Mycronic AB (publ)

STO:MYCR

Earnings Call Transcript 2020-Q4

[Tobias Bulow, Director Investor Relations]

Good morning, and warm welcome to Mycronic's fourth quarter 2020. My name is Tobias Bulow, and I'm heading Investor Relations. With me today here in Stockholm, I have Mycronic President and CEO, Anders Lindqvist; as well as our CFO, Torbjörn Wingårdh. [Operator Instructions] We will end at latest at 11:00. And for your information, this session will also be uploaded as on demand on the web. For this reason, we ask you to stick to English also during the Q&A. With that, I leave over to Anders.

[Anders Lindqvist, President & CEO]

So thank you very much. So I will, together with Torbjörn, our CFO, present the Q4 result and some other things. So starting with the agenda, and it's almost a standard agenda. There is a little bit change, which you might have seen. So first, I will talk about the quarter 4 and also the outlook for this year, 2021. What is new is that we will go deeper into the divisional development and the market view. As you know, we have changed the organization with a new structure into 4 divisions, and as from now, we will also report according to that new structure so you will have some more details about our performance. Torbjörn will go through the financial details, and I will end with some words on the platform we have for continuous growth. And then, as Tobias said, we have a question-and-answer session. So first, to tell you a little bit on what we actually are doing at Mycronic. We develop and sell products and solutions that make it possible for our customers, in their turn, to produce products for what we call the everyday life. And example of our customers' product could be switches that are used in data communication centers. It could be life-saving devices such as heart starters and pacemakers. It could be all kind of entertainment equipment and car safety equipment. So it's really supporting your everyday life, what our customers are doing. Then moving over to the quarter 4. And also, I will make some comments on the full year and on our outlook. So during the year, quite early, I think in April, we changed our structure, our operating model into a much more decentralized model. And it was quite good timing because that really helped us to manage the effects of the pandemic during the year. So we were able to manage our performance, our cost and also our local presence really to manage the effect of that one. So the diversified setup has supported in that. If we look on the financial development in the quarter, we saw an increase of the EBIT of 5%, up to a 22% margin. Sales decreased with 11%, and this is based on constant currency. And we had a quite sharp decline in orders of 49%. And the majority of the difference, you can also see, is a comparison to a very strong quarter in quarter 4 in 2019. We still have the target for what we call the Assembly Solutions. So that will be -- consist of the 3 divisions that were the Assembly Solutions. And there, we had an EBIT margin of 5%. And we're still confident and it's still our target that we should be at least at the level of 10% for 2021. So this is this year. Backlog of almost SEK 2 billion going into the year, which is quite good. And long term -- we see that the long-term market is robust. We see that the electronic industry are showing some good growth number going forward. Then we have the outlook. So our outlook for 2021 is SEK 3.9 billion. And I can imagine that, that looks flat because we have more or less the same result in 2020. And there are some reasons why we have chosen to have this outlook. One of them is currency. We have a headwind of -- from the currency. Just to compare the kind of the outlook currency versus the 2020 currency. It's more than SEK 200 million gap just of currency. Another factor is the backlog going into the year. When we went from 2019 into 2020, we had almost SEK 200 million more in the backlog, which is creating quite a gap. And then it's our time that we have between order and revenue. So we believe that 2021 will be a good year and [ visible ] of the order intake, and the time to revenue is in our business a little bit later. So with the currency headwind, with the lesser backlog, the time between order and revenue, that is how we have arrived at a number of SEK 3.9 billion. So with that, I will go into the different divisions. So starting with the Pattern Generators division, which are producing what we call mask writer equipment. The customer segment for this is the display industry, semiconductor industry, and we're also serving what we call the multi-purpose industry. The drivers for this market is very much technology driven. So it's new display applications, which could be larger display; more advanced displays, like the shift from LCD displays to AMOLED display; and higher resolution display. So all that is a driver for creating our market. And we are the global leader and the only supplier of mask writers for advanced photomask for the display industry. So if we look on the performance. So we introduced -- that was late in '19, but we introduced a new product some time ago, which is the SLX mask writer, which is aimed for the semiconductor industry. And we had a fantastic year. We had 4 orders in quarter 4, and for the full year, we have 8 orders. So that really confirms that we had a very good timing of the introduction of this product, and the product will hit the market with its features and benefits. Also, you can see that we had quite a few orders of display writers. And it's kind of -- there's normal very big deviations between quarters in this business. So you really need to look at this at a very long perspective. Sales for the quarter ended at SEK 385 million compared to SEK 405 million previous -- a year before; and for the full year, SEK 1.5 billion, about, which was a little bit higher in the year before. We have delivered the first SLX mask writer to a customer in Asia. We had also delivery of Prexision 8 Evo and one major upgrade. We also had one delay, and that is FPS 6100 that should have been delayed -- should have been shipped at the end of the quarter that has now moved into the first half of this year. And this is all due to the pandemic situation. Currency effect has quite a big impact in the quarter with SEK 16 million and the full year with an impact of SEK 39 million. EBIT up 14% in the quarter and on the full year decreased 18%, and the margin was 48% for the quarter and 54% for the year. Backlog is good. We have 11 systems to deliver in 2021, and we have 2 systems on order that is for delivery in 2022. The pandemic situation has increased the time line uncertainty -- or it is uncertain. And it's mainly due to logistical challenges due to traveling, customers coming to our factory for signing of the machine and so on, which we are always working around and find different solutions for. On the High Flex division -- so what we do in the High Flex division is that we develop and sell very flexible full-line solutions, consisting of different type of technology, pick-and-place machinery, solder jet -- solder paste jet printers, inspection equipment, storage and material handling equipment. The market drivers is really here -- and the market is really the high-flex market -- high-flex, low-volume market, where just-in-time production, automation, yield and cost efficiency and so on are really the drivers for that. And here, we have a leading position in this High Flex segment with the low and medium volumes. Performance, so you saw almost a U-shaped year. We have had a quite low activity level from April to August, and we have seen an increased market activity from that low level in the quarter. So we have seen that investments that have been on hold start to materialize. We have seen examples of large orders in Western Europe and the United States. The uncertainty is still there, and it's an increase from a low level. The sales decreased in the quarter with 23% and -- 21% in the quarter and 23% for the full year. And also here, in this division, we have a very challenging comparison with a very strong quarter 4 in 2019. Currency is also affecting this division. And in the quarter, we had a SEK 24 million effect of that, which is the same for the full year. A decline in EBIT of 25% in the quarter and 65% for the full year. Margin was 8% in the quarter and 3%. And order intake had more or less the same decrease with 25% in quarter 4 and for the full year 2020. Moving over to the High Volume division. So what we do here is we're selling into the high-volume market segment in the electronics industry. And the high-volume segment is mainly consumer electronics. Such as -- mobile phone is a big application or a large segment in this market. The market drivers as well here are automation, cost effectiveness and the need for robust electronics. The main application that we have here is dispensing equipment into this segment. The high-volume segment is large in China, and we have a leading position in China with this technology. And we are #4 globally in this technology. If we look on the performance of High Volume, we had a very strong ending of the year 2020. We had -- majority of our sales is in China, and our position in China has improved and strengthened during the year, have a stable and healthy market. We had a dip, of course, during the pandemic situation that was quite early in China and the full close down in February last year. But since then, we have seen a great recovery of the market. We are also growing outside China in -- with orders. And as I said, the COVID-19 impact has been limited for the full year. For the quarter, we had a sales increase of 8% and for the full year, very strong 4% to 6% increase of orders -- of sales. Currency effect is SEK 9 million in the quarter and for the full year SEK 22 million negatively. EBIT improved in the quarter with 3%, and for the full year, we had a 75% increase of EBIT. So the margin in the quarter was 15% and 21% for the full year. Order intake, also here, we had a very challenging comparison. We have a challenging comparison with quarter 4 2019. So the order intake saw a decrease of 33% in the quarter, and for the full year, we had a 6% increase. Moving over to the last one, Global Technologies. Here, we have 2 lines of business. And one is die bonding, which is a high-precision placement technology; and camera module assembly, which is mainly for the automotive market, assembly and alignment of active cameras for the automotive market, these 2 lines of business. The market drivers is -- for the die bonding is really the data center applications, everything that has to do with data communication. And the 5G rollout really supports this market in a strong way. For the camera module assembly side of the -- line of the business, the driver here is the in-car, advanced cameras for automotive. And we have a leading position in both of these businesses. If you look at the performance, we have a very mixed development. What we call optoelectronics, and this is the die bonding or the -- die bonding market or the die bonding technology supports, data communications and so on. We have seen strong -- very strong performance, and this is driven by the increased number of data centers in communication and also the increased need of high-speed communication. Chinese market has been a little bit slower. We had very high levels earlier, and we've seen that going down. And it's quite a lot driven by an accumulation of inventory. And that combination of inventory was because of the belief in an increased uncertainty because of the U.S.-China trade wars. The other line of business, camera module assembly, has seen an automotive industry that has been extremely affected by the pandemic situation and already was in decline before that. And here, we have seen a much -- a quite low activity and less good performance. So there's really this mixed development inside this division. And the summary of that is that the sales declined with 46% in the quarter and with 16% for the full year. Currency effect is negative in the quarter with SEK 11 million, and it's the same currency effect for the full year. EBIT was minus SEK 8 million in quarter 4 and minus SEK 87 million; and margin, minus 9% and minus 21%. And here, you may remember that in the quarter 3, we had a write-down of intangibles that has quite some effect on the full year EBIT. Order intake decreased with 52% in the quarter and 27% in the full year. So coming over to long-term performance. So I already said on the first page, I think, that our outlook for this year is SEK 3.9 billion. We still see very positive on the year. And that positive attitude also is the reason why we confirm our target of SEK 5 billion by late 2023. No change on the other financial targets. We still want to be above 15% EBIT margin over a business cycle. The Assembly Solutions business area, we want to be at or preferably above 10% for this year. And Pattern Generators should continue on a healthy level as it does. Capital structure, net debt should not be higher than 3x average EBITDA, and that is calculated over 3 years. All right. So that was that part. Now I hand over to Torbjörn to present the financials a little bit more in depth.

[Torbjörn Wingårdh, Chief Financial Officer]

Thank you very much, Anders. So please, if we look at our order intake and revenue slide. So we entered the year of 2021 with a robust order backlog. We had an order intake decrease in quarter 4 with 49% to SEK 865 million. We had a strong order intake from Pattern Generators with 4 SLX systems and 1 Prexision Lite 8 Evo while in Assembly Solutions, the decrease was 34%. So we've seen in terms of Pattern Generators, it was a good number of systems coming in even though the value was lower than the corresponding quarter in previous year. Just like Anders said, we entered 2021 with a strong order backlog at almost SEK 2 billion, which was a little bit above SEK 2 billion in corresponding time last year. In terms of Assembly Solutions, there was a slight increase in the order backlog while for Pattern Generators, the decrease was to SEK 1.156 billion, which is approximately SEK 200 million less, which Anders also mentioned was a difference in backlog going into this year. For quarter 1 2021, we have 3 mask writers scheduled for delivery. And if you look at the rolling 12 number, the group is at SEK 3.7 billion. And we are ready to go into the next slide, please. So looking at the next slide, we see the net sales, where we had a decrease of 16% to a little bit less than SEK 1 billion. The decrease in constant currency was 11%. So that decrease was less. We had within Assembly Solutions a mixed performance, which lead to a 22% decrease to approximately SEK 600 million. And for Pattern Generators, the decrease was 5% to SEK 385 million. And in connection with that, we think it's important to point out that a scheduled FPS6 100 delivery has been moved into first half of 2021 connected to circumstances during the pandemic, which complicates this aspect. We also note that in quarter 4, the first SLX was delivered, which we consider to be a very important event. We also delivered a Prexision 8 Evo and also a major upgrade. Currency effect has had a negative impact of SEK 60 million. And if we look at the rolling 12-month net sales, we are at SEK 3.9 billion. So we are then ready to look at the next slide, please. In terms of margin development, we are very happy about the good levels that we continue to be at. And in quarter 4, gross margin actually strengthened to a little bit more than 52% compared to a little bit more of 49% in the corresponding period previous year. At Assembly Solutions, we had a slightly lower margin. And at Pattern Generators, we had a stronger margin at 73.5%. The Assembly Solutions gross margin continue to be close to 40%, which is good. In terms of EBIT margin, we had a strengthening from 17.2% up to 21.5%. And Assembly Solutions performed at 4.6%, slightly lower than the previous year. And in terms of Assembly Solutions, Anders reiterated the target level for 2021 being about 10%. We will also present the corresponding number for underlying, which is taking away the acquisition-related costs, and that was 5.6%, also a little bit lower than corresponding period last year. Pattern Generators continue at the strong level of 48.5% EBIT margin. And here, we have benefited from a favorable product mix. We're ready to look at the next slide, please. So in terms of investing for the future, our R&D for innovation and growth was lower in quarter 4 compared to the corresponding period last year. In this, we had full year capitalizations of SEK 85 million, and there was also amortization and impairment of SEK 37 million relating to the full year. Our level of R&D cost to sales ratio was at 13.2%, which is basically the same level as it was during the corresponding period last year. We're ready to switch to the next slide, please. And we are, of course, very satisfied of ending the year with a very strong cash position, and it is more than SEK 1.3 billion. And for the full year change in working capital, that is mainly explained by advances from customers. And in terms of financing activities, this includes, of course, the dividend to shareholders of almost SEK 200 million. And I think it's important, then again, to mention our very strong balance sheet and also our readiness to pursue growth in the future. And that, of course, includes, as we have said many times before, activities within M&A. And with that, I would like to give the word back to Anders Lindqvist.

[Anders Lindqvist, President & CEO]

Okay. Thank you very much, Torbjörn. And I think we have now a very strong platform to grow further in this business. We implemented the new operating model during last year here, already seeing effects of that with a scalable structure, with a new organization in place, where we have a decentralized way of working with clear leadership and accountability for managing performance throughout the different divisions. On the product side, we have -- in all the segments that we are active in, we have a leading position or we are in the top layer of market leaders, and that's where we want to be. And so we continue to invest in the next-generation solutions all the time. Torbjörn just showed you that we have a very strong balance sheet. And in our growth strategy, there are M&A activities included. We haven't done an acquisition in quite some time, but we are constantly evaluating and scanning for opportunities. And now with the support of the divisional structure, we also have a very clear target profile on what technology, what markets and what areas do we want to find those companies and targets to grow with. We have also increased, because of change and the other things, our market and customer focus. I would say that we have customer obsession in the organization. And what we're doing and our view on the market remains intact. So we reconfirm -- or we confirm our long-term financial outlook. All right. So that was the end of the presentation. So I hand over to Tobias.

[Tobias Bulow, Director Investor Relations]

Okay. Thank you, Anders and Torbjörn. With that, we conclude the presentation and move over to the Q&A session. So operator, please go ahead.

[Operator]

[Operator Instructions] And our first question comes from the line of Daniel Djurberg of Handelsbanken.

[Daniel Djurberg, Research Analyst]

I was -- first question would be on your AS margin target for '21 despite you have a quite hefty currency headwind currently at least. Can you give us the key triggers for you to meet this target 10% or above? And my second question would be on -- yes, why not, component shortage. We've seen component shortage in many segments, automotive, ICTs, that a lot of companies are talking about. Have you seen any impact on your business or customers? And will this impact you negatively in '21, you think?

[Anders Lindqvist, President & CEO]

All right. So I can -- Anders here. I can answer on the -- on both of them, I think. So on the Assembly Solutions target, so yes, first of all, when we set the target of 10%, remember I said that we don't need an increase in revenue to reach this target. This is all done by efficiency measures in the organization, and the efficiency measures were very much around how we spend our OpEx. So it was R&D efficiency, sales efficiency, margin expansion and so on. Now we have seen that the revenue had declined quite a lot, but we still maintain the margin. So it's clear that we have implemented a lot of efficiency measures as we can keep having drops in the market significantly, and the leverage that we have created and the scalability in that organization is really good right now. So that's why we believe that we have a good position to reach this target. But the efficiency measures or what we have done is really to work with R&D efficiency, sales efficiency and cost efficiency on all places without jeopardizing anything on our innovation capability and -- or our customer coverage or anything else like that. So...

[Daniel Djurberg, Research Analyst]

Would you say the current pipeline could [ achieve ] this target, I guess? The volume...

[Anders Lindqvist, President & CEO]

Yes, that's correct. On the component shortage, so this is interesting because it's -- it can have an impact both ways, in a way. So the component shortage is very much because of stocking in the supply chain and inventory buildup, especially on the IC, the semiconductor part of things. The shortage, of course, do that -- there is a lack of components especially for automotive industry and so on, so the production volumes are lower and that can, of course, affect us negatively. But our customers -- our direct customers are doing really good, and we believe that long term, this is a good thing if they make money and so on. However, we need to have a look, of course, on this inventory situation as this can create swings in the market when it equalizes.

[Operator]

Our next question comes from the line of Fredrik Lithell of Danske Bank.

[Fredrik Lithell, Senior Analyst]

I had 2 questions on the PG division. First, you are sort of talking about some time line uncertainties. If you could sort of maybe expand a little bit on that, if that has sort of a background on financials at your clients or if it's just COVID-19, it's difficult to travel, they want to visit you in order to calibrate before it is shipped and so on. Please elaborate a little bit on that one. And then on the drivers for PG, we've talked about that for many years now. But could you reflect on the latest a little bit on what you see and what you heard from CES? Even though it was digital, there was still a lot of presentations and trends on the panel side. So could you reflect on the drivers, what you feel are different or new or has changed?

[Anders Lindqvist, President & CEO]

Okay. Yes. So on the time line, so this is just to say that there is an uncertainty in the time line. It's not at all due to any technical side. It's -- on the supply side, we managed quite well. It's a little bit of lead time, the uncertainty, obviously, because of the transportation modes are -- there are less choices actually or less available. But that side, we managed very well. So I think all the machines that we have supplied -- or about to supply, we know that we can make them in time. So it's really more on the -- there is normally what we call a factory acceptance test before we deliver a machine, where the customers spend quite some time together with us, run the machines and verify that it will work in their environment as expected and so on. And we have, during the year, invented other ways of doing this with remote monitoring, virtual factory acceptance visits and so on. So I think we have managed the situation in a very good way. But it is more -- it takes more time to do it the other way. And some customers are -- want to do it this way and maybe some are less willing. So it's nothing to do with the customer situation on the finance side. It's nothing to do with our ability to build. But it's more around this kind of handover process that is more complicated but manageable. So we just want to flag for that uncertainty in that -- on that side. On the drivers, yes, yes, we had visitors there, but virtual visitors, I think. And I think that the trends that we have talked about are confirmed. We see larger screens coming. We see higher resolution screens coming in large sizes and so on. But I think maybe what's most interesting is foldable and curved and the shapes of screens, which hasn't -- that has also -- that's a positive driver for us as well. The curved screens require more advanced layers and so on. So that has a positive effect on our mask writers. And we also see -- and this is what we talked about a long time already, that we see displays in much more applications and also higher resolution displays. On the change from LCD to AMOLED, so right now, the LCD panel display manufacturers are doing extremely well. So the increase of displays have boomed during the year, very much from this working-from-home trend, and everyone needs now at least 2 or 3 computers because they have different workplaces and so on. So that's doing -- the production rates of the LCD is very high. And by that, the time or willingness to change over time with others, momentarily, is a little bit lower. So producers are very busy to produce and make money right now. So I think long term, this is positive. It's very good if the display industry makes money because that means that they will and can invest in new technology. So long term, I think this is positive for us.

[Fredrik Lithell, Senior Analyst]

Can I just add a question there on the variations? And just to be clear then so I'm not wrong, that the micro LEDs or the mini LEDs or OLEDs or AMOLED, the variations, they are basically the same in the bottom, and it's all -- they need you in every instance of whatever variation that is, right?

[Anders Lindqvist, President & CEO]

That's correct. And that's a good point because we can see more variations. I think we talked very much about AMOLED and micro LED, but we also see other technologies. And the more, the better for us actually. So that is...

[Operator]

Our next question comes from the line of Mikael Laséen of Carnegie.

[Mikael Laséen]

A follow-up on that question about PG uncertainties. Is that also a fact for order intake, that it takes longer to take in new orders, that the sales cycles are longer? Not only slowing handover process but also the order intake process might take longer, is that also the case?

[Anders Lindqvist, President & CEO]

I could imagine, because, of course, with no ability to meet and demonstrate, that should have an impact. But on that side, the customers in this have an extremely long horizon because we are 2 steps away from the display industry. So our customers are mask writer producers and in turn, their products are used in the display industry. And the investment logic for them is they need to think 5 years ahead. So they are far, far away from, hopefully, this temporary pandemic situation. So investment decisions and so on. But of course, the whole negotiation process, which is very much, in our case, a technical negotiation and demonstrating of the capabilities and so on, is more complicated. We haven't really seen that it has had a large impact. I think the variation we see now is quite natural despite that.

[Mikael Laséen]

Okay. Great. And the second question is about the new division reporting structure. We can see margin differences in the High Volume, High Flex and global tech segments. And some are at lower margins, and High Volume is quite profitable. Can you say something -- elaborate on the margin profile for these 3 divisions just to give us a backdrop on how they should perform? And maybe explain a bit how 2020 developed from a quarterly perspective. We only have 1 quarter and the full year.

[Anders Lindqvist, President & CEO]

Yes. And that's the only...

[Mikael Laséen]

Whether you see upside potential to improve significantly and have all segments possibly go to 10%, also global tech. More insight on that, please.

[Anders Lindqvist, President & CEO]

Right. So I think the different divisions have different ability to reach different levels because they are -- and that's also the reason why we made a split, to really give every division the best chance. So it's not really democratic target that is equally distributed over the divisions, but the total should be definitely above 10%. And the way -- the ability to reach that, we believe, is higher by creating this visibility, and the push for that -- and there are different recipes. So the only comparison we have is to that we have right now, and there will be more comparison, of course, as we go to the quarters coming in this year, of course. But as you can see, the High Volume division has a very good profitability. We are very happy with the 20 -- about 20% EBIT margin in that division. So there, we really look for increasing revenue. That will be the recipe for the success there, and we had very good growth in that business. The growth has been very much driven by the mobile phone market, which continue to grow. But our strategy is to expand into adjacent and other segments in the electronics industry there as well such as the semicon industry and especially the electrical vehicle side of automotive. So that's the expansion plan, with maintained profitability obviously, and also to expand outside China. So we are growing actually triple-digit rate, I think, outside China but from a low level. So there are opportunities to expand on that side as well. On the High Flex, this is a niche market, high flex and low volume. Aerospace, med tech, some automotive industrial applications are here, and we've seen recovery. This is where we have worked quite a lot with efficiency and scalability. So I think we really have good effects here. And here, we want to be about 10% and even higher. When we're at 10%, we will most likely put a target higher than that. On Global Technologies, here, we have this mix really, the good performance in the die bonding, which is driven by data communication centers and so on. And -- but on the other side of the business with the camera module assembly, this is -- we have several factors. We have the production rates in the automotive industry which has declined quite a lot. We have the adoption rate of number of advanced cameras in cars not increasing as the outlook was a few years ago. So here, we have some market headwind, I would say, we need to work, both with cost and market expansion. We have a very strong position in the market. So it's very much related to the market on that side. So altogether, that makes us comfortable to reach the above -- about 10%, but it's not 10% flat all over. So more margin -- sustained margin on the High Volume business with more revenue and about 10% in the HF and quite an improvement on the GT obviously.

[Operator]

Our next question comes from the line of Viktor Westman of Redeye.

[Viktor Westman, Analyst]

I wanted to touch on the headwinds in the automotive, in global technologies there. Can you say something -- how long the sales cycles are here? Because there is a rather large -- I mean large volumes down the road here from regulation, et cetera, in cameras in cars. But when does customer need to order your machinery to be able to deliver on this?

[Anders Lindqvist, President & CEO]

Yes. So the market is driven by volume. It's one key factor. And the other is technology, so the more advanced cameras. I mean there's a difference between a parking camera and a safety, pedestrian brake equipment -- camera and so on. And we are more targeted to the advanced side. So that's the adoption rate that is there. But right now, the volume is the biggest. And there is -- also, the utilization is, of course, a factor, when do customers need to invest in volume or in capacity improvement. And our customers is mainly the Tier 1 companies in the automotive industry. And I would say that 12 months ahead of start of production, they should have been -- there should be firm discussions on this kind of equipment about. And that's very -- it could differ very much between manufacturers and how far they are in their own kind of process and so on. But it's quite a lot of uniqueness in this business, especially on the advanced cameras. So it's rather long, the cycle here.

[Viktor Westman, Analyst]

Yes. I can imagine. And then a question on the optoelectronics. You mentioned that this was previously been driven a lot by the inventory buildup on the trade war. Can you say something -- how large the effect this had? And what -- anything about the normalized level here?

[Anders Lindqvist, President & CEO]

Yes. So we had -- we saw a lot of activity in the early of last year, and that was customers being a little bit uncertain where the trade war would be going so they ordered machinery. Now it's more normalized, and I think the visibility is better on that. So it's difficult to have an idea, opinion on how -- which way that will turn going forward. But I think right now, we have a more normalized market level and also more comfort, I think, around customers to know what they can invest in and what they cannot invest in. The trade war had, had not really a material impact on our business so far. So if change not -- if things don't change, I think this is as it is right now. But there is, of course, a positive driver. The 5G rollout is only in its beginning, and then the consequential effect of the 5G. Which means that -- because the 5G data center -- is connected to data center, this is a direct effect, of course. But then all the other applications that will be possible or enabled by the 5G technology will, in turn, also require data communication. And so I think there will be a secondary effect here. So we believe that this market will be good.

[Viktor Westman, Analyst]

Yes, that's a great point. And just to follow up quickly, to clarify there. Is that hyperscale data centers or any kind of data centers?

[Anders Lindqvist, President & CEO]

Sorry, can you explain what that is?

[Viktor Westman, Analyst]

I mean they're really, really big data centers with lots of servers from the FANG companies, the world's largest tech companies. Are those the kind of data centers you're referring to?

[Anders Lindqvist, President & CEO]

Yes, that's one part, and that's very big. What I referred to, so secondary effect that the computing will be done closer to the applications or on the close distance of applications and -- but not in the application. If you take self-driving cars, it might be that the intelligence is not in the car but in a device close along the road or anything like that. And that will require communication and so on. So our benefit is mainly on the high-speed communications side. When the speed increases, that's where we see a need of our equipment.

[Operator]

Our next question comes from the line of Daniel Djurberg of Handelsbanken.

[Daniel Djurberg, Research Analyst]

I have 2 more questions, if I may. The first one would be on the PG side. And we are talking about the triggers, the AMOLED and curved screens and different sizes. And then we see a lot of new use cases for displays and so on. But on the multipurpose side, I think you took your last and perhaps only FPS8100 order in December '18. So I was wondering what has happened since. Is it like internal competition with the other machines, Prexision Lite? And I also note, of course, that you have this FPS 6100 to be delivered. But a little bit -- I had expected some more of these multipurpose machines given the more use cases. So is that yet to be seen? That's the first question.

[Anders Lindqvist, President & CEO]

All right. So we don't see a difference in demand -- so there's no overlap between the technology. So they cannot do the same -- or they can do the same, but that will be an overkill to buy a Prexision machine for a multipurpose use by far. If you just look on the price points, they are extremely different. And the SLX also is very different. So there should not be any logical overlap or cannibalization internally on our range. So on the multipurpose segment, we -- I mean, we have -- on the display side, we are the only supplier to the advanced photomask. On the SLX side, we're by far the best supplier into the semicon industry for laser writers and so on. But on the multi-purpose -- and on the multipurpose, we have more competition. We haven't seen that we have lost more orders than normal, I would say. So I think it's -- there's no really performance explanation on the -- if you see the fewer orders and so on. So it's just how the market is working right now.

[Daniel Djurberg, Research Analyst]

And I guess you focus more on selling Prexision and perhaps SLX as well rather than -- or is it I cannot be incentivized saying that it's -- selling Prexision...

[Anders Lindqvist, President & CEO]

So we're happy to sell any kind of machine, of course. And there's no -- we haven't really -- we haven't come to a situation where we need to choose where to put focus on yet. But if we would, I think you're right in your priorities there if you look at...

[Daniel Djurberg, Research Analyst]

Okay. Another question, if I may, and that would be on SLX. You delivered a machine in quarter and so on. Can you comment a bit on the aftermarket, if it differs to the PG side -- or to the Prexision side, if it's similar -- or also the display side, I should say, if it's similar?

[Anders Lindqvist, President & CEO]

So if you say potential versus price of a system, it's similar or the relative value of the aftermarket will be same. But of course, the installed base has to be built up first. So there's a delay, of course, time-wise in that. But over a lot of years, of course the revenue potential is in -- it's not more, but it's, I would say, in the range of being very close to the same. So the need of aftermarket -- I mean the -- you can say the importance of uptime is at least as high as in the display industry of such machinery.

[Operator]

Our next question comes from the line of Fredrik Lithell of Danske Bank.

[Fredrik Lithell, Senior Analyst]

I have a question on SLX. You have had great success on that line of product. Do you -- can you see -- are you evaluating variations of the SLX in any odd way that I can't really come to think about? But can you sort of create -- do you see that you can increase your total addressable market by saying, "All right, we are selling the SLX to this specific solution today. But if we tweak it like this, we have an adjacent small niche market that we can also address and thereby, building out the scope of this machine?" That's -- if you could expand on that. And then also for Torbjörn then. You had a negative SEK 31 million in the P&L, other income/expenses. Is that purely sort of revaluation FX effects from assets and liabilities? Or is it anything else in there?

[Anders Lindqvist, President & CEO]

Okay. So yes, commenting on the SLX. And of course, we are looking for what's beyond that. So the SLX itself, what we have launched now is already a series of variants, and -- which will cover quite a lot of the laser-written applications in semiconductor. The expansion as I see it will be within the same application in semiconductor but possibly taking a larger share of that -- of those applications and so on. And the laser technology has some limitations. And half the limitation is electro beam technology, and there is no laser that we want to go into that technology. But even within the laser-driven applications, there could be expansion opportunities. Of course, we are looking into that and that is in the strategic plan to be, but no firm ideas that we can communicate about here. But there's space to grow, that is for sure.

[Torbjörn Wingårdh, Chief Financial Officer]

Yes. And thank you for the question, Fredrik, on that line. We have -- in terms of the other income and expenses which you are referring to, we have currency effects. But we -- also, in this quarter, we have a reservation for restructuring costs included in part of the organization that impact that line.

[Operator]

Our next question comes from the line of [ Adolf Bahadri ] of Danske Bank.

[Unknown Analyst]

No, I have no questions. Thank you.

[Operator]

We currently then have no further questions at this point. I will hand back to the speakers for any final remarks.

[Tobias Bulow, Director Investor Relations]

Okay. Thank you a lot. As there seems to be no questions left, we will end the call now. Thanks a lot for joining us today, and thanks for good questions. And welcome back next quarter.

[Anders Lindqvist, President & CEO]

Thank you very much, everyone.