Financial information

CEO's comments on the Q1 2023 interim report on April 28, 2023

Making wood matter - good start of the year under challenging market conditions, EUR 49.6 million mill order as the highlight of the quarter

Raute’s order intake of EUR 67 million during the first quarter was strong due to Lumin plywood mill order in Uruguay received in March, demonstrating our strong ability as a one-stop-supplier. We had active dialogue as well with other customers on prospects for new mill orders and larger modernizations, but some customer investment decisions were postponed in Q1. Demand for modernization offerings related to new automation solutions also remained at a good level, whereas increased market uncertainty impacted the customer demand for single production lines, and demand for new services orders. The order book was EUR 121 million at the end of Q1.

First quarter net sales were EUR 36.8 million, 11% reduction against comparison period resulting mainly from lower activity level in Wood Processing. We continued to scale-down the Russian order book and have recognized EUR 5.5 million of sales from Russia in Q1 related to orders received before the war in Ukraine. We have now completed all the remaining line deliveries from Finland to Russian customers. We are pleased with the comparable EBITDA of EUR 2.8 million (-0.1) and EBITDA margin of 7.7% and that all our business units continue to perform profitably.

Wood Processing sales were at a reasonable level. We were also pleased to see another quarter of positive comparable EBITDA. Following the controlled wind-down of operations from Russia, part of the revenue and margin were still recognized from the remaining Russian order book. Analyzers sales were growing strong against comparison period, and the comparable EBITDA margin for Analyzers improved to EUR 0.7 million or 17% of the Sales, demonstrating our good market position in this business. Growth in Services sales were at 4%, which is good considering that the comparison period still included Russian sales, and profitability remained at good level.

We have continued to follow through the profitability improvement program as announced last year and are making good progress with those initiatives. Cost inflation is currently tamed, but we continue to face some component availability issues. Related to profitability initiatives, we have in Q1 restructured our market area operations in China, and the related restructuring costs of EUR 0.6 million are visible in the Q1 financials. We have concluded in Q1 the negotiations for temporary layoffs concerning the hourly workers at the production plants in Finland, in order to actively manage operational competitiveness.

During Q1, we have also updated our strategy and introduced new financial targets for the five-year strategy period. According to the new strategy, Raute is the partner to future-proof the wood industry. With our unique solutions, we drive change and promote resource-efficient society. Moving ahead, our aim is to accelerate growth by expanding Raute’s portfolio into new wood products segments, especially through digital and analytical solutions and new service concepts. Our new financial targets are net sales of 250 MEUR, including both organic and inorganic growth, Services and Analyzers relative share of net sales of 40% of the Group, comparable EBITDA margin of 12% on average over cycle, and equity ratio of over 40%.

To support the strategy execution, we have taken decisive steps to strengthen our balance sheet and build our ability to serve customers. Following the decisions of the AGM, the company is now operating under one share series and the directed share issue was completed in early April. Further actions are ongoing to prepare for the rights issue planned for May. These important events give us the needed boost to invest in activities that support our growth agenda.

Looking ahead in 2023, we expect the market situation to continue to be uncertain, although principal interest to Raute’s solutions has so-far remained quite good. During the Q2, our main unit in Nastola is also getting ready for the go-live of our renewed ERP- system. While we expect to gain major process and efficiency improvements from the new system over time, we need to be prepared that for the first months we may experience inefficiencies and minor disturbance on business operations until the learning curve settles. Thanks to the new mill-size orders, we expect the year 2023 to deliver higher net sales than we originally estimated at the beginning of the year, but we remain somewhat cautious about the profitability development during the following months before the new mill orders start to generate profit.

Our new promise is making wood matter, and I would like to invite the current and new shareholders to join Raute journey by participating in the forthcoming rights issue.

Mika Saariaho
President and CEO