CEO’s review

Componenta Corporation’s business review 1 January–31 March 2025, 9 May 2025/ Sami Sivuranta, CEO:

“Year 2025 started well for Componenta, considering the general market conditions. Our net sales increased, and our profitability improved clearly in the first quarter of the year, making it the third consecutive quarter in which we improved our performance compared to the comparison period. The development also continued to be positive in terms of sales and the production load factor, although the level of production volumes as a whole remained modest, especially in our foundry operations. The most important factor for this is the general economic uncertainty, and particularly the low level of demand in the agricultural machinery industry throughout Europe. Sales was also affected by the low level of the main raw material and energy indices included in sales prices. The outlook for the industry has remained cautiously optimistic, expectations for the second half of the year are on the rise and our order book development has continued to grow slightly.

In addition to low demand, our profitability was burdened by labour market disturbances and strikes that affected our customers’ operations and our own production in the first quarter of the year. In the second half of 2024, we significantly adjusted our operations to correspond to lower utilization rates and maintained a temporary pricing model for customers that corresponds to low order backlogs and our utilization rates. The Group’s service capability and production quality capability were at a good level in the first quarter. During the review period, we steered our capital expenditure to production capacity and efficiency development, which will further improve our capabilities and profitability in the future.

After the review period, we also announced our new financing arrangements to increase our credit limits and a capex loan to prepare for future capex in accordance with our plans.

Our liquidity remained good throughout the review period. Inflation has stabilised at a moderate level and the availability of raw materials, materials and components is currently at a good level. We actively monitor the development of the market, prepare for the positive development of our order book and ensure the functionality of our own supply chains also in the future. There are currently no significant near-term risks to the availability of electricity, but the general price level of electricity includes uncertainties, and short-term significant price fluctuations and responses to them have become daily business in energy-intensive industries.

The uncertainty created by the geopolitical situation and customs decisions in the market has increased our customers’ average decision time from the submission of the offer to the acceptance of the offer and postponed the end customers’ capex decisions. However, from Componenta’s point of view, the situation is currently stable, and we are actively monitoring the development of the situation. There are customer- and industry-specific differences in order intake, the decline in interest rates supports the launch of capex projects, and there is currently a strong momentum, especially in the energy and defence equipment industries. The indices of the agricultural machinery industry also show signs of picking up already towards the end of 2025.

As a contract manufacturer, we will continue to pursue measures to strengthen our market position, and we are working to be the preferred sustainable total supplier to our customers, with a wide offering.”