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Financial information

Tapani Kiiski's comments on the Half-year Report published on July 23, 2021

Heading into the second half of 2021 with a strong order book

Demand for Raute’s technology and services remained brisk also in the second quarter. We managed to receive new orders totaling EUR 65 million. Even without the EUR 30 million order for an LVL mill’s production process, the order intake was at a good level. I am particularly pleased with this good level of mid-sized production line and modernization orders. Our order book thus almost reached a record of EUR 129 million. Our outlook for the near future is good.

Despite the continuing pandemic, the market situation was good, especially in the traditional, industrialized and developed markets of Europe, North America and Russia. Travel restrictions continue to hamper work carried out at our customers’ sites, however. Furthermore, in the emerging markets, except for China, the pandemic is still considerably limiting the progress of our customers’ projects. The travel restrictions are hampering the progress of many of our development projects also in China.

Our net sales in the first half of this year were EUR 12 million higher than in the same period last year. Most of the growth in net sales took place in the second quarter. As predicted, however, the growth was not enough to turn our result into a profit due to the exceptionally low payroll costs and the planned marketing and digitalization efforts. Even major fluctuations in net sales, and the accompanying operating profit, are typical for the project business, which accounted for roughly two thirds of our net sales in the second quarter.

The travel restrictions imposed due to the coronavirus pandemic continue to hinder the implementation of installation supervision and commissioning and maintenance services, and, of course, our sales efforts. However, the removal of these restrictions bit by bit as vaccinations progress is creating optimism that business activities will gradually begin to normalize this year. Very recently, the spread of new virus variants has led to increasing uncertainty about the easing of the pandemic, however. I am pleased with the abilities demonstrated by our customers and our personnel to continue working using remote connections. The lessons learned and experience gained will improve both our ability to serve our customers and our flexibility also in the future.

The order intake for technology services was also at a good level. This is yet another reason to conclude that the capacity utilization rate of our customers’ production is at a good level. If the travel restrictions were not hampering maintenance work, there would be even more demand for these services.

Because of the exceptional market changes caused by the pandemic and the stimulus measures aimed at recovering from it, many raw material, component and freight costs have risen, even to a great extent, and delivery times have increased; there have even been challenges in availability. So far, Raute has managed to operate amid these changes without major problems. Our operational organization is actively addressing these challenges together with our partners. We estimate that in the second half of the year, we may encounter delays and possible cost issues.

Because of the pandemic, in the near future the focus of our market will be more on developed markets than we estimated before the pandemic. In the longer term, however, we believe that the focus of growth will again shift to the emerging markets. Accordingly, 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, as well as 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 result to improve from last year.