From the CEO

October 30, 2019

The impact of the postponement of our customers' project decisions on our order intake during the early year is now reflected in our net sales falling short of last year's level and our targets.
Uncertainty in our customers' markets has further increased, and the start-up of a few projects that have progressed well has been delayed. Some of them have been postponed until the market situation settles. Our demand continues to focus on a customer base that is new to us and less established. We are addressing this in part through the announced organization changes. Demand for strategic, major, long-term projects and minor immediate improvements and maintenance services is at a good level, while demand for repair and improvement investments is weak. This makes it more difficult to forecast order intake and causes larger variations in order intake volumes. Demand for spare parts and maintenance services has remained stable. It indicates that, in spite of the market uncertainty, the utilization rates of customer mills have mostly kept to a good level.
The third-quarter order intake, EUR 73 million, was at an excellent level, taking into consideration the market situation. The dominant role of a single exceptionally large order also reflects the market situation well. The record order received at the end of the third period brought our order book back to a strong level of EUR 109 million. However, this major order will not start generating any major net sales until next year. The project will also be implemented over a rather long period of time. Thus we will be able to serve our other customers with quick and flexible delivery times, despite the large order book.
In terms of operating profit, we are nearly five million euros behind the record result of the corresponding period last year. In terms of the third quarter, the result stayed at the realized level in part due to the above-mentioned delays in new orders and the resulting low net sales. As for the last quarter of the year, our order book enables the realization of the best period of the year. I believe that we will be able to close in on last year's performance to some extent, but unfortunately we will not be able to bridge the gap entirely. Therefore, our estimate that Raute's net sales will decrease and operating profit will weaken in 2019 compared to 2018 remains unchanged.

Tapani Kiiski
President and CEO