Raute Corporation - Half-year report January 1-June 30, 2023

Raute Corporation, Half-year report, August 25, 2023 at 8:30 a.m.

This is a summary of Raute’s Half-year Report January 1-June 30, 2023. The complete report is attached to this release as a pdf file and is also available on the company’s’ website at www.raute.com.

RAUTE CORPORATION – HALF-YEAR REPORT JANUARY 1–JUNE 30, 2023

April-June 2023

•         Net sales were EUR 29.3 million (29.6), 1% below comparison period

•         Comparable EBITDA was EUR 0.7 million (-10.9)

•         Operating profit was EUR -1.0 million (-15.1)

•         Earnings per share were EUR  -0.15 (-2.87), and diluted earnings per share EUR -0.15  (-2.87).

•         Order intake was EUR 112 (40) million.

•         Equity ratio 57% (34%)

January- June 2023

• The Group’s H1 net sales amounted to EUR  66.2 million (70.9), 7 % below the comparison period.
• Comparable EBITDA was EUR 3.6 million (-10.9),  5.4 % (-15.5%) of net sales.
• Operating profit was EUR -0.2 million (-16.6), -0.3 % (-23.4%) of net sales.
• Earnings per share were EUR   -0.07 ( -3.14).
• Order intake was EUR  179 million (75) and the order book at the end of the reporting period EUR 202 million (104). The order book includes EUR 2 million (15) in orders from Russia after reservations.

Guidance statement for 2023:
Raute’s 2023 net sales are expected to be above EUR 150 million and Comparable EBITDA margin to be above 4%.

Mika Saariaho, President and CEO:  Record order intake in Q2 and order book at the end of Q2 following the new mill-size orders.

Raute’s order intake of EUR 112 million during the second quarter was the highest ever quarterly order intake in Raute’s history. Order intake was supported by a plywood mill order from Latvijas Finieris and an LVL-mill order from French company Thebault. These orders are good examples of Raute’s strong position in the complete mill-sized solutions.  Demand for Analyzer solutions has also remained at a good level. However, increased market uncertainty has impacted the customer demand for single production lines, and demand for spare parts. Following the strong order intake during the first half of the year, the order book ended at a record high level of EUR 202 million at the end of Q2.

Second quarter net sales were EUR 29.3 million, showing 1% reduction against comparison period. Analyzers sales increased strongly by 70%, Wood Processing sales were at last year level and Services sales declined 30% against the comparison period. Sales in both Wood Processing and Services were negatively impacted by the lower activity level in our production and partly also by the inefficiencies caused by the ERP implementation in our main unit in Nastola. We have now completed all the remaining equipment deliveries to Russian customers and have recognized EUR 3.8 million of sales in Q2 related to orders received before the war in Ukraine. Our target is to finalize exit from Russia as soon as possible.

Our comparable EBITDA of EUR 0.7 million (-10.9) and comparable EBITDA margin of 2.5% (-36.7%) were negatively impacted by the lower activity level in Wood Processing and Services. Analyzers profitability increased significantly supported by strong sales growth.

Our main unit in Nastola had a go-live of our renewed ERP system during Q2. As we anticipated, we have experienced inefficiencies and minor disturbances on business operations during the go-live phase. These inefficiencies have especially impacted the Wood Processing and Services business units which have major delivery operations in Nastola. We believe that our new ERP-system will bring clear process and efficiency improvements as the learning curve is now settling.

We have continued to follow through the profitability improvement program as announced last year and we are on track to reach the targeted cost savings. Cost inflation has been smoothening out, and we are now also better prepared to offset the impacts of inflation. Based on the record high order book, we have stopped the temporary layoffs concerning the hourly workers at the production plants in Finland.

During Q2 we completed a directed share issue, rights issue and issued junior loans to strengthen our balance sheet. As a result of these actions our equity ratio increased to 57%. We now have a strong balance sheet that enables us to implement our new growth strategy.  Raute has a sustainable foundation to be the partner to future-proof the wood industry. 

We are reiterating 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 new mill-size orders and record high order book, we expect our sales and profitability to increase during the latter part of the year as the new mill orders start to generate sales and profit. The order book towards next year is strong and gives an excellent basis for further business development.

BUSINESS ENVIRONMENT

Market situation in the global economy has continued to be uncertain during the first half of this year. High inflation, as experienced last year, has been smoothening out. However, increasing interest rates and overall uncertainty in the global economy are impacting the market outlook. These impacts are visible in demand for Raute’s customers’ products. The raw material availability has started to limit our customers’ production volumes, especially due to the lack of the Russian birch logs which used to be an important raw material source before 2022. The slowdown of the construction market and reduction in housing starts have reduced the demand for softwood plywood especially in Europe and North American markets.

The market for Raute’s technology has been active in the mill-sized projects. This trend seems to continue as some of our customers have a long-term capacity planning horizon, regardless of the current market situation. However, demand has slowed for individual product lines in Europe and in Asia. Market slowdown is also visible in demand for spare parts. Customer activity in North America has continued to be on a good level. In Latin America demand is stable.

We are encouraged by the development of our high-end technology offerings and our capability to offer mill-size solutions. During H1/2023 Raute received three major orders. In March we signed a plywood mill machinery order with Lumin and in April with Latvijas Finieris. In May we signed an LVL-mill machinery order with French company Thebault. All these orders are good examples of a complete mill-size solution where technology of the production lines is of the modern automated R7/R5-Series technology equipped with analyzers for grading and MillSIGHTS software for data capturing and dynamic reporting.

There is an increasing interest in Europe also for Services, as well as possibilities to increase the birch plywood production capacity to compensate supply of lost Russian volumes.

Raute continues its controlled wind-down of activities in Russia, and the remaining order book for Russian customers after reservations was EUR 2 million (15) at the end of the reporting period.

GUIDANCE STATEMENT FOR 2023

Raute’s 2023 net sales are expected to be above EUR 150 million and Comparable EBITDA margin to be above 4%.

RAUTE CORPORATION
Board of Directors

BRIEFING ON AUGUST 25, 2023 AT 2:00-3:00 P.M.:
A briefing will be organized for analysts, investors and the media on August 25, 2023 at 2:00-3:00 p.m. at Scandic Simonkenttä Hotel, Simonkatu 9, Helsinki. The half-year report will be presented by President and CEO Mika Saariaho and CFO Ville Halttunen. The presentation will be in Finnish. The event can also be followed online via Teams. We will send a Teams link to those who have registered by email; registrations at ir@raute.com. The event will be recorded, and the recording can be viewed on Raute’s website www.raute.com at the latest on August 28, 2023.

NEXT INTERIM REPORT:
Raute Corporation’s interim report January 1-September 30, 2023 will be published on Thursday October 26, 2023.

FURTHER INFORMATION:
Mr. Mika Saariaho, President and CEO, tel. +358 40 154 9393
Mr. Ville Halttunen, CFO, tel. +358 50 346 0868

DISTRIBUTION:
Nasdaq Helsinki Ltd, main media, www.raute.com

RAUTE IN BRIEF - Making Wood Matter
Raute is the partner to future-proof the wood industry. Our technologies cover different production processes with supporting digital and analytics solutions for engineered wood products. Additionally, we offer full-scale service concept ranging from spare parts to regular maintenance and modernizations. Our innovative hardware and software solutions are designed to support our customers’ efficient consumption of natural resources. In mill-scale projects, Raute is a global market leader both in the plywood and LVL industries. Raute’s head office and main production is located in Lahti, Finland. The company’s other production plants are located in Kajaani, Finland, the Vancouver area of Canada, Changzhou, China, and in Pullman, WA, USA. Raute’s net sales in 2022 were EUR 158.3 million. The Group’s headcount at the end of 2022 was 778. More information about the company can be found at www.raute.com.