CEO’s greeting

CEO TOMMI KAJASOJA COMMENTS ON THE LATEST FINANCIAL STATEMENT

“The third quarter was better than the challenging second quarter, but it was still short of the level of previous years, with continuing COVID-19-related issues regarding market demand. As expected, the industrial shutdown season commenced in the third quarter after delays from the spring and deliveries were carried out well in terms of quality, health & safety and efficiency.

Net sales of Cleaning Services declined by 15% in the third quarter of 2020. In some cases, our scope of delivery in the shutdowns was narrower than usual and our daily assignments activity was at a lower level than in the previous year, mainly in the industrial segment. Despite the lower demand, we managed to plan and execute resourcing, partially enabled by temporary layoffs, reasonably efficiently in the third quarter.

Recycling Services’ net sales declined by 19% in the third quarter, mainly due to the pandemic-related slowdown of incoming waste volumes and a large customer’s insourcing of waste processing. The operative performance remained at a good level in Recycling Services; however, the reported operating profit declined on the back of considerable non-recurring relocation costs and increased waste cost provisions. Following the Rusko plant interruptions in May, the site is currently in good operational shape and production processes are functioning well.

In addition to optimizing the operative resources in a suppressed market, our efficiency actions taken earlier this year decreased our administrative costs by over 30% in the third quarter, with further actions being prepared. To further protect our cash flow, we have postponed certain fleet investments, while the fleet maintenance programmes have continued according to schedule to secure operational capabilities.

The Demolition Services divestment process is ongoing in Finland, despite the general market uncertainty. Delete’s Demolition Services business in Finland is in reasonably good shape and currently delivers positive operating profit. Since the self-standing incorporation of the business in late 2019, it has been executing its growth strategy well. In August 2020, we announced our plan to also assess the divestment of the Recycling Business, which would enable us to focus and allocate additional resources on the long-term development of the Cleaning Services business. In line with these plans and to support our strategic goals, we have also made some changes in our management team.

We will continue to enforce tight cost and cash flow controls and prepare ourselves for quick manoeuvring with health & safety as well as efficiency aspects in mind should COVID-19-related issues interfere with the planned fourth quarter assignments. We will continue to follow the health & safety precautions every day, protecting not only our employees but also our customers and partners with whom we are in contact. Throughout the pandemic, we have sustained a fully operational team with the ability to execute all tasks as usual.

Entering the fourth quarter, we have gained better visibility and published a new outlook in November, with a caveat concerning possible unexpected COVID-19 interruptions. The industrial shutdowns will continue in the fourth quarter and we also see some gradual recovery in the daily assignments activity in the Cleaning Services and improvement in incoming waste volumes for our Recycling Services business. In the medium and long term, we believe that the megatrends supporting our business have not changed and remain supportive, while some uncertainty concerning demand remains in the short to mid-term.”