Lehto Group Plc
Insider information
28 January 2022, at 8.00 a.m. (EET)
Preparation of Lehto’s 2021 financial statements is still ongoing but according
to the unaudited 2021 accounts net sales declined by 20% to approximately EUR
435 million and operating loss from continuing operations was approximately EUR
-24 million.
The reason behind the operating loss was especially significant losses from six
business premises projects. These projects caused loss of EUR -24 million in
year 2021. Two of the projects are complete renovation projects (approximately
EUR -10 million), two hotel projects (approximately EUR -4 million), one office
building project (approximately EUR -8 million) and one industrial building
project (approximately EUR -2). Losses are due to defects in project
preparation, problems and delays in construction phase, fixed sales prices
agreed in early phase and increased construction material costs. Lehto has
already in 2019 decided to withdraw from complete renovation business and the
commitments on two projects in question have been made already in 2017-2019.
The whole Business Premises Service Area has approximately EUR -29 million
negative effect on Lehto’s 2021 operating result. Regardless of the increased
material costs profit development on Housing Service Area was positive and
better than budgeted.
Lehto has taken operational actions to improve project risk management on
Business Premises Service Area. Implementation of the actions is ongoing by the
new head of the Service Area who started his duty in the beginning of year 2022.
The company is paying a specific attention on the selection of the projects and
their fit on company’s resources and strategy. The company is also planning
structural and operational changes to reduce the cost level.
Lehto will report Swedish operations as discontinued operations in 2021
financial statements. Loss from discontinuing operations was approximately EUR
-7 million. The loss consists of losses in operative business, costs of closing
down the business and impairment of deferred tax assets and capitalized R&D
costs. The close down of the Swedish business does not have a significant effect
on cash flow.
The cash reserves at the end of year 2021 were EUR 32.8 million and interest
-bearing debt without IFRS 16 lease liabilities was EUR 45.8 million. EUR 25.0
million of the debt is related to syndicated RCF-credit limit agreement that is
valid until December 31, 2022. According to the agreement, some of the debt will
be paid back before the end of the contractual period and part of the debt will
fall due at the end of the agreement. The agreement includes both partial
collateral and financial covenants on EBITDA, interest-bearing net debt, net
gearing and other covenants. The creditors have granted a waiver to temporarily
exceed the covenant levels set in the original agreement. Lehto is having
negotiations on refinancing the debt.
Outlook published in January-September business review report on 4 November 2021
was:
Lehto estimates that net sales in 2021 will be approximately 20% lower than in
the previous year (EUR 544.7 in 2020) and that the operating result will be
negative.
The main factors behind the declined outlook are some loss-making business
premises projects and their delayed execution, rising prices of the building
materials and their weak availability, and delays in the starts of new projects.
The main risks to the development of net sales and the operating result in 2021
concern the availability and rising prices of building materials and the
completion of certain business premises projects according to the planned
schedule and planned costs.
Further information:
Juuso Hietanen
CEO
Tel. +358 50 343 4023
Veli-Pekka Paloranta
CFO
Tel. +358 400 944 074