RAUTE CORPORATION INTERIM REPORT OCTOBER 22, 2021 AT 9:00 a.m.
This is a summary of Raute's Interim Report January 1-September 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 - INTERIM REPORT JANUARY 1-SEPTEMBER 30, 2021
- The Group's net sales, EUR 98.1 million (MEUR 76.1), increased 29% on the comparison period. Order intake was very high, at EUR 154 million (MEUR 49).
- Operating profit amounted to EUR -1.6 million (MEUR -2.7), up 41% on the comparison period. The result before taxes was EUR -1.2 million (MEUR -2.3).
- Earnings per share were EUR-0.31 (EUR-0.54), and diluted earnings per share EUR -0.31 (EUR -0.54).
- Net sales in the third quarter were EUR 37.9 million and operating profit was EUR 1.9 million. Order intake in the third quarter was EUR 58 million. The order book at the end of the reporting period was at a record-high EUR 150 million (MEUR 62).
- Raute's net sales are expected to grow in 2021 and operating profit to improve from 2020.
KEY FIGURES Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4
2021 2020 2021 2020 2020
Net sales, MEUR 37,9 27,9 98,1 76,1 115,0
Change in net sales, % 35,8 -17,3 28,9 -32,1 -24,0
Exported portion of net sales, % 90,0 92,7 90,0 93,7 94,2
Operating profit, MEUR 1,9 1,3 -1,6 -2,7 -1,9
Operating profit, % of net sales 5,1 4,8 -1,6 -3,6 -1,6
Profit before taxes, MEUR 1,9 1,3 -1,2 -2,3 -1,5
Profit before taxes, % of net sales 5,1 4,5 -1,2 -3,0 -1,3
Profit for the period, MEUR 1,4 0,8 -1,3 -2,3 -0,9
Profit for the period, % of net sales 3,7 2,8 -1,4 -3,0 -0,8
Gross capital expenditure, MEUR 3,7 3,1 6,3 5,2 5,2
% of net sales 9,8 11,1 6,4 6,9 4,5
Research and development costs, MEUR 1,1 1,0 3,6 3,2 4,6
% of net sales 3,0 3,7 3,7 4,2 4,0
Order book, MEUR 150 62 150 62 94
Order intake, MEUR 58 11 154 49 119
Personnel, at the end of the period 783 749 751
Personnel, effective, on average 778 747 743
Personnel, on average 786 764 760
TAPANI KIISKI, PRESIDENT AND CEO: RECORD-HIGH ORDER BOOK AND POSITIVE RESULT IN THE THIRD QUARTER
Raute's market situation was good, especially in the traditional, industrialized and developed markets of Europe, North America and especially Russia, in spite of the continuing pandemic. However, in the emerging markets the pandemic is still limiting the progress of our customers' projects. In China's case, too, pandemic-related restrictions coupled with the general economic uncertainty, for instance in terms of the price and even availability of energy, are hampering the progress of our customers' and our projects alike.
We received new orders totaling more than EUR 58 million in the third quarter. New orders included production machinery and equipment worth EUR 18 and 16 million for a birch veneer and plywood mill and a plant expansion project, both for Russia. Mid-sized line orders and modernization orders were also at a good level, indicating that the markets have picked up in all sectors. Our order book is at an all-time high of EUR 150 million, so our outlook for the near future is good.
Our net sales this period were EUR 22 million higher than the same period last year. Net sales continued to grow at the same rate as in the second quarter, and we achieved a positive result as predicted. Our efforts in product development, digitalization and marketing continue and are still reflected in our result development. Our result was also weakened by a few unexpected cost items, such as a rather large expense involving the repair of an important machine tool at our Nastola plant. We are not satisfied with the level of our result.
However, the removal of travel restrictions bit by bit as vaccinations progress is creating optimism that business activities will gradually begin to normalize in the coming months. Despite the progress of vaccinations and the lessening of restrictions it has enabled, the uncertainty and inconvenience caused by the pandemic continue to a lesser degree.
The order intake for technology services was at a particularly good level thanks to modernization projects. This is yet another reason to conclude that the capacity utilization rate of our customers' production is at a good level. Our customers' desire to systematically develop the safety, quality and efficiency of their operations is also at a good level.
Many raw material, component and freight costs have risen, even to a great extent, delivery times have increased and there have even been challenges in availability due to the exceptional market changes caused by the pandemic and the stimulus measures aimed at recovering from it. The rise in prices is expected to affect the future profitability of projects for transactions that have already been concluded. This only has a minor impact on the Q3 result. Our operational organization is actively addressing these challenges together with our partners. In terms of new orders, I believe we will be able to transfer most of the cost increases to prices.
Because of the pandemic, the focus of our market will, now and going forward, be more on developed markets than we estimated before the pandemic. In the longer term, we believe that the focus of growth will again shift to the emerging markets. 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 and 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 profit 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 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 third quarter, the situation and outlook in the global economy and the financial markets remained good, although inflationary concerns over the rising raw material and transport costs increased uncertainty at the end of the period. Vaccinations and the easing of the Covid-19 pandemic in many market areas created positive expectations, despite the continuing uncertainty, and demand remained strong. The strong rise in the prices of our customers' products leveled out and began to decline. Prices nevertheless remained at a historically good level. We expect the market situation for our customer industries to remain good.
Demand for wood products technology and technology services
As a result of the exceptional volatility in the market situation caused by the Covid-19 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. This development was further strengthened by the strong demand for wood products. In contrast, emerging markets have not made similar progress in recovering from the pandemic. Demand for Raute's products and services has thus remained low in these markets. Demand overall has been at a good level so far this year. Mill-scale projects are also moving forward in several market areas.
Investment activity among Raute's customers has strengthened compared to last year. We consider our order intake during the reporting period to be very good. Even without the reported new capacity projects, which are more one-off in nature, the number of new orders was good.
Demand was particularly high in Russia. Demand and project planning have gained momentum. However, forecasting the realization and timing of large projects is difficult. The pandemic continued to have a major impact on the emerging markets of Asia and South America, which were quiet. Also in China, the pandemic-related precautionary measures continue and are hampering the progress of projects, in addition to which the general economic development is slower than usual. Demand continued to be active 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 Covid-19 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 further 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 profit to improve on the previous year.
Board of Directors
BRIEFING ON OCTOBER 22, 2021, AT 2 P.M.:
A briefing will be organized for analysts, investors and the media on October 22, 2021, at 2 p.m. at Scandic Simonkenttä Hotel, Tapiola cabinet, Simonkatu 9, Helsinki. The interim report will be presented by Mr. Tapani Kiiski, President and CEO, and Ms. Tarja Järvinen, CFO. The event will be recorded, and the recording can be viewed on Raute's website, raute.com, later on the same day, October 22, 2021.
Mr. Tapani Kiiski, President and CEO, Raute Corporation, mobile phone +358 400 814 148
Ms. Tarja Järvinen, Group Vice President, Finance, CFO, Raute Corporation, mobile phone +358 40658 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.