Componenta: A sizable order coming from the Finnish Defence Forces

Translation: Original comment published in Finnish on 5/31/2024 at 7:33 am EEST.

Componenta announced yesterday that the Finance Committee of the Finnish Government is supporting a major purchase of mortar ammunition from Componenta. The deal is virtually certain, but not yet finalized, so it has not yet been factored into our forecasts. In any case, this is important positive news for Componenta.  

Order almost certain

According to a press release issued yesterday, the Government's Finance Committee supports the acquisition of shell-tail assemblies of 120 mm mortars (rounds) from Componenta Manufacturing between 2025 and 2028. The total value of the authorization is 50 MEUR (41 MEUR + option of 9 MEUR). The order has already been approved by various preparatory bodies and its implementation is practically awaiting the sign-off by the Minister of Defence Antti Häkkänen.

Growth opportunities for Componenta's revenue and result

This is a follow-up order, as Componenta already manufactures shells for 120 mm mortar rounds for the Defence Forces. However, the new order would represent a significant scale-up, as last year the Defence Forces accounted for approximately 4 MEUR (4%) of Componenta's revenue. Even if the new order would fully replace these deliveries, Componenta's annual revenue for 2025-2028 would increase by at least 5-6 MEUR (+4...+5%). This would also increase the Defence Forces' share of Componenta's revenue to about 9%. Moreover, we believe that the margins on the order are good, as the defense equipment market is currently heated up, and it will not hurt the image of the Defence Forces to end up with a domestic, well-known supplier.

We look forward to more information from Componenta in the coming days/weeks, at which point it should be possible to ask further questions.