CEO´s Review
In 2024 we were able to take Bittium into profitable growth path. Net sales grew 13.2% year-on-year and operating profit was 10.1% of net sales. Cash flow improved significantly, and order backlog increased to EUR 45.1 million year-on-year. The growth was driven by the increased demand and product deliveries in the Defense & Security Business Segment.
At the end of the year, we updated our strategy for the next three years. The strategy aims to achieve profitable growth in all Business Segments and we will emphasize even more strongly on comprehensive customer focus and sales growth. In addition, we will continue to systematically improve profitability and efficiency.
The company’s long-term financial goal is to grow by an average of more than 10 percent per year and exceed an operating profit level of 10 percent. Achieving these targets last year proofs that we have succeeded in turning the company onto a profitable growth path.
Net sales in Defense & Security Business Segment grew by 42.3 percent to EUR 51.6 million year-on-year. Operating result was EUR 8.6 million representing 16.7 percent of net sales. This year’s net sales development has been influenced by the general growth in demand in the defense sector and the increased number of product deliveries. The order backlog improved significantly from the previous year.
Cooperation with the Finnish Defence Forces strengthened and we signed a Partnership Agreement for the years 2025–2036. The aim of the agreement is for the partnership to become a solid part of the national defense, and for it to create mechanisms for joint planning in normal conditions and states of emergency. The agreement covers the tactical communication systems and related products used by the Finnish Defence Forces, as well as their maintenance and further development. We are very proud of this trust shown to us. Also, the serial deliveries of Bittium Tough SDR radios to the Finnish Defence Forces began at the end of the year when the Defence Forces placed an order for the radios for approximately EUR 25.6 million. The order is related to the additional purchase option included in the purchase agreement signed on December 12, 2018.
Our strategy to grow in the international defense market has progressed well during the past year. We delivered tactical communication system products to our customers in Croatia, Estonia and Austria, and cooperation with our new partners operating in the global defense market progressed well.
Increased awareness of information security threats has increased the demand for our security products. We developed our SafeMove Mobile VPN software to be quantum secure. Implementing quantum secure algorithms in security products has become a hot topic as quantum computers continue to develop.
The NATO Communications and Information Agency (NCIA) has listed the Bittium Tough Mobile 2 C communications solution in the NATO Information Assurance Product Catalogue (NIAPC). The highly secure communications solution, approved for use at the NATO Restricted level, is intended for communications between government administrations and authorities. Finland’s NATO membership is believed to have a positive impact on the demand for Bittium’s defense and authority products, especially in NATO countries.
Net sales in the Medical Business Segment decreased by 12.6 percent to EUR 19.3 million affected by the slow progress of the regulatory medical device approvals slowing down the sales growth. Operating result was EUR -0.9 million corresponding to -4.5 percent of the net sales. Operating result was weakened by EUR -0.7 million extra costs resulting from strengthening in-house regulative expertise as well as from using external expertise. Order backlog improved year-on-year.
A significant portion of the sales of ECG measuring devices resulted from products sold to our US customer Boston Scientific Cardiac Diagnostics. ECG measurement devices were also sold to customers in Europe, Asia and Australia. For Bittium Respiro, which is used to diagnose sleep apnea, we have received the additional approvals required in certain European countries for the sale of medical devices in addition to the EU Medical Device Approval (MDR) and we are now focusing on increasing sales in Europe in line with our strategy.
In connection with the strategy update, we announced that we will launch an EMG device for measuring the electrical activity of muscles. EMG measurement device, designed for remote diagnostics, has already been in the company’s product portfolio before, and the product version presented now is currently being used by our customer to identify Parkinson’s disease. Other application area for the device could include monitoring the rehabilitation progress and identifying various muscle or movement disorders. We continue to explore the market opportunities with interest and to find potential partners to be able to provide a comprehensive solution.
Net sales in the Engineering Services Business Segment . Net sales of the whole year 2024 decreased by 15.6 percent to EUR 14.3 million and operating result was EUR 1.2 million representing 8.2 percent of net sales. The decline in net sales was driven by the challenging market situation, especially in the manufacturing industry, and by a lower number of R&D projects than in the comparison period. The cost pressures in the operating environment were also reflected in the order backlog, which weakened slightly from the previous year.
Cooperation with our long-term key customers continued well and despite the challenging market situation, we managed to win new deals from, among others, the Telecom and manufacturing industries. The versatility of our expertise is reflected in the wide range of customer projects in different industries.
As the number of R&D service projects was smaller, some of the Business Segment’s experts have been working flexibly on customer projects in the Defense & Security Business Segment throughout the year. The market situation for R&D services is still challenging and we do not expect any changes in demand, at least not during the first half of the year. Visibility in the R&D service business is very short and fluctuations in the market situation can cause significant changes on a short time frame.
Last year, we continued our work on sustainability and defined our material sustainability matters in accordance with the new European Corporate Sustainability Reporting Directive (CSRD). We updated our sustainability strategy and calculated our carbon footprint including scope 3 emissions from our value chain for the first time. We committed to the European Green Deal and set a target of net zero emissions by 2050 to fight against the climate change. To this end, we put together a transition plan towards a carbon-neutral future, which we will update in the coming years as our plans become more specific. This annual report contains the company’s first CSRD-compliant sustainability report.
Our goals for the last year were to turn Bittium into a sales-oriented product house and to improve profitability. We have made very good progress towards the goals, and I am proud of our achievements. I want to thank especially our talented personnel, who have despite the tough changes stayed committed making these results possible. I would also like to thank our customers and other stakeholders for their trust and good cooperation in the past year. The company is in a good position to continue implementing its growth strategy, focusing strongly on customer service, new customer sales, and building the growth.
Johan Westermarck
CEO