Raute Corporation, the parent company of the globally operating Raute Group, which manufactures machines for the production of veneer, plywood and LVL panels and beams has released its fourth quarter financial results.
– The Group’s net sales amounted to EUR 115.0 million (MEUR 151.3), down 24% on the comparison period. Order intake was EUR 119 million (MEUR 148). The order book at the end of the year, EUR 94 million (MEUR 88), was strong, however.
– Operating result amounted to EUR –1.9 million (MEUR 8.5), down 121%. The result before taxes was EUR –1.5 million (MEUR 9.3) and result for the financial year was EUR –0.9 million (MEUR 7.7).
– Undiluted earnings per share were EUR –0.21 (EUR 1.80) and diluted earnings per share were EUR –0.21 (EUR 1.79).
– Fourth-quarter net sales amounted to EUR 38.9 million and the operating result was EUR +0.8 million. Order intake was EUR 70 million.
– The Board of Directors will propose to the Annual General Meeting that a dividend of EUR 0.80 (EUR 1.45) per share be paid for the financial year 2020.
| KEY FIGURES | 1.10. –31.12.2020 | 1.10. –31.12.2019 | 1.1. –31.12.2020 | 1.1. –31.12.2019 |
| Net sales, MEUR | 38,9 | 39,3 | 115,0 | 151,3 |
| Change in net sales, % | -0,8 | -27,5 | -24,0 | -16,4 |
| Exported portion of net sales, % | 95,0 | 92,0 | 94,2 | 88,3 |
| Operating result, MEUR | 0,8 | 1,8 | -1,9 | 8,5 |
| Operating result, % of net sales | 2,2 | 4,6 | -1,6 | 5,6 |
| Result before taxes, MEUR | 0,8 | 2,5 | -1,5 | 9,3 |
| Result before taxes, % of net sales | 2,0 | 6,4 | -1,3 | 6,1 |
| Result for the period, MEUR | 1,4 | 2,3 | -0,9 | 7,7 |
| Result for the period, % of net sales | 3,6 | 5,8 | -0,8 | 5,1 |
| Gross capital expenditure, MEUR | 0,1 | 0,9 | 5,2 | 3,0 |
| % of net sales | 0,3 | 2,2 | 4,5 | 2,0 |
| Research and development costs, MEUR | 1,4 | 1,3 | 4,6 | 4,4 |
| % of net sales | 3,6 | 3,4 | 4,0 | 2,9 |
| Order book, MEUR | 94 | 88 | 94 | 88 |
| Order intake, MEUR | 70 | 17 | 119 | 148 |
| Personnel, at the end of the period | 751 | 778 | ||
| Personnel, effective, on average | 743 | 761 | ||
| Personnel, on average | 760 | 784 |
TAPANI KIISKI, PRESIDENT AND CEO: IMPROVEMENTS SEEN TOWARDS THE END OF THE YEAR AS THE PANDEMIC CONTINUED
The President and CEO of Raute Corporation, Tapani Kiiski, said: “Our fourth-quarter net sales were the highest during the year under review. The result fell short of our target, however, and was not enough to make up for the losses of the first half of the year and bring the full year into positive territory”.
“Our net sales were lower than our targets, due largely to the more difficult delivery of installation supervision and commissioning and maintenance services caused by the travel restrictions, which are still in effect.
In our North American locations, we were forced to continue our adaptation measures for several weeks. In this respect, the situation in our locations in Finland and China was better”.
Since spring, the uncertainty caused by the coronavirus pandemic continued to have a strong impact on our customers’ investment decisions and thus on our order intake. Q1’s relatively good order intake included orders that had, for the most part, been negotiated almost fully before the start of the coronavirus crisis.
In Q2 and Q3, many of our customers put off their plans and orders, based on the uncertainty of their market situations. The number of actual cancellations was low, however, so when the situation settles, I anticipate that the postponed projects may restart, perhaps even at short notice.
In early October, we successfully concluded long and, due to the circumstances, exceptional negotiations and confirmed an order worth almost EUR 55 million to Russia. As a result, our outlook for 2021 became much clearer and our order book is still strong.
In Russia, demand and project planning is even more active. China was the only market area in which activity has returned to a somewhat normal level. Our mill in China was operating normally and our customers’ projects continued to move forward. Project preparation is also active in Europe and North America, but decision-making is exceptionally uncertain.
As we have consolidated in our main locations the kind of expertise that is often required for special maintenance, project installation supervision and commissioning, the travel restrictions inconvenienced us and our customers globally.
In spite of this, we successfully carried out a variety of these services with the help of remote work arrangements. I expect that these restrictions will unfortunately persist, which is why we will increase our local resources.
We will furthermore increase our focus on providing these services remotely, and this applies to both tools and expertise. The overall impact of the coronavirus pandemic on our net sales and especially our operating profit can still be described as substantial.
Due to the pandemic, our markets have developed more and more in a direction that we have anticipated. This underscores the importance of our strategic goals – growing the emerging market share, developing the technology service business and investing in digitalization.
We will thus continue to focus on these areas. Our strong balance sheet, market position and long-standing customer accounts are important competitive advantages and enablers of this type of long-term work. We will succeed in this together with our personnel, customers and other partners, and we will come out of this crisis even stronger as the leading company in our industry.
I would like to express my sincerest thanks for the past year to Raute’s customers for their invaluable cooperation and trust, to our personnel for their good work and strong commitment in extraordinary circumstances, to our shareholders for their continued confidence in us, and to all our other partners for their contribution to helping Raute adapt to a rapidly changing operating environment.
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 fourth quarter, the situation and outlook in the global economy and the financial markets remained weak. Before the start of the pandemic, we had estimated that the market situation had improved slightly.
Soon after the pandemic broke out, the situation took a clear turn for the worse and, so far, has not taken a new turn for the better. We do not expect the situation to improve significantly before the pandemic is under control. The start of vaccinations has created positive expectations, but it is still difficult to assess the realization of those expectations.
Demand for wood products technology and technology services
Many of Raute’s established and traditional customers have invested heavily in recent years. During the past year, this traditional customer base has mostly returned to lower investment volumes.
The measures to contain the coronavirus crisis have further slowed down the implementation and decision-making involved in the investments of this traditional customer base in particular.
As a result, demand for our technology continued to shift towards new customers, although a major transaction that took place in the Russian market also indicated a pick-up in investments by our more traditional customer base.
Overall, investment activity among Raute’s customers weakened from what it has been in recent years, and the weakening was intensified by the spread of the coronavirus pandemic and its countermeasures. Despite the market conditions, we are not satisfied with the volume of new orders received during the review period.
In Russia, demand remained active. However, forecasting the realization and timing of projects is more difficult than before. The coronavirus pandemic had a particularly strong impact on the emerging markets of Asia and South America, and the markets practically came to a halt.
China was the only exception. Following the break caused by the pandemic countermeasures, demand in China has recovered rapidly and planned projects have been picked up again. Project planning was active in Europe and North America, but decision-making was slow and uncertain.
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.
In Finland, the industrial actions at our customers’ plants caused a temporary lull in demand for spare parts and maintenance services at the start of the year. After this, the travel restrictions resulting from the pandemic have prevented us from carrying out the majority of our maintenance services as planned.
BOARD OF DIRECTORS’ PROPOSAL CONCERNING PROFIT DISTRIBUTION, DIVIDEND EUR 0.80 PER SHARE
On December 31, 2020, the Parent Company Raute Corporation’s distributable assets total EUR 33,169 thousand, of which EUR 2,674 thousand stands for the loss for the financial year of January 1–December 31, 2020.
The Board of Directors will propose to Raute Corporation’s Annual General Meeting, to be held on March 31, 2021, that a dividend of EUR 0.80 per share be paid to holders of series A and K shares for the financial year 2020, and that the remainder of distributable assets be transferred to equity.
On the date of the profit distribution proposal, the number of shares entitling to a dividend is 4,263,194 shares, which would amount to total dividends of EUR 3,411 thousand. Shareholders who are registered in the shareholders’ register maintained by Euroclear Finland Ltd on the record date for dividend distribution, April 6, 2021, are entitled to dividends. The dividend payment date would be April 13, 2021.
No essential changes have taken place in the company’s financial position since the end of the financial year. The company has good liquidity, and in the Board of Directors’ view, the proposed dividend does not pose a risk to solvency.
OUTLOOK FOR 2021
Due to the strong order book and presumed alleviated impacts of the Covid-19 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 from the previous year due to growth in net sales.
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