Lassila & Tikanoja plc: Interim Report 1 January–31 March 2024
Lassila & Tikanoja plc
Stock exchange release
26 April 2024 at 8:00 a.m.
Lassila & Tikanoja plc: Interim Report 1 January–31
March 2024
STABLE RESULT IN THE FINNISH DIVISIONS – FACILITY
SERVICES SWEDEN DID NOT MEET EXPECTATIONS
Unless otherwise mentioned, the figures in brackets refer to the
corresponding period in the previous year.
- Net sales for the first quarter were EUR 185.0 million (192.7).
Net sales decreased by 4.0%. The decline in net sales was due to
the weak economic environment.
- Adjusted operating profit was EUR 0.0 million (1.4) and
operating profit was EUR -1.7 million (1.4). Earnings per share
were EUR -0.02 (0.03).
- Net cash flow from operating activities after investments was
EUR -9.4 million (19.2) and net cash flow from operating activities
after investments per share was EUR -0.25 (0.50). Net cash flow was
negatively impacted by the reduction in factoring.
Outlook for the year 2024
Net sales in 2024 are estimated to be at the same level as in
the previous year, and operating profit is estimated to be at the
same level or better compared to the previous year.
PRESIDENT AND CEO EERO HAUTANIEMI:
"The high interest rates, along with the decrease in industrial
production and the weak market situation in the construction
industry, combined with political strikes in Finland, had a
negative impact on the L&T service demand in the first quarter.
In the first quarter, net sales decreased by 4.0% and adjusted
operating profit was EUR 0.0 million (1.4). The impact of the
political strikes on L&T’s result was approximately EUR 0.3
million negative.
In Environmental Services, the economic recession and political
strikes reduced the demand of recycling and waste management
services while the market share of the division strengthened
slightly. The demand and prices of recycled raw materials
stabilised during the first quarter. The municipalisation of the
collection of packaging waste from housing properties continued,
but the measures initiated in the fourth quarter of 2023 to improve
the efficiency and profitability of operations largely compensated
for the impact of municipalisation.
Net sales increased in Industrial Services. Political strikes in
Finland weakened the demand in the Hazardous waste business line to
a small extent, and some process cleaning work was postponed from
the first quarter to the second quarter. The process cleaning
business in Sweden was expanded to the Gävleborg region through an
acquisition in line with the strategy. Industrial Services
currently has approximately 100 employees in Sweden, and process
cleaning services are offered in southern and central Sweden.
In Facility Services Finland and Facility Services Sweden,
measures are under way to improve the efficiency of operations and
streamline the cost structure. The result of the Facility Services
Finland for the first quarter was negatively affected by provisions
of EUR 0.6 million booked for potential disability pension
contributions. The result of the Facility Services Finland Cleaning
business line improved year-on-year. In Facility Services Sweden, a
significant customer relationship ended in the end of 2023, and the
loss of that significant account was not fully compensated by new
customer accounts during the review period.
The Group reduced its factoring financing by EUR 10 million as
planned which reduced cash flow after investments in the first
quarter. The company’s financial position is strong."
GROUP NET SALES AND FINANCIAL PERFORMANCE
January–March
Net sales for the first quarter amounted to EUR 185.0 million
(192.7), representing a year-on-year decrease of 4.0%. The organic
decrease in net sales was 4.1%. Adjusted operating profit was EUR
0.0 million (1.4), representing 0.0% (0.7%) of net sales. Operating
profit was EUR -1.7 million (1.4), representing -0.9% (0.7%) of net
sales. Earnings per share were EUR -0.02 (0.03).
Net sales increased in Industrial Services and decreased in the
other divisions. Operating profit declined in each division.
The result for the review period was negatively affected by net
financial expenses rising to EUR -1.8 million (-1.6). The result
for the period was affected positively by L&T’s EUR 2.1 million
(1.5) share of the profit of the joint venture Laania Oy.
Financial summary
|
1–3/2024 |
1–3/2023 |
Change % |
1–12/2023 |
|
|
|
|
|
Net sales, EUR
million |
185.0 |
192.7 |
-4.0 |
802.1 |
Adjusted
operating profit, EUR million |
0.0 |
1.4 |
-98.6 |
39.0 |
Adjusted
operating margin, % |
0.0 |
0.7 |
|
4.9 |
Operating profit,
EUR million |
-1.7 |
1.4 |
|
38.4 |
Operating margin,
% |
-0.9 |
0.7 |
|
4.8 |
EBITDA, EUR
million |
12.1 |
15.4 |
-21.7 |
95.8 |
EBITDA, % |
6.5 |
8.0 |
|
11.9 |
Earnings per
share, EUR |
-0.02 |
0.03 |
|
0.79 |
Net cash flow
from operating activities
after investments per share, EUR |
-0.25 |
0.50 |
|
1.33 |
Return on equity
(ROE), % |
-1.4 |
2.2 |
|
13.3 |
Capital employed,
EUR million |
418.5 |
421.8 |
-0.8 |
425.9 |
Return on capital
employed (ROCE), % |
9.9 |
11.4 |
|
10.3 |
Equity ratio,
% |
33.4 |
32.7 |
|
36.8 |
Gearing, % |
85.8 |
84.5 |
|
69.3 |
NET SALES AND OPERATING PROFIT BY DIVISION
Environmental Services
January–March
The division’s net sales for the first quarter decreased to EUR
65.4 million (66.3). Operating profit was EUR 2.7 million
(3.2).
In Environmental Services, the economic recession and political
strikes reduced the demand of recycling and waste management
services while the market share of the division strengthened
slightly. The demand and prices of recycled raw materials
stabilised during the first quarter. The municipalisation of
the collection of packaging waste from housing properties
continued, but the measures initiated in the fourth quarter of 2023
to improve the efficiency and profitability of operations largely
compensated for the impact of municipalisation.
Industrial Services
January–March
The division’s net sales for the first quarter increased to EUR
28.1 million (26.1). Adjusted operating profit was EUR -0.1 million
(0.1). Operating profit was EUR -0.4 million (0.1). Operating
profit was reduced by a change of EUR 0.2 million in the fair value
of a consideration related to the acquisition of Sand &
Vattenbläst i Tyringe AB (“SVB”) (no change in the comparison
period). The change in fair value is related to the impact of the
expansion of the business on the expected growing EBITDA level.
Demand remained strong in the Environmental construction
business line. Political strikes in Finland weakened the demand in
the Hazardous waste business line to a small extent, and some
process cleaning services were postponed from the first quarter to
the second quarter. Thus far, there have been no changes to the
timing or scope of annual maintenance services that would affect
L&T's business operations.
The process cleaning business of the Industrial Services
division was expanded in Sweden to the Gävleborg region through an
acquisition that was completed on 1 February 2024. L&T acquired
the entire share capital of PF Industriservice AB, which provides
process cleaning services. PF Industriservice had net sales of
approximately EUR 2.5 million in the most recent financial year,
and it has approximately seven employees. PF Industriservice offers
various process cleaning services to customers in the forest
industry, energy sector and construction industry. Following the
acquisition, the Industrial Services division has approximately 100
employees in Sweden, and process cleaning services are offered to
industrial customers in southern and central Sweden.
Facility Services Finland
January–March
The division's net sales for the first quarter amounted to EUR 63.3
million (67.1). Operating profit was EUR -0.1 million (0.2).
Unprofitable customer agreements ended in Facility Services
Finland during the period under review. Measures to streamline the
cost structure continued. The result of the cleaning business line
was stronger than in the comparison period. The demand for
data-driven cleaning services grew. In the Facility Services
Finland, provisions of EUR 0.6 million (0.4) were booked for
potential disability pension contributions in the first
quarter.
Facility Services Sweden
January–March
The division's net sales for the first quarter decreased to EUR
29.5 million (34.5). Operating profit was EUR -2.1 million (-1.0).
Operating profit before the amortisation of purchase price
allocations of acquisitions was EUR -1.8 million (-0.7).
Customer agreements in the Swedish business are mostly
fixed-price contracts, and the division has not been able to pass
the increased production costs on to customer prices. A significant
customer relationship ended in the division in the end of 2023, and
the loss of that account was not fully compensated by new customer
accounts during the review period. The division has a programme
under way to simplify operating models and adapt them to the
changed business environment. The results are expected to become
visible by the end of 2024.
FINANCING
Net cash flow from operating activities in the first quarter of
2024 amounted to EUR 1.9 million (26.8). Net cash flow after
investments totalled EUR -9.4 million (19.2). The company reduced
its factoring by EUR 10 million as planned. This reduced cash flow
after investments in the first quarter. At the end of the period
under review, factoring totalled approximately EUR 12.5 million
(17.2). Net cash flow after investments for the review period was
reduced by acquisitions, which had a total impact of approximately
EUR 1.2 million. A total of EUR 6.2 million in working capital was
committed (EUR 8.9 million released).
At the end of the review period, interest-bearing liabilities
amounted to EUR 208.3 million (219.0). Net interest-bearing
liabilities totalled EUR 180.3 million (171.4). The average
interest rate on long-term loans, excluding lease liabilities, with
interest rate hedging, was 4.0% (2.8%). The company had no interest
rate swaps at the end of the review period.
Of the EUR 100.0 million commercial paper programme, EUR 10.0
million was in use at the end of the review period (unused in the
comparative period). 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 -1.8 million
(-1.6). The effect of discounting of environmental provisions
decreased the net financial expenses by EUR 0.3 (-0.0) million. The
effect of exchange rate changes on net financial expenses was EUR
-0.0 million (-0.0). Net financial expenses were 1.0% (0.8%) of net
sales.
The equity ratio was 33.4% (32.7%) and the gearing ratio was
85.8% (84.5%). The Group’s total equity was EUR 210.2 million
(202.8). Equity was reduced by dividends of EUR 18.7 million
distributed for the financial year 2023. In accordance with the
resolution of the Annual General Meeting held on 21 March 2024, the
dividends were paid to shareholders on 3 April 2024. Translation
differences caused by changes in the exchange rate of the Swedish
krona affected equity by EUR -2.4 million. Cash and cash
equivalents amounted to EUR 28.0 million (47.6) at the end of the
review period.
DIVIDEND DISTRIBUTION
The Annual General Meeting held on 21 March 2024 resolved that a
dividend of EUR 0.49 per share, totalling EUR 18.7 million, be paid
on the basis of the balance sheet that was adopted for the
financial year 2023. The dividend was paid to shareholders on 3
April 2024.
CAPITAL EXPENDITURE
Gross capital expenditure for the first quarter of 2024 totalled
EUR 11.1 million (13.8). The capital expenditure consisted
primarily of machine and equipment purchases, as well as
investments in information systems. Acquisitions accounted for
approximately EUR 2 million of the gross capital expenditure
(0).
SUSTAINABILITY
In February, Lassila & Tikanoja published its Annual Review
2023, 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.
Progress towards sustainability targets
Indicator |
1–3/2024 |
1–3/2023 |
2023 |
Target |
Target to be achieved by |
|
ENVIRONMENTAL RESPONSIBILITY |
|
|
|
|
|
|
Carbon handprint (tCO2e)
i.e. emissions prevented |
-115,200 |
-126,500 |
-453,000 |
growth
faster than net sales |
|
|
|
|
|
|
|
|
|
Carbon footprint (tCO2e)
Scope 1&2 |
6,900 |
8,000 |
31,200 |
24,400 |
2030 |
|
|
|
|
|
|
|
|
SOCIAL RESPONSIBILITY |
|
|
|
|
|
|
Total recordable incident frequency |
21 |
26 |
23 |
15 |
2030 |
|
Sickness-related absences (%) |
5.5 |
6.5 |
5.1 |
4 |
2030 |
|
PERSONNEL
In the first quarter of 2024, the average number of employees
converted into full-time equivalents was 6,305 (6,611). At the end
of the review period, L&T had 7,686 (8,244) full-time and
part-time employees.
Number of employees at the end of the review
period |
1–3/2024 |
1–3/2023 |
2023 |
|
|
|
|
Group |
7,686 |
8,244 |
8,159 |
Finland |
6,482 |
6,875 |
6,891 |
Sweden |
1,204 |
1,369 |
1,268 |
|
|
|
|
Environmental
Services |
1,534 |
1,554 |
1,576 |
Industrial
Services |
680 |
627 |
679 |
Facility Services
Finland |
4,257 |
4,654 |
4,603 |
Facility Services
Sweden |
1,103 |
1,289 |
1,187 |
Group
administration and other |
112 |
120 |
114 |
SHARES AND SHARE CAPITAL
Traded volume and price
The volume of trading in L&T’s shares in January–March was
2.1 million shares, which is 5.5% (5.3%) of the average number of
outstanding shares. The value of trading was EUR 19.6 million
(21.9). The highest share price was EUR 10.36 and the lowest EUR
8.52. The closing price was EUR 8.80. At the end of the review
period, the market capitalisation excluding the shares held by the
company was EUR 335.9 million (385.3).
Own shares
At the end of the period, the company held 623,273 of its own
shares, representing 1.6% of all shares and votes.
Share capital and number of shares
The company’s registered share capital amounts to EUR 19,399,437
and the number of outstanding shares was 38,175,601 at the end of
the period. The average number of shares excluding the shares held
by the company was 38,140,636 shares.
Shareholders
At the end of the review period, the company had 25,255 (25,228)
shareholders. Nominee-registered holdings accounted for 8.7% (8.5%)
of the total number of shares.
Authorisations for the Board of Directors
The Annual General Meeting held on 21 March 2024 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 21 March 2024, adopted the financial statements and
consolidated financial statements for the financial year 2023,
discharged the members of the Board of Directors and the President
and CEO from liability and adopted the remuneration report and
remuneration policy 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, the adoption and remuneration of the
sustainability auditor, 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 0.49
per share be paid on the basis of the balance sheet adopted for the
financial year 2023. It was decided that the dividend be paid on 3
April 2024.
The Annual General Meeting confirmed the number of members of
the Board of Directors as seven (7) in accordance with the proposal
of the Shareholders’ Nomination Board. Teemu Kangas-Kärki, Laura
Lares, Sakari Lassila, Jukka Leinonen, Anni Ronkainen and Pasi
Tolppanen were re-elected, and Juuso Maijala was elected as a new
member to the Board until the end of the following 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. In addition, the company’s auditor was adopted also
as the company’s sustainability auditor to audit the sustainability
report for the financial year 2024.
The resolutions of the Annual General Meeting were announced in
more detail in a stock exchange release on 21 March 2024.
BOARD OF DIRECTORS
The members of Lassila & Tikanoja plc’s Board of Directors are
Teemu Kangas-Kärki, Laura Lares, Sakari Lassila, Jukka Leinonen,
Juuso Maijala, Anni Ronkainen and Pasi Tolppanen. Lassila &
Tikanoja plc’s Annual General Meeting held on 21 March 2024 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, Juuso
Maijala 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.
EVENTS AFTER THE FINANCIAL PERIOD
On 8 April 2024, Lassila & Tikanoja announced that Juha
Saarinen (M.Sc. Tech) has been appointed as Chief Purchasing
Officer (CPO) and a member of the Group Executive Board effective
from 1 August 2024. Saarinen joins L&T from Kamux plc, where he
has served as Chief Purchasing Officer.
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, and
potential changes in interest rates may have an impact on the
company’s financial performance.
The Finnish Waste Act was amended in July 2021. Under the
reforms to the Waste Act, municipalities take on a larger role in
organising the collection of packaging materials and biowaste from
housing properties. As a consequence of the reform, L&T’s
direct customer agreements with housing properties on the separate
collection of packaging waste and biowaste will be transferred to
municipalities for competitive bidding gradually between 1 July
2022 and 1 July 2025. L&T estimates that, as a result of
municipalisation, approximately EUR 30 million of the Finnish waste
management market will be moved out of the scope of free
competition between 2024 and 2026. L&T participates in the
competitive tendering of municipal contracts and is a significant
operator in municipal contracts. Nevertheless, L&T estimates
that the overall impact of the change will be negative for the
company.
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 and labour availability.
The geopolitical situation involves continued uncertainty due to
Russia’s war of aggression. The 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 for unpaid receivables. At the end of
the financial year, the amount of receivables on the company’s
balance sheet was approximately EUR 1.5 million. The former L&T
customer company in question has rejected Lassila & Tikanoja FM
AB’s claims and the payment obligation, and brought a counterclaim
demanding compensation totalling approximately SEK 144 million from
Lassila & Tikanoja FM AB. The dispute is still pending. Lassila
& Tikanoja considers the counterclaim to be without merit and
has not recognised any provisions in relation to it.
More detailed information on Lassila & Tikanoja’s risks and
risk management will be provided in the 2023 Annual Review and in
the Report by the Board of Directors and the consolidated financial
statements.
Helsinki, 25 April 2024
LASSILA & TIKANOJA PLC
Board of Directors
Eero Hautaniemi
President and CEO
For additional information, please contact:
Eero Hautaniemi, President and CEO, tel. +358 10 636 2810
Valtteri 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 8,160 people. Net sales in 2023
amounted to EUR 802.1 million. L&T is listed on Nasdaq
Helsinki.
Distribution:
Nasdaq Helsinki
Major media
www.lt.fi/en/
- LT-interim report Q1 2024
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