Tapani Kiiski's comments on the Interim Report published on October 22, 2021
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.