CEO’s greeting

CEO TOMMI KAJASOJA COMMENTS ON THE FINANCIAL STATEMENTS BULLETIN 2020

“As expected, our profitability improved in the fourth quarter despite the somewhat soft market demand, enabled by our internal productivity and efficiency actions. The suppressed market conditions gradually improved in the fourth quarter, but they were yet not up to the normal level.

2020 was a challenging year for Delete, but despite the COVID-19 driven demand decline, we managed to improve our relative adjusted EBITDA. The improvements required a strong effort from the organisation under the circumstances of declining sales, tightening market pricing and some customer losses due to it. We would like to thank our customers, investors and our skilled staff for the continued confidence shown in us.

We completed two key efforts, with partially overlapping purposes, when we announced the sale of our remaining Demolition Services business in Finland and restructuring of our financing structure in December, both formally completed in the first quarter of 2021. As a result, we are now aligned to execute our strategy of becoming a focused and leading environmental services provider in the Nordics, with a lowered exposure on projects. In addition, we have reinforced our capital structure and equity position by EUR 34,8 million after the year end, when a consent was reached with our bondholders regarding the restructuring of our financing structure.

In the fourth quarter, net sales of Cleaning Services declined by 1% due to a lower level of daily assignments activity than in the previous year, mainly in the industrial segment. Responding to the lower demand, we managed to plan and execute resourcing efficiently, partially enabled by temporary layoffs. As a result, our EBITDA in the fourth quarter improved.

Recycling Services’ net sales declined by 10% in the fourth quarter, mainly due to the pandemic-related slowdown of incoming waste volumes and as communicated previously a large customer’s decision to insource their waste processing during early 2020. The operative performance remained at a good level in Recycling Services; however, the reported operating profit declined on the back of a considerable increase in waste cost provisions. Our recycling plants are currently in good operational shape and production processes are functioning well, which is expected to improve our financial performance in 2021.

In addition to optimising the operative resources in a suppressed market, our efficiency actions taken in 2020 decreased our administrative costs. Excluding non-recurring items mainly related to divestment and financing projects, the administrative costs decreased by over 40% for the full year, with further actions being prepared. In order to secure operational capabilities, we have continued our fleet maintenance programmes according to schedule.

The Demolition Services divestment was announced in December and completed in January 2021. While the sales price was somewhat disappointing, it was a fair reflection of the recent trading and uncertainties in the segment. Furthermore, the divestment allows us to focus on executing our environmental services focused strategy in 2021 and onward, hence we are no longer actively pursuing a sale of our Recycling Services business.

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 2021 first half 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.”