Fingerprint Cards AB

Interim Report January – June 2020

Highlights of the quarter

• The demand for Fingerprints’ sensors remained healthy, but sales were negatively impacted by continued insufficient access to production capacity among the major semiconductor manufacturers.
• Fingerprints expanded its product portfolio in physical and logical access control.
• Fingerprints’ iris recognition technology was implemented at a South Korean hospital.
  
  

Second quarter of 2020

• Revenues amounted to SEK 282.3 M (381.8)
• The gross margin was 21 percent (22)
• EBITDA totaled SEK 6.7 M (44.0)
• The operating result was negative SEK 16.7 M (pos: 6.2)
• Earnings per share before dilution were negative SEK 0.07 (pos: 0.01)
• Cash flow from operating activities amounted to SEK 81.3 M (179.6)

January-June 2020

• Revenues amounted to SEK 592.3 M (724.7)
• The gross margin was 23 percent (22)
• EBITDA totaled SEK 18.3 M (79.8)
• The operating result was negative SEK 34.4 M (pos: 4.3)
• Earnings per share before dilution were negative SEK 0.08 (0.00)
• Cash flow from operating activities amounted to SEK 43.5 M (18.5)

CEO’s comments

As expected and communicated earlier, sales in the second quarter were negatively impacted by continued insufficient access to production capacity among the major semiconductor manufacturers. The geopolitical situation has led to increased domestic demand for silicon chips from Chinese smartphone manufacturers, which means that there is a production capacity deficit. At the same time, demand for our sensors remained healthy, despite declining deliveries of smartphones in China during May and June. The proportion of mobile phones with fingerprint sensors has continued to increase. In the mid-price segment, nearly all models sold have a fingerprint sensor and the penetration rate in the low-price segment continues to develop positively.

The gross margin was a percentage point lower than in the corresponding period in 2019, primarily due to higher purchase prices, and the earnings level is not satisfactory. At the same time, it is gratifying that cash flow from operating activities was strong during the quarter. We have continuously improved our inventory management and generally improved working capital.

We expect that the outbreak of the coronavirus will dampen the demand for smartphones for the remainder of the year. Consumers are waiting ever longer to replace their devices and, accordingly, the replacement cycle for mobile phones is expected to be of record-breaking length this year. This means that the global smartphone market could shrink by 10–20 percent in 2020.