Stock exchange release
POSITIVE DEVELOPMENT IN NET SALES AND ADJUSTED OPERATING PROFIT
Unless otherwise mentioned, the figures in brackets refer to the corresponding period in the previous year.
- Net sales for the third quarter were
EUR 204.4 million (198.4). Net sales increased by 3.1%. Net sales growth excluding the renewable energy sources business was 7.0%. Organic growth was 3.7%. - Adjusted operating profit for the third quarter was
EUR 20.3 million (18.5) and operating profit wasEUR 20.2 million (18.0). Earnings per share wereEUR 0.38 (0.37). - Industrial Services had a strong quarter, with the division’s net sales growing to
EUR 38.9 million (29.8) and operating profit amounting toEUR 7.0 million (4.1). - In Environmental Services, the number of corporate customers continued to grow, and the demand for recycled raw materials remained at a good level.
- In Facility Services in
Finland andSweden , the higher general cost level had a negative effect on the divisions’ profitability. Both divisions have programmes under way to simplify and increase the efficiency of their operating models. - Net sales for January–September totalled
EUR 634.0 million (589.0). Adjusted operating profit wasEUR 31.3 million (32.3) and operating profit wasEUR 30.0 million (32.3). Net cash flow from operating activities amounted toEUR 38.7 million (31.3). Earnings per share wereEUR 0.53 (0.64).
Outlook for the year 2022
Net sales and adjusted operating profit in 2022 are estimated to be at the same level as in the previous year.
Starting from
PRESIDENT AND CEO
“Net sales and adjusted operating profit developed favourably in the third quarter. Net sales increased by 7 per cent year-on-year, excluding the effect of the renewable energy sources business, and adjusted operating profit was
Our circular economy businesses achieved a good operating result. In the Industrial Services division, all business lines developed favourably. In hazardous waste business, demand remained at a good level, and the resource allocation of annual maintenance breaks in the process cleaning business was successful. In Environmental Services, the number of corporate customers continued to grow, and the demand for recycled raw materials remained at a good level.
In Facility Services in
We received international recognition for our sustainability efforts.
L&T’s businesses are not particularly sensitive to economic cycles. Nevertheless, inflation and rising interest rates create uncertainty, and the overall level of economic activity affects the demand for the company’s services.”
GROUP NET SALES AND FINANCIAL PERFORMANCE
July–September
Lassila & Tikanoja’s net sales for the third quarter totalled
business was 7.0%. Organic growth was 3.7%. Adjusted operating profit was
Net sales grew in Industrial Services, Facility Services Finland and Environmental Services, excluding the effect of the renewable energy sources business. Net sales decreased in Facility Services Sweden. Operating profit improved in Environmental Services and Industrial Services, and declined in Facility Services in
The Group’s adjusted operating profit was still affected by the higher general cost level. The result for the review period was negatively affected by net financial expenses rising to
January–September
Net sales for January–September totalled
Net sales increased in Environmental Services, Industrial Services and Facility Services Finland. Net sales decreased in Facility Services Sweden. Operating profit improved in Environmental Services and Industrial Services, and declined in Facility Services in
Throughout the period under review, the Group’s adjusted operating profit was negatively affected by the higher general cost level. In the first half of the year, the Group’s adjusted operating profit was also negatively affected by increased fuel prices and the large number of sickness-related absences caused by the COVID-19 pandemic. The result for the review period was negatively affected by net financial expenses rising to
Financial summary
7–9/2022 | 7–9/2021 | Change % | 1–9/2022 | 1–9/2021 | Change % | 1–12/2021 | |
Net sales, EUR million | 204.4 | 198.4 | 3.1 | 634.0 | 589.0 | 7.6 | 812.5 |
Adjusted operating profit, EUR million | 20.3 | 18.5 | 9.8 | 31.3 | 32.3 | -3.0 | 42.4 |
Adjusted operating margin, % | 9.9 | 9.3 | 4.9 | 5.5 | 5.2 | ||
Operating profit, EUR million | 20.2 | 18.0 | 12.2 | 30.0 | 32.3 | -7.0 | 42.2 |
Operating margin, % | 9.9 | 9.1 | 4.7 | 5.5 | 5.2 | ||
EBITDA, EUR million | 34.1 | 31.4 | 8.5 | 71.8 | 71.9 | -0.2 | 95.1 |
EBITDA, % | 16.7 | 15.8 | 11.3 | 12.2 | 11.7 | ||
Profit before tax, EUR million | 18.4 | 17.1 | 7.3 | 25.6 | 29.8 | -14.3 | 39.0 |
Earnings per share, EUR | 0.38 | 0.37 | 4.7 | 0.53 | 0.64 | -16.7 | 0.90 |
Net cash flow from operating activities after investments per share, EUR | 0.15 | 0.05 | 203.6 | 0.03 | -0.50 | 105.0 | 0.05 |
Return on equity (ROE), % | 12.9 | 16.5 | 17.1 | ||||
Invested capital, EUR million | 440.1 | 410.0 | 7.3 | 406.0 | |||
Return on invested capital (ROI), % | 9.4 | 10.9 | 10.8 | ||||
Equity ratio, % | 32.7 | 33.1 | 33.7 | ||||
Gearing, % | 95.0 | 92.6 | 79.4 |
NET SALES AND OPERATING PROFIT BY DIVISION
Environmental Services
July–September
The division’s net sales for the third quarter decreased to
January–September
The Environmental Services division’s net sales for January–September rose to
The number of corporate customers continued to grow in the third quarter in Environmental Services. The prices of recycled raw materials returned to normal after being at an exceptionally high level earlier in the year, and demand remained good.
The Environmental Services division’s renewable energy sources business was merged with Neova Oy’s corresponding business, and the joint venture Laania started its operations on
In the first half of the year, the net sales of the renewable energy sources business was
Industrial Services
July–September
The division’s net sales for the third quarter grew to
January–September
The Industrial Services division’s net sales for January–September grew to
All of the Industrial Services division’s business lines developed favourably in the third quarter. In hazardous waste business, demand remained at a good level. In the environmental construction business, several demanding industrial maintenance projects and soil decontamination projects were under way. Due to the COVID-19 pandemic and industrial disputes, annual maintenance breaks for industrial customers were postponed from early 2022 to the autumn. In the process cleaning business, the resource allocation of annual maintenance breaks during the autumn was successful. Several successful industrial water treatment projects were carried out in the process cleaning business in Sweden.
Facility Services Finland
July–September
The division’s net sales for the third quarter increased to
January–September
The net sales of Facility Services Finland grew to
In the cleaning business, challenges associated with the availability of labour continued, and employee turnover increased in the third quarter. In the property maintenance business, the higher production costs caused by general cost inflation could not be fully passed on to customer prices. The demand for energy management projects was strong.
Measures were continued in the Facility Services Finland division to improve operational efficiency and profitability. The progress of the improvement measures was slower than expected due to the challenging business environment. Change negotiations are under way in the division on local and business line level, which may lead to changes in job descriptions and duties as well as redundancies concerning 83 salaried employees and 78 employees at most.
Facility Services Sweden
July–September
The division’s net sales for the third quarter decreased to
January–September
The net sales of Facility Services Sweden decreased to
Production costs in the Facility Services Sweden division were increased by general cost inflation in the third quarter. The increased production costs could not be passed on to customers in the form of price increases. The result of Facility Services Sweden was affected not only by inflation but also the weaker-than-expected sales of additional services. Efforts continued in the third quarter to simplify operating models and adapt them to the rapidly changing business environment.
FINANCING
Net cash flow from operating activities amounted to
At the end of the period, interest-bearing liabilities amounted to
Of the
Net financial expenses amounted to
The equity ratio was 32.7% (33.1%) and the gearing ratio was 95.0% (92.6%). The Group’s total equity was
DISTRIBUTION OF ASSETS
The Annual General Meeting held on
CAPITAL EXPENDITURE
In January–September, gross capital expenditure totalled
SUSTAINABILITY
Environmental responsibility
Climate benefits for customers created by L&T
1–9/2022 | 1–9/2021 | 2021 | Target | Target to be achieved by | |
Carbon handprint (tCO2e) | 388,000 | 752,000 | 1,100,000 | 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 biofuels and solid recovered fuels. The carbon handprint of the renewable energy sources business will no longer be reported as part of
Progress towards science-based emission reduction targets, using 2018 as the baseline
1–9/2022 | 1–9/2021 | 2021 | Target | Target to be achieved by | |
Carbon footprint (tCO2e) | 24 200 | 27 700 | 37,800 | | |
Carbon footprint intensity (gCO2e/km) | 661 | 763 | 767 | 476 | 2030 |
L&T’s strategic objective is to halve the carbon footprint of its operations from the 2018 level by 2030 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. The carbon footprint January-September was affected by, among other factors, the change in the fuel distribution obligation
Social responsibility
Overall accident frequency
1–9/2022 | 1–9/2021 | 2021 | Target | Target to be achieved by | |
Overall accident frequency (TRIF) | 23 | 23 | 24 | 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
1–9/2022 | 1–9/2021 | 2021 | Target | Target to be achieved by | |
Occupational health rate (proportion of employees with no sickness-related absences) | 47 | 55 | 45 | 57 | 2026 |
Sickness-related absences (%) | 5,5 | 4,6 | 5.0 | 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. The COVID-19 pandemic increased the number of sickness-related absences in all divisions during the first quarter. The number of sickness-related absences began to decrease in May, but it was still higher than normal in June. The sickness-related absences during the third quarter were at a normal level.
Current issues related to sustainability
The renewable fuel distribution obligation in
PERSONNEL
In January–September, the average number of employees converted into full-time equivalents was 7,382 (7,202). At the end of the period, L&T had 8,637 (8,729) full-time and part-time employees. Of these, 7,251 (7,362) worked in
SHARES AND SHARE CAPITAL
Traded volume and price
The volume of trading in L&T’s shares in January–September was 8.0 million shares, which is 20.9% (21.0%) of the average number of outstanding shares. The value of trading was
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
Shareholders
At the end of the period, the company had 23,944 (23,166) shareholders. Nominee-registered holdings accounted for 8.2% (9.1%) of the total number of shares.
Authorisations for the Board of Directors
The Annual General Meeting held on
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
Lassila & Tikanoja’s Annual General Meeting was held on
BOARD OF DIRECTORS
The members of
The company announced the composition of
Long-term targets
In September,
Financial targets
Measure | Target |
Annual growth in net sales, % | 5% |
Return on investment, % (ROI) | 15% |
Gearing, % | Below 125% |
Sustainability and stakeholder targets
Measure | Target |
Net Promoter Score, NPS | >50 by 2026 |
Employee Net Promoter Score, eNPS | >50 by 2026 |
Carbon handprint | Growth faster than net sales |
Carbon footprint | -50% by 2030 in comparison to 2018 |
Sustainability and stakeholder measures are reported as part of the Group quarterly and annual reporting.
EVENTS AFTER THE REVIEW PERIOD
The company management is not aware of any events of material importance that
might have affected the preparation of the interim report.
NEAR-TERM RISKS AND UNCERTAINTIES
Higher costs, especially fuel prices, may have a negative impact on the company’s financial performance. Fluctuations in the price of oil influence both fuel costs and the prices of oil-based secondary raw materials, such as recycled plastic and regenerated lubricants.
Potential interest rate hikes may increase the company’s interest costs.
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.
Challenges related to the availability of labour may increase production costs.
The measures and recommendations issued by the authorities to restrict the COVID-19 pandemic, and the resulting customer-specific production restrictions and adjustment measures, are still expected to cause disruptions in service production during 2022. COVID-19 may lead to increased sickness-related absences, which can cause disruptions in L&T’s service production and increase costs.
As the company has no operations or holdings in
More detailed information on Lassila & Tikanoja’s risks and risk management will be provided in the 2021 Annual Report and in the Report of the Board of Directors and the consolidated financial statements.
Board of Directors
President and CEO
For additional information, please contact:
Distribution:
Nasdaq
Major media
www.lt.fi/en
Attachment
- LT-interim report Q3 2022
© OMX, source