategy execution. We have four cornerstones. That is the base regarding our legacy technologies and doing everything better what we are doing, new growth areas for TFTs, added value subsystems, and investing into long-term new technology on foundation of better performing organization and team and more pleased successful customers to ease to use products and services from DT. I think this is quite interesting. This is the EUR 65 million target, additional sales of EUR 65 million to be reached by 2030.

Speaker #1: Return on assets, net assets is still quite nice, 19.9%, and I expect that for the future, we can improve that. Then what I want to go through a little bit is what we have done in terms of execution.

Speaker #1: We have four cornerstones. That's the base regarding our legacy technologies and doing everything better that we are doing—new growth areas for TFTs, added value, subsystems, and then investing into new long-term technology.

Speaker #1: On the foundation of a better-performing organization and team, and more pleased, successful customers through easy-to-use products and services from DT. I think this is quite interesting.

Speaker #1: This is the €65 million target—additional sales of €65 million to be reached by 2030. We have divided this, and this is something we also published at our Capital Markets Day a bit over a year ago. We have divided this into the areas for TFT, into medical industrial CT, line scan, into security CT, line scan, and then into security cargo.

Hannu Martola: We have divided this. This is something we also published at our Capital Markets Day a bit over a year ago. We have divided this into the areas for TFT, into the medical, industrial CT line-scan, into security CT line-scan, and into security cargo. TFT, by the way, represents one-third of this growth. Very important for us. We have now launched more than 60 TFT products. We have launched the world's largest X-Panel 43108, and its little brother, X-Panel 4386, which is even faster but slightly shorter. We have introduced new IGZO TFT products for both EV battery and energy storage and dental applications. We have launched AIDA for more value-added subsystem hardware, software detector system. X-ACE HS for high-speed medical CT. We launched AVA for low-cost security, a little bit industrial.

Speaker #1: TFT, by the way, represents one third of this growth—very important for us. So, now we have launched more than 60 TFT products.

Speaker #1: We have launched the world's largest fast panel, 43,108 by 4,386, which is even faster but slightly shorter. We've introduced new IGZO TFT products for both EV battery and energy storage, as well as dental applications.

Speaker #1: We've launched AIDA for more value-added subsystems, hardware, software, detector systems; XACE for high-speed medical CT; we launched AVA for low-cost security, a little bit industrial; and then we have in our pipeline new, both low-cost and high-performing CT products, both for medical and security.

Hannu Martola: We have in our pipeline new, both low-cost and high-performing CT products, both for medical and security. We launched X-Cargo, which is a very fast detector, especially for trains and cargo detection. All these together are helping us now to get to our target of EUR 65 million additional revenue. We are working on developing new photon counting technology, which boosts the growth even higher later on. To have the enablers for doing this, we have opened new sales and production site in India. By the way, it has just been granted a medical device manufacturing license in India. It is very fresh news. We started a new site in Shanghai, not only for better environment for our R&D employees and sales and administration there, but especially for new facilities for testing our products and so on, and much bigger capacity.

Speaker #1: We launched Xcargo, which is a very fast detector, especially for trains and cargo detection, and all these together are helping us now to get to our target of €65 million additional revenue.

Speaker #1: We are working on developing new photon counting technology, which boosts the growth even higher later on. And then, to have the enablers for doing this, we've opened a new sales and production site in India. By the way, it has just been granted a medical device manufacturing license in India—it's very fresh news. We started a new site in Shanghai, not only to provide a better environment for our R&D employees, sales, and administration there, but especially for new facilities for testing our products and so on, and with much bigger capacity.

Speaker #1: And then expanding the European-origin capability manufacturing in Oulu, which is helping us further, especially in the defense area in the Western world. On TFT sales, there was nice growth of 20% for the first half—I think it was 25% for the second quarter. But the notable thing here is that actually now, TFT starts to be 10%, one-tenth, of our revenues.

Hannu Martola: Expanding the European origin capability manufacturing in Oulu, which is helping us further into especially defense area in the Western world. On TFT sales, nice growth of 20% for H1. I think it was 25% for Q2. The notable thing here is that actually now TFT starts to be 10%, one-tenth of our revenues. Out of this roughly 10%, 20% already is coming outside of China. We are very well now moving ahead with our strategy execution and in plans. We have had growth for industrial applications, all regions for TFTs. TFT deliveries for medical has started. If we look at the order backlog, so the future orders, we have growth in all regions. Looks quite nice. Most important foundation here is that now we have the world's best set of fast and large single glass flat panel detectors.

Speaker #1: And out of this, roughly 10%, 20% already is coming from outside of China. So we are now moving ahead very well with our strategy execution and plans.

Speaker #1: We've had growth for industrial applications in all regions for TFTs. TFT deliveries for medical have started, and if we look at the order backlog—the future orders—we have growth in all regions.

Speaker #1: It looks quite nice. And most importantly, the foundation here is that now we have the world's best set of fast and large single-glass flat panel detectors.

Speaker #1: This is extremely important, especially for the defense weapons industry. In the background, here are the two new flat panel products: 43108 and 4386.

Hannu Martola: This is extremely important, especially for defense weapons industry. To back that up, here are the two new flat panel products. We have 43108 and 4386. As one of our customers stating, a representative from Fraunhofer-Gesellschaft, which is the largest research institute in Europe, I think Fraunhofer has some 35,000 research people. He said that this is a real game changer for industrial CT, and we are now stepping into the era of quantity. Everybody knows the word of drone. From stepping from the missile into multiple high volume drone manufacturing, it is quantity. You need throughput, but also you need the quality. That is where this X-ray technology steps in. Defense drives now demand for fast and large-scale scanning for high throughput and quality. This is now positioning after these launches and verified. We have several of our customers have been verifying.

Speaker #1: As one of our customers stated—a representative from the Fraunhofer Institute, which is the largest research institute in Europe—I think Fraunhofer has around 35,000 research people.

Speaker #1: He said that this is a real game changer for industrial CT, and we are now stepping into the era of quantity. Everybody knows the word "drone."

Speaker #1: So, from stepping from the missile into multiple high-volume drone manufacturing, it's quantity you need—throughput—but also you need the quality. And that's where this X-ray technology steps in.

Speaker #1: So, defense drives now demand for fast and large-scale scanning for high throughput and quality. And this is now positioning after these launches and being verified. So, several of our customers have been verifying; now we need to sell.

Hannu Martola: We need to sell. We are number one in high value industrial defense inspection, large panels, dynamic large panels. Okay, stepping from products into the reporting. This is something that we are now planning. We are now planning to move into IFRS reporting, first time from Q4 this year, and this would then put us into the same framework with all our peer group. The transition date is 1 January 2025, and we are doing then the reporting Q4 2026 as informed. This is then helping especially the analysts and financial community to really come up with comparable finance numbers. I would bet that it is more probable that our results will a little bit improve than vice versa, but let's see when we finalize the planning work. What do we see for future? Very short term, we see growth.

Speaker #1: We are number one in high-value industrial defense inspection large panels, dynamic large panels. Okay, stepping from products into the reporting—this is something that we are now planning.

Speaker #1: We are now planning to move into IFRS reporting for the first time from the fourth quarter this year, and this would then put us into the same framework as all our peer group.

Speaker #1: The transition date is the 1st of January, '25, and we are then doing the reporting for the fourth quarter of '26 as informed. And this is then helping, especially the analysts and financial committee, to really come up with comparable finance numbers.

Speaker #1: I would bet that it is more probable that our results will be a little bit improved than vice versa, but let's see when we finalize the planning work.

Speaker #1: Then what do we see for the future? Very short term, we see growth. We see growth for the third quarter and fourth quarter. Probably the growth for the second half is similar to the second quarter.

Hannu Martola: We see growth for Q3 and Q4. Probably the growth for H2 is similar than Q2. From the applications, industrial expect growing, medical growing, but security declining a little bit. The official guidance for Q3 and Q4 is growth. The financial targets midterm remains the same, 10% growth, 15% EBITDA, and then 30% to 60% dividend yield. This is in a nutshell our performance for Q2. I would be very happy to answer to any questions if they may arise. Thank you.

Speaker #1: From the applications industrial expect growing, medical growing, but security declining a little bit. So the official guidance for third and fourth quarter is growth.

Speaker #1: The financial targets for the midterm remain the same: 10% growth, 15% EBITDA, and a 30% to 60% dividend yield. So, this is the nutshell of our performance for the second quarter.

Speaker #1: I would be very happy to answer any questions if they arise. Thank you.

Speaker #2: Hello, this is Nico Ragnars from SCB. Thank you for the presentation. I have a couple of questions, and I'll go one by one. Starting with security sales, both the outlook and sales in Q2—you highlighted that you are not expecting sales to grow due to Chinese weakness and also some fluctuations in the EMEA market.

Niklas Rönnow: Hello, this is Niklas Rönnow from SEB. Thank you for the presentation. I have a couple of questions and I will go one by one. Starting with security sales, both outlook and sales in Q2. You highlighted that you are not expecting sales to grow due to Chinese weakness and also some fluctuation in EMEA market. Can you open the reasoning behind, especially the EMEA market, a bit more?

Speaker #2: So, can you elaborate on the reasoning behind the EMEA market in particular?

Speaker #1: I think if I look first—I mean the Western market and so on—I mean, they are now, we know that our customers have new orders. We know that we have in our order pipeline, for example, products that will end up in US airports, as an example, and so on.

Hannu Martola: I think if I look first, the Western market and so on. We know that our customers have new orders. We know that we have in our order pipeline, for example, products that will end up into the US airports, as an example, and so on. Overall, we see growth. Of course, there can be some quarterly adjustments and so on, but that market is growing, and we expect to be growing. On APAC, also outside of China, we see growth. China security market, high probability it is declining still. Let's say the share of our revenues, from, if I call companies who have headquarters in China, we also have the Western companies in China. I'm not talking of those sort of companies whose headquarters are in China. Many of them, by the way, are government-related companies.

Speaker #1: So overall, we see growth. Of course, there can be some quarterly adjustments and so on, but I mean that market is growing, and we expect to be growing.

Speaker #1: Then on APAC, also outside of China, we see growth, but then China security market, I mean it high probability it is declining still. Let's say the share of our revenues, I mean from if I call companies who have headquarters in China, we also have Western companies in China, I'm not talking of this, sort of companies whose headquarters are in China, and many of them by the way are government-related companies, the share of our total sales has been constantly, I mean declining, but also that means that the impact of it will be getting less.

Hannu Martola: The share of our total sales has been constantly declining, but also that means that the impact of it will be getting less. Long term, we see also growth in this China-related headquarters. It's just that, for example, there's not very much investments in China in security, and also after the price erosion and let's say the market size has been changing.

Speaker #1: Long term, we also see growth in this China-related headquarters. It's just that, for example, there's not very much investment in China in security, and also after the price erosion, let's say the market size has been changing.

Speaker #2: Okay, so that's basically the reason you are not expecting growth in Q3—is due to China.

Niklas Rönnow: Okay. That's basically the reason you are not expecting growth in Q3 is due to the China.

Speaker #1: Very much so, yeah.

Hannu Martola: Very much so.

Niklas Rönnow: Yeah. Then you mentioned also the in-housing trend from a couple of your clients. Can you?

Speaker #2: And then you mentioned also the in-housing trend from a couple of your clients. Can you?

Speaker #1: I mean, I think if we look at history, we have had a very strong position. In those days, also, China was by far the biggest securities market in the world—probably bigger than all the other countries combined.

Hannu Martola: I think if we look in history, we have had very strong position. In those days also, China was by far the biggest security market in the world, probably bigger than all the other countries counted together. That passed. We don't think that that will return in a way. The picture has changed. Also, we were almost having a monopoly. We were winning almost every single piece, obviously we're the first one, we were ready and so on. Now it's becoming more sort of, let's say, normal type that customers might use two suppliers for risk mitigation, et cetera, these kind of things. This has been the sort of the journey there.

Speaker #1: That passed. We don't think that that will return, in a way, so the picture has changed. Also, we were almost having a monopoly. We were winning almost every single piece, and some of these were the first one, and we were ready, and so on.

Speaker #1: And now it's becoming more, let's say, normal that customers might use two suppliers for risk mitigation, et cetera—these kinds of things.

Speaker #1: And this has been sort of the journey there.

Speaker #2: Okay. And that considers China.

Niklas Rönnow: Okay. That considers China?

Speaker #1: Yes.

Hannu Martola: Yes, indeed.

Speaker #2: Okay, thank you. Then on the medical side, you showed strong growth there. So could you elaborate a bit? Was it between China and markets outside China, and how sustainable is the growth rate you are currently seeing there?

Niklas Rönnow: Okay. Thank you. On medical side, you showed strong growth there. Can you elaborate a bit? Was it between China and kind of markets outside China? How sustainable is the growth rate you are currently having there?

Speaker #1: Right now it looks quite let's say sustainable, nothing of course. I mean is everlasting, but I mean the thing is we also know that both GE Healthcare and Siemens have come out with second quarter results and they've had quite nice results on the imaging sector, which is CTs, but the most important biggest and the highest profit maker there.

Hannu Martola: Right now it looks quite, let's say, sustainable. Nothing, of course, is everlasting. The thing is we also know that both GE HealthCare and Siemens have come out with Q2 results, and they've had quite nice results on the imaging sector, which is CT, is the most important, biggest, and the highest profit maker there. This is global. It's a little bit different if we think that China is the global hub for medical. Let's see, will that change because of India and so on? Right now, is most of the equipment and so on are made in China because the super competitive supply chain and so on. Part of the equipment will stay there. Answering your questions on growth, we see growth in basically all markets for computed tomography.

Speaker #1: So this is global. It's a little bit different if we think that China is the global hub for medical. Let's see—I mean, will that change because of India and so on? But right now, most of the equipment and so on are made in China because of the super competitive supply chain and so on.

Speaker #1: Part of the equipment will stay there. And answering your questions on growth, I mean, we see growth in basically all markets for computer tomography.

Speaker #2: Okay, good, thank you. And then the last one from me: your business model tends to be scalable. While you are now guiding for, or expecting, medical sales to grow and security sales to decline, so probably the mix will be a bit weaker also in H2.

Niklas Rönnow: Okay, good. Thank you. The last one from me. Your business model tends to be scalable, while you are now guiding for or expecting medical sales to grow and security sales to decline. Probably the mix will be a bit weaker also in H2. Should we expect relative profitability to improve in H2?

Speaker #2: So, should we expect relative profitability to improve in H2?

Hannu Martola: Our profitability improves when revenues increase. Of course, mix is something that also has an effect. I think from the profitability point of view, medical is high volume. The margins are smaller. Security, the volumes are smaller, the margins are a little bit better there. Also if we look the TFT business overall, the margins are quite okay globally. Of course, there's big variation on the sort of different segments and also the markets.

Speaker #1: I mean, our profitability improves when our revenues increase. Of course, mix is something that also has an effect. I think, from the profitability point of view, medical is high volume—the margins are smaller. Security, the volumes are smaller, but then the margins are a little bit better there.

Speaker #1: And then also, if we look at the TFT business overall, the margins are quite okay globally. Of course, there’s a big variation in the different segments and also the markets.

Speaker #2: All right, thank you. That's all from me.

Niklas Rönnow: All right. Thank you. That's all from me.

Speaker #3: Hi, it's Patrick Campbell from Nordea. You completed some investments in Q2 related to the production process. Could you perhaps explain the rationale behind these investments?

Patrik Cilliacus: Hi, it's Patrik Cilliacus from Nordea. You completed some investments in Q2 related to the production process. Could you perhaps kind of explain the rationale behind these investments?

Patrick Campbell: Hi, it's Patrik Cilliacus from Nordea. You completed some investments in Q2 related to the production process. Could you perhaps kind of explain the rationale behind these investments?

Speaker #1: Well, I think the Q2 investments, it's in a way threefold. We have a production investment, so a little bit for improved capacity and also, let's say, quality and automation.

Hannu Martola: Well, I think the Q2 investments, it's in a way threefold. We have production investments a little bit for improved capacity and also the, let's say, quality and automation. We have investments for long-term R&D.

Speaker #1: And then we have investments for long-term R&D.

Speaker #3: All right, thank you. And just looking ahead, will further similar investments be needed in H2? And if so, what kind of size are we talking about for these investments?

Patrik Cilliacus: All right. Thank you. Looking ahead, will further similar investments going to be needed in H2? If so, what is kind of the size of these investments?

Patrick Campbell: All right. Thank you. Looking ahead, will further similar investments going to be needed in H2? If so, what is kind of the size of these investments?

Speaker #1: Probably, the long-term R&D investments are not something that are with us every quarter, so we will see that coming down. The production capacity needs to be seen.

Hannu Martola: Probably the long-term R&D investments are not something that are with us every quarter. We will see that coming down. The production capacity needs to be seen. Compared to our revenues and on the investments, the production are fairly small.

Speaker #1: We have—I mean, compared to our revenues and so on—the investments to production are fairly small.

Speaker #3: All right, thank you. And then maybe on component availability, which you've mentioned earlier, and now you continue to grow inventories. So what kind of cost increases have you seen on the component side, and what is being done to mitigate the impact?

Patrik Cilliacus: All right. Thank you. Then maybe on component availability, which you've mentioned earlier, and now you continue to grow inventories. What kind of cost increases have you seen on the component side, and what is being done to mitigate the impact?

Patrick Campbell: All right. Thank you. Then maybe on component availability, which you've mentioned earlier, and now you continue to grow inventories. What kind of cost increases have you seen on the component side, and what is being done to mitigate the impact?

Speaker #1: I think if we look at our P&L, you don't see very much of the impact from cost increases. There's a little bit of cost increase there, but we have been able to mitigate those by taking more value added in scintillator pixelation.

Hannu Martola: I think if we look our P&L, you don't see very much the impact in the cost increases. There's a little bit cost increase there, but we have been able to mitigate those with taking more value-added in scintillator pixelation, and that's relating to the investments also to Wuxi sort of production and factory.

Speaker #1: And that's relating to the investments also to FUGSI—FUGSI's sort of production and factory.

Speaker #3: All right, thank you. And then maybe just another one on margins. So, obviously, the weight of medical sales has increased quite a bit, and now we're going into H2.

Patrik Cilliacus: All right, thank you. Then maybe just another one on margins. Obviously the weight of medical sales has increased quite a bit, and now we're going into H2. How should we think about the margin levels towards the end of the year? Should we think about a similar sequential pickup despite the higher medical sales, or should we think about lower underlying margins as a whole?

Patrick Campbell: All right, thank you. Then maybe just another one on margins. Obviously the weight of medical sales has increased quite a bit, and now we're going into H2. How should we think about the margin levels towards the end of the year? Should we think about a similar sequential pickup despite the higher medical sales, or should we think about lower underlying margins as a whole?

Speaker #3: So how should we kind of think about the margin levels towards the end of the year? Should we kind of think about a similar sequential pickup despite the higher medical sales or should we think about lower underlying margins as a whole?

Speaker #1: Probably the mix gets a little bit less medical heavy overall if we look from a margin perspective.

Hannu Martola: Probably the mix a little bit gets less medical-heavy overall if we look from margin perspective.

Speaker #3: All right, thank you.

Patrik Cilliacus: All right. Thank you.

Patrick Campbell: All right. Thank you.

[Analyst] (Inderes): Hi, this is Juha from Inderes. Another question about margins. I'm just wondering about the TFT flat panels as they are the growth driver for the future also, I suppose. Now 20% of the sales were coming outside of China, if I understood correctly. How much the margins are better there, and overall, how is the margin profile? Is it somewhere around the middle of DT's offering or I'm just wondering how is the mix going to change when the TFT panels are growing faster than the other sales?

Juha Kinnunen: Hi, this is Juha from Inderes. Another question about margins. I'm just wondering about the TFT flat panels as they are the growth driver for the future also, I suppose. Now 20% of the sales were coming outside of China, if I understood correctly. How much the margins are better there, and overall, how is the margin profile? Is it somewhere around the middle of DT's offering or I'm just wondering how is the mix going to change when the TFT panels are growing faster than the other sales?

Speaker #4: Hi, this is Yua from Inderes. Another question about margins. I’m just wondering about the TFT flat panels, as they are the growth driver for the future also, I suppose.

Speaker #4: Now, 20% of the sales are coming from outside of China, if I understood correctly. How much better are the margins there, and overall, how is the margin profile?

Speaker #4: Is it somewhere around the middle of DD's offering, or—I'm just wondering—how is the mix going to change when the TFT panels are growing faster than the other sales?

Speaker #1: I think the TFT, if we look at the TFT margin, first of all, we believe they will be improving overall. But I mean, if we look then on application, it probably behaves a little bit similar to our other business.

Hannu Martola: I think if we look the TFT margin, first of all, we believe they will be improving overall, but if we look then on application, it probably behaves a little bit similar than our other business. It's also pending very much on volumes. I mean, somebody buying a lot, there's different type of contracts than somebody who's just buying a little. If we then think of, let's say, application, for example, for weapons, for defense, these products are under quite a lot of stress because of radiation. These need to be replaced even every eight months. We will see a little bit like consumable type of behavior for that business.

Speaker #1: So, it's also depending very much on volumes. I mean, somebody buying a lot, there are different types of contracts, and for somebody who's just buying a little.

Speaker #1: If we then think of, let's say, applications, for example, for weapons for defense, these products are under quite a lot of stress because of radiation.

Speaker #1: These need to be replaced even every eight months, so we will see a little bit of a consumable-type behavior for that business.

[Analyst] (Inderes): Well, this is actually another question that I was wondering about. The defense opportunity seems pretty clear. Like you said, there's going to be a lot of quantity coming and you are in a good position. Could you quantify a little bit what kind of amount of sales it could be if you succeeded very well in the coming years?

Juha Kinnunen: Well, this is actually another question that I was wondering about. The defense opportunity seems pretty clear. Like you said, there's going to be a lot of quantity coming and you are in a good position. Could you quantify a little bit what kind of amount of sales it could be if you succeeded very well in the coming years?

Speaker #4: Well, this is actually another question that I was wondering about. The defense opportunity seems pretty clear. And like you said, there's going to be a lot of quantity coming, and you are in a good position.

Speaker #4: Could you quantify a little bit what kind of amount of sales it could be if you succeeded very well in the coming years?

Speaker #1: It's we what we intend to have is double digit, double digit growth in that area. How well then the plans realize is a little bit challenging to give any exact number there except that I can say that there's a lot of testing being done at current in both in US and in Europe for our sort of DT TFT enabled equipment.

Hannu Martola: What we intend to have is double-digit growth in that area. How well then the plans realize it's a little bit challenging to give any exact number there except that I can say that there's a lot of testing being done at current in both in US and in Europe for our sort of DT TFT-enabled equipment.

Speaker #4: All right, maybe a similar question about India, because now you have made some deliveries from there. You have new capabilities or, let's say, government approval for medical, if I understood correctly.

[Analyst] (Inderes): All right. Maybe a similar question about India because now you have made some deliveries from there. You have new capabilities or let's say government approval for medical, if I understood correctly. Could you quantify a little bit how you expect to grow your sales from India?

Juha Kinnunen: All right. Maybe a similar question about India because now you have made some deliveries from there. You have new capabilities or let's say government approval for medical, if I understood correctly. Could you quantify a little bit how you expect to grow your sales from India?

Speaker #4: Could you quantify a little bit how you expect to grow your sales from India?

Speaker #1: Yeah, India is, I think, India is, from our point of view, very nice. I mean, we see opportunities for medical, both for CT later on.

Hannu Martola: Yeah, I think India from our point of view is very nice. We see opportunities for medical, both for CT later on. By the way, there is not CT machines equipment made very, very little volumes today. Also especially TFT, which India is already a sizable market for TFT for medical. We see opportunities for security. India still is in the process of making more than 100 new airports, so that's a big need for all kinds of aviation products. We see opportunities in India for cargo. India has 7,500 kilometers of shoreline, as an example, very undeveloped harbor infrastructure, so that's good opportunity for harbor. India needs to invest into high-speed trains, into trains, and that's also yielding into cargo inspection as harbors. Then altogether it should be quite nice and balanced portfolio. Medical, security, industrial, even the battery, and so on.

Speaker #1: By the way, there are not CT machines’ equipment made in very, very little volumes today. But also, especially TFT, where India is already a sizable market for TFT for medical.

Speaker #1: We see opportunities for security. India is still in the process of building more than 100 new airports, so that's a big need for all kinds of aviation products.

Speaker #1: We see opportunities in India for cargo. India has 7,500 kilometers of shoreline, as an example. Very undeveloped harbor infrastructure, so that's a good opportunity for harbors.

Speaker #1: India needs to invest in high-speed trains, into trains, and that's also yielding into cargo inspection at harbors. And then altogether, it should be quite a nice and balanced portfolio.

Speaker #1: Medical, security, industrial—even the battery, and so on. India basically has to be able to create internal competence and production for all key technologies.

Hannu Martola: India basically has to be able to create internal competence and production for all key technologies. That is battery storages, that is medical, dental, CT, et cetera. A lot of opportunities. The challenge for India is the money. How much and how fast can they invest into this infrastructure to be able to develop the economy up?

Speaker #1: And that is battery, battery storages. That's medical, dental, CT, et cetera. So a lot of opportunities. Of course, the challenge for India is then the money.

Speaker #1: How much, and how fast, can they invest into this infrastructure to be able to develop the economy up?

Speaker #4: All right, understood that it's a massive opportunity, but you don't want to kick anything to the future. Last question from me is about the cash flows.

[Analyst] (Inderes): All right. Understood that it is a massive opportunity, you don't want to guide anything to the future. Last question from me is about the cash flows. My colleague already asked a little bit about this. I just wanted to understand, do you still need to raise the inventory levels in H2, or are we now in the level where you feel comfortable even though the situation in the component market is tight?

Juha Kinnunen: All right. Understood that it is a massive opportunity, you don't want to guide anything to the future. Last question from me is about the cash flows. My colleague already asked a little bit about this. I just wanted to understand, do you still need to raise the inventory levels in H2, or are we now in the level where you feel comfortable even though the situation in the component market is tight?

Speaker #4: I think my colleague already asked a little bit about this, but I just wanted to kind of understand: do you still need to raise the inventory levels in the second half of the year, or are we now at a level where you feel comfortable, even though the situation in the component market is tight?

Speaker #1: Yeah, I think on a big scale we are starting to be sort of at the peak. I mean, of course, there can be small ups or downs and so on, but I mean it's—and then next year we should be starting to see some melting of the inventory.

Hannu Martola: In big scale, we start to be at the peak. There can be small ups or downs and so on. Next year we should be starting to see some melting of the inventory.

Speaker #4: All right, thanks.

[Analyst] (Inderes): All right. Thanks.

Juha Kinnunen: All right. Thanks.

Speaker #2: Thank you, Yua. Let's take some online questions. So, how much of TFT sales is coming from outside industrial?

[Company Representative] (Detection Technology): Thank you, Juha. Let's take some online questions. How much TFT sales is coming from outside industrial?

Speaker #1: Oh, TFT sales outside. So the question is how much TFT sales is coming from outside industrial? That's a pretty good question. It's not very sizable because we've just started some, let's say, first deliveries for medical.

Hannu Martola: Oh, TFT sales outside. The question is how much TFT sales is coming from outside industrial. That's a pretty good question. It's not very sizable because we've just started some first deliveries for medical. Basically, TFT, I would bet, and now it's just my guesstimate, it's like 90% is industrial so far. It started with industrial. We're working a lot with EV companies and battery inspection, some electronics companies. We might see in future also some security deals there. Let's see. The big thing is getting, and this is more long-term, getting the medical and dental markets opened for DT outside of China, Europe and US.

Speaker #1: So, basically, TFT—I would bet, and now it's just my guesstimate—it's like 90% is industrial so far. It started with industrial. We're working a lot with EV companies and battery inspection, some electronics companies.

Speaker #1: And we might see, in the future, also some security deals there. Let's see. The big thing is getting—and this is more long-term—getting the medical and dental markets opened for DT outside of China.

Speaker #1: So Europe and US.

Speaker #2: Thank you. How do you plan to improve profitability during the second half, given that the product mix is something that you cannot directly impact?

[Company Representative] (Detection Technology): Thank you. How do you plan to improve profitability during the H2, given that the product mix is something that you cannot directly impact?

Speaker #1: Yeah, well, first I think the product mix can be improved a little bit as a mix. But then we need to improve, increase the top line.

Hannu Martola: Yeah, well, first I think the product mix can a little bit improve as a mix, we need to improve, increase the top line.

Speaker #2: Thank you. Do you expect a change in your sales mix in the second half?

[Company Representative] (Detection Technology): Thank you. Do you expect a change in your sales mix in the second half?

Speaker #1: Not very much. Well, like I said, probably the sales mix is a little bit better from the point of view of margins. But, I mean, not very much.

Hannu Martola: Not very much. Well, like I said that probably the sales mix is a little bit better from point of view of margins, but not very much.

Speaker #2: Thank you. That's all.

[Company Representative] (Detection Technology): Thank you. That's all.

Hannu Martola: Thank you. Well, I think we are finished. I thank you very much and wish you a great day. Thank you for watching.

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