CEO’s review

Componenta Corporation’s Half-Year Financial Report 1 January–30 June, 2024, 23 July 2024/ Sami Sivuranta, CEO:

“The first half of the year presented two different streams. In the first quarter, the development of volumes and the order book remained well below expectations, particularly because of the low level of demand prevailing in the agricultural machinery industry across Europe. Overall, the decrease was caused by lower delivery volumes in the first half of the year and lower main raw material and energy index levels included in sales prices compared with the corresponding period in the previous year. Our order book started to grow slightly in the second quarter. In May, we also announced a deal in the defence equipment industry, the impacts of which will become visible in the company’s operations during the rest of the year and in the coming years. In the first quarter, our profitability was weakened by low operating rates, especially in the Karkkila and Pori foundries, combined with volume products taken into serial production. These had a clear impact on production efficiency and the quality level, but systematic measures to improve quality were successfully implemented during the second quarter. We also adjusted our operations to meet the temporarily lower volume and order book levels. As a result of this, profitability improved clearly during the second quarter compared with the first quarter.

We expect volumes in the second half of the year to be better than in the first half. The ongoing ramp-up of serial products will have a positive impact on our result as deliveries return to their expected level. While there are differences in order backlogs between customers and sectors, the outlook for 2024 as a whole remains generally positive. Our liquidity remained at a good level throughout the first half of the year.

Inflation has levelled off, but the impacts of the political strikes in the early part of the year continued to burden our profitability in the second quarter.

We were able to maintain good service capability across the Group despite the challenging operating environment. The general availability of raw materials and other materials is currently at a good level. We are actively monitoring market developments and Net sales and EBITDA decreased Half-Year Financial Report 1 January–30 June 2024 3 ensuring that our own supply chains continue to work effectively. There are currently no significant near-term risks in the availability of electricity, but the prices and price fluctuations of electricity were higher than expected in the second quarter.

In line with our strategy, sustainability is one of the priorities in our operations and their development. For example, we are currently carrying out energy audits in our units for new energy efficiency measures. During the review period, we continued to prepare for the requirements of the CSRD on corporate sustainability reporting, according to which Componenta is required to report for 2024. We are determined to continue to meet our customers’ expectations and demands in the coming years. As a contract manufacturer, we will continue to actively 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.”