Investors

CEO's review

Business Review 1 January‒30 September 2022, 4 November, 2022 / Sami Sivuranta, CEO:

”The first three quarters went well in a very challenging operating environment. Our market share, net sales and EBITDA continued to grow, and considering the circumstances, we are satisfied with the result. Our liquidity is also at a good level.

The profitability of the review period was burdened by the very exceptional price development of raw materials, materials and especially the price of electrical energy, which has increased our manufacturing costs significantly. In terms of our main raw materials and electrical energy, the cost development is largely tied to our customer agreements through indices, which are reflected in our sales prices with a delay. The index increases took effect at the beginning of the last quarter of the year. We have also agreed separately with our customers on the compensation of some of the non-indexed cost increases.

Our profitability during the review period was somewhat affected by the quality and productivity challenges of the Karkkila foundry. The exceptionally fast growth of our Karkkila unit's production volumes has set special needs and challenges, both in terms of increasing human resources and rapidly increasing technical process capacity. Our measures to correct these challenges in Karkkila have progressed as planned and the performance indicators have started to develop positively. The situation is expected to develop positively during the fourth quarter as well.

The crisis situation in Eastern Europe has prolonged the general uncertainty of the market, a challenge to the availability of materials and cost development, and has had a strong impact on the price of energy. The effects through the business of our customers and suppliers have been mild. We actively monitor the development of the situation in our own business environment and strive to ensure the availability of raw materials in all situations and conditions. The general availability of raw materials and materials has started to improve, as alternative procurement channels and supply chains have been ramped up.

In our own operations, we have managed to control our supply chain and secure our own production and deliveries to our customers. The situation in the labor market and the availability of labor has also started to ease, and our human resources correspond to the current production situation. Our entire personnel has been commendably flexible in order to maintain our production and delivery reliability throughout the review period.

Our customers' order books, forecasts and expectations have generally remained positive throughout the past year, and our order book is at a very strong level at the end of the review period. Thanks to the current customer outlook and our own sales success, our expectations for the end of the year are very positive.

Our customers have also increasingly actively communicated that, in addition to risk management, the need for responsible suppliers in local markets has grown even more, and the localization of production chains is carried out closer to Europe and its surrounding areas.

We will actively continue our efforts to strengthen our market position and further improve our profitability as part of our growth strategy. In addition, we are focusing on our service capability, close customer relationships, sustainability and highly competent personnel, as well as on expanding our offering. We are investing in close partnerships with our customers, aiming to be their preferred supplier with a sustainable and extensive offering.”