From the CEO
February 13, 2020
A YEAR OF CHANGE
In 2019, uncertainty in the global economy and in our customers' markets increased. Many of our traditional customers were still digesting major investments made in the past few years. As a result, our demand focused on major new capacity projects, minor improvements, as well as services. Mid-sized projects accounted for a low share of demand, which made it more difficult to forecast order intake and caused larger variations in our order intake volumes.
We started the year with a strong order book and high hopes to continue the strong development we had enjoyed for the past several years. The market change and unforeseen challenges with some deliveries surfacing during 2019, caused by the previous year's record-high workload, made us fall short of our expectations and targets in terms of revenue and profits. This was a disappointment. Based on these experiences, we are developing models and risk management for the projects' implementation. We can be satisfied with the strong development of our spare parts and technology services business and new orders from the emerging markets in Asia and South America.
Our markets are changing. In the future, plywood and LVL industries are expected to have modest growth in the developed markets. At the same time, the emerging economies are forecasted to continue strong demand growth. The results of this were seen already in 2019, when we were able to secure orders from several new customers, especially in the emerging markets. These companies have a different way of operating. Their priorities in terms of investments' size, technology, quality and scope of services differ from the more traditional players. In order to meet the requirements of these new customers, we have to constantly develop our product and service offering and the way we do business. We will make significant investments in this new market situation, through product development and marketing measures during 2020. We will also strongly focus on the digital transformation of our own operations. Digitalization creates new opportunities in developing our technology services and measurement system business (Metrix). Due to the costs of these investments, our profitability will, unfortunately, weaken temporarily.
The global economic situation remains uncertain, despite the weak signals in recent months indicating a decrease in the risk of recession. In addition, uncertainty in terms of profitability development will result from China's coronavirus epidemic and Finland's difficult labor market situation. The megatrends that are the foundation for Raute's technology and services demand, including the mitigation of climate change through wood construction, are strengthening.
2019 was a year of change for Raute. And the change will continue. Our challenge will be to reposition ourselves in the new market situation. In 2020, we want to finalize the implementation of the new management structure, maintain and strengthen our leading position in our traditionally strong markets as a leading supplier of technology as well as strengthen our standing in the emerging markets through a suitable offering and grow our technology services business. I believe we are in a good position to do all this.
I would like to express my sincerest thanks for the past year to Raute's customers for their invaluable cooperation and trust, to our personnel for their good work and strong commitment in an environment of varying workloads, to our shareholders for their continued confidence in us, and to all our other partners for their contribution to furthering Raute's development and progress.
President and CEO