The fourth quarter was strong as it is typical for Bittium. The operating result exceeded our 10 percent operating profit target. The net sales for the fourth quarter were EUR 27.6 million, which was 8.1 percent less than the previous year, mainly due to the decrease in product-based net sales, especially in the Medical Technologies business unit. The product-based net sales of the Defense & Security business, on the other hand, increased slightly from the previous year. Service-based net sales also decreased slightly from a year ago.
Overall, the year 2022 was challenging for Bittium. Net sales decreased from the previous year and were EUR 82.5 million. Product-based net sales decreased especially due to delivery difficulties caused by a shortage of components for Medical Technologies products. The weaker-than-planned development of Medical Technologies net sales was also affected by the delay in the medical device approval of Bittium Respiro, a home sleep apnea measuring solution. Looking at the entire year, the net sales of Defense & Security products remained at the previous year´s level. Net sales growth was slowed down by the longer-than-expected trial use phases of several Tough Mobile 2-based information security solutions.
The service-based net sales of 2022 increased slightly compared to the previous year, especially thanks to the increase in the service-based net sales of the Defense & Security business. The net sales of Connectivity Solutions R&D services, on the other hand, remained at the same level compared to the previous year.
The operating profit for the entire year 2022 was EUR 0.3 million. The weakening of the operating result was especially affected by the temporary decrease in the net sales of the Medical Technologies product business due to the lack of components and the continued investments in sales and marketing, as well as in product development, to ensure the future growth of the business.
The order backlog grew during the last quarter and was 28.1 million euros at the end of the year.
The war in Ukraine or the sanctions against Russia have no direct financial impact on Bittium´s business, and Bittium does not have business in Russia, Ukraine, or Belarus. The world political situation caused by the war is reflected in the defense market when countries increase their defense budgets. New defense forces modernization projects are starting again, which has also been reflected in Bittium as a positive increase in demand for tactical communication system products and information security solutions. Last year was very active with numerous customer and partner meetings. We got to participate in several tenders, and we will continue to participate in several new tenders regarding the modernization of tactical communications of different states. In accordance with the nature of the market, the bidding stages of these new modernization projects are quite slow and can take several years.
Last year, Finland started the process of joining the military alliance NATO. Joining NATO would strengthen our competitive position, especially in tenders from NATO countries.
In the domestic defense market, we continued to supply the Defense Forces with tactical communication products and received an order for the multi-year development of software versions of tactical communication systems´ waveform and radio platform software in order to maintain the best possible performance. The field testing of the software-based Tough SDR radios and their waveforms continued. We received an order from the Defense Forces for Tough SDR radios. In addition, we received a continuation order for the development of the waveform of the Tough SDR radios, which will be multi-year.
2022 was a very active year in the international defense and security markets. Product deliveries, integration, and testing of tactical communication system products continued to customers in Austria and Estonia, as well as to other international customers. During the past year, a new promising market area has emerged: international companies developing air defense and sensor systems. In addition, several pilots of Tough SDR radios started in different parts of Europe and Asia. We also continued our cooperation in the ESSOR project with Bittium Tough SDR radios with good results. The interoperability tests performed in the summer with the new ESSOR High Data Rate Waveform were successful.
We expanded the tactical communication product range and launched the new Bittium Tough VoIP Field Phone™ 2, which enables reliable communication in demanding operating environments. The secure Bittium Tough Mobile™ smartphone product family was also supplemented in Junewith the new Bittium Tough Mobile™ 2 Tactical solution, which enables military mobile communication.
Interest in Bittium Tough Mobile 2 smartphones has increased in the governmental market due to the Russian war of aggression and numerous data security attacks. We have applied for NATO security approval for our Tough Mobile 2 solution and expect to receive it during 2023. We believe that the approval will increase sales of the solution.
The importance of remote care and remote monitoring is further emphasized by the insufficiency of medical care resources and cost pressures, which positively affect the demand for Bittium´s medical technology products and services. The worldwide component shortage significantly slowed down the manufacturing and delivery of the devices. Due to strict delivery time requirements, we also could not accept all orders.
Bittium has medical device approval processes ongoing in many countries. The new European product safety regulation for medical devices, MDR (Medical Device Regulation, EU 2017/745), has caused a backlog of quality system audits and device approvals and thus delay in application turnaround times. In December, we received MDR approval for Bittium Respiro, a home sleep apnea test and analysis solution. FDA (Food and Drug Administration) medical device approval for Respiro in the North American market is expected during the first half of 2023.
We made good progress in increasing the European sales of Bittium Faros™ ECG measuring devices. However, a significant part of the product deliveries of the past year was still made to Preventice Solutions (a subsidiary of Boston Scientific Group), a customer offering remote monitoring services in the US ECG market. We expanded the Faros product family with a new ECG measuring device that measures ECG with one battery charge continuously for at least 14 days. The new version makes it easier to diagnose arrhythmias thanks to the extended measurement time. The device also enables earlier discharge of patients and better conditions to quickly detect and react to possible arrhythmias.
In the neurophysiology market, the piloting of Bittium BrainStatus™ EEG measuring devices continued and new ones started. Some Finnish and European university hospitals are testing the use of BrainStatus in their intensive care units. The market for BrainStatus is just opening up as the recommendations for intensive care are changing in a more demanding direction regarding EEG measurement.
Last year, we established a separate Clinical Advisory Board to support the business of our healthcare technology products. The Clinical Advisory Board brings us medical expertise and an international forum for the continuous development of our products. Based on this expertise, feedback, and clinical research, we have the opportunity to develop even more competitive solutions.
During the past year, the net sales of R&D services remained at the same level compared to the previous year. The market has recovered from the coronavirus pandemic, and we have been able to do active sales and marketing work. The demand for R&D services focused on the Industrial IoT, Telecom, and MedTech technology markets, where companies seek wireless connectivity for their products. Several customer projects were successfully completed, and new ones were started. The goal of the Connectivity Solutions business is to focus on growing the international customer base.
The availability of labor is still a challenge. In particular, there are too few software experts compared to the demand, and the competition for employees has increased the mobility of the workforce. During the past year, we have invested in building an employer image, which has contributed to the recruitment of new employees.
I would like to thank our customers, employees, shareholders, and partners for the past year. We have strengthened and focused our business units to become even more independent, with the aim of starting to report independent business units from 2024 at the latest. We believe this will bring more transparency and added value to both owners and other stakeholders.