From the CEO
July 23, 2020
FOCUS UNCHANGED DESPITE THE PANDEMIC
Net sales for the first half of the year remained low and the result was negative. The decline in our net sales and the consequent weakened result were expected due to the timing of the order book. The impacts of the corona pandemic showed most dramatically in the second quarter in the order intake. Our Canadian, US and China locations were forced to shut down for several weeks. Our field operations were largely prevented due to the travel restrictions.
Our order book is still strong. Q1's relatively good order intake included orders that had, for the most part, been negotiated almost fully before the start of the corona crisis. In Q2, many of our customers put off their plans and orders, based on the uncertainty of their market situations. Very few actual cancellations took place, however, so when the situation settles, I anticipate that the postponed projects may restart, perhaps even at short notice.
The restrictions put in place due to the coronavirus pandemic countermeasures and the resulting increased uncertainty impacted our business in full force in the second quarter. China was the only market area in which development took a turn for the normal again. There, our plant's operations returned to normal and our customers' projects resumed. We received an order from China that gained us a foothold in the Chinese markets. In our North American locations, we were forced to restrict our operations due to the official guidelines. As we have consolidated in our main locations the kind of expertise that is often required for special maintenance, project installation supervision and commissioning, the travel restrictions inconvenienced us and our customers globally. The impact of the coronavirus pandemic on our net sales and operating profit can be described as significant.
The impact of the corona pandemic on the outlook highlights the importance of our strategic goals – growing the emerging market share, developing the technology service business and investing in digitalization. We will thus continue to focus on product development, marketing and digitalization. Buying the majority of Hiottu Oy was one of these measures. We also initiated a significant system investment during Q2, which will improve our operations and our technical capabilities to serve our customers. Our strong balance sheet, market position and long-standing customer accounts are important competitive advantages and enablers of this type of long-term work. We will succeed when our personnel, customers and other partners work together and we will come out of this crisis as a stronger and more agile Raute.
It is clear that our original targets and predictions for net sales and operating profit for this year will not be met. We would like to repeat our estimate given on April 24th: our net sales will fall and operating profit will weaken clearly year-on-year.
President and CEO