CEO’s greeting

CEO TOMMI KAJASOJA COMMENTS ON THE LATEST FINANCIAL STATEMENT

“The first quarter is always a low season in Delete’s business and this year the development was two fold. Even though we achieved solid growth as a Group, the profitability fell behind the previous year’s level. The Industrial Cleaning services segment’s performance was on a good level given the generally slow winter season. However, the Group’s operating profit was supressed by continuing challenges with Recycling Services segment’s recycled fuel market and even more so by Demolition Services’ challenging project mix.

Net sales of Industrial Cleaning Services grew by 3% with 2% organic growth6). The typically slow first quarter turned out to be better than last year. In particular, our operating profit improved due to well executed resource planning and utilisation during the first quarter of 2019.

Demolition Services’ net sales increased by 11% driven by the acquisitions made in 2018, which contributed 13%, while organic growth was -2%. The sales- and project mix was weaker than in the previous year comprising of smaller assignments which were more tightly priced, hindered efficient resource utilisation and increased logistics costs, resulting in a clearly weakened operating profit. In terms of new orders, Demolition Services’ business has developed favourably since the challenging first quarter, but the operating profit is not expected to reach last year’s level in the first half of 2019.

Recycling Services net sales grew by 30%, all organically, but the profitability fell short of the previous year due to continued low demand for and increased processing costs of recycled fuel. We have recently invested in increasing capacity and efficiency at our Rusko recycling plant, which we expect to improve the profitability gradually during 2019.

Our strategic focus areas are to grow our service offering and to expand geographically within Finland and Sweden. We will continue to improve our operations in all our segments and realise synergies between our Finnish and Swedish operations. In the first quarter we have progressed with efficiency-enhancing measures in all segments, both in terms of cost structure and delivery efficiency. The measures will be implemented gradually in 2019, and their impact is expected to be partly reflected in the 2019 result.

In 2019, the focus will be on organic and profitable growth, the integration of the companies acquired in the previous years and harvesting the synergies. I see a lot of potential in our market and I expect the demand to continue at a favourable level, especially in the industrial cleaning services market.

The strategic assessment of options to support the company’s future growth announced on 16 August 2018 will continue during 2019. The results of the evaluation will be announced when the assessment has been completed.”

6) Equity ratio = equity/(assets-prepayments)