{"segments": [{"speakerId": "spk1", "sentences": [{"start": 5, "end": 9, "text": "Welcome to last year's first quarter results webcast."}, {"start": 10, "end": 16, "text": "The broadcast is hosted by Lassila & Tikanoja plc's CEO and CFO, Valtteri Palin."}, {"start": 16, "end": 22, "text": "Questions can be asked during the broadcast by using the phone or via the chat functionality."}, {"start": 23, "end": 26, "text": "But without further ado, here the stage is yours."}]}, {"speakerId": "spk2", "sentences": [{"start": 26, "end": 32, "text": "Thank you, and welcome to this first quarter earnings release."}, {"start": 33, "end": 39, "text": "Typically, the first quarter is the smallest quarter of the year."}, {"start": 39, "end": 54, "text": "And this year, the fact is strengthened by the slowness of the Finnish economy and also the political strikes that we experienced here in Finland."}, {"start": 56, "end": 57, "text": "In Industrial Services."}, {"start": 57, "end": 62, "text": "We had a solid performance in all business lines."}, {"start": 62, "end": 76, "text": "In Environmental Services, we were able to largely compensate for the effects of municipalisation in Finnish Facility Services."}, {"start": 77, "end": 81, "text": "Solid performance and the turnaround is on track."}, {"start": 81, "end": 94, "text": "And in Sweden, we did have some challenges, which were affected especially by the loss of a large customer at the end of '23."}, {"start": 97, "end": 109, "text": "Looking at the net sales, we can see that the slowness of the Finnish economy had an effect on pretty much all of our businesses."}, {"start": 109, "end": 115, "text": "In Industrial Services, we were able to grow compared to the previous period."}, {"start": 115, "end": 122, "text": "But in all other business lines, we had a decline in net sales."}, {"start": 125, "end": 130, "text": "When it comes to the operating profit in Environmental Services."}, {"start": 131, "end": 141, "text": "We had a decline of €500,000 in Industrial Services and Facility Services."}, {"start": 141, "end": 150, "text": "Finland. We were pretty much on par with the previous year's level and in Facility Services Sweden."}, {"start": 150, "end": 159, "text": "The first quarter was difficult and we will strengthen our efforts to turn around the business."}, {"start": 159, "end": 163, "text": "And I'll come back to that later during the presentation."}, {"start": 167, "end": 177, "text": "As I said, there was a clear effect of the slowness of the Finnish economy on all of our Finnish business lines."}, {"start": 177, "end": 185, "text": "And this was especially visible in Environmental Services on top of the construction industry."}, {"start": 185, "end": 194, "text": "Also, other industrial customers had less demand for services."}, {"start": 194, "end": 202, "text": "The good news is that the recyclable raw material prices stabilized."}, {"start": 202, "end": 207, "text": "So the decline has now plateaued."}, {"start": 207, "end": 219, "text": "And hopefully, we will see later this year also an increase in the prices of recyclable raw materials."}, {"start": 221, "end": 242, "text": "The restructuring efforts that we have now made to compensate for the effect of the municipalisation are well on track, and we were able to compensate for most of the effect already in the first quarter."}, {"start": 242, "end": 248, "text": "So from that perspective, the performance was good in Environmental Services."}, {"start": 254, "end": 256, "text": "In Industrial Services."}, {"start": 256, "end": 261, "text": "The demand remains strong in environmental construction."}, {"start": 262, "end": 266, "text": "In hazardous waste."}, {"start": 266, "end": 278, "text": "We did see an effect due to the political strikes, because obviously that was mainly affecting our large industrial customers."}, {"start": 278, "end": 286, "text": "And that was visible also in the demand for hazardous waste services."}, {"start": 286, "end": 295, "text": "The good thing is that there were no major shifts in the planned maintenance breaks."}, {"start": 296, "end": 303, "text": "So far, the outlook for the second quarter is good."}, {"start": 303, "end": 307, "text": "And as expected, obviously, it remains to be seen."}, {"start": 307, "end": 310, "text": "Will there be effects later in the year?"}, {"start": 310, "end": 319, "text": "But so far, we have no information of any shifts in the planned maintenance breaks."}, {"start": 321, "end": 342, "text": "We did expand our business in Sweden by acquiring PF Industriservice AB in our region, and why this is important even though the sales are rather small."}, {"start": 342, "end": 349, "text": "It offers us a platform to grow also further north in Sweden."}, {"start": 349, "end": 363, "text": "Currently, we have been strong in the second area and in southern Sweden, but now we have a foothold also in the center of Sweden that will allow organic growth."}, {"start": 363, "end": 374, "text": "Obviously, we will also look for potential acquisitions to further strengthen our position in Sweden."}, {"start": 378, "end": 380, "text": "In Facility Services Finland."}, {"start": 380, "end": 390, "text": "The progress was steady, and the efforts that we have made continued as planned."}, {"start": 390, "end": 395, "text": "And, the result of cleaning services was strong."}, {"start": 397, "end": 399, "text": "Also in property maintenance."}, {"start": 399, "end": 402, "text": "The progress was good."}, {"start": 402, "end": 421, "text": "Obviously, the conditions were quite challenging in the first quarter this year in Finland. We did book a provision of €600,000 for potential additional disability pension contributions."}, {"start": 421, "end": 436, "text": "And, as we are a large employer, when such incidents happen, we carry the full effect of these kinds of pension liabilities."}, {"start": 439, "end": 447, "text": "In Sweden, we did make progress on our efforts to turn around the business."}, {"start": 447, "end": 461, "text": "But at the same time, the effect of losing one large customer was so significant that we were not able to compensate for all of that in the first quarter."}, {"start": 462, "end": 472, "text": "As you can see from the number of employees, we have approximately 180 employees, less than we had."}, {"start": 473, "end": 485, "text": "A year earlier, we have taken pretty active measures to compensate for the situation in Sweden."}, {"start": 486, "end": 491, "text": "But more work remains to be done in Sweden."}, {"start": 493, "end": 499, "text": "Also, we have gained several new customer contracts, which is obviously good news."}, {"start": 499, "end": 513, "text": "But before they are visible in our numbers, it will take a while to see how much they will be able to compensate for the loss of this one large customer contract."}, {"start": 516, "end": 528, "text": "In sustainability, we have made significant long-term efforts, and the results of those efforts are visible here."}, {"start": 529, "end": 542, "text": "I'm very proud of how we have been able to reduce our carbon footprint compared obviously to 2020."}, {"start": 542, "end": 549, "text": "The reduction is significant, but also compared to the last year's first quarter."}, {"start": 549, "end": 551, "text": "There is a clear improvement."}, {"start": 553, "end": 559, "text": "Also, I'm very happy with the work safety development."}, {"start": 559, "end": 562, "text": "Our tariff has come down to 21."}, {"start": 563, "end": 570, "text": "And as I said, the weather conditions were very challenging in the first quarter this year."}, {"start": 570, "end": 579, "text": "And despite that, we were able to have the best result ever in the first quarter in work safety."}, {"start": 579, "end": 582, "text": "This is a marathon, and the work continues."}, {"start": 582, "end": 589, "text": "But obviously, we are happy about the very good progress we have made in this area."}, {"start": 591, "end": 596, "text": "Also, sick leave percentage has reduced significantly from the previous year."}, {"start": 596, "end": 602, "text": "So overall, a very good performance in the sustainability area."}, {"start": 603, "end": 609, "text": "But now let's dive a little deeper into the financials, and I hand over to Valtteri."}]}, {"speakerId": "spk3", "sentences": [{"start": 612, "end": 616, "text": "Thank you and good morning on my behalf as well."}, {"start": 617, "end": 622, "text": "Now moving on to the financials, and I will start with the key figures."}, {"start": 623, "end": 631, "text": "Capital expenditure was less than a year ago, now €11.1 million."}, {"start": 631, "end": 638, "text": "And also that includes the company we acquired from Sweden, PF Industriservice AB."}, {"start": 638, "end": 644, "text": "As I mentioned, the company's annual net sales are around €2.5 million."}, {"start": 645, "end": 652, "text": "Depreciation is on the same level as a year ago, €13.8 million."}, {"start": 653, "end": 666, "text": "And then, the joint venture, Linear Renewable Energy Sources Company, which has been now operating for almost two years, had a strong performance."}, {"start": 667, "end": 669, "text": "The development was good."}, {"start": 669, "end": 694, "text": "Of the net result, 55% was €2.1 million compared to last year's €1.5 million. Capital employed decreased by a few million euros, and the return on capital employed was 9.9%, lower than a year ago due to the lower result."}, {"start": 695, "end": 699, "text": "Earnings per share were $0.02 negative."}, {"start": 699, "end": 709, "text": "Then, balance sheet KPIs, the equity ratio, were above last year at 33.4%."}, {"start": 709, "end": 719, "text": "And now, dividends of €18.7 million have been booked as debt in the Q1 balance sheet."}, {"start": 720, "end": 731, "text": "The dividend was paid now in April, with gearing on the same level as a year ago, at 85.8%."}, {"start": 732, "end": 737, "text": "The total number of employees decreased significantly."}, {"start": 737, "end": 746, "text": "560 employees. The company's net sales decreased by 4%."}, {"start": 746, "end": 755, "text": "But also, we have taken actions to improve efficiency and profitability, and it's now visible in the number of employees."}, {"start": 759, "end": 763, "text": "Net working capital was €38.7 million."}, {"start": 763, "end": 768, "text": "Indeed. As you can observe, there's a certain seasonality."}, {"start": 769, "end": 773, "text": "It was €10 million less than a year ago."}, {"start": 773, "end": 782, "text": "And the main reason for that is that we lowered the level of factoring finance by €10 million."}, {"start": 783, "end": 785, "text": "But anyway, it's still at a core level."}, {"start": 788, "end": 795, "text": "Cash flow. A year ago, cash flow was really strong, €19.2 million."}, {"start": 795, "end": 801, "text": "Now this year, first quarter, -€9.4 million."}, {"start": 801, "end": 807, "text": "And the main reason is the factoring financing of less than €10 million."}, {"start": 807, "end": 814, "text": "So basically the cash flow was pretty much according to the company's net result, close to zero."}, {"start": 814, "end": 820, "text": "We spent €11.3 million on investments."}, {"start": 823, "end": 832, "text": "Uh, debts and liquidity, uh, that's, uh, increased by €10 million."}, {"start": 832, "end": 837, "text": "The reason is that we, uh, replaced this factoring financing by using commercial papers."}, {"start": 837, "end": 854, "text": "So now we have €10 million of commercial papers in use, and, uh, IFRS 16 liabilities, uh, were, uh, €82 million and the cash balance, uh, €28 million."}, {"start": 854, "end": 864, "text": "And as I said, we spent the money, uh, paying dividends, uh, in the beginning of, of, uh, April."}, {"start": 867, "end": 869, "text": "Then loan portfolio."}, {"start": 869, "end": 872, "text": "No changes on this side in Q1."}, {"start": 872, "end": 875, "text": "Uh, the loans, sustainability-linked loans."}, {"start": 875, "end": 876, "text": "We have €40 million."}, {"start": 876, "end": 879, "text": "Bank loan will mature in 2026."}, {"start": 879, "end": 884, "text": "And the bond, uh, €75 million in 2028."}, {"start": 884, "end": 894, "text": "The average interest rate is the same, 4%, and the bond has a fixed interest rate and the bank loan variable."}, {"start": 897, "end": 901, "text": "And now Eero will continue with the outlook."}]}, {"speakerId": "spk2", "sentences": [{"start": 903, "end": 911, "text": "Thank you, Valtteri. Our outlook is unchanged for 2024."}, {"start": 912, "end": 926, "text": "We estimate our net sales to be at the same level as the previous year, and operating profit to be at the same level or better compared to the previous year."}, {"start": 927, "end": 931, "text": "Thank you. And now we are ready for your questions."}]}, {"speakerId": "spk4", "sentences": [{"start": 936, "end": 944, "text": "If you wish to ask a question, please dial Pound Key five on your telephone keypad to enter the queue."}, {"start": 944, "end": 950, "text": "If you wish to withdraw your question, please dial Pound Key six on your telephone keypad."}, {"start": 953, "end": 957, "text": "The next question comes from Nico Kangas from SEB."}, {"start": 958, "end": 959, "text": "Please go ahead."}]}, {"speakerId": "spk5", "sentences": [{"start": 960, "end": 963, "text": "Right. This is Michael from NCBI."}, {"start": 963, "end": 966, "text": "Good morning, and thank you for the presentation."}, {"start": 967, "end": 972, "text": "Uh, I have a couple of questions and maybe starting with a general one."}, {"start": 972, "end": 979, "text": "So you talked about the effects of low general economic activity on your performance."}, {"start": 980, "end": 986, "text": "Uh, so were the effects in line with your expectations or the tier one?"}, {"start": 986, "end": 992, "text": "Or has something surprised you during the quarter or maybe the fourth quarter?"}]}, {"speakerId": "spk2", "sentences": [{"start": 993, "end": 996, "text": "Uh, no. Uh, good question."}, {"start": 996, "end": 1006, "text": "The performance was very much in line with our expectations, with the exception of the political strikes."}, {"start": 1006, "end": 1025, "text": "Obviously, we did not see those coming when we gave the outlook for the year, and maybe the 300,000 effect is a cautious one from our side."}, {"start": 1025, "end": 1037, "text": "But it clearly had an effect on our large industrial customers that we have for both environmental services and industrial services."}, {"start": 1037, "end": 1043, "text": "But overall, the big picture of the economy was as expected."}]}, {"speakerId": "spk5", "sentences": [{"start": 1045, "end": 1054, "text": "All right. Understand then, on the utilization, where you were successful in compensating for the negative effects."}, {"start": 1054, "end": 1073, "text": "So, good, good. Uh, but do you expect the transition in the market from free competition to municipalities to be gradual between the quarters, or do you expect some better practice in some quarters?"}, {"start": 1074, "end": 1081, "text": "And do you expect them also to be able to compensate those in the same region, like in tier one?"}, {"start": 1081, "end": 1083, "text": "Or do you expect some kind of test?"}]}, {"speakerId": "spk2", "sentences": [{"start": 1085, "end": 1099, "text": "The municipalisation, in fact, is more detailed this year than last year, rather than a new municipalisation."}, {"start": 1099, "end": 1105, "text": "This year, there are certain regions where it happens as well."}, {"start": 1105, "end": 1108, "text": "But mostly, it's the tale from."}]}, {"speakerId": "spk6", "sentences": [{"start": 1108, "end": 1109, "text": "From."}]}, {"speakerId": "spk2", "sentences": [{"start": 1109, "end": 1113, "text": "Last year, and we."}, {"start": 1113, "end": 1118, "text": "We know quite well what the effects are."}, {"start": 1119, "end": 1122, "text": "We have solid plans to."}, {"start": 1123, "end": 1129, "text": "And we will continue to work on the efficiency of the environmental services."}, {"start": 1129, "end": 1136, "text": "So, obviously, a small part of the work was visible in the first quarter."}, {"start": 1137, "end": 1150, "text": "Uh, so, uh, there may be sort of a small, uh, uh, discrepancy between the, our, our, uh."}, {"start": 1151, "end": 1154, "text": "Efficiency measures and the actual municipalisation."}, {"start": 1154, "end": 1170, "text": "But in the big picture for 2024, I'm quite confident that we will be able to offset the effects of the municipalisation this year."}]}, {"speakerId": "spk5", "sentences": [{"start": 1173, "end": 1175, "text": "All right."}, {"start": 1175, "end": 1179, "text": "Then on to the Facility Services Sweden."}, {"start": 1180, "end": 1187, "text": "So your adjusted EBITDA declined, as you also explained earlier."}, {"start": 1187, "end": 1190, "text": "But you say that actions to improve continued."}, {"start": 1190, "end": 1207, "text": "So, how much of the decline in adjusted EBIT year-on-year was explained by this one large customer loss, and then, maybe continue on that, that you indicated that you expect to see improvement by the end of the year."}, {"start": 1207, "end": 1220, "text": "So, does this mean that you expect the adjusted EBITDA to be positive, or that the adjusted EBIT decline trend stops by the end of the year?"}]}, {"speakerId": "spk2", "sentences": [{"start": 1220, "end": 1225, "text": "Yeah, we don't give the outlook by business segment."}, {"start": 1225, "end": 1237, "text": "But mostly, the difference between the first quarter of 2023 and 2024 was affected by the loss of this large customer."}, {"start": 1237, "end": 1253, "text": "But at the same time, I have to say that we need to sort of strengthen our efforts to do more than we perhaps originally thought."}, {"start": 1254, "end": 1257, "text": "Um, and those measures are ongoing already."}, {"start": 1259, "end": 1270, "text": "Our target is to improve the profitability of the Swedish business in 2024."}, {"start": 1270, "end": 1277, "text": "But we cannot give an outlook for what it will be, actually for 2024."}]}, {"speakerId": "spk5", "sentences": [{"start": 1280, "end": 1282, "text": "All right, but that clarifies."}, {"start": 1283, "end": 1285, "text": "Thanks. That's it for me."}]}, {"speakerId": "spk1", "sentences": [{"start": 1291, "end": 1294, "text": "We also have a few questions online."}, {"start": 1295, "end": 1299, "text": "The first one is related to industrial services in Sweden."}, {"start": 1300, "end": 1310, "text": "Apart from the change in fair value of SVB, why did industrial services' EBITDA go down so much while revenues increased substantially?"}]}, {"speakerId": "spk2", "sentences": [{"start": 1311, "end": 1322, "text": "This relates to the different mix in the net sales compared to the previous year."}, {"start": 1324, "end": 1325, "text": "In certain business lines."}, {"start": 1325, "end": 1331, "text": "The EBITDA and the margin are different than the margin."}, {"start": 1331, "end": 1336, "text": "And the cost structure is different compared to the others within the industrial services."}, {"start": 1336, "end": 1344, "text": "So this is a mix change that we had in the first quarter of 2024 compared to the first quarter of 2023."}]}, {"speakerId": "spk1", "sentences": [{"start": 1347, "end": 1352, "text": "The second question is also related to Sweden, about Facility Services Sweden now."}, {"start": 1353, "end": 1362, "text": "So there's a question that says, will the sales drop in Sweden continue in the coming quarters in the same magnitude?"}, {"start": 1362, "end": 1364, "text": "And how can you turn around earnings there?"}, {"start": 1364, "end": 1368, "text": "You touched a little bit on this already in the previous answer, but can you clarify?"}]}, {"speakerId": "spk2", "sentences": [{"start": 1368, "end": 1372, "text": "Yeah, sure. As I said during the presentation."}, {"start": 1372, "end": 1376, "text": "So we do have new customer contracts as well."}, {"start": 1376, "end": 1380, "text": "But they are sort of in the startup phase."}, {"start": 1380, "end": 1385, "text": "So the effect is not visible yet in the numbers."}, {"start": 1385, "end": 1397, "text": "And when it comes to the turnaround program, I think I explained that when I answered Nico's question earlier."}, {"start": 1397, "end": 1407, "text": "So we need to expedite and strengthen our efforts to make sure that we compensate for the loss of this customer."}]}, {"speakerId": "spk1", "sentences": [{"start": 1410, "end": 1412, "text": "Thank you. That was the last question online."}]}, {"speakerId": "spk2", "sentences": [{"start": 1414, "end": 1416, "text": "Excellent. Thank you very much."}, {"start": 1416, "end": 1423, "text": "We wish you a nice continuation of Friday and a good weekend."}, {"start": 1423, "end": 1424, "text": "Thank you. Bye bye."}]}], "speakers": [{"speakerId": "spk1", "name": "Unknown"}, {"speakerId": "spk2", "name": "Unknown"}, {"speakerId": "spk3", "name": "Eero Hautaniemi"}, {"speakerId": "spk4", "name": "Unknown"}, {"speakerId": "spk5", "name": "Unknown"}, {"speakerId": "spk6", "name": "Unknown"}], "id": "662b62adfa0deb0a02b36a58", "createdAt": "2024-04-26T08:15:41.396Z", "updatedAt": "2024-04-26T08:15:41.396Z", "langCode": "en", "transcriptType": "ENHANCED", "amberscriptJobId": null, "speechmaticsJobId": null, "eventId": "6613e69e168f196942e19568"}