Earnings call transcript: Detection Technology Q2 2025 sees stock dip

Detection Technology OY reported its second-quarter earnings for 2025, revealing a decline in sales and a cautious outlook, which led to a 3.17% drop in its stock price. The company’s earnings per share (EPS) and revenue fell short of forecasts, contributing to the negative market reaction. The stock closed at €11.05, with significant pressure following the earnings announcement. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculations, despite maintaining a strong financial health score of 3.2 out of 5.

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Key Takeaways

• Detection Technology’s Q2 sales fell by 7% to €24.4 million.
• The company’s EBITA was €1.7 million, representing 7% of sales.
• The stock price dropped 3.17% post-earnings announcement.
• Revenue and EPS missed market expectations, exacerbating investor concerns.
• The company anticipates a single-digit decline in net sales for Q3.

Company Performance

Detection Technology faced a challenging second quarter, with sales declining by 7% to €24.4 million. This downturn was partly due to unfavorable currency exchange differences, which accounted for 4% of the decline. The company maintains robust financial fundamentals with a current ratio of 4.8 and minimal debt, holding more cash than debt on its balance sheet. Despite these challenges, the company maintained a return on investment of 14.7% and continues its 10-year streak of consistent dividend payments, currently yielding 4.52%. The industrial segment showed resilience with a 4% growth, while the medical segment grew by 14%. However, the security segment, which comprises 34% of total sales, experienced a significant decline.

Financial Highlights

• Revenue: €24.4 million, a 7% decline year-over-year.
• EBITA: €1.7 million, representing 7% of sales.
• First Half Sales: €47 million.
• EBITDA: €3.1 million, 6.7% of sales.

Earnings vs. Forecast

Detection Technology’s EPS and revenue fell short of market expectations. The company had an EPS forecast of €0.1383, but actual results were not provided, indicating a miss. The revenue forecast was €25.41 million, but actual sales were €24.4 million, marking a notable shortfall. This miss, combined with downward revisions in EPS forecasts over the past 90 days, contributed to the stock’s negative performance.

Market Reaction

Following the earnings announcement, Detection Technology’s stock price fell by 3.17%, closing at €11.05. This decline reflects investor disappointment with the company’s financial performance and its cautious outlook for the coming quarters. The stock is trading closer to its 52-week low of €10.45, with a significant 26.31% decline over the past six months. Despite the recent pressure, the company maintains a healthy free cash flow yield of 11% and trades at a P/E ratio of 13.98, suggesting potential value opportunity.

[Access the complete Detection Technology financial health analysis and detailed valuation metrics with InvestingPro, including exclusive Fair Value calculations and peer comparison tools.]

Outlook & Guidance

Looking forward, Detection Technology expects a single-digit decline in net sales for the third quarter and the second half of the year. The company revised its EBITDA target from 15% to potentially above 10%, reflecting a more conservative outlook. Despite challenges in the medical and security segments, the company anticipates industrial segment growth in Q3.

Executive Commentary

CEO Hannu Maratol highlighted the potential for growth in the €3 billion X-ray digital detector market, despite current challenges. He noted, "We believe that this is a nice market of €3,000,000,000. There’s still a lot of room to grow in this market." Maratol also expressed optimism about future growth in the medical segment, stating, "We expect also nice sort of growth in Medical next year."

Risks and Challenges

• Currency fluctuations continue to impact financial results.
• Competitive pressures in China, where 50% of companies reportedly operate at a loss.
• Component shortages due to the data center boom may affect production.
• Potential softness in the U.S. market could pose additional challenges.
• Security segment decline and regional sales disparities, particularly in Europe.

Q&A

During the earnings call, analysts focused on the challenges in the Chinese medical market and the impact of component shortages. They also inquired about potential softness in the U.S. market and the company’s cost-saving measures. Detection Technology addressed these concerns by emphasizing its strategic focus on innovation and operational efficiency improvements.

Full transcript - Detection Technology OY (DETEC) Q2 2025:

Hannu Maratol, President and CEO, Detection Technology: Good afternoon, everyone, and welcome to Polo Detection Technologies Half Yearly and Second Quarter Results Announcing. I’m pleased to present it to you. My name is Hannu Maratol. I’m the President and CEO of Detection Technology. Now let’s go see what we got.

So second quarter, we reached the sales of €24,400,000 which is a decline of 7%. Disappointment from that point of view for us, we reached EBITA of €1,700,000 which is 7% of sales and also a decline compared to last year. Looking at these numbers, I think it’s important to remember that out of the minus 7% decline, actually, the currency exchange differences represent about 4%. So the remaining 3% is sort of the net decline. Then if we look on the application point of view.

Yes, the sales declined, but on the other hand, we remain the market position strongly. So we did not lose business. It’s just that there was not business. Industrial sales, actually, we did quite well, especially in the flat panels. In China, we had very nice growth.

We on flat panels, we even grew about 40%. Medical sales, biggest part here is China. That starts to be now normal. So we had a nice 14% growth in medical sales when the markets now are recovering from the health care reform. And then the true disappointment was the security sales.

And security sales in Europe, we had a decline of 28%. This dip was much bigger than expected and led to a sharp decline in 40% in Europe, Middle East and Africa sales. And the reason is that there was a halt in the security CT system installations in Europe and because of the so called 100 milliliter rule that is now actually being lifted, but it still had a big effect on second quarter and will have effects on third and fourth quarters. And again, the market position remained intact. I think what’s good in here is that if we look in big picture, it seems to be that actually now the big sort of, let’s say, fundamental changes in the business are and negative changes since COVID are starting to be normalizing.

Just we have to be patient that it takes a couple of quarters to get back on track. Sales by quarter, we clearly fell then below last year, as you can see 7% decline as well as in profitability, 7% compared to 12.7% in the previous year. If you look at the regions, Americas, minus 5% APAC was up 9%, driven by nice performance in both Medical and Industrial and then Europe, as I said, negative 40%, which is really, I would call this as a halt, temporary halt. And leading so that actually 75% of the total sales was APAC. And then looking on the applications.

Industrial, up 4%. And by the way, Industrial percentage wise was nice, 23% of total sales. Medical, 14% positive and a bit over 40% of the total sales, then Security down to 34%. First half, I think we have very similar behavior, 47,000,000 sales, minus EUR 4,500,000.0 net sales change, EBITDA of EUR 3,100,000.0, which is 6.7 percentages. And important to remember that actually first quarter, we did not have so strong currency exchange rate effect.

So the exchange rates, of course, they go up and down and change and so on. And but what was quite extraordinary was the speed this year in what happened in March. And that is something we will be seeing, unless anything changes also in the coming third and fourth quarters. By business units, similar than second quarter, Americas minus 4% APAC plus 6% and Europe, Middle East, Africa minus 28%. And by applications, Industrial up 4%, thanks to very nice behavior of especially flat panels Medical 14% and Security is minus 24%, down for the six months period.

Looking a little bit closer into the financials. Something that to point out here, we had slightly higher R and D costs. We are developing these kind of very large panels that we are first in the market. We call them jumbo, the one meter panel, and there are some costs related to that. Yielding saw that with this lower sales, we had even 13% R and D cost.

Cash flow, $460,000,000. That’s clearly down from previous year. Actually, two big explaining factors. One is, of course, the profits, less profits. And the other one is that we did not in 2024, we did not have incentive payment that we paid for last year for our employees’ incentive, and that’s now recognized in the cash flow affecting that.

Investments are up to EUR 1,100,000.0. And biggest driver here is that we did some long term R and D investment that we have recognized as CapEx that is affecting here and then should help long term growth possibilities for the company. Return on investment, still nice, 14.7%, so this in a nutshell. On first half strategy highlights, flat panel, I brought it up. That’s nice behavior there and we are very, very pleased on how it has been going.

We’ve been winning a lot of new customers in China and also starting outside. Several notable new products, the XPanel 40 three-one 108, the XCargo four actually and that’s very much into the cargo inspection in Europe. We will see some sales already in second half of that. And then a smaller panel, 25.2 panel. We also progressed in India.

We have now tested the first products in our new factory. Production facility in India, in New Delhi area is finished, and we did first testing late June as well as the first invoicing of our products to our India subsidiary. And as I mentioned, we made an investment into new technology. We have also been working on updating our strategy. I think core thing here is that we, as a focus, we remain focused on X-ray digital detectors.

We believe that this is a nice market of EUR 3,000,000,000. There’s still a lot of room to grow in this market. And our emphasis, our aim is to deliver smart X-ray detector solutions that drive customer success through exceptional usability to outgrow the market. This means more value added, that means more software, in one word. So adding stronger software layer on top of our hardware.

And we will be through this fall, we will be communicating more of our strategy and execution of it. Other events, we successfully worked in area of sustainability, increasing the use of green energy, promoted environmental work safety awareness on internal employee survey. Results were quite okay. We’re working with the results from that and possibilities to develop things further. Working with the Lean Six Sigma, we have been doing that more than ten years.

That’s essential for our quality performance and then continue to help the children children rights with UNICEF and Astrum Capital Astrum Collective impact. Then important sales expectations for third quarter and second half. We expect the Industrial to grow in third quarter. We expect Medical to decline in third quarter and Security to decline in third quarter. And from regions, we expect APAC and Europe, East And Africa to remain stable and in Americas actually have a fairly large decline by double digit in third quarter.

And then total net sales as the official guidance, we expect to decline by single digit in the third quarter and second half. And a little bit things behind here, I think, is that, like I mentioned, that one headwind that we have for the third quarter, most probably also fourth quarter, is the exchange ForEx exchange rates. We have about 5% impact to our sales because of much, much stronger dollar and renminbi. And then on Medical, actually, the Medical market is moving nicely. Also in China, we have some supply chain limitations.

We could sell more, but short term, we have some supply chain limitations. We are working with some change in our suppliers and so on. Are things are in control, but those will still have an effect before we get the improvements out. One of the things that also has changed in the world is that there’s huge boom for data centers, and then suddenly, there’s very unique shortages that were totally impossible to be predicted affecting. And this is something that we also face in our supply chain, especially in this medical.

So as total single digit year on year net sales declined for third quarter and second half because of these kind of internal things and external things. And then as I say, I think very good news is that, finally, the Europe has lifted the 100 milliliter rule. So very late last week of June, they came with a new specification. There’s already first company, CT company, has been approved. And we are back on where passengers in aviation can have their liquids with the handbags and so on, meaning that installations for CT start to roll again.

What we have heard from the companies in the industrial zone that they start to have record sort of order books and so on, so this is something that we also will see then starting possibly a little bit late fourth quarter, but starting then next year. And then as I mentioned that we’ve also finally the China health care reform is now sort of sorted out, and we see also growth there. And as financial midterm targets, we are not giving up, so the midterm targets annual growth is 10% EBITDA 15% and then dividend and return capital between 30% to 60% of the net proceedings. So this in short of an update on after second quarter. Thank you.

And I would be happy to answer to any questions that there might arise.

Jyuk Pekkapeissner, Analyst, Nordea: Thank you, Handel, for the presentation. I must start this. I’m Jyuk Pekkapeissner from Nordea. To your best knowledge, you guide for sales decline in H2,

Hannu Maratol, President and CEO, Detection Technology: but

Jyuk Pekkapeissner, Analyst, Nordea: do you see it more in Q3? Or do you also see maybe decline already in Q4 or maybe more stable in Q4?

Hannu Maratol, President and CEO, Detection Technology: That’s a bit mix. I think as total, I think both quarters we see decline. One driver is really this ForEx exchange rate, which affects both, of course, from today’s point of view on forecasting. Possibly third quarter is a bit more affected by the still the dip coming out of the dip on security. Fourth quarter may be a little bit more on supply chain still on Medical that we have recovered faster.

But it’s of course, from today’s point of view, it’s a bit hard to predict. So we better play safe than here.

Jyuk Pekkapeissner, Analyst, Nordea: On that topic also, what would be the main lever that could maybe change the end of the year to growth maybe in Q4? What would need to happen?

Hannu Maratol, President and CEO, Detection Technology: I think the well, two things is orders for security for the city installations and second is the Medical to perform strongly in China.

Jyuk Pekkapeissner, Analyst, Nordea: And you said that you’re looking into cost measures or doing some cost measures to actually bring your profitability back to appropriate levels. So which cost items especially are you looking at or the cost levels?

Hannu Maratol, President and CEO, Detection Technology: Yes, we are. I mean, short term, we are looking on the fixed cost. I mean, what are the really the core things we need to be moving forward, what are the things we can save. So basically, it’s fixed cost savings, meaning that all fixed cost including then also personnel.

Jyuk Pekkapeissner, Analyst, Nordea: Okay. And maybe last from my side. You stated that there’s intensifying competition in China and this like new block purchase model. So could you open this up? And maybe how DT has to adapt to these changes?

Hannu Maratol, President and CEO, Detection Technology: Yes. I think this blockchain not blockchain, but block purchase is interesting concept. This is an outcome of the health care reform. Before it was so that all the hospitals were buying what they wanted or what they needed, and then they made the deals and so on. And that actually created also environment for possible corruption through these middle consultants in between, so between the OEMs and the hospitals.

And now what how the system has developed it is that what’s smartly actually that each of the hospitals can still maintain whatever their strategy is, they can be expert on something and also buy relevant equipment to be able to do the things they want to do. But all these needs are then area based, pooled into blocks. And then these blocks are being tendered, so they have requests for quotations for the blocks, and then they typically select two or three providers on how they split. And also the block is then taking care of the money. And then the hospitals get more cost effectively what they need, and then sort of all the funding and so on is organized and managed on the sort of block level.

Walter Rossi, Analyst, Danske Bank: Thank you, Hano for the presentation. Walter Rossi from Danske Bank. First, on the margin side. Can you give us any guidance on where you see EBITDA margins going this year now after these cost savings and also lower top line?

Hannu Maratol, President and CEO, Detection Technology: Well, what I can say is it’s pretty hard now after these two quarters and also what the outlook is for second half to reach the target this year, which is 15%. And then I think as minimum, we need to be fighting so that we can deliver more than like 10, which is at least be on the double digit side there.

Walter Rossi, Analyst, Danske Bank: All right. On the recovery in the Security business, what does that look like in your mind, Kenny? I think you already touched it a bit, but when do you see that starting in terms of actually seeing growth again? And did you say that you already have a record order book in the security side?

Hannu Maratol, President and CEO, Detection Technology: Yes. Thanks. If I take the last one, what you mentioned, I didn’t say us. I mean what we hear from markets, from our customers. I mean we don’t see it yet.

It’s pretty hard to be except I mean, it’s a fact that the CT machines will be installed. There’s also even rumors there and so on, but it can be that it’s very much next year. So at increasing speed, I mean, this technology really is needed. Anybody can Google and so on. There’s a lot of irritation and the airports are very angry on the officials on not being able to support.

For example, it’s been a peak travel season in Europe, a lot of families and so on going for holiday. And it’s not just the Helsinki Airport, but also other airports have been a mess. And this would not have happened to happen. So there are a lot of drivers to smoothen this out and so on when we get into normal sort of waters. But the most important is that the decisions are there.

I mean the rule has been lifted. The first company has been approved. And now that there’s more companies, OEMs are on the line of getting acceptance.

Walter Rossi, Analyst, Danske Bank: Right. Two quick ones still. On the margins and China, can you give us any color on how much lower are Chinese margins compared to the other business?

Hannu Maratol, President and CEO, Detection Technology: It’s actually fairly complicated would be a complicated answer. I can’t go into details, but actually very, very business specific. It’s a little bit on how niche is the product. I mean how of course, I mean, these kind of like the basic volume products that are being purchased through these block deals. They are fairly competitive, meaning that the margins are fairly tight, but also the volumes are nice.

So it’s and still then, of course, if you have a nice volume and you have even tighter margin, but still the effect can be on the EBITA fairly good. But it’s very business specific and very much driven by the competition. If you might have some area that there’s some kind of challenger wanting and must to get into the business without I mean, we must remember that now there’s even and this is according to Financial Times, I think 50% of the Chinese companies are on loss. And this is at the increasing rate. It’s the huge deflation in China, which of course we see from the cost pressure and so on.

And this has an impact to the thing. And there’s companies. There are companies that are fighting for their life. And we are still making money in China. And we are in a strong position, of course, thanks to our balance sheet and also our history and so on.

We just need to maintain our quality. We need to be learning a little bit more faster. We need to also be developing lower cost products so that we don’t leave too much room for the low cost producers, so that they get strong and can attack us later on. So these kind of things we have and those are part of our strategy.

Walter Rossi, Analyst, Danske Bank: All right. Thanks. And lastly, as you know, it’s quite difficult to estimate your sales in different segments from quarter to quarter. So do you see that trend kind of normalizing or stabilizing somewhere in the future?

Hannu Maratol, President and CEO, Detection Technology: Yes, yes. Thanks And for the question. I think we are on a journey of more normal waters now finally, and 26% then should be when we see then more predictable business.

Walter Rossi, Analyst, Danske Bank: Right. Great. That’s it. Thanks.

Matt Reykkonen, Analyst, DNB Carnegie: Good afternoon. It’s Matt Reykkonen, DNB Carnegie. A couple of questions still. When we talk about the Chinese medical new regime, Isn’t it so that the medical business is always kind of lower margin than the other segments, but of course the volumes then compensate and perhaps on the EBIT margin side you are fairly well off? But now, if the situation is going to change in China for good, and it will be more negative than what it used to be in China, wouldn’t that mean that in the big picture, longer term, everything that you do in the medical business in China would have structurally lower margin than earlier because the competition just keeps intensifying?

Hannu Maratol, President and CEO, Detection Technology: Well, I think first if I take your first part, is, think, yes, I mean, you have I mean, like, health care, you have big customers, big OEMs, you have high volumes. And fairly, I mean, from our point of view also, the products are lower value added. I mean, we don’t have any software there and so on. So that is sort of building the business scale so that there’s more pressure on prices and more buying power from the customer point of view. That’s one thing.

Another thing I think is that this has already lasted for a while, this kind of very intense cost pressure and so on. And there is, let’s say, there’s a limit to that. So I would expect at least the trend to be, let’s say, slowing down, downwards trend. And then on the other hand, we are not out of ideas yet. So we also have ways to decrease our costs.

It’s just that this is fairly slow cycle of getting new products in also because of the regulatory authorities’ approvals and so on.

Matt Reykkonen, Analyst, DNB Carnegie: But isn’t it also so that in China, if you think that the competitive landscape is going to be like it is, And unless there are exits from the players in the market, then the prices cannot kind of improve, because everybody that still is in the game, they want to keep the volumes and then they keep on discounting until some are going bankrupt and then the others basically reap the benefits. But as long as that hasn’t happened, then the price fight continues.

Hannu Maratol, President and CEO, Detection Technology: Yes. Well, that’s market economy. I think probably there can be some consolidation. Not everybody can survive, like you mentioned. I mean, maybe even some bankruptcy, more I would think see that in China, they sort of have the companies to get together and, let’s say, consolidate and therefore, the supplydemand to normalize.

Matt Reykkonen, Analyst, DNB Carnegie: Okay. But if you are not taking part of the consolidation, then somebody will get stronger and then they have then they basically have more ways to push against you and maybe other.

Hannu Maratol, President and CEO, Detection Technology: On consolidation, I think I was more talking on our customer level because, I mean, these are like computer tomography is the most complex equipment probably after the space rocket and airplane. So small there are still some small players there, and it’s pretty demanding and tough for them to continue in the race. So I was talking more on that level. And then we must remember that, yes, China is a large country. It’s what, close to 20% of the population, but there’s other countries and other markets too.

And that’s the beauty is that when we survive and prosper in this very high, tough competitive environment, we are very strong in other markets. And that’s why it’s so important to be part there, face the competition and fight and get stronger. But this is not this is we are seeing future market now in China. The competition will get other places too,

Matt Reykkonen, Analyst, DNB Carnegie: All right. On

Hannu Maratol, President and CEO, Detection Technology: all

Matt Reykkonen, Analyst, DNB Carnegie: Okay. For that. So what was this component shortage about? You mentioned something like AI related demand mixing up with your sourcing plans. But what is kind of the source?

Hannu Maratol, President and CEO, Detection Technology: I think, yes, it’s data centers. I mean, it’s massive amounts of money are being poured in data centers globally everywhere. I think the biggest one in Sweden is at SEK nine billion. And this has increased demand, even basic print circuit board assemblies and so on. And it happens to be that when you have this kind of strong demand on certain area that is unique from the mix that was in history, the supply chains are not ready for this kind of fast pull.

So that’s sort of the answer. And this is short term, couple of quarters, and then things get resolved.

Matt Reykkonen, Analyst, DNB Carnegie: So it basically means that somebody has to lift the capacity to do all the components that you and others are needing. Do you really think that, that would be a couple of quarters game?

Hannu Maratol, President and CEO, Detection Technology: Right now, it’s I mean, we like I said, we have some changes We look on suppliers that are not so, let’s say, wanted for that. And so it’s a bit structural. The truth is that, of course, from the pool demand point of view, the demand will stay there. This data center boom is not over in a couple of quarters.

But we are now starting to work with certain other suppliers, like I mentioned, that have better are in better capacity situation. Have to remember that even the health care demand on components and so on is fairly small compared to the huge consumer electronics, which the data center is part of. So big companies and capacities are supporting the big booms and the big needs in priority first.

Matt Reykkonen, Analyst, DNB Carnegie: Do you also see that the component prices would have increased? Because if there’s a greater need, it makes your kind of

Hannu Maratol, President and CEO, Detection Technology: economical That’s model good question. At least I have not there’s pressure, yes, but then there’s huge also price downwards trend. So it’s that’s not at least it has not yet hit, and we don’t see that as impacting our numbers.

Matt Reykkonen, Analyst, DNB Carnegie: All right. Fair enough. Coming back to The U. S. Security segment, which you now expect to come down by double digit in Q3.

What is the root cause of that? And what is happening in The U. S? Because I understand that there’s delays in the European market because

Hannu Maratol, President and CEO, Detection Technology: Yes. That’s pretty that’s interesting. So also we have I mean, out of the customer mix and so in The U. S, it’s there’s a couple of sort of larger ones from our point of view. And there are things like, for example, a factory closing in outside U.

S. And production move into U. S. And typically, these things don’t go like in movies. U.

S. Has quite a big shortage talented competent engineers, as an example, and so on. And it’s from point of view of business, we see it’s probably Trump’s agenda and so on is pretty challenging on trying to move more manufacturing in U. S. Due to the huge shortage of talent.

So it’s more of a short term items instead of I mean, the market there’s need and there’s just the investments they plan to do for the Mexican border and so on. So these kind of things are not changing. They are sort of big drivers. And then, yes, tariff, of course, tariff thing is causing also some, let’s say, uncertainties and so on. It’s we have not seen yet what the impact of these tariffs is.

And latest this, I think, S. Announced that there can be some, was it, 100% extra tariff on semiconductors for the companies that are not planning to move their production to U. S. Or are not in U.

S. So and we our products are not classified as semiconductors, but it’s just, I mean, broader. There’s a lot of, let’s say, uncertainty still left.

Matt Reykkonen, Analyst, DNB Carnegie: Right. So if I understood correctly, some of your customers outside of U. S. Is moving into The U. S, and it takes a while before they get their production running there.

And that’s the cause of the delay and softness in The U. S. Security. Yes.

Hannu Maratol, President and CEO, Detection Technology: As an example, and it’s a U. S. Customer having a factory outside U. S, moving the factory now inside U. S.

As an example. So you were asking on clear examples on why is this short term, this U. S. Is negative. On the other hand, we’ve got some new orders on, but those are for first quarter twenty twenty six.

So it’s still a live market and a very important one.

Matt Reykkonen, Analyst, DNB Carnegie: All right. Then finally, you discussed the medical flat panel demand driving your top line. Do you see that you are now able to basically capitalize on the Haubo acquisition so that the flat panel devices that they were first making for security market sorry, industrial market? And now are you getting the door open to the medical market segment, so finally getting to the big business or behind what was behind harbor acquisition?

Hannu Maratol, President and CEO, Detection Technology: I think we are very pleased of this harbor. We call it DTS. I mean it’s a fantastic team and really nice performance. We are still growing in the industrial area, like this 40% growth that’s in industrial. I mean we are not yet in the medical ones, hopefully and we are working on.

Hopefully, we are getting those. And but even so far, I think it’s a good success. And there’s it’s still I mean, flat panel business is €1,500,000,000 There’s a lot of nice pockets out there that we can work and capture, and it’s very fragmented and so on. So it provides good possibilities for a small company like us to find growth.

Matt Reykkonen, Analyst, DNB Carnegie: Right. Thank you. That’s all from me.

Magnus Hillen, Analyst, Evli: Magnus Hillen from Evli. So you’re seeing these Chinese medical supply chain limitations over H2, while the security CD systems market is only starting to normalize. And you kind of imply basically imply that you will see strong security top line recovery next year. But when it comes to Medical, is it still like more uncertain when it comes to Medical, like 2026 growth?

Hannu Maratol, President and CEO, Detection Technology: I think from point of view, we believe that this is now more like normalized permanent situation is that the health care globally is, let’s say, starting despite all the tariff stuff and so on, is starting to enter into more of a growth phase. So we expect also nice sort of growth in Medical next year.

Magnus Hillen, Analyst, Evli: Okay. And any comments on India at this point? I mean it’s still quite small for you, but what kind of volumes might it contribute in H2 and next year?

Hannu Maratol, President and CEO, Detection Technology: India is quite small. I think the biggest business we’ve had in we started with industrial, but that has not yet grown that much. There’s still quite little manufacturing in India. Then we had the biggest growth items in security area, also the airports that India was building and so on. But India had actually a big tender and so on, and they halted it.

It’s still there’s no news that they will start again. So short term, we don’t see very much sales in India, some. And but as a market, it’s coming and so on, pending on the government decisions on these big airport sort of tenders.

Walter Rossi, Analyst, Danske Bank: Okay. And

Magnus Hillen, Analyst, Evli: was there anything any comments on Industrial? Like it doesn’t seem to have like that much issues in H2 like Security and Medical Or

Hannu Maratol, President and CEO, Detection Technology: No. I mean, as the total industrial, I think the flat panel looks quite nice. And the legacy industrial is sort of more like, let’s say, flat door or so on.

Walter Rossi, Analyst, Danske Bank: Okay. Thanks. That’s all for me.

Nick Grogangass, Analyst, ZEP online: We have Nick Grogangass from ZEP online. So we could be taking a few of his questions as well. So he’s saying that you indicated in the report that you are taking cost measures. How big are they and when they will be visible?

Hannu Maratol, President and CEO, Detection Technology: I think the cost measures, are looking at what can we do with our fixed cost, realizing now the fact that the top line is not where it should be. Size wise, we don’t have still a very precise number. Time wise, we are looking now what we can do during third quarter so that we would have then a clean fourth quarter.

Nick Grogangass, Analyst, ZEP online: Okay. Then another question from him. So do you see any cuts in The U. S. Healthcare regarding spending impacting you in the future?

Hannu Maratol, President and CEO, Detection Technology: That’s a very, very challenging question. We no idea where it goes. It’s very much depending on what are the policies of the U. S. Government.

Nick Grogangass, Analyst, ZEP online: Thank you. Handing over to Matti from Garnik.

Matt Reykkonen, Analyst, DNB Carnegie: Hi, it’s Matti Rekonne again. Just a clarification on the cost savings. So it’s kind of difficult to imagine the situation that you plan to grow your top line eventually. And these if you kind of make fixed cost cuts now in Q3, so very short term, don’t you think that you would be needing that kind of resources going forward if the demand comes back in security, if medical normalizes as it basically has been, and if the industrial demand continues to be fairly good. So why and how can you make the cut so that you are not cutting also the capacity for the future?

Or do you just plan to kind of hire more people then when it’s actual and let them go short term?

Hannu Maratol, President and CEO, Detection Technology: That’s really that’s the core. I think the logic is that we have to see that what is now, from today’s perspective, what is less important, where we need to be focusing. And the thing is that we need to see that where should we save in a way to be able to invest into things that are growing.

Matt Reykkonen, Analyst, DNB Carnegie: All right. And that’s just a technical question. You talked about some R and D recognized as CapEx. So do you mean that you have been capitalizing R and D costs?

Hannu Maratol, President and CEO, Detection Technology: No. I mean it’s what I said is that we have this kind of long term investment in the area of R and D, and that is CapEx. In general, we are not capitalizing internal R and D development.

Matt Reykkonen, Analyst, DNB Carnegie: Okay. What does it mean in practice, a longer term investment in CapEx?

Hannu Maratol, President and CEO, Detection Technology: It means on creating long term enablers, technological enablers for growth.

Matt Reykkonen, Analyst, DNB Carnegie: I still don’t get it. Could you clarify?

Hannu Maratol, President and CEO, Detection Technology: It’s on a high level, we are investing on long term technological development.

Matt Reykkonen, Analyst, DNB Carnegie: So it’s a kind of product or

Hannu Maratol, President and CEO, Detection Technology: a generic technology that can be used then through the line of our businesses later on.

Matt Reykkonen, Analyst, DNB Carnegie: Okay. We’ll see about that. Thank you.

Hannu Maratol, President and CEO, Detection Technology: Okay. Are we excellent. So thank you for very good questions, and thank you for your interest and time. And we’ll be closing now this half yearly sort of reporting. Thank you, and

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