RAUTE CORPORATION HALF-YEAR REPORT JULY 23, 2021 AT 9:00 a.m.
This is a summary of Raute's Half-year Report January 1-June 30, 2021. The complete report is attached to this release as a pdf file and is also available on the company's' website at www.raute.com.
RAUTE CORPORATION - HALF-YEAR REPORT JANUARY 1-JUNE 30, 2021
- The Group's net sales, EUR 60.2 million (MEUR 48.2), increased 25 percent on the comparison period. Order intake was EUR 95 million (MEUR 38).
- Operating profit amounted to EUR -3.5 million (MEUR -4.0), up 13% on the comparison period. The result before taxes was EUR -3.1 million (MEUR -3.6).
- Earnings per share were EUR -0.64 (EUR -0.73) and diluted earnings per share were EUR -0.64 (EUR -0.73).
- Net sales in the second quarter were EUR 35.5 million and operating profit was EUR -1.0 million. Order intake in the second quarter was EUR 65 million. The order book at the end of the reporting period stood at EUR 129 million (MEUR 80).
- Raute's net sales are expected to grow in 2021 and operating profit to improve from 2020.
KEY FIGURES Q2 Q2 Q1-Q2 Q1-Q2 Q1-Q4
2021 2020 2021 2020 2020
Net sales, MEUR 35,5 24,4 60,2 48,2 115,0
Change in net sales, % 45,5 -34,1 24,9 -38,5 -24,0
Exported portion of net sales, % 89,2 93,5 90,5 94,4 94,2
Operating profit, MEUR -1,0 -1,0 -3,5 -4,0 -1,9
Operating profit, % of net sales -2,9 -4,2 -5,8 -8,4 -1,6
Profit before taxes, MEUR -0,7 -0,7 -3,1 -3,6 -1,5
Profit before taxes, % of net sales -1,8 -2,8 -5,2 -7,4 -1,3
Profit for the period, MEUR -0,3 -0,9 -2,8 -3,1 -0,9
Profit for the period, % of net sales -0,7 -3,5 -4,6 -6,4 -0,8
Gross capital expenditure, MEUR 1,5 1,2 2,6 2,1 5,2
% of net sales 4,2 5,0 4,3 4,3 4,5
Research and development costs, MEUR 1,3 0,8 2,5 2,2 4,6
% of net sales 3,7 3,2 4,2 4,5 4,0
Order book, MEUR 129 80 129 80 94
Order intake, MEUR 65 13 96 38 119
Personnel, at the end of the period 817 784 751
Personnel, effective, on average 774 750 743
Personnel, on average 783 768 760
TAPANI KIISKI, PRESIDENT AND CEO: HEADING INTO THE SECOND HALF OF 2021 WITH A STRONG ORDER BOOK
Demand for Raute's technology and services remained brisk also in the second quarter. We managed to receive new orders totaling EUR 65 million. Even without the EUR 30 million order for an LVL mill's production process, the order intake was at a good level. I am particularly pleased with this good level of mid-sized production line and modernization orders. Our order book thus almost reached a record of EUR 129 million. Our outlook for the near future is good.
Despite the continuing pandemic, the market situation was good, especially in the traditional, industrialized and developed markets of Europe, North America and Russia. Travel restrictions continue to hamper work carried out at our customers' sites, however. Furthermore, in the emerging markets, except for China, the pandemic is still considerably limiting the progress of our customers' projects. The travel restrictions are hampering the progress of many of our development projects also in China.
Our net sales in the first half of this year were EUR 12 million higher than in the same period last year. Most of the growth in net sales took place in the second quarter. As predicted, however, the growth was not enough to turn our result into a profit due to the exceptionally low payroll costs and the planned marketing and digitalization efforts. Even major fluctuations in net sales, and the accompanying operating profit, are typical for the project business, which accounted for roughly two thirds of our net sales in the second quarter.
The travel restrictions imposed due to the coronavirus pandemic continue to hinder the implementation of installation supervision and commissioning and maintenance services, and, of course, our sales efforts. However, the removal of these restrictions bit by bit as vaccinations progress is creating optimism that business activities will gradually begin to normalize this year. Very recently, the spread of new virus variants has led to increasing uncertainty about the easing of the pandemic, however. I am pleased with the abilities demonstrated by our customers and our personnel to continue working using remote connections. The lessons learned and experience gained will improve both our ability to serve our customers and our flexibility also in the future.
The order intake for technology services was also at a good level. This is yet another reason to conclude that the capacity utilization rate of our customers' production is at a good level. If the travel restrictions were not hampering maintenance work, there would be even more demand for these services.
Because of the exceptional market changes caused by the pandemic and the stimulus measures aimed at recovering from it, many raw material, component and freight costs have risen, even to a great extent, and delivery times have increased; there have even been challenges in availability. So far, Raute has managed to operate amid these changes without major problems. Our operational organization is actively addressing these challenges together with our partners. We estimate that in the second half of the year, we may encounter delays and possible cost issues.
Because of the pandemic, in the near future the focus of our market will be more on developed markets than we estimated before the pandemic. In the longer term, however, we believe that the focus of growth will again shift to the emerging markets. Accordingly, we will continue to invest in our stated strategic priorities, the emerging markets and the development of our technology services business and digitalization. Besides the opportunities offered by the current market situation, our strong financial position and market position, as well as our long-standing customer relationships are important competitive advantages and enablers of this type of long-term work.
Our outlook for 2021 remains unchanged, and we expect our net sales to grow and our operating result to improve from last year.
Market situation in customer industries
Raute's customers in the veneer, plywood and LVL (Laminated Veneer Lumber) industries are engaged in the manufacture of wood products used in investment projects and are thus highly affected by fluctuations in construction, housing-related consumption, international trade, and transportation. We expect that the trend-like growth in wood construction will create demand for our customers and indirectly for Raute, strengthening our long-term growth opportunities.
In the second quarter, the situation and outlook in the global economy and financial markets continued to pick up. Vaccinations and the easing of the Covid-19 pandemic in many market areas created positive expectations. Demand remained strong and the prices of our customers' products were exceptionally high. Currently, new variants of the virus are causing increased uncertainty, but for now, it has not affected demand among Raute's customers. We expect the market situation of our customer industries to remain favorable and for things to get better this year, including in areas that have not yet experienced an upturn.
Demand for wood products technology and technology services
As a result of the exceptional volatility in the market situation caused by the pandemic, many of our customers, particularly in traditional, developed markets, initially put the brakes on their investments, whereas this year they have accelerated them and cleared their investment backlog. In contrast, emerging markets have not yet begun to make a similar recovery from the pandemic. Demand for Raute's products and services has thus remained at the same level in these markets, and in some it has even slowed. Demand overall has been at a good level in the first half of the year. Mill-scale projects also moved forward during the first six months of the year, alongside smaller projects and modernizations.
Investment activity among Raute's customers strengthened in the first six months of the year compared to last year. We consider our order intake during the reporting period to be very good. Even without the reported single large mill project, the order intake was at a good level.
In Russia, demand remained active, although decisions were few and far between. Forecasting the realization and timing of projects remains difficult. At the start of this year's Q3, we announced a rather large order destined for Russia. The pandemic continued to have a major impact on the emerging markets of Asia and South America, which were very quiet. We nevertheless managed to gain a few orders. The only exception to this was China, where the planning of projects remained active. In Q2, however, we did not receive significant orders to China. Demand resumed in Europe and North America, and the order intake was at a good level.
Demand for maintenance and spare parts services remained good, which is an indication of the generally good capacity utilization rates of Raute's customers' production plants. In our estimation, without the travel restrictions related to the pandemic, sales of maintenance services would have been even stronger than they were.
Outlook for 2021
Due to the strong order book, active demand and presumed alleviated impacts of the coronavirus pandemic, we expect Raute's net sales to increase in 2021 compared to the level of the previous year. We expect the operating result to improve on the previous year mostly due to growth in net sales.
Board of Directors
PRESENTATION OF THE HALF-YEAR REPORT ONLINE ON JULY 23, 2021, AT 2:00 PM:
Analysts, investors and the media can watch the presentation of the Half-year Report online on July 23, 2021, starting at 2 p.m. via MS Teams. The Teams link will be sent to registered participants by email. The event will take place in Finnish. Registrations to [email protected].
The Half-year Report will be presented by Mr. Tapani Kiiski, President and CEO, and Ms. Tarja Järvinen, CFO. Analysts, investors and the media can send questions related to the Half-year Report in advance to the email address [email protected]until July 23, 2021, 2.30 p.m., after which President and CEO Tapani Kiiski and Group Vice President, CFO Tarja Järvinen will answer the sent questions in a live Half-year Report presentation up until around 3 p.m. There will also be an opportunity to present questions in Teams and through the Teams chat channel.
President and CEO Tapani Kiiski has also reserved time for answering questions over the phone after the Half-year Report presentation, starting at 3 p.m. The phone number is +358 400 814 148.
NEXT INTERIM REPORT:
Raute Corporation's Interim Report for January 1-September 30, 2021, will be published on Friday, October 22, 2021.
Mr. Tapani Kiiski, President and CEO, Raute Corporation, mobile phone +358 400 814 148
Ms. Tarja Järvinen, Executive Vice President, Finance, CFO, Raute Corporation, mobile phone +358 40 658 3562
Nasdaq Helsinki Ltd, main media, www.raute.com
RAUTE IN BRIEF:
Raute is a technology and service company that operates worldwide. Raute's customers are companies operating in the wood products industry that manufacture veneer, plywood, LVL (Laminated Veneer Lumber) and sawn timber. Its technology offering covers the entire production process for veneer, plywood and LVL and special measurement equipment for sawn timber. As a supplier of mill-scale projects, Raute is a global market leader both in the plywood and LVL industries. Additionally, Raute's full-service concept includes technology services ranging from spare parts deliveries to regular maintenance and equipment modernizations. Raute's head office is located in Lahti, Finland. The company's other production plants are located in Kajaani, Finland, the Vancouver area of Canada, the Shanghai area of China and in Pullman, Washington, USA. Raute's net sales in 2020 were EUR 115.0 million. The Group's headcount at the end of 2020 was 751. More information about the company can be found at www.raute.com.