INTL-SENSOR > News > VTI Technologies Oy's consolidated financial statements for 2007

VTI Technologies Oy's consolidated financial statements for 2007    Times:2008/6/18 10:06:31    Count : 3990 Times

Financial highlights of 2007

  • Net sales grew to €73,5 million (comparable net sales in 2006: €67,5 million).
  • Comparable operating profit improved slightly and was €5,0 million (2006: €4,7 million) representing 7% of net sales (2006: 7%).
  • Cash flow from operating activities was €10,0 million (2006: €11,6 million).
  • Investments activity (cash based) was high at €11,0 million (2006: €13,6 million).
  • The financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS).


VTI Technologies is the global market leader of low-g acceleration sensors for automotive industry applications and cardiac rhythm management. VTI is also successfully building its business in new consumer related applications of sensor technology.

The company's sensor design and production are based on 3D MEMS (Micro Electro-Mechanical Systems) technology which enables a wide range of cost effective high performance products and solutions. The objective is to increase market share substantially in applications for portable devices, medical and instruments and to maintain the position as the leading producer of low-g acceleration sensors for the automotive industry.

VTI’s strong position is based on solid technology knowledge, customer understanding and innovative products.

Positive sales development

Business developed positively and comparable sales grew in 2007. Net sales improved by 9% to €73,5 million (2006: €67,5 million excluding the net sales of the 2006 sold automotive sensor module business, see the attached chart). Automotive Business Unit (ABU) strengthened its leading market position with launching of the new automotive digital platform. Sensing Solutions Business Unit (SES) sales growth was due to increased net sales in new application areas as well as increased penetration in the current application areas.

Profitability improved slightly from 2006. Comparable operating profit was €5,0 million (2006: €4,7 million) representing 7% (2006: 7%) of net sales. Gross margin was weaker than previous year at 31% (34% in 2006) due to higher than expected production costs. This was mainly due to slower ramp up of new production capacity and lower production yields. Overhead costs developed positively during 2007 and were lower at €17,5 million (€18,2 million in 2006).

Investment activity remained high but clearly below previous year. Cash based investments were €11,0 million in 2007 (2006: €13,6 million). The capital structure remained strong.




2006 (*


Net sales
Sensing Solutions




Cost of sales




Gross profit




R&D expenses




Sales and marketing expenses




Administrative expenses




Other income




Other expenses




Operating profit/loss


') Excluding non-recurring items, e.g. the sale of the non-core
automotive sensor module business. Ongoing business of the sold
automotive sensor module business (annual sales ca. €7 million,
with net effect of €4.9 million on net sales) as well as effect of
cost of sales and fixed expenses until November 2006 are also
excluded. The figures include goodwill value adjustment related to
th sold module business of €1 million.


Business environment

VTI operates in the global two-billion-euro market of micro electro-mechanical (MEMS) inertial and pressure sensors. In addition to the automotive industry, inertial and pressure sensors are increasingly being used in medical, industrial and consumer electronics, providing an attractive growth opportunity for VTI. As a whole, the MEMS market is expected to grow by more than 10% annually.

In the coming years, significant growth is expected for MEMS as new applications are emerging. The most significant volume outlook is in portable electronic devices. Sensor technology will also be used to a growing extent in medical equipment and instruments in the future, although the growth is expected to be more moderate than in other industries. The automotive industry is already a significant user of sensors, the growth is driven by increasing penetration as well as new and more demanding applications.

Large consumer electronics manufacturers have already started to integrate MEMS sensors into their products and this trend is expected to continue in the coming years.

IFRS reporting

VTI is reporting the consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS). The date of transition to IFRS was January 1, 2005. Figures for 2003 and 2004 have been prepared according to the Finnish Accounting Standards (FAS). The major changes between FAS and IFRS relate to how goodwill depreciations and development costs are handled in the income statement and balance sheet. In comparison to FAS both have a positive impact on the recorded operating profit of the group.

Net sales growth

VTI Group's comparable net sales grew by 9% in 2007 and were €73,5 million (2006: €67,5 million excluding the net sales of the 2006 sold automotive sensor module business). The net sales of Automotive Business Unit grew by 8% and were €62,9 million (2006: €58,2 million). The net sales of Sensing Solutions Business Unit grew by 14% being €10,6 million (2006: €9,3 million).

Automotive Business Unit (ABU)

The sales of Automotive Business unit increased in 2007 by 8% to €62,9 million (comparable 2006: €58,2 million). In comparable ABU sales for 2006 the sales of the sold module business has been excluded.

ABU strengthened its leading market position in low-g acceleration sensors with launching of the new automotive digital platform that generated positive feedback from the market.

The Automotive Business Unit (ABU) serves the automotive industry with motion and pressure sensors, used in applications such as vehicle stability control (ESC), electronic parking brake (EPB), hill start assistance (HSA), anti-lock braking systems (ABS), electronically controlled suspension (ECS) and various alarm and control applications. VTI sensors are being used by the majority of automotive manufacturers and ESC is the main application for ABU products. Penetration of ESC is already high in Europe and it will become mandatory in the USA from 2011 onwards.

Automotive business is expected to grow steadily mainly due to the increased demand for vehicle stability control systems (ESC).

Sensing Solutions Business Unit (SES)

The net sales of SES grew in 2007 by 14% to €10,6 million (2006: €9,3 million). The increase in sales was generated by the growing demand for applications in instruments and portable devices using VTI sensors.

The Sensing Solutions Business Unit (SES) is the market leader in accelerometers for cardiac rhythm management and is further increasing its market share, even though the market growth has temporarily slowed down. The instruments business has been growing steadily, in particular in high accuracy inclinometers. In consumer electronics VTI has strengthened its position as the leading supplier for altimeters and barometers in personal navigation devices (PND) and various sports and wellness applications.

The SES business is expected to grow further due to increasing demand in medical and consumer applications.

Profitability improved slightly

Operating profit in 2007 improved slightly to €5,0 million representing 7% of sales (2006 comparable: €4,7 million and 7% of sales). In 2006 the unadjusted reported operating profit of € 10,3 million in 2006 included the sales proceeds and the on going business of the sold automotive module business. The sold business represented approximately € 7 million of annual sales in 2006. Gross margin declined in 2007 to €22,6 million representing 31% of sales (comparable 2006: €23,0 million and 34% of sales) mainly due to weaker production yields and slower ramp up of new production capacity. Overhead costs developed positively and were €17,5 million (2006: €18,2 million). Research and development activities were strong but related costs were lower than previous year (€8,6 million vs €9,4 million). Sales and marketing and administrative expenses were at previous year levels.

High investment activity, capital structure remained strong

Gross capital expenditure remained at high level and was €10,5 million in 2007 (2006: €16,6 million). Gross capital expenditure for 2007 contains capitalized development costs amounting to €1,2 million (2006: €2,3 million). Other investments were mainly related to machinery and equipment improving production performance and increasing capacity in element manufacturing as well as assembly lines.

The net cash flow from operating activities in 2007 was strong being €10,0 million (2006: €11,6 million). Working capital increased slightly. Gearing was 25% (2006: 24%) and equity ratio 68% (2006: 69%). Net interest bearing liabilities were €19 million (2006: €18 million). Liquidity remained good throughout the year.

Risk management

VTI´s business operations are currently dependent on automotive industry's demand for low-g acceleration sensors. Automotive segment accounted for 86% of the sales in 2007 (comparable 2006: 86%). In this market segment, where VTI is the leader, it is also dependent on one major customer but is growing it's business with other key customers in the segment as well. Predictability of the automotive business is good over the years. In the most important application area for VTI, the vehicle stability control (ESC), the United States has issued a law making them mandatory from year 2011 onwards.

VTI is intensively developing business in applications for portable devices and medical and instruments. The growth in these application areas for motion and pressure sensors is already evident but the future development is uncertain and thus exposes VTI to business risks which are managed by intensive research and development work as well as right timing of product launches and investments into the production capacity.

For high-technology companies like VTI the protection of immaterial assets is essential. Immaterial assets are protected with patents and trade secrets.

Production risks are minimized by ensuring that there is flexibility to produce products in different locations and production lines. The most important raw materials in the production are ASICs and silicon wafers and plastic packaging material for components. The aim is to reach long-term relationships with subcontractors and suppliers. Quality and price risks are minimized by ensuring that most materials have at least two suppliers. New partners are carefully selected and controlled during the business relationship. Also the cost of energy and water exposes VTI to increases in production costs. These risks are managed mainly by contractual arrangements or in some cases by derivative instruments.

Financial risks relate mainly to fluctuation of currencies which are hedged by having production both in Europe with cost related to euro as well as in Mexico with US-dollar based costs. Sourcing of materials are also balancing the currency denominated sales. When currencies expose VTI to transaction risks they are hedged with currency derivatives. In closing of the accounts for 2007 there was a natural hedge in the currency position and thus no derivatives were used.

VTI may also be exposed to credit risks through its customers and this is monitored on a regular basis. Customers are mostly having strong credit status and are mainly in countries having low political risks.

Product development successes

Research and development expenses in the income statement 2007 were €8,6 million (comparable 2006: €9,4 mil). The lower level of research and development expenses are mainly caused by timing of some of the development projects as well as focus on the core business after the sold non-core module business.

According to the IFRS standards development expenses of some major development projects are capitalized thus lowering the R&D expenses in the income statement. The capitalized amount in 2007 was €1,2 million (2006: €2,3 million). Gross R&D expenses (excluding impact of capitalized expenses) in 2007 were €9,8 million (2006: €11,7 mil) representing 13% of the net sales (comparable 2006: 17%).

The objective of VTI's research and development activities is to create added value for the customers. New products and product versions were introduced during the year of which the most important were the new automotive digital platform products. The new digital sensor solutions combine ease of use and savings for the customers. The digital platform is intended for one-, two-, and three-axis acceleration and inclination measurement. Another important milestone was the successful completion of VTI's new Chip-on-MEMS (CoM) technology. This manufacturing concept allows a novel way of combining MEMS and ASIC technology enabling smaller, smarter and dramatically lower cost sensing devices suitable for large volume production.


VTI Group employed 733 (676 in 2006) full time employees at the year-end of 2007. The total number of personnel increased by 57 persons. Direct labor increased by 6 people only. Salaried personnel increased by 51 people. At the year end, 450 people worked in Finland, 253 in Mexico, 23 in China, 3 in the US, 3 in Germany and 2 in Japan. The average number of personnel during the year was 692 (757).

In Mexico the launch of one additional work shift was started due to the need for increase in assembly capacity. The level of automatization used in manufacturing processes increased as well decreasing the need for additional production personnel. At the end of the year 2006 VTI went through six weeks of negotiations with salaried personnel about the needs for increased profitability resulting to decrease in salaried personnel amount in the beginning of 2007. Due to improved business situation resources has been increased during the latter part of the year and this is likely to continue in 2008.

Environment and sustainability

VTI has been operating according to the environmental standard ISO14001 since 2001. Currently the production facilities both in Finland and Mexico are certified to ISO14001:2004. The company has a comprehensive environmental program with various development projects aiming at eliminating harmful effects to the environment. The projects are aimed at reducing waste, material and water consumption, promoting safe use of chemicals and abiding to new environmental regulations. Compatibility to ELV, WEEE and RoHS directives has been taken into account.

Group structure

The structure of the Group was unchanged in 2007.

Shares and shareholders

VTI's largest shareholder is the EQT III Private Equity Fund (former EQT Northern Europe).

Board of Directors and Management

The Annual General Meeting elected the following persons as members of the Board of Directors of VTI Technologies Oy: Peter Grafoner, Kurt Hellström, Hasse Johansson, Juha Lindfors, Tuomo Lähdesmäki and Petri Myllyneva. Joonas Kettunen was elected as deputy member of the Board of Directors. Peter Grafoner was elected as the Chairman of the Board.

Juha Lindfors resigned from the Board of Directors in September, and the Extraordinary General Meeting on 15 October 2007 elected Bjørn Høi Jensen to replace Juha Lindfors as the member of the Board of Directors. Hasse Johansson and Tuomo Lähdesmäki resigned from the Board of Directors in October. Christian Sinding was elected as new member of the Board of Directors in the Extraordinary General Meeting on 15 February 2008.

The President and CEO was Hannu Martola until the 31st of March 2007 and Markku Hirvonen from the 1st of April 2007 onwards.


PricewaterhouseCoopers Oy has been the auditor of VTI Technologies Oy during 2007 fiscal year. Kari Lydman, Authorized Public Accountant, was the responsible auditor.

Board of Directors proposal for profit distribution

At the end of the year 2007 the shareholders´ equity for VTI Group was €76,4 million and that of VTI Technologies Oy, the parent company, €59,9 million.

Parent company's distributable funds at the end of the year were 59.323.836,43 euros of which the net loss of the period was -3.606.805,25 euros. Parent company's accounts are based on Finnish Accounting Standards and the biggest difference to IFRS is that goodwill is amortized thus lowering the result.

The Board of Directors proposes to the Annual General Meeting that no dividends are distributed and that the parent company's net loss of -3.606.805,25 euros for the financial year 2007 is allocated to retained earnings.

Vantaa, 5th of May 2008

VTI Technologies Oy
Board of Directors

Further information

Ilkka Virtanen, CFO, VTI Technologies Oy, ilkka.virtanen @, tel. +358 40 545 0151

VTI in Brief

VTI Technologies is a leading supplier of acceleration, inclination, motion and pressure sensor solutions for automotive, medical, instrument and consumer applications. VTI develops and produces silicon-based capacitive sensors using its proprietary 3D MEMS (Micro Electro-Mechanical System) technology. Further information

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