Lassila & Tikanoja plc: Interim Report 1 January–31 March 2023
Lassila & Tikanoja plc Stock exchange release 3 May 2023 at
8:00 a.m.
Lassila & Tikanoja plc: Interim Report 1 January–31
March 2023
THE PROFIT PERFORMANCE OF FACILITY SERVICES FINLAND
IMPROVED
Unless otherwise mentioned, the figures in brackets refer to the
corresponding period in the previous year.
- Net sales for the first quarter were EUR 192.7 million (210.4).
Net sales decreased by 8.4%, mainly due to the divestment of the
renewable energy sources business in the previous financial year.
Net sales growth excluding the renewable energy sources business
was 2.9%.
- Adjusted operating profit was EUR 1.4 million (0.0) and
operating profit was EUR 1.4 million (-0.3). Earnings per share
were EUR 0.03 (-0.02).
- Net cash flow from operating activities after investments per
share was strong at EUR 0.50 (-0.16).
- The result of Facility Services Finland improved
substantially.
Outlook for the year 2023
Net sales and adjusted operating profit in 2023 are estimated to
be at the same level as in the previous year even though the
comparison period includes net sales from the renewable energy
sources business in the amount of EUR 35.4 million.
PRESIDENT AND CEO EERO HAUTANIEMI:
“Net sales, excluding the renewable energy sources business,
increased by 2.9 per cent, and adjusted operating profit amounted
to EUR 1.4 million (0.0).
The financial performance of L&T’s circular economy
businesses, namely Environmental Services and Industrial Services,
was stable. In Environmental Services, the number of B2B customers
increased thanks to active sales efforts. In Industrial Services,
the hazardous waste business line saw strong demand, and new
customer projects started in the environmental construction
business line.
In Facility Services Finland, the measures taken in the latter
half of 2022 to streamline the cost structure improved the profit
performance, and the rising costs caused by high inflation were,
for the most part, passed on to customer prices. In Facility
Services Sweden, the effort to simplify operating models and adapt
them to the changed business environment continued.
The number of sickness-related absences was lower than in the
comparison period, but still higher than usual.
Net cash flow from operating activities was strong, as was the
company’s financial position.
The Waste Act that entered into force in Finland in 2021
requires changes concerning the separate collection of packaging
waste, and these changes are now under way. While the aim is to
achieve increasingly ambitious recycling targets, a growing
proportion of waste is directed to waste-to-energy plants. Measures
are needed to prevent material flows that are suitable for
recycling from being disposed of by incineration.”
GROUP NET SALES AND FINANCIAL PERFORMANCE
January–MarchNet sales for the first quarter
amounted to EUR 192.7 million (210.4), a decrease of 8.4%
year-on-year. Excluding the effect of the renewable energy sources
business, net sales increased by 2.9%, and the rate of organic
growth was 2.3%. Adjusted operating profit was EUR 1.4 million
(0.0), representing 0.7% (0.0%) of net sales. Operating profit was
EUR 1.4 million (-0.3), representing 0.7% (-0.1%) of net sales.
Earnings per share were EUR 0.03 (-0.02).
Net sales increased in Environmental Services (excluding the
effect of the renewable energy sources business), Industrial
Services and Facility Services Sweden. Net sales decreased in
Facility Services Finland. Operating profit improved in
Environmental Services and Facility Services Finland, and declined
in Facility Services Sweden. In the Industrial Services division,
operating profit was on a par with the comparison period. The
number of sickness-related absences was lower than in the
comparison period, but still higher than usual.
The result for the review period was negatively affected by net
financial expenses rising to EUR -1.6 million (-1.0). The result
for the review period was favourably affected by the profit of the
joint venture Laania plc, which amounted to EUR 1.5 million.
Financial summary
|
1–3/2023 |
1–3/2022 |
Change % |
1–12/2022 |
|
|
|
|
|
Net sales, EUR
million |
192.7 |
210.4 |
-8.4 |
844.1 |
Adjusted
operating profit, EUR million |
1.4 |
0.0 |
|
40.9 |
Adjusted
operating margin, % |
0.7 |
0.0 |
|
4.8 |
Operating
profit, EUR million |
1.4 |
-0.3 |
|
42.9 |
Operating
margin, % |
0.7 |
-0.1 |
|
5.1 |
EBITDA, EUR
million |
15.4 |
13.5 |
14.3 |
98.3 |
EBITDA, % |
8.0 |
6.4 |
|
11.6 |
Earnings per
share, EUR |
0.03 |
-0.02 |
|
0.83 |
Net cash flow
from operating activities after investments per share, EUR |
0.50 |
-0.16 |
|
1.08 |
Return on
equity (ROE), % |
2.2 |
-1.5 |
|
14.6 |
Capital
employed, EUR million |
421.8 |
413.0 |
2.1 |
437.2 |
Return on
capital employed (ROCE), %1 |
11.4 |
9.9 |
|
10.4 |
Equity ratio,
%1 |
32.7 |
30.9 |
|
34.3 |
Gearing,
% |
84.5 |
103.3 |
|
75.9 |
1 The figures for the first quarter of 2022 have been adjusted.
More detailed information on the restatements are provided in the
section on key figures in this interim report.
NET SALES AND OPERATING PROFIT BY DIVISION
Environmental Services
January–MarchThe division’s net sales for the
first quarter decreased to EUR 66.3 million (87.3). Operating
profit was EUR 3.2 million (2.9). Excluding the effect of the
renewable energy sources business, net sales increased by 2.0%. The
renewable energy sources business was reported as a part of the
Environmental Services division until the end of the second quarter
of 2022.
In Environmental Services, the number of B2B customers increased
thanks to active sales efforts. The prices of recycled raw
materials remained at the low level seen in late 2022. Industrial
action in the transport sector made resource allocation more
difficult, and increased overtime led to higher costs in the review
period.
Industrial Services
January–MarchThe division’s net sales for the
first quarter increased to EUR 26.1 million (23.1). Operating
profit was EUR 0.1 million (0.2).
In Industrial Services, the hazardous waste business line saw
strong demand, and the prices of recycled raw materials were at a
good level. In the environmental construction business line, demand
remained high and new customer projects were started. In the
process cleaning business in Finland, blast cleaning services at
power plants saw strong demand. Industrial action in the transport
sector and the facility services sector in Finland had a negative
impact on the process cleaning business in particular. In the
process cleaning business in Sweden, demand was lower compared to
the high level seen in the comparison period.
Facility Services Finland
January–March The division’s net sales for the
first quarter decreased to EUR 67.1 million (68.3). Operating
profit was EUR 0.2 million (-2.3).
In Facility Services Finland, unprofitable customer contracts
ended during the review period. The measures taken in the latter
half of 2022 to streamline the cost structure improved the profit
performance. In the cleaning business, the efficiency of production
improved and personnel turnover decreased from the high level seen
in late 2022. The rising costs caused by high inflation were, for
the most part, passed on to customer prices. The impacts of the
industrial action in the facility services industry were
limited.
Facility Services Sweden
January–MarchThe division’s net sales for the
first quarter increased to EUR 34.5 million (32.9). Operating
profit declined to EUR -1.0 million (-0.2). Operating profit before
the amortisation of purchase price allocations of acquisitions was
EUR -0.7 million (0.3).
Customer agreements in the Swedish business are mostly
fixed-price contracts, and the increased production costs could not
be passed on to customers in the form of price increases. The
division has a programme ongoing to simplify operating models and
adapt them to the changed business environment and the results of
the programme are expected to realize during the next 18
months.
FINANCING
Net cash flow from operating activities in the first quarter of
2023 amounted to EUR 26.8 million (13.9). Net cash flow after
investments came to EUR 19.2 million (-6.0). In the comparison
period, net cash flow after investments was reduced by
acquisitions, which had a total impact of approximately EUR 13
million. A total of EUR 8.9 million in working capital was released
(EUR 2.5 million released).
At the end of the review period, interest-bearing liabilities
amounted to EUR 219.0 million (220.8). Net interest-bearing
liabilities totalled EUR 171.4 million (198.5). The average
interest rate on long-term loans, excluding lease liabilities, with
interest rate hedging, was 2.8% (1.1%). Of the company’s floating
rate loans totalling EUR 50 million, EUR 30 million have been
converted into fixed rate loans by means of an interest rate
swap.
The EUR 100.0 million commercial paper programme was unused at
the end of the review period (EUR 20.0 million in use). The account
limit totalling EUR 10.0 million and the committed credit limit
totalling EUR 40.0 million were not in use, as was the case in the
comparison period.
Net financial expenses amounted to EUR -1.6 million (-1.0). The
increase in net financial expenses was attributable to the higher
general interest rate level. The effect of exchange rate changes on
net financial expenses was EUR -0.0 million (0.0). Net financial
expenses were 0.8% (0.5%) of net sales.
The equity ratio was 32.7% (30.9%) and the gearing ratio was
84.5% (103.3%). The Group’s total equity was EUR 202.8 million
(192.2). Translation differences caused by the depreciation of the
Swedish krona affected equity by EUR -1.0 million. Cash and cash
equivalents at the end of the period amounted to EUR 47.6 million
(22.3).
DIVIDEND DISTRIBUTION The Annual General
Meeting held on 23 March 2023 resolved that a dividend of EUR 0.47
per share, totalling EUR 17.9 million, be paid on the basis of the
balance sheet that was adopted for the financial year 2022. The
dividend was paid to shareholders at the end of the review
period.
CAPITAL EXPENDITURE
Gross capital expenditure for the first quarter totalled EUR
13.8 million (28.5). The capital expenditure consisted primarily of
machine and equipment purchases, as well as investments in
information systems and facilities with environmental permissions.
Acquisitions accounted for approximately EUR 21 million of the
gross capital expenditure in the comparison period.
SUSTAINABILITY
Environmental responsibility
Climate benefits for customers created by L&T
|
1–3/2023 |
1–3/2022 |
2022 |
Target |
Target to be achieved by |
|
|
|
|
|
|
Carbon handprint (tCO2e) |
-126,500 |
-125,800 |
-534,500 |
growth
faster than net sales |
|
The carbon handprint illustrates the climate benefits of a
product, process or service, i.e. the emission reduction potential
for the user. L&T’s carbon handprint reduces the customer’s
carbon footprint. Our services generated emission reductions for
customers through, for example, customers replacing virgin raw
materials with secondary raw materials, and fossil fuels with solid
recovered fuels.
The carbon handprint of the joint venture Laania is not reported
as part of L&T’s carbon handprint for the full year 2022.
Progress towards science-based emission reduction targets, using
2018 as the baseline
|
1–3/2023 |
1–3/2022 |
2022 |
Target |
Target to be achieved by |
|
|
|
|
|
|
Carbon footprint (tCO2e) |
7,543 |
8,500 |
31,700 |
24,400 |
2030 |
L&T’s strategic objective is to halve the carbon footprint
of its operations by 2030, using 2018 as the baseline, and to
reduce the indirect emissions generated by its supply chain. The
emission reduction target set by L&T has been validated by the
Science Based Targets initiative. The achievement of this objective
will be promoted by switching to zero-emission transport
technologies and fuels and by opting for renewable energy at
L&T’s properties. Transport operations account for 95 per cent
of the emissions generated by L&T’s own operations.
The fuel distribution obligation was adjusted in 2022 by
reducing the biofuel component by 7.5 per cent in July. The change
has not been taken into account in the emissions calculations
reported in this release, as Statistics Finland has yet to update
its fuel classification data in accordance with the change.
Statistics Finland is expected to publish updated fuel
classification data during spring 2023.
Social responsibility
Overall accident frequency
|
1–3/2023 |
1–3/2022 |
2022 |
Target |
Target to be achieved by |
|
|
|
|
|
|
Overall accident frequency (TRIF) |
23 |
26 |
23 |
19 |
2026 |
L&T eliminates hazards and improves its own safety as well
as the safety of customers and other stakeholders through effective
proactive measures, such as risk assessments, safety observations,
Safety Walks and occupational safety sessions.
Well-being at work
|
1–3/2023 |
1–3/2022 |
2022 |
Target |
Target to be achieved by |
|
|
|
|
|
|
Occupational health rate(proportion of
employees with no sickness-related absences) |
61 |
59 |
40 |
57 |
2026 |
Sickness-related absences
(%) |
5.6 |
6.5 |
5.6 |
4.3 |
2026 |
The objective of L&T’s personnel policies and plans is to
ensure that the number, competence and retention of personnel are
at the level required for effective performance. For a
labour-intensive company, employees’ ability to work and function
and maintain it throughout their careers until retirement on
old-age pension is important.
Current issues related to sustainability
Lassila & Tikanoja updated its sustainability programme in
February to better correspond to the company’s mission of being a
leader in the regenerative society. The renewed sustainability
programme is built around three focal points: the environment,
people and governance. With the new programme, L&T will further
deepen its sustainability work in the supply chain, and the
promotion of biodiversity was added to the programme as a
completely new part.
In March, Lassila & Tikanoja published its Annual
Review 2022, which includes a sustainability report in accordance
with the Global Reporting Standard (GRI) as well as a report on
risks and opportunities related to climate change in line with the
Task Force on Climate-related Financial Disclosures (TCFD)
recommendations.
PERSONNEL
In the first quarter of 2023, the average number of employees
converted into full-time equivalents was 6,889 (7,055). At the end
of the review period, L&T had 8,244 (8,367) full-time and
part-time employees. Of these, 6,875 (7,015) worked in Finland and
1,369 (1,352) in Sweden.
SHARES AND SHARE CAPITAL Traded volume
and price
The volume of trading in L&T’s shares in January–March was
2.0 million shares, which is 5.3% (12.2%) of the average number of
outstanding shares. The value of trading was EUR 21.9 million
(55.1). The highest share price was EUR 11.84 and the lowest EUR
9.85. The closing price was EUR 10.10. At the end of the review
period, the market capitalisation excluding the shares held by the
company was EUR 385.3 million (412.6). Own shares
At the end of the period, the company held 653,256 of its own
shares, representing 1.7% of all shares and votes. Share
capital and number of shares The company’s registered
share capital was EUR 19,399,437 and the number of outstanding
shares was 38,145,618 at the end of the period. The average number
of shares excluding the shares held by the company was
38,145,618.
Shareholders
At the end of the review period, the company had 25,228 (24,318)
shareholders. Nominee-registered holdings accounted for 8.5% (7.4%)
of the total number of shares. Authorisations for the Board
of Directors The Annual General Meeting held on 23 March
2023 authorised Lassila & Tikanoja plc’s Board of Directors to
decide on the repurchase of the company’s own shares using the
company’s unrestricted equity. In addition, the Annual General
Meeting authorised the Board of Directors to decide on a share
issue and the issuance of special rights entitling their holders to
shares. The Board of Directors is authorised to purchase a maximum
of 2,000,000 company shares (5.2% of the total number of shares).
The repurchase authorisation is effective for 18 months. The Board
of Directors is authorised to decide on the issuance of new shares
or shares which may be held by the company through a share issue
and/or issuance of option rights or other special rights conferring
entitlement to shares, referred to in Chapter 10, Section 1 of the
Finnish Companies Act, so that under the authorisation, a maximum
of 2,000,000 shares (5.2% of the total number of shares) may be
issued and/or conveyed. The authorisation is effective for 18
months.
RESOLUTIONS BY THE ANNUAL GENERAL MEETING
The Annual General Meeting of Lassila & Tikanoja plc, which
was held on 23 March 2023, adopted the financial statements and
consolidated financial statements for the financial year 2022,
discharged the members of the Board of Directors and the President
and CEO from liability and adopted the remuneration report for the
company’s governing bodies. The Annual General Meeting resolved on
the use of the profit shown on the balance sheet and the payment of
dividend, the composition and remuneration of the Board of
Directors, the election and remuneration of the auditor, amendment
of Articles of Association, and authorising the Board of Directors
to decide on the repurchase of the company’s own shares and on a
share issue and the issuance of special rights entitling to
shares.
The Annual General Meeting resolved that a dividend of EUR 0.47
per share be paid on the basis of the balance sheet adopted for the
financial year 2022. It was decided that the dividend be paid on 3
April 2023.
The Annual General Meeting confirmed the number of members of
the Board of Directors as six in accordance with the proposal of
the Shareholders’ Nomination Board. Teemu Kangas-Kärki, Laura
Lares, Sakari Lassila, Jukka Leinonen and Pasi Tolppanen were
re-elected, and Anni Ronkainen was elected as a new member, to the
Board for a term ending at the conclusion of the next Annual
General Meeting. Jukka Leinonen was elected as the Chairman of the
Board and Sakari Lassila was elected as the Vice Chairman.
The Annual General Meeting elected PricewaterhouseCoopers Oy,
Authorised Public Accountants, as the company’s auditor.
PricewaterhouseCoopers Oy has announced that it will name Samuli
Perälä, Authorised Public Accountant, as the principal
auditor.
The Annual General Meeting resolved to amend Article 10 of the
Articles of Association to enable the holding of a general meeting
without a meeting venue, as a remote meeting.
The resolutions of the Annual General Meeting were announced in
more detail in a stock exchange release on 23 March 2023.
BOARD OF DIRECTORS The members of Lassila &
Tikanoja plc’s Board of Directors are Teemu Kangas-Kärki, Laura
Lares, Sakari Lassila, Jukka Leinonen, Anni Ronkainen and Pasi
Tolppanen. Lassila & Tikanoja plc’s Annual General Meeting held
on 23 March 2023 elected Jukka Leinonen as the Chairman of the
Board and Sakari Lassila as the Vice Chairman. In its constitutive
meeting held after the Annual General Meeting, the Board of
Directors elected the members of the Audit Committee and the
Personnel and Sustainability Committee from amongst its members.
Sakari Lassila (Chairman), Teemu Kangas-Kärki and Anni Ronkainen
were elected to the Audit Committee. Jukka Leinonen
(Chairman), Laura Lares and Pasi Tolppanen were elected to the
Personnel and Sustainability Committee.
CHANGES IN THE GROUP EXECUTIVE BOARD
On 31 March 2023, the company announced that Tina Hellstadius,
the Senior Vice President for Facility Services Sweden, will leave
Lassila & Tikanoja on 31 March 2023.
On 18 April 2023, the company announced that Mikko Taipale
(Master of Laws) has been appointed Senior Vice President, Facility
Services Sweden and a member of the Group Executive Board effective
from 19 April 2023.
NEAR-TERM RISKS AND UNCERTAINTIES
General economic uncertainty may affect the level of economic
activity among customers, which may reduce the demand for L&T’s
services.
Higher costs, such as the rising prices of fuel and energy,
potential interest rate hikes and wage-related decisions in the
labour market may have a negative impact on the company’s financial
performance.
The company has several ERP system renewal projects under way.
Temporary additional costs arising from system deployments and
establishing the operating model may weigh down the company’s
result.
Production costs may be increased by challenges related to
employee turnover, labour availability and higher sickness
rates.
Russia’s invasion of Ukraine has only minor direct impacts on
the company. However, indirect impacts on overall economic activity
in Finland and Sweden may have a negative impact on net sales and
profit.
The Group company Lassila & Tikanoja FM AB is a claimant and
a defendant in legal proceedings in Sweden concerning unpaid
receivables invoiced from a former customer of the Group. In June
2022, Lassila & Tikanoja FM AB took legal action in the
District Court of Solna against the former customer company of
L&T, demanding payment of approximately SEK 18 million for
unpaid receivables. In March 2023, the L&T’s former customer in
question rejected Lassila & Tikanoja FM AB’s claims and the
payment obligation, and brought a counterclaim demanding
approximately SEK 102 million from Lassila & Tikanoja FM AB.
The dispute is still pending. Lassila & Tikanoja considers the
counterclaim to be without merit.
More detailed information on Lassila & Tikanoja’s risks and
risk management will be provided in the 2022 Annual Review and in
the Report by the Board of Directors and the consolidated financial
statements.
Helsinki, 2 May 2023
LASSILA & TIKANOJA PLC
Board of DirectorsEero HautaniemiPresident and CEO
For additional information, please contact:Eero Hautaniemi,
President and CEO, tel. +358 10 636 2810Valtteri Palin, CFO, tel.
+358 40 734 7749
Lassila & Tikanoja is a service company that is putting the
circular economy into practice. Together with our customers, we
keep materials, manufacturing sites and properties in productive
use for as long as possible and we enhance the use of raw materials
and energy. This is to create more value with the circular economy
for our customers, personnel and society in a broader sense.
Achieving this also means growth in value for our shareholders. Our
objective is to continuously grow our actions’ carbon handprint,
our positive effect on the climate. We assume our social
responsibility by looking after the work ability of our personnel
as well as offering jobs to those who are struggling to find
employment, for example. With operations in Finland and Sweden,
L&T employs approximately 8,300 people. Net sales in 2022
amounted to EUR 844.1 million. L&T is listed on Nasdaq
Helsinki.
Distribution:Nasdaq HelsinkiMajor mediawww.lt.fi/en/
- LT-Interim Report Q1 2023
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