CEO’s Review

Strong performance in the whole Group – revenue grew by 29% in 2023

Our strong growth continued in 2023, and we improved the profitability of our core business operations. Our revenue increased by 28.8% from 2022 and was EUR 363.3 (282.0) million. The revenue includes EUR 7.6 million (14.0) in sales revenue from wind power projects. The Group’s adjusted EBITDA was EUR 15.1 (13.7) million. The profitability of the core business operations improved in all business areas. However, investments in strategic focus areas continued to be significant, and had an impact of EUR -11.8 (-6.1) million on EBITDA. At the end of the year, the Group’s order backlog was at a good level, at EUR 457 (415) million. The Group’s cash flow turned positive in the last quarter of the year.

Implementing the energy transition through profitable and growing business operations is at the core of our strategy. In 2023, all our business areas increased their revenue significantly, supported by a strong order backlog. In the Baltic countries, the construction of high-voltage power lines continued at a good level. In Connectivity, there was strong activity in fixed optical fibre construction projects. In late 2022 and early 2023, we announced contracts totalling around EUR 100 million for the construction of optical fibre connections. In the Power business area, the market situation was good, particularly in services related to the construction of transmission networks. Enersense plays a significant role in implementing projects related to Finland’s main grid. In Smart Industry, revenue increased as a result of higher volumes in service and project business operations.

We are particularly pleased with the significant increase in EBITDA in the Smart Industry, Connectivity and International Operations business areas. In the Power business area, EBITDA decreased year-on-year. Investments in strategic focus areas continued to be reflected in the profitability of the Smart Industry and Power business areas, and especially the ramp-up of the offshore-business has been slower than anticipated. However, both business areas have been able to improve the profitability of their core business operations, supported by strong volumes in particular. In the International Operations and Connectivity business areas, higher volumes and profitability improvement measures have already yielded results. Our significant investment in the company’s ERP system progressed to the next phase towards the end of the year, when the system was successfully implemented in the Smart Industry business area. The successful first phase lays a good foundation for the implementation of the system in other business areas.

To achieve our strategic growth targets, we are working to strengthen our position in our selected focus areas. We received our first significant orders for offshore projects during 2023. These projects increased business volumes, but the investments in the ramp-up of operations continued to burden profitability. We continued to develop our wind and solar power project portfolio. At the end of 2023, our onshore wind power project portfolio stood at around 8,400 MW (June 2023: 8,100 MW), and our solar power project portfolio totalled around 400 MW (June 2023: 60 MW). Our renewable energy project development portfolio of around 8,800 MW provides a good basis for the development of our own energy production. The assessment of the options related to our own energy production continues in line with the process announced in June 2023.

In charging solutions for zero-emission transport, we further specified our role as a developer and supplier of high-power charging technology. The market introduction of our advanced ECDC high-power charging equipment is progressing, and interest in the equipment has been at a good level, especially in the professional and commercial charging operator segments that are of interest to us. In November, as the first operator in Finland, we announced cooperation with electric transport payment and management platform developer Monta and started preparing integrations with several electric transport back-end system suppliers.

Towards the end of the year, we made a significant decision in the field of climate work by making a commitment to the near-term emissions reduction target of the Science Based Targets initiative. Through the commitment, we will determine science-based emissions reduction targets by the end of 2025 that support the Paris Agreement’s guideline to limit global warming to 1.5 degrees. We also wanted to engage our supply chain in the discussion on the transition towards low-emission solutions in the steel industry. In late 2023, we joined WWF Finland’s Ready for Green Steel campaign, which encourages steel industry companies to accelerate this positive change.

We have set ourselves ambitious financial targets for 2027. The strong growth in 2023 shows that we are on the right track in terms of our growth targets. Alongside growth, we will increasingly shift our focus to improving profitability. For example, we believe that the new ERP system will increase the efficiency of our operations. The work to streamline our business portfolio will also continue. At the beginning of 2024, we started preparatory work to merge the organisations of the Power and International Operations business areas. Very similar projects are being carried out in these two business areas in many respects, and we believe that by combining these operations we will improve both our competitiveness and our efficiency.

The outlook for 2024 is favourable and we expect both the revenue and EBITDA to grow. In 2024, we expect the revenue to be in the range of EUR 365–435 million and EBITDA in the range of EUR 15–25 million.

Jussi Holopainen

(Financial statement bulletin 2023, 29 February 2024)