CEO’s greeting

TOMMI KAJASOJA, DELETE GROUP CEO COMMENTS ON THE LATEST FINANCIAL STATEMENT:

“The fourth quarter was disappointing, even though we didn’t expect it to reach previous year’s record high performance. While Industrial Cleaning and Recycling were performing on a typical late autumn level, the average deal size in Demolition Services started to decline in the fourth quarter, lowering productivity and margin.

For the full year, Delete’s growth continued in 2018 driven by acquisitions. The Group’s net sales increased by 9% and EBITDA by 22%, despite the soft fourth quarter.

Net sales of Industrial Cleaning Services grew by 24%, supported by acquisitions in late 2017. For maintenance shut-downs, the year was quieter than the previous year, which affected the development of net sales. Profitability was negatively affected by the prolonged winter in the early part of the year and an overtime ban imposed by trade unions in Finland in the second half of the year, which caused delays and cancellations in work assignments.

Demolition Services net sales decreased compared to the previous year, but I’m happy that our profitability developed strongly during the year. Our business in Finland developed favourably whereas the recovery in Sweden progressed slower than expected due to a lack of sizeable demolition projects. We are investing in improving our sales operations and in the future we are aiming for growth in large demolition orders in both of our main markets.

Regarding Recycling Services, net sales grew steadily, but profitability was slightly lower than in the previous year due to the low demand for recycled fuel. We have invested heavily in increasing capacity and efficiency at Rusko’s recycling plant. As a result of our investments, we expect the profitability of Recycling Services to improve in 2019.

We implemented our growth strategy during the year through acquisitions in both Finland and Sweden. In Finland, we bought Karhupurku Oy, a company based in Eura that specialises in elevator demolitions, and three companies in Sweden: Waterjet Karlstad AB, which specialises in industrial cleaning services and Waterjet Karlstad AB and W-Tech AB with focused offering in infrastructure demolitions and maintenance. On the back of those acquisitions, we grew by 40 employees in Sweden.

Customer and employee satisfaction developed positively in 2018, which is a sign of our strong expertise and customer confidence in the quality of our services. We want to thank our customers and our skilled staff for contributing to this great development in 2018.

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.

Our strategic focus areas are growing our services offering and geographic expansion. We will continue to improve our operations in all of our business areas and utilise synergies between the Finnish and Swedish operations. At the end of 2018, we have launched efficiency-enhancing measures in all business areas, 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.

Delete’s core is in the services business, which is somewhat resilient to market fluctuations. However, we monitor the market development closely and are prepared to act accordingly. In 2019, the focus will be on organic and profitable growth as well as 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 pick up, especially in the industrial cleaning services market.”