Studsvik AB

STO:SVIK

Earnings Call Transcript 2023-Q1

[Operator]

Welcome to Studsvik Q1 Report 2023. [Operator Instructions] Now I will hand the conference over to the speakers CEO, Camilla Hoflund, and CFO, Niklas Karlsson. Please go ahead

[Camilla Hoflund, executive]

Thank you, operator. Ladies and gentlemen, welcome to the Studsvik Interim Report for the first quarter 2023. Let me introduce myself. My name is Camilla Hoflund, the CEO of Studsvik. And with me on the call today, I have the CFO, Niklas Karlsson.

You will hear about the results of the Studsvik Group for the first quarter 2023. There is still a strong focus on the nuclear worldwide and the main cranes that support nuclear are climate change and the need to reduce the CO2 emissions, the increased need of reliable and predictable energy supply for the industry and we also have an unstable geopolitical situation that drives nations to be more independent and self-sufficient when it comes to secure energy supply.

In this overall context, the Swedish government has made a positive statement to allow for increased nuclear power in Sweden by allowing new locations and more reactors. This opens for new concepts in the future like small modular reactors. In the light of the global situation, Studsvik as an independent and global organization, with the vision innovating neutral sustainability to support world with safe and efficient solutions.

As you will hear later on the call, it has been variances between the business areas. Altogether, the operating profit and margin are slightly higher compared to last year, and sales are on the same level. We also noticed an increased interest from the market when it comes to technical support and development within the nuclear area and especially for small modular reactors.

Let me start to present the Decommissioning and Radiation Protection Services, a business area that provides expertise and experience from Germany, Switzerland, Belgium and the Netherlands. The business area had a strong start of the year with a high customer demand. And in addition, we performed maintenance works that usually takes place later in the year. The utilization of the staff was high and the segment rates reduced compared to last year. All these factors had a positive impact on the net sales, operating profit and margin.

Focus areas. As the last reactors have been shut down, the focus area for the German market will be to increase the dismantling services to support the decommissioning of the reactors. Outside the German market, we will continue to support reactor operations in Switzerland, Belgium and the Netherlands. We are also focusing on combining and expanding services within decommissioning and waste handling.

Let me present Fuel and Materials Technology, a business area with the position as the international laboratory supporting the global industry with world-leading testing and analysis. The business area had production disruptions that impacted the quarter. However, these have now been sold. We are also strengthening the management resources to intensify the market and sales activities to position us for the future customer demands as well as ensuring the deliveries and performance of the facilities.

It is great to finally be able to meet people face-to-face again after the release of pandemic restrictions. There have been several visits at the static site, both from international customers, local politicians and governmental representatives.

Focus areas. As mentioned in the previous slide, it is important for the business area to ensure stable operations and efficiency in the facility to be able to grow the business and at the same time, be responsive to the market changes such as SMRs. We will also continue to expand on the decommissioning market. Another key focus area is to continue with the international projects as they add another starting point for new customer relations.

Let me present Scandpower, a business area that is a world leader in software for fuel optimization. Our software is installed in about 50% of the worldwide light water reactors that are in operation today. The business area has lower sales and operating margin compared to last year, mainly due to lower software sales in the quarter. This year, the user group meeting with 90 international participants was held in Hungary, and it was an opportunity to market our software for Eastern Europe. As earlier reported, Studsvik has exercised its option to acquire all shares from the minority shareholder in Scandpower. The arbitration process is proceeding.

Focus areas. We will continue to develop the software portfolio internally and with our partners to meet the future customer demand. There is an increased interest for research and development activities with the new areas such as SMRs and advanced directors. The business area is also looking into the new markets and it's usually the first point of contact for new customers. A recent example for this is for the new vectors in operation in United Arab Emirates.

Let me present Waste Management Technology, a business area that supports efficient and safe handling of radioactive waste with our technical solutions and advisory support. Waste Management Technology decreased its sales and that's mainly due to a change of business model where we reduced the subconsultants and instead promote our key specialists as waste management advisers. The project with Westinghouse is progressing. The business area has ongoing commercial discussions for technology support with customers in North America.

Focus areas. Our focus areas are to engage with customers with technical advisory services. This can be the beginning of a license opportunity depending on what kind of waste problems the customer need to handle. We are also looking into partnership and cooperations for specific customer projects. In connection with new build of reactors, waste handling plants need to be produced. This is an area where Studsvik expertise can support the customers.

In summary, the increased focus in nuclear open for new and more opportunities on an international market. Studsvik is increasing its efforts to meet the changing market demand like new reactors and fuel types. We also believe in teaming up with partners and enter into corporations to quicker and stronger access new markets and to broaden our services.

Thank you for listening to Studsvik quarter 1 report. Now I hand over to the operator to invite for any -- for the Q&A session.

[Operator]

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

[Camilla Hoflund, executive]

We wish you a nice day, and thank you for calling in. Bye-bye.