Lamor Corporation Plc Company release 16 August 2022 at 09:00 a.m. EEST
Lamor Half-Year Financial Report January–June 2022: Revenue growth continued as planned
This release is a summary of Lamor’s half-year financial report 1 January–30 June 2022. The complete report is attached to this release as a pdf file. It is also available on the company website at investors.lamor.com.
April–June 2022 in brief
- Revenue increased by 96.4% to EUR 22.2 million (11.3)
- EBITDA was EUR 3.5 million (1.4)
- Adjusted EBITDA increased by 159.6% and totalled EUR 3.5 million (1.4) or 15.9% of revenue
- EBIT was EUR 1.7 million (0.7)
- Adjusted EBIT increased by 187.0% and amounted to EUR 1.8 million (0.6) or 8.0% of revenue
- Net cash flow from operating activities was EUR 6.4 million (-1.4)
- Earnings per share increased to EUR 0.01 (0.00) by 259.7%
- Orders received was EUR 7.3 million (81.9)
January–June 2022 in brief
- Revenue increased by 265.5% to EUR 65.4 million (17.9)
- EBITDA was EUR 9.5 million (0.9)
- Adjusted EBITDA increased by 1239.7% and totalled EUR 11.4 million (0.9) or 17.5% of revenue
- EBIT was EUR 6.2 million (-0.6)
- Adjusted EBIT amounted to EUR 8.3 million (-0.6) or 12.6% of revenue
- Net cash flow from operating activities was EUR -1.4 million (-2.4)
- Earnings per share increased to EUR 0.08 (-0.05)
- Impairment losses from Russian business amounted to EUR 2.0 million
- Orders received was EUR 43.6 million (88.2)
CEO Mika Pirneskoski:
During the second quarter of 2022, we continued on our strong growth path. The revenue of the second quarter almost doubled compared to the previous year and was 22.2 million euros. The main drivers behind the growth were our long-term service projects in the Middle East supported by the volume of our basic business as well as finishing the clean-up project in Peru and Ecuador. Our adjusted EBIT did not reach our targeted level due to lower volume than anticipated and challenges in the invoice acceptance process in Saudi Arabia. We believe, however, that we will reach our guidance i.e., an adjusted EBIT of 14 million euros.
The large-scale service projects in Kuwait and Saudi Arabia advanced mostly as planned also in the second quarter of the year. In Kuwait, we have started the work on the site, and the construction of the treatment centres is well under way. As the transportation of the contaminated soil will start in the second half of the year, the project is expected to advance with a faster pace. In addition, we submitted a bid for the second phase of the SKETR project in Kuwait jointly with our local partner. Our service project contract party in Saudi Arabia is changing. The contract will be transferred to Public Investment Fund’s subsidiary Saudi Investment and Recycling Company (SIRC) and the process started at the end of July. We estimate that this has no significant impact on the current contract, but we believe that it will create significant future potential for scope increase and contract extension.
The significant increase in business volume also led to the increase of working capital especially due to large on-going service projects and the final assessment and the timing of the client invoicing of the oil spill clean-up project. The operative cash flow, however, improved significantly during the reporting period.
Investments to tackle the pace of climate change
A part of Lamor’ strategy - to be globally local - is based on the idea that we need a strong geographical reach in our business and enough local resources to be able to offer the solutions in the clients’ own operating environment fulfilling the global quality standards. Lamor’s competitive advantage is based on e.g., the global distribution network and project delivery references for large global corporations. These competitive advantages also enable the expansion of our offering. A great example of that is the decision to invest in the first industrial-scale chemical plastic recycling plant in Finland.
In the first phase we aim to build a 10,000-tonne per year capacity in Kilpilahti by the end of 2023, but our medium-term plan is to build a distributed 40,000-tonne chemical recycling capacity in Finland by the end of 2026 jointly with our partner Resiclo Oy.
Lamor will invest EUR 1.2 million in the company established for the project, Resiclo Kilpilahti Oy which corresponds to 50% of the shares of Resiclo Kilpilahti. The rest of the shares of the company will be owned by Resiclo Oy. The total investment of the first phase of Resiclo Kilpilahti Oy is estimated to be EUR 12 million consisting of equity and debt financing. In addition, we are committed to finance Resiclo Kilpilahti’s future investments with a sub-ordinated loan amounting up to a maximum of EUR 3 million. At the same time, Lamor will invest EUR 1.3 million in Resiclo Oy, where it will be acting as a minority shareholder with a 11.8% stake. Resiclo is a Finnish start-up phase recycling company which has been developing chemical recycling projects for plastics waste since 2018. The agreement includes conditions which need to be met before the closing of the agreement. These conditions are expected to be met during the second half of 2022.
Our plan is to build a blueprint of the factory and gain the references needed in Finland, after which we plan to utilise our global network to build similar plants in our strong market areas. Our long-term target is to build an annual chemical recycling capacity of 200,000 tonnes by 2030.
There are significant initiatives globally to reduce the use of virgin crude oil in the petrochemical industry to combat climate change, and the chemical recycling market is expected to be in the magnitude of hundreds of billions euros by 2050.
Strategic targets and transformation
The year 2021 was significant for Lamor in terms of order backlog growth, and as per our financial guidance, the year 2022 will be significant in terms of revenue and profitability growth. We continue our investments to enable profitable future growth.
The next step in the transformation is to take the implementation of the strategy of profitable growth closer to the client interface by leading the operations closer to sales and project execution. In addition, we continue the work in unifying our offering and processes on a global level. We believe that these development actions will help us in reaching our strategic targets.
Sustainability is at the heart of everything we do, and we aim to develop our ability to combine sustainability data with financial and operative data. We believe that we can create a sustainable competitive advantage by creating an extensive lifecycle assessment model for our whole offering. The model aims to show what is the impact of the solutions being offered from the client perspective. This will help us to differentiate ourselves from the local competitors, whose main advantage is low price.
We have strengthened our organisation greatly over the past year. Our aim is to strengthen, as a part of our strategy, our local presence as well as global operations. The announcement made in July, that Lamor was chosen to deliver three projects in Bangladesh once again highlighted how our strategy works and our competitiveness in international tenders. The total value of these three equipment projects is approximately EUR 25 million. The contracts are estimated to be signed, and the projects added in the order backlog during the third quarter of 2022.
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Guidance for 2022
As released on 10 May 2022, Lamor estimates its turnover to be at least EUR 120 million in 2022. Adjusted EBIT is estimated to be at least EUR 14 million.
Lamor has a strong order backlog for 2022. Since a significant part of the revenue is generated by large service project deliveries, any major delay in the project progress would have a negative impact on revenue and profit for 2022.
Lamor closely follows how the Russian invasion of Ukraine is affecting the company’s operating environment. Due to the war, Lamor has ceased the sales activities of the products and services in Russia. War-related global cost inflation as well as the shortage of raw materials and components are having an effect also on Lamor’s business. Lamor will continue to monitor the situation carefully.
In addition, any potential virus variant of the COVID-19 could have a negative impact on Lamor’s revenue and result in 2022 by impacting Lamor’s capabilities to deliver projects efficiently.
Webcast for shareholders, analysts, and media
Webcast for shareholders, analysts, and media will be arranged on 16 August 2022 at 10:00 EEST. The result will be presented by CEO Mika Pirneskoski and CFO Timo Koponen. The webcast includes a Q&A session and participants can ask questions in English and Finnish via the event chat room. The webcast can be followed at lamor.videosync.fi/q2-2022-interimreport.
A recording of the webcast will be available later on the company’s website at investors.lamor.com/reports-and-presentations.
Mika Pirneskoski, CEO, Lamor Corporation Plc, tel. +358 40 757 2151
Timo Koponen, CFO, Lamor Corporation Plc, tel. +358 40 749 2986
Danske Bank A/S, Finland Branch, tel. +358 50 590 7667
Lamor in brief
Lamor is one of the leading global providers of environmental solutions. Lamor provides its customers with equipment used for oil recovery, waste management, and water treatment as well as versatile environmental solutions and services, such as clean-up and preparedness services related to oil spill response and oil spills, services for the treatment of waste and tailored and adapted water treatment solutions. Lamor operates together with its local partners, offering a wide selection of solutions, which can be tailored according to the needs of each customer, and aiming to clean the world, for which the company has worked since its incorporation. The company's share is listed on the Nasdaq First North Premier Growth Market Finland marketplace maintained by Nasdaq Helsinki under the trading code LAMOR. Further information: www.lamor.com