Financial information

CEO's comments on the Q3 2023 report on October 26, 2023

On track with profitability turnaround and building foundation for future growth

We had a good quarter in terms of profitability development as our comparable EBITDA was EUR 3.0 million, representing a margin of 8.8%. This was supported by the good progress of the profitability improvement program. I’m pleased that all our three business units – Wood Processing, Analyzers and Services – were able to show black figures on the comparable EBITDA level. The comparison figure of Q3/2022 was exceptionally high due to the release of some provisions related to the wind-down of the Russian operations.

Our order intake of EUR 19 million in the third quarter was rather low after a record high order intake in the previous quarter. The order intake mainly consisted of after-sales services and modernization projects, while some orders were postponed to the fourth quarter. The order book at the end of the reporting period was still at a near record-high level of EUR 192 million, thanks to the complete mill-sized orders received earlier in the year.

The fundamental demand for Raute’s solutions was still at a reasonable level, even if the short-term market uncertainty has increased, impacting on the demand for single production lines and spare parts. We have a strong position in complete mill-sized projects and there is continued customer interest in these solutions over the business cycle, driven by sustainability needs.

Net sales decreased by 18.5% to EUR 34 million in the third quarter and were somewhat below our expectations. As the structure of our order backlog is more weighted towards mill-sized projects, revenue recognition takes place later than in equipment deliveries and the service business. In addition, the implementation of the ERP system has also caused slowness, but the learning curve is constantly improving.

We are now in a good position to proceed with our growth strategy implementation at full speed, including driving our ESG agenda and expanding our portfolio into new wood product segments. Our profitability improvement program is moving ahead as planned, and we expect to achieve the previously announced annual cost savings of EUR 4−5 million by the end of 2023. These savings were already partly visible in our third-quarter result. Also, we do not have any remaining equipment deliveries to Russia, and our target remains to finalize the exit from Russia as soon as possible.

Earlier this month, we updated our full-year guidance for 2023. Our short-term priority remains on further profitability improvements and realizing the full benefits of the new ERP system. Thanks to the high order book, we are in a good position for further business development.

Mika Saariaho
President and CEO