I-Tech AB (publ) (ticker: ITECH) publish the Year-end report for 2023

Watch I-Tech´s CEO. Philip Chaabane present the report on the 8th of February at 10:30 (CET): Here
Read the full report here: Financial Reports – I-Tech AB

Summary of the period
“Convincing full-year results with a strong increase in profit and sales”

Net sales during the fourth quarter amounted SEK 25,273 k (30,222) which corresponds to a decrease in sales of -16% (156) compared to the same quarter in 2022. The operating profit amounted SEK -479 k (5,420).

Net sales for the full year 2023 amounted to SEK 120,861 k (83,631) corresponding to a an increase in sales of 45% (58) compared to the full year 2022. The operating profit amounted to SEK 23,388 k (12,024).

Significant events January to December 2023

  • I-Tech increases its turnover in Korea by 147% during first half of the year.
  • An expert panel proposes changed classification of Selektope in the EU.
  • I-Tech held its Annual General Meeting (AGM) in May. At the meeting it was decided to re-elect all representatives of the board with exception of Bjarne Sandberg who declined to be re-elected in advance of the meeting.
  • In conjunction with the AGM, it was decided to approve a long-term incentive program for the management and employees. Due to a significant change in market value, no employee signed up to the program which was consequently terminated.
  • I-Tech signs a license agreement with major customer with initial focus on the North-east Asian market.
  • The company adopted a dividend policy and the board proposes an ordinary dividend of SEK 0.75 per share and an extra dividend of SEK 0.75 per share, in total SEK 1.5 per share, corresponding to 88% of the net profit for the year.

Significant events after the end of the period

  • Philip Chaabane announces that he will resign as CEO in connection with the Annual General Meeting.
  • The Nomination Committee announces that it will propose Philip Chaabane as new Chairman of the Board at the Annual General Meeting and that the company’s major shareholders support this.

Financial summary

All amounts in SEK k 2023 Oct-Dec 2022 Oct-Dec 2023 Jan-Dec 2022 Jan-Dec
Net sales 25,273 30,222 120,861 83,631
Operating result -479 5,420 23,388 12,024
EBITDA 1,542 7,652 31,370 20,045
Net result -373 4,356 20,202 10,617
Operating cash flow -774 4,292 35,143 20,125
Equity at end of period 136,237 116,035 136,237 116,035
Cash and cash equivalents at end of period 83,262 52,754 83,262 52,754

CEO Comments

2023 marks a record year in many ways. The financial performance was very solid where operating profit increased by 95% and sales by 45% compared to 2022. In 2023, we also signed a license agreement with a major new customer that will eventually strengthen the business in the dominant Asian market. This is yet another sign that products containing Selektope benefit greatly from a clear shift in the market towards higher and more reliable performance against marine fouling.

During the closing months of the year, increased temporary costs were incurred for pilot projects aimed at verifying the efficiency potential of the manufacturing process. The quarter was further characterized by non-recurring costs linked to the regulatory process in the EU. In addition, sales slowed down in the final months of the year. There is no direct link to a specific event, but it´s likely derived by year-end inventory optimization at customers.

At the same time, we note that our largest customer, Chugoku Marine Paints, is growing its business within marine coatings with increasing profitability.

In summary, our turnover amounted to SEK 120.9 m (83.6) and the operating profit to SEK 23.4 m (12.0) for the full year 2023, while the corresponding figures for the fourth quarter show a temporary headwind. The turnover for the quarter amounted to SEK 25.3 m (30.2) and the operating profit amounted to SEK -0,7 m (5,4).

The fact that business has grown so strongly over the year shows that the products that have been established on the market over the past two years have been very well received. Two customers in particular are contributing to the growth, one of which is our regular and largest customer, Chugoku Marine Paints. Their broad portfolio of products containing Selektope means that they can today offer solutions for most types of ships. During the year, our second largest customer has also broadened its sales of Selektope products in more geographical markets, but continues to be clearly focused on newbuilding projects. The majority of our revenue still comes from the newbuilding market, which initially will also be the focus segment for the new customer that recently signed a license agreement as part of the final commercial preparations.

Geographically, shipbuilding in Asia continues to dominate the industry and for I-Tech, Asia accounts for as much as 92% of sales in 2023. The distribution is mainly due to the fact that our largest customers have their home markets in the region. Another influencing factor is that the paint companies can register their new products significantly faster in Asia than in the EU, despite using the same ingredients, which are approved in both markets.

Although the implementation of stricter emission requirements in the marine sector may be slower than previously assumed, our assessment is that the strong transition we have seen in the antifouling industry will continue. In addition to the emission requirements, there are several other strong incentives for the transition – including increased fuel costs but also the increased risk of transferring invasive species between ecosystems, which are caused by ineffective antifouling products. In particular, the risk of the latter has led to a sharply increased interest in premium products, which today account for about half of the total sales of the 3-4 largest paint manufacturers. This is a big difference compared to just a few years ago and further strengthens my conviction that the years ahead will continue to benefit the development of our business.

Philip Chaabane
CEO I-Tech