Stock exchange release
A STRONG YEAR IN CIRCULAR ECONOMY BUSINESSES, HIGHER COSTS WEIGHED DOWN THE RESULT OF FACILITY SERVICES
Unless otherwise mentioned, the figures in brackets refer to the corresponding period in the previous year.
- Net sales for the final quarter were
EUR 210.1 million (223.5). Net sales decreased by 6.0%. Net sales growth excluding the renewable energy sources business was 2.9%. - Adjusted operating profit for the final quarter was
EUR 9.6 million (10.1) and operating profit wasEUR 12.9 million (9.9). The Group's operating profit was increased by a gain ofEUR 4.3 million recognised on the sale of the share of renewable energy sources business to a newly established joint venture. - L&T’s circular economy businesses, namely Environmental Services and Industrial Services, achieved a strong operating result in 2022. In Industrial Services, net sales increased by 25.6 per cent.
- In Facility Services in
Finland andSweden , the higher general cost level had a negative effect on profitability. Both divisions launched programmes during the review period to simplify and increase the efficiency of their operating models. These programmes will continue in 2023. - Net sales for 2022 amounted to
EUR 844.1 million (812.5). Adjusted operating profit wasEUR 40.9 million (42.4) and operating profit wasEUR 42.9 million (42.2). Earnings per share wereEUR 0.83 (0.90). - Net cash flow from operating activities after investments per share was
EUR 1.08 (0.05). - The Board of Directors proposes a dividend of
EUR 0.47 per share.
Outlook for the year 2023
Net sales and adjusted operating profit in 2023 are estimated to be at the same level as in the previous year even though the comparison period includes net sales from the renewable energy sources business in the amount of
PRESIDENT AND CEO
“The year 2022 was exceptional and the business environment changed significantly. The economic uncertainty caused by Russia’s invasion of
The development of net sales was positive in 2022, but adjusted operating profit declined slightly due to the weak result of Facility Services Finland and
L&T’s circular economy businesses, namely Environmental Services and Industrial Services, achieved a good operative result in 2022.
In Environmental Services, net sales growth excluding the renewable energy sources business came to 8.1 per cent. The number of corporate customers and producer responsibility organisation customers grew. The division’s environmental responsibility management and consulting capabilities and organisation were strengthened.
In Industrial Services, net sales increased by 25.6 per cent, of which 6.6 per cent was organic growth. Industrial Services expanded its operations into the Swedish market and strengthened its market position in hazardous waste in
In Facility Services in
L&T’s businesses are not particularly sensitive to economic cycles. Nevertheless, inflation and rising interest rates create uncertainty in the operating environment.
In 2024, the Environmental Services division will focus particularly on corporate customers and producer responsibility organisations as the progress of municipalisation reduces the significance of households as customers.
The Industrial Services division will continue to invest in the development of new hazardous waste recycling solutions and process cleaning methods in both
Facility Services Finland and
GROUP NET SALES AND FINANCIAL PERFORMANCE
October–December
Lassila & Tikanoja’s net sales for the fourth quarter amounted to
Net sales increased in Industrial Services and Facility Services Finland. Net sales decreased in Environmental Services and Facility Services Sweden. Operating profit improved in Industrial Services and Facility Services Finland, and declined in Environmental Services and Facility Services Sweden.
The Group’s adjusted operating profit was still negatively affected by the higher general cost level. Net financial expenses rose to
Year 2022
Net sales for 2022 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
The Group’s adjusted operating profit was negatively affected by increased fuel prices and the higher general cost level. The sickness rate was exceptionally high during the review period, which had a negative impact particularly on the labour-intensive facility services business. The Group's operating profit was increased by a gain of
Net financial expenses rose to
Financial summary
10–12/2022 | 10–12/2021 | Change % | 1–12/2022 | 1–12/2021 | Change % | |
Net sales, EUR million | 210.1 | 223.5 | -6.0 | 844.1 | 812.5 | 3.9 |
Adjusted operating profit, EUR million | 9.6 | 10.1 | -5.1 | 40.9 | 42.4 | -3.5 |
Adjusted operating margin, % | 4.6 | 4.5 | 4.8 | 5.2 | ||
Operating profit, EUR million | 12.9 | 9.9 | 30.2 | 42.9 | 42.2 | 1.7 |
Operating margin, % | 6.2 | 4.4 | 5.1 | 5.2 | ||
EBITDA, EUR million | 26.5 | 23.2 | 14.2 | 98.3 | 95.1 | 3.3 |
EBITDA, % | 12.6 | 10.4 | 11.6 | 11.7 | ||
Profit before tax, EUR million | 12.2 | 9.1 | 33.8 | 37.8 | 39.0 | -3.0 |
Earnings per share, EUR | 0.29 | 0.26 | 11.1 | 0.83 | 0.90 | -8.3 |
Net cash flow from operating activities after investments per share, EUR | 1.05 | 0.55 | 92.8 | 1.08 | 0.05 | 2,279.1 |
Return on equity (ROE), % | 14.6 | 17.1 | ||||
Capital employed, EUR million | 437.2 | 406.0 | 7.7 | |||
Return on capital employed (ROCE), % | 10.4 | 10.8 | ||||
Equity ratio, % | 34.3 | 34.2 | ||||
Gearing, % | 75.9 | 79.4 |
NET SALES AND OPERATING PROFIT BY DIVISION
Environmental Services
October–December
The division’s net sales for the fourth quarter decreased to
Year 2022
The full-year net sales of the Environmental Services division grew to
In Environmental Services, growth was derived particularly from corporate customers and producer responsibility organisations. The producer responsibility organisation
During the period under review, the organisational structure and operating model were reformed by assigning more commercial responsibility to the local organisation. Environmental responsibility management and consulting organisation grew, and its competencies were expanded.
The ERP system and related information system renewal programme continued in the division and progressed to the implementation stage. The system is scheduled to enter the deployment stage in the first half of 2024. The total investment in the system projects under the programme is estimated at approximately
Due to the reform of the Waste Act in 2021, direct customer agreements with housing properties were transferred to municipal operators during the period under review, but the impact of these changes on net sales was compensated for by growth in the corporate customer segment.
The prices of recycled raw materials increased in the first half of the year. The prices of recycled raw materials subsequently stabilised and, in the case of certain fractions, began to decrease in the latter half of the year. The market prices of recycled cardboard and paperboard falling to less than half of the level seen in the early part of the year was particularly reflected in the net sales of the Environmental Services division. The reduced level of activity in the construction industry was also reflected in declining volumes towards the end of the year.
Fuel prices rose sharply at the end of February due to the war in Ukraine. The higher fuel costs were successfully passed on to customer prices through cost increases carried out in February–April.
The merger of the Environmental Services division’s renewable energy sources business with Neova Oy’s corresponding business was approved by the
Industrial Services
October–December
The division’s net sales for the final quarter grew to
Year 2022
The full-year net sales of the Industrial Services division grew to
The Industrial Services division strengthened its position in hazardous and non-hazardous waste recycling services during the period under review by acquiring Fortum’s hazardous waste SME business in
In the environmental construction business line, several demanding industrial soil decontamination projects were carried out. At the beginning of the year, a new material treatment center started its operations in Pori,
In February, Industrial Services expanded into the Swedish process cleaning services market by acquiring 70% of the shares of Sand & Vattenbläst i
Fuel prices rose sharply at the end of February due to the war in Ukraine. The higher fuel costs were, for the most part, passed on to customer prices through cost increases carried out in February–April.
Facility Services Finland
October–December
The division’s net sales for the final quarter grew to
Year 2022
The full-year net sales of Facility Services Finland grew to
Several significant new customer accounts were acquired and started in the cleaning business, and the demand for data-driven cleaning services increased. The demand for energy efficiency services increased during the review period.
The COVID-19 pandemic and other respiratory infections significantly increased sickness-related absences in the first and fourth quarters, which increased production costs in all service branches, especially in cleaning. Production costs were increased by higher fuel prices and general cost inflation. The increased production costs could not be fully passed on to customer prices.
In the cleaning business, the availability of labour declined and employee turnover increased significantly, which drove costs higher. Several new projects were launched to improve the availability of labour. Co-operation with municipal employment services and government organisations was intensified to ensure that jobs offered by L&T are better known by job seekers. L&T joined forces with Staffpoint to offer jobs to Ukrainian refugees. A group of workers from
Measures were taken in Facility Services Finland to improve operational efficiency and profitability throughout the period under review. Local and business line-specific change negotiations were conducted in the division in the second half of the year, leading to the termination of employment for approximately 70 white-collar employees and approximately 30 employees.
Facility Services Sweden
October–December
The division’s net sales for the final quarter decreased to
Year 2022
Facility Services Sweden’s full-year net sales decreased to
Production costs were increased by higher fuel prices and general cost inflation from February onwards. The COVID-19 pandemic increased sickness-related absences, particularly in the first quarter. Customer agreements in the Swedish business are mostly fixed-price contracts, and the increased production costs could not be passed on to customers in the form of price increases. The profit performance of Facility Services Sweden was lowered not only by inflation but also the weaker-than-expected sales of additional services. Adaptation measures were initiated in the division in the second quarter. The effort to simplify operating models and adapt them to the rapidly changing business environment will continue in 2023.
FINANCING
In 2022, cash flow from operating activities amounted to
At the end of the financial year, interest-bearing liabilities amounted to
The
Net financial expenses amounted to
The equity ratio was 34.3% (34.2%) and the gearing ratio was 75.9% (79.4%). The Group’s total equity was
DISTRIBUTION OF ASSETS
The Annual General Meeting held on
CAPITAL EXPENDITURE
Gross capital expenditure for 2022 came to
SUSTAINABILITY
Environmental responsibility
Climate benefits for customers created by L&T
2022 | 2021 | Target | Target to be achieved by | |
Carbon handprint (tCO2e) | 534,500 | 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 is no longer reported as part of L&T’s carbon handprint in 2022. In 2021, L&T’s total carbon handprint excluding renewable energy sources was 528,000 tCO2e.
Recycling rate and material recovery
2022 | 2021 | Target | Target to be achieved by | |
Recycling rate of material flows managed by L&T, % | 59.4 | 58.4 | 65 | 2026 |
The recycling rate is the weighted average of our customers’ recycling rates. It also includes materials that cannot yet be recycled. To increase our reuse and recycling rate, we actively look for new material streams whose refining rate we can increase. Reporting covers municipal waste collected from corporate customers, hazardous waste, industrial waste and construction waste in
Progress towards science-based emission reduction targets, using 2018 as the baseline
2022 | 2021 | Target | Target to be achieved by | |
Carbon footprint (tCO2e) | 31 700 | 37,800 | | |
Carbon footprint intensity (gCO2e/km) | 646 | 767 | 476 | 2030 |
L&T’s strategic objective is to halve the carbon footprint of its operations by 2030, using 2018 as the baseline, 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. Transport operations account for 95 per cent of the emissions generated by L&T’s own operations.
The fuel distribution obligation was adjusted in 2022 by reducing the biofuel component by 7.5 per cent in July. This change has not been taken into account in the emissions calculations reported in the financial statements release, as Statistics Finland has yet to update its fuel classification data in accordance with the change. Statistics
Social responsibility
Overall accident frequency
2022 | 2021 | Target | Target to be achieved by | |
Overall accident frequency (TRIF) | 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
2022 | 2021 | Target | Target to be achieved by | |
Occupational health rate (proportion of employees with no sickness-related absences) | 40 | 45 | 57 | 2026 |
Sickness-related absences (%) | 5.6 | 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 and other respiratory infections significantly increased sickness-related absences in the first and fourth quarters.
Current issues related to sustainability
CDP ranked
The sustainability figures in this release have not been externally assured yet. L&T will publish its externally assured sustainability scores as part of the Annual review during week 9.
PERSONNEL
In 2022, the average number of employees converted into full-time equivalents was 7,364 (7,319). At the end of the period, L&T had 8,371 (8,171) full-time and part-time employees. Of these, 7,020 (7,003) worked in
SHARES AND SHARE CAPITAL
Traded volume and price
The volume of trading during the year 2022 was 9.4 million shares, which is 24.7% (25.2%) of the average number of outstanding shares. The value of trading was
Own shares
At the end of the financial year, 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 amounts to
Share-based incentive plans
In
During the performance period 2023–2025, the earning of rewards is based on the following performance criteria: return on capital employed (ROCE), total shareholder return (TSR) and reduction of the carbon footprint (ESG).
The target group of the Performance Share Plan during the performance period 2023–2025 consists of approximately 50 key employees, including the Group’s President and CEO and the Group Executive Board.
The transitional share-based incentive scheme 2023–2026 consists of two (2) earnings periods of one (1) year each, corresponding to the calendar years 2023 and 2024. The earnings period is followed by a two-year commitment period. The aim of the scheme is to support the transition from the old share-based incentive scheme to the new share-based incentive scheme. The target group of the transitional share-based incentive scheme for the earnings period 2023 consists of approximately 10 key employees, including the Group’s President and CEO and the Group Executive Board.
Shareholders
At the end of the financial year, the company had 24,556 (23,087) shareholders. Nominee-registered holdings accounted for 7.0% (9.6%) 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
The Annual General Meeting, which was held on
The Annual General Meeting resolved that a dividend of
The Annual General Meeting confirmed the number of members of the Board of Directors as six.
The Annual General Meeting elected
The Annual General Meeting resolved to amend the third sentence of Section 4 of the Articles of Association so that the General Meeting elects the Chairman and the Vice-Chairman of the Board.
The resolutions of the Annual General Meeting were announced in more detail in a stock exchange release on
BOARD OF DIRECTORS
The members of
The company announced the composition of
Long-term targets
In September,
Financial targets
Indicator | Target |
Annual growth in net sales, % | 5% |
Return on capital employed, % | 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.
CHANGES IN THE GROUP EXECUTIVE BOARD
In
EVENTS AFTER THE FINANCIAL YEAR
On
NEAR-TERM RISKS AND UNCERTAINTIES
General economic uncertainty may affect the level of economic activity among customers, which may reduce the demand for L&T’s services.
Higher costs, such as fuel and energy, potential interest rate hikes and wage-related decisions in the labour market, may have a negative impact on the company’s financial performance.
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.
Production costs may be increased by challenges related to employee turnover, labour availability and higher sickness rates.
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 Review and in the Report by the Board of Directors and the consolidated financial statements.
PROPOSAL FOR THE DISTRIBUTION OF ASSETS
According to the financial statements,
The Board of Directors proposes to the Annual General Meeting that a dividend of
No dividend shall be paid on shares held by the company on the record date of the dividend payment,
On the day the proposal for the distribution of assets was made, the number of shares entitling to dividend was 38,145,618, which means the total amount of the dividend would be
Lassila & Tikanoja’s Annual Report, which includes the Report by the Board of Directors and the financial statements for 2022, will be published in week 9 at www.lt.fi/en.
Board of Directors
President and CEO
For additional information, please contact:
Distribution:
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Attachment
- LT-Financial_statements_release_2022
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