CEO’s review

Componenta Corporation’s Business Review 1 January–31 March, 2024, 7 May 2024/ Sami Sivuranta, CEO:

“In the first quarter of the year, volume and order book growth were well below expectations as a result of continued low demand. High interest rates and the development of inflation in the market environment have affected the demand for main customers’ end products, which also had a negative impact on Componenta’s volumes and order book in the first quarter. Net sales were also affected by the lower level of price indices as a result of lower costs, which is why net sales and EBITDA decreased from 2023. In addition to the low utilisation rate, the volume products that were ramped up for serial production in the Karkkila and Pori foundries had a negative impact on production efficiency and quality levels, which contributed to weaker profitability. Profitability was also burdened by the impact of the strikes earlier in the year. However, liquidity remained at a good level during the first quarter.

We have adjusted our operations to meet the temporarily lower volume and order book levels. However, we expect volumes in the second half of the year to be better than in the first half. The ongoing ramp-up of serial products will have a positive impact on the result as deliveries return to their normal level.

We were able to maintain good service capability across the Group despite the challenging operating environment. The general availability of raw materials and other materials is currently at a good level. We are actively monitoring market developments and ensuring that our own supply chains continue to work effectively. There are currently no signs of significant near-term risks to the availability of electricity. However, there is still significant variation in electricity prices on a daily basis.

While there are differences in order books between customers and sectors, the outlook for 2024 as a whole remains generally positive. With the start of serial production of new volume product lines from the second quarter onwards, and thanks to Componenta’s growing market shares, we expect our total production volumes to develop favourably during 2024.

We have updated our strategy for 2024–2026. In this strategy period, we will continue to seek growth in net sales and profitability through systematically implemented measures. By the end of the strategy period, we aim to achieve annual net sales of EUR 150 million through organic growth and EUR 200 million in total, including M&A, and to improve our profitability from the current level. Sustainability has become a focus area in the strategy, emphasised in internal measures and customers’ expectations and requirements. We are currently preparing for regulatory changes that will be implemented in the near future, as well as preparing our long-term sustainability targets and the related measures. As a contract manufacturer, we will continue to actively pursue measures to strengthen market position, and we are working to be the preferred sustainable total supplier to our customers, with a wide offering.”