Koskisen Corporation’s Interim Report January-September 2023: Profitability weakened year-on-year – outlook for 2023 unchanged

Koskisen Corporation Interim Report January-September 2023: Profitability weakened year-on-year – outlook for 2023 unchanged

This release is a summary of Koskisen Corporation’s Interim Report January–September 2023. The complete Interim Report is attached, and also available on the company’s website at koskisen.com/investors.

July–September 2023 in brief
· Revenue decreased to EUR 55.5 (67.4) million.
· EBITDA decreased to EUR 1.3 (10.3) million.
· The EBITDA margin was 2.4 (15.3) per cent.
· Adjusted EBITDA amounted to EUR 1.4 (11.3) million.
· The adjusted EBITDA margin was 2.5 (16.7) per cent.
· Operating profit amounted to EUR -1.0 (8.3) million and was -1.7 (12.3) per cent of revenue.
· The profit for the financial period was EUR -1.0 (7.1) million.
· Basic earnings per share were EUR -0.04 (0.40).
· Diluted earnings per share were EUR -0.04 (0.40).

January–September 2023 in brief
· Revenue decreased to EUR 202.6 (240.2) million.
· EBITDA decreased to EUR 27.8 (56.4) million.
· The EBITDA margin was 13.7 (23.5) per cent.
· Adjusted EBITDA amounted to EUR 27.7 (55.5) million.
· The adjusted EBITDA margin was 13.7 (23.1) per cent.
· Operating profit amounted to EUR 21.4 (50.3) million and was 10.6 (21.0) per cent of revenue.
· The profit for the financial period was EUR 17.6 (41.0) million.
· Basic earnings per share were EUR 0.77 (2.34).
· Diluted earnings per share were EUR 0.76 (2.33).

Profit guidance for 2023 unchanged (published on 16 March 2023)
Koskisen’s revenue for 2023 is not expected to exceed the level of 2022. The adjusted EBITDA margin is expected to be 12–14 per cent.

The profitability of the Sawn Timber Industry segment is expected to decrease compared to the level of 2022. The profitability of the Panel Industry segment is expected to remain unchanged or improve compared to the level of 2022.

Key figures

EUR million	7–9 2023	7–9 2022	Change, %	1–9 2023	1–9 2022	Change, %	1–12 2022
Revenue	55.5	67.4	-17.7	202.6	240.2	-15.7	317.7
EBITDA	1.3	10.3	-87.0	27.8	56.4	-50.8	66.3
EBITDA margin, %	2.4	15.3		13.7	23.5		20.9
Adjusted EBITDA	1.4	11.3	-87.8	27.7	55.5	-50.2	66.6
Adjusted EBITDA margin, %	2.5	16.7		13.7	23.1		21.0
Operating profit (EBIT)	-1.0	8.3	-111.6	21.4	50.3	-57.5	58.2
Operating profit (EBIT) margin, %	-1.7	12.3		10.6	21.0		18.3
Profit for the period	-1.0	7.1	-113.5	17.6	41.0	-56.9	46.0
Basic earnings per share, EUR	-0.04	0.40		0.77	2.34		2.48
Diluted earnings per share, EUR	-0.04	0.40		0.76	2.33		2.47
Gross investments	4.3	9.1		19.0	21.2		26.6
Equity per share, EUR				6.3	5.6		5.9
Return on capital employed (ROCE), %				16.4	N/A		35.7
Working capital, end of period				39.6	37.6		28.9
Net cash flow from operating activities				8.0	30.5		47.2
Equity ratio, %				55.2	45.7		52.7
Gearing, %				-5.9	13.4		-21.0

The figures in brackets refer to the comparison period, i.e. the corresponding period the previous year, unless specified otherwise.

CEO Jukka Pahta:
Uncertainty in the operating environment has continued, and the end-product market, particularly in the construction sector, is under heavy pressure. Koskisen Group’s profit for the third quarter decreased in line with the company's expectations with adjusted EBITDA amounting to EUR 1.4 (11.3) million. The adjusted EBITDA margin was 2.5 (16.7) per cent. Profit performance in the third quarter reflects the planned maintenance and production shutdowns that took place in July. In terms of the cumulative figures, we are still on pace with our guidance: we keep the guidance issued in November 2022 unchanged, which can be considered a good level of performance in the present operating environment.

The profitability of the Sawn Timber Industry segment decreased substantially year-on-year, with EBITDA amounting to EUR -1.0 (6.1) million. The prices of sawn timber continued their downward trend in the third quarter. Raw material costs relative to the business cycle remained at a historically unfavourable level. The company has survived in a very challenging market situation, primarily thanks to active sales efforts, and there has been no need to limit production.

The ramp-up of the new sawmill is continuing, and the related production runs with gradually increased capacity which were scheduled for the third quarter were carried out as planned. However, the cumulative production volumes are slightly behind the target. We have compensated for the shortfall in production volumes through our production operations at the old sawmill, but its production efficiency has already declined. This is expected to have a positive effect on the cost structure of the Sawn Timber Industry segment. The construction of the log yard at the new sawmill began in September. The log yard is expected to be completed at the beginning of 2025.

The profitability of the Panel Industry segment decreased year-on-year, with EBITDA amounting to EUR 2.6 (6.2) million. The market conditions for birch plywood have remained moderate in spite of the general uncertainty. However, some producers have indicated potential restrictions in production. The order backlog for chipboard products reflects the weakness of new construction in particular, which is why we have concluded local agreements on the potential adaptation of production. Renovation-driven demand has also decreased, albeit to a lesser extent than new construction.

The ramp-up of production with the spindleless veneer peeling line currently under construction at the plywood mill began as planned in September, and the deployment of the new line is scheduled for the beginning of December. The new veneer peeling line will significantly improve material efficiency and enhance our ability to use valuable wood raw material as efficiently as possible. In Hirvensalmi, we are investing in a new thin plywood press, as well as various measures to improve energy efficiency. These will make production more efficient, increase the share of renewable energy and reduce the amount of purchased energy.

The commercial production of Zero, the world’s first completely wood-based furniture board, began in the autumn. The positive feedback we have received from our customers drives us forward in the development of completely wood-based materials and products. From November onwards, our birch plywood and panel products will be even more sustainably produced as the solar power plant to be completed in the vicinity of the production plant starts to generate electricity for the plywood and particle board mills located in Järvelä.

The purchase prices of softwood logs have levelled off and turned to a slight decrease, but the price level is still very high relative to the market price of sawn timber. The price of birch raw material has remained at the previous high level. The supply of raw material for both the Sawn Timber Industry segment and the Panel Industry segment has gone according to plan in spite of the situation.

In October, Koskisen launched KoskiReppu, a new online service for forest owners, which provides versatile tools for the management of forest assets. The service enables users to browse forest resources data for their properties, view other forest-related documents – such as documents related to the timber trade – and manage their KoskiRaha account. The new service has attracted interest among forest owners, and the number of KoskiReppu users has increased steadily. We intend to continue to develop the online service to provide forest owners with even better service and to distribute forest-related data in the most diverse manner possible.

Webcast
A webcast (in Finnish) in relation to January-September 2023 Interim Report will be held today on 17 November 2023 at 10:00 a.m. EET. The webcast can be followed at koskisen.com/webcasts. The presentation material and a recording of the webcast will be available on the company’s website afterwards.

For further information, please contact:
Jukka Pahta, CEO, Koskisen Corporation
jukka.pahta@koskisen.com
puh. +358 20 553 4561

Media enquires:
Sanna Väisänen, Director, Sustainability and Communications, Koskisen Corporation
sanna.vaisanen@koskisen.com
puh. +358 20 553 4563

Koskisen is an international wood processing specialist with more than a century of experience and known for its agility and ability to listen to the customer. We utilise our valuable wood raw material as thoroughly as possible, up to the last particle of sawdust. At the same time, we bring the best carbon narrative to life: We manufacture high-quality and sustainable products that store carbon for decades. The Group’s revenue in 2022 was EUR 318 million. Read more: koskisen.com