Raute Corporation - Interim Report January 1-March 31, 2021

RAUTE CORPORATION INTERIM REPORT APRIL 29, 2021 AT 9:00 a.m.

This is a summary of Raute’s Interim financial report January 1-March 31, 2021. 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 - INTERIM REPORT JANUARY 1–MARCH 31, 2021

- The Group’s first-quarter net sales, EUR 24.8 million (MEUR 23.8), increased 4% on the comparison period.
- Operating profit amounted to EUR -2.5 million (MEUR -3.0), up 17%. The result before taxes was EUR -2.5 million (MEUR -2.9).
- Earnings per share were EUR -0.58 (EUR -0.52), and diluted earnings per share EUR -0.58 (EUR -0.52).
- Order intake, at EUR 30 million (MEUR 25), was at a reasonable level. The order book at the end of the reporting period stood at EUR 98 million (MEUR 92).
- Raute’s net sales are expected to grow in 2021 and operating profit to improve from 2020.

TAPANI KIISKI, PRESIDENT AND CEO: BETTER DAYS AHEAD

In the first quarter of 2021, our net sales were only slightly higher than they were in the comparison period. Although the result improved somewhat in relation to net sales, it was nevertheless negative. As we predicted, the timing of our confirmed order book did not increase net sales in the first quarter in a way that would have boosted our result to an acceptable level.

The travel restrictions imposed due to the coronavirus pandemic continue to hinder the implementation of installation supervision and commissioning and maintenance services. 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. At the same time, I am pleased with the abilities demonstrated by our customers and our personnel to continue working using remote connections. The lessons learned will improve both our ability to serve our customers and our flexibility also in the future.Demand picked up in several market areas in the first quarter. Our first-quarter order intake, at EUR 30 million, was at least at a reasonable level, especially considering that no large mill-scale orders were received during the period. I am pleased that mid-sized line orders and modernization orders were at a good level. For the first time in a while, North America was our largest market area in terms of order intake. The order intake for technology services was also at a good level.

A large order of nearly EUR 55 million that we received from Russia in early October 2020 puts our order book on a solid footing for this year. With the orders we have now received, our already strong order book grew, which strengthens our outlook for the rest of the year. At our main production facility in Lahti, we have been able to operate at near-normal capacity throughout the pandemic. Of course, the various precautionary measures are hindering development projects in particular. Of our operating areas, China is the only one where activity has returned to a somewhat normal level. Our facility there was operating normally and our customers’ projects continued to move forward. Travel to China is still restricted due to the pandemic. This hinders the collaboration of Raute’s experts from different locations in implementing projects in China, as well as in sales and development projects. At our North American facilities, the operating restrictions are currently being lifted thanks to the coronavirus vaccinations.

The raw material market is now heating up, which is creating uncertainty. There is pressure to raise the prices of raw materials and components, not to mention uncertainty in their availability and delivery times. Our operational organization is addressing these challenges, and I believe that we will find solutions to this situation together with our partners.

The pandemic’s impact on the development of our markets has been in line with our predictions. Accordingly, we will continue to invest in our stated strategic priorities, the emerging markets and the development of our technology services business and digitalization. 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.

Business environment

Market situation in customer industries
Raute’s customers in the veneer, plywood and LVL (Laminated Veneer Lumber) industries are engaged in the manufacture of wood products used in investment projects and are thus highly affected by fluctuations in construction, housing-related consumption, international trade, and transportation. We expect that the trend-like growth in wood construction will create demand for our customers and indirectly for Raute, strengthening our long-term growth opportunities.

In the first quarter, the situation and outlook in the global economy and the financial markets picked up to some degree. Information about the start of vaccinations has created positive expectations, and demand has remained strong or strengthened. This year, we expect the market situation of our customer industries to remain favorable and for things to get better also in areas that have not yet experienced an upturn.

Demand for wood products technology and technology services
Many of Raute’s established and traditional customers have invested heavily in recent years. In 2020, this traditional customer base of ours mostly returned to traditional, lower investment volumes. The measures to contain the coronavirus crisis further slowed the implementation and decision-making involved in the investments of this traditional customer base in particular. As a result, the focus of demand for our technology shifted towards new customer accounts. A significant exception to this is the Russian market, where demand remained good. Demand picked up in several market areas in the first quarter. At the same time, the focus has shifted to smaller projects and modernizations. Decision-making on such projects is faster than it is in larger new capacity projects. This is evident when examining the first-quarter order intake. Mill projects are also under way, but they have not yet reached the phase of ordering production machinery.

Investment activity among Raute’s customers strengthened in the first quarter compared to last year. We consider our order intake during the reporting period to be reasonable, especially considering it does not include large mill projects.

In Russia, demand remained active, although decisions were few and far between. Forecasting the realization and timing of projects remains difficult. The coronavirus pandemic continued to have a major impact on the emerging markets of Asia and South America, and the markets practically came to a halt. The only exception to this was China, where the planning of projects remained active and from where we also received a medium-sized order. Demand resumed in Europe and North America, and the order intake was at a reasonable level. North America proved to be our largest market area for new orders during the first quarter.

Demand for maintenance and spare parts services remained good, which is an indication of the generally good capacity utilization rates of Raute’s customers’ production plants.

Outlook for 2021

Due to the strong order book and presumed alleviated impacts of the pandemic, we expect that Raute’s net sales will increase in 2021 compared to the level of the previous year. We expect the operating result to improve on the previous year mostly due to growth in net sales.

RAUTE CORPORATION
Board of Directors

PRESENTATION OF THE INTERIM REPORT ONLINE ON APRIL 29, 2021, AT 2:00 PM:
Analysts, investors and the media can watch the presentation of the Interim Report online on April 29, 2021, starting at 2 p.m. via MS Teams. The Teams link will be sent to registered participants by email. The event will take place in Finnish. Registrations to ir@raute.com.

The Interim Report will be presented by Mr. Tapani Kiiski, President and CEO, and Ms. Tarja Järvinen, CFO. Analysists, investors and the media can send questions related to the Interim Report in advance to the email address ir@raute.com on April 29, 2021, until 2.30 p.m., after which President and CEO Tapani Kiiski and Group Vice President, CFO Tarja Järvinen will answer the sent questions in a live Interim Report presentation up until around 3 p.m. There will also be an opportunity to present questions in Teams and through the Teams chat channel.

President and CEO Tapani Kiiski has also reserved time for answering questions over the phone after the Interim Report presentation, starting at 3 p.m. The phone number is +358 400 814 148.

NEXT INTERIM REPORT:
Raute Corporation’s half-year report for January 1–June 30, 2021 will be published on Friday, July 23, 2021.

FURTHER INFORMATION:
Mr. Tapani Kiiski, President and CEO, Raute Corporation, mobile phone +358 400 814 148
Ms. Tarja Järvinen, Group Vice President, Finance, CFO, Raute Corporation, mobile phone +358 40 658 3562

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

RAUTE IN BRIEF:
Raute is a technology and service company that operates worldwide. Raute’s customers are companies operating in the wood products industry that manufacture veneer, plywood, LVL (Laminated Veneer Lumber) and sawn timber. Its technology offering covers the entire production process for veneer, plywood and LVL and special measurement equipment for sawn timber. As a supplier of mill-scale projects, Raute is a global market leader both in the plywood and LVL industries. Additionally, Raute’s full-service concept includes technology services ranging from spare parts deliveries to regular maintenance and equipment modernizations. Raute’s head office is located in Lahti, Finland. The company’s other production plants are located in Kajaani, Finland, the Vancouver area of Canada, the Shanghai area of China and in Pullman, Washington, USA. Raute’s net sales in 2020 were EUR 115.0 million. The Group’s headcount at the end of 2020 was 751. More information about the company can be found at www.raute.com.