CEO’s greeting

CEO TOMMI KAJASOJA COMMENTS ON THE LATEST FINANCIAL STATEMENT

“The third quarter was diverse as the development was positive in Industrial Cleaning services and Recycling Services, but Demolition Services had challenges with project execution affecting our profits adversely. While the third quarter net sales grew 11%, the EBIT decreased by EUR 1.8 million compared to the previous year due to challenges in Demolition Services.

Industrial Cleaning Services had a solid performance in the third quarter. Despite stable net sales development (0%), profitability improved due to efficient execution and control in the high season assignments.

I am pleased that, after a challenging first half of the year, the operating profit margin in Recycling Services recovered as planned to 7% in the third quarter from -1% in the first half of the year. Net sales grew organically4) 8% and the operating profit was close to the previous year’s level. The continued low demand for recycled fuel and increased processing costs for construction waste have been gradually mitigated by our operating efficiency measures and price increases.

Demolition Services’ net sales increased by 30%. The growth was driven by the acquisitions we made in 2018, which contributed 27 percentage points, while the share of organic growth was three percentage points. Third quarter profitability was low due to continued weak project mix with fewer large projects than in the previous year and also due to cost overruns related to ongoing projects.

After the reporting period we announced that, as a result of our strategic assessment initiated in 2018, Delete has mandated financial advisors to explore various possibilities for the sale of the Demolition Services business area or a part thereof. The Demolition Services business has grown strongly, both organically and through acquisitions. We believe that the Demolition Services business would benefit from an owner with focus on further development and expansion opportunities. By reducing the complexity of the group and allocating more resources, Delete would be able to focus on the long-term development of the stable environmental service businesses with Industrial Cleaning Services as the backbone.

We will continue to develop our service offering, seek opportunities to expand geographically within Finland and Sweden and improve our operations in all of our segments and realise synergies between our Finnish and Swedish operations. We will continue the implementation of our efficiency-enhancing measures across all segments, in terms of both cost structure and delivery efficiency, and we expect their impact to be partly reflected in the 2019 result.”