Short-term risks

Componenta Corporation Half-Year Financial Report 1 January–30 June 2026

The most significant risks associated with Componenta’s business operations are related to the business environment, operations and financing. Risks related to the business environment include competitive and pricing risks, commodity risks,
and environmental risks. Risks related to business operations include the following: customer and supplier dependencies; productivity, production and process risks; labour market disruptions; contractual and product liability risks; and risks related to personnel, information security and cybersecurity. Financing risks are related to liquidity and the availability of financing, as well as to counterparty, currency, interest rate and credit risks.

The availability of certain raw materials such as recycled steel, pig iron, structural steel, aluminium and energy at competitive prices, as well as the uninterrupted supply of energy, is essential for the Group’s business operations. In the review period, the variation of the market prices of electricity at the daily and hourly levels was significant. Greater geopolitical tension may increase uncertainty regarding the availability of raw materials and supplies, even within Componenta’s own operational activities. In addition, global challenges with the availability of materials for customers may lead to production disruptions for end-customers and thereby affect Componenta’s sales volumes in the short term. However, from Componenta’s perspective, the situation is currently stable.

To ensure the availability of raw materials and supplies, Componenta actively engages in dialogue with its suppliers, continuously updates its needs forecasts, optimises its inventory levels to meet longer-term demand, and closely monitors the situation of its suppliers and market developments.

Componenta has no significant or immediate risk concentrations related to Russia, Ukraine or the Middle East among its customers or suppliers of goods, and the company has no operations in these regions. The Russian war of aggression has had an impact on the general price development and availability of raw materials such as structural steel and pig iron, and on the development of energy prices. The war has had an indirect impact on the supply chains of manufacturers of steel materials and wholesalers through the price development and availability of iron ore and coal, for example. Going forward, a deterioration in the geopolitical situation, including an escalation or prolongation of the conflict in the Middle East, may affect the financial market, sales volumes, the availability and price development of raw materials and energy, and the availability of foreign labour, which increases forecasting uncertainty. Any increases in import duties may have a direct impact on Componenta’s business operations through purchases of raw materials and supplies, and an indirect impact through customers. However, Componenta delivers hardly any components directly to the United States.

The cost risk associated with raw materials is mainly managed through index-based price agreements, based on which the sales prices of products are updated in response to changes in the prices of raw materials for the next quarter. An increase in raw material prices may tie up more working capital than expected. In terms of commercial risks, future volumes may be weakened by customers switching to cheaper alternatives due to price competition.

Componenta’s business operations depend on the reliability of production plants, procurement and supply chains, and the related processes and systems. The company is also closely monitoring developments in the labour market. Due to the central role of information technology, the quality, accuracy and availability of information are essential in Componenta’s operations. If materialised, IT and cybersecurity risks may cause operational disruptions, loss or distortion of data, and interruptions to operations, which may affect product availability. Componenta pays particular attention to cybersecurity and monitors the situation of its suppliers and customers.

The company continuously monitors the liquidity and counterparty risk. The company’s financing is based on income financing, factoring arrangements, committed loans from financial institutions, credit facilities and convertible bond arrangements. At the end of the review period, the company had committed and unutilised credit facilities totalling EUR 5.0 million (EUR 5.0 million), which are valid until September 2027; furthermore, a capital expenditure loan of EUR 3.0 million, of which EUR 2.0 million remained undrawn at the end of the review period, and a convertible bond arrangement of up to USD 3.0 million agreed with a US investor, which is available at the company’s sole discretion, remains fully unutilised and is valid until 31 December 2027. However, the termination or non-renewal of these arrangements could create uncertainty regarding the Group’s liquidity. It is the company’s view that the Group will continue to have access to debt financing from the market if necessary. The Group’s liquidity was at a good level at the end of the review period.

Componenta’s credit facilities and working capital loans include the following financial covenants: net interest-bearing debt/rolling 12-month EBITDA no higher than 3.0, and an equity ratio of at least 25%. The covenants are reviewed twice a year, on 30 June and 31 December. On 30 June 2026, Componenta’s financial situation fulfilled all the covenants included in the loan agreements. However, unfavourable EBITDA development over a rolling 12-month period can cause a covenant breach.