CEO Jukka Poutanen:

(Published on February 24, 2022 in the Financial Statement Release)

jukka poutanen

Turnover increased significantly in both the cable and rubber industries. About 60% of the turnover increase in the cable business is explained by rising metal prices. In the rubber industry, customer order volumes grew strongly. Reka Rubber was acquired at the end of June 2020, and thus the figures for the rubber business have been taken into account since 1 July 2020.

Due to Reka Cables' good delivery capacity towards the end of the year, the Group's EBITDA in the fourth quarter developed strongly and the EBITDA in 2021 increased to EUR 11.3 million from EUR 9.4 million in the previous year. This is a good achievement, as there is still a clear delay in passing on increased acquisition costs to customer prices in both industries.

The impact of higher metal prices on the value of inventories and the net effect of metal and currency hedging supported the cable industry's EBITDA by approximately EUR 0.5 million, compensating sharply and unprecedentedly high acquisition costs, which can only be passed on to customer prices with a delay.

There have been procurement and delivery capacity challenges in both industries. COVID-19 and supply chain logistics have required a lot of effort to ensure material deliveries. Both material prices and costs of logistics have continued to rise strongly.

The cable industry has succeeded in serving customers reliably despite ongoing procurement challenges.

In the rubber industry, the turnover of Polish production personnel has been high and the increase in production volumes has not been successful. Despite overtime and temporary labour, our delivery capacity has been poor, especially for Polish hose production. The main focus of the remedial measures is now on increasing the production capacity of hose production and streamlining the production process. Changes in production also improve the personnel situation. The prioritized measures will be completed in stages during January-May.

Cable business has made decision to increase production facilities space within Riihimäki factory. The additional space will be available in mid-2023. According to current information, the additional space for the rubber industry in Poland will be available in early April 2022.

Operating cash flow was clearly positive. This also allowed for faster loan amortization than scheduled.

The demand situation in both industries is good. The Nordic cable market is growing and is expected to grow in the coming years. Cable industry's market share in Finland is strong and we aim to increase our market share in the other Nordic countries.

The rubber industry has a strong position in its selected market segments.  Order volumes have continued to grow. Especially in construction equipment, the market share continues to grow. Enquiries in the truck industry have grown from before.

Green Bond funded projects have been taken forwards and new ones are ongoing. Investments have been made specially to the projects relating to wind power and decreasing energy consumption. The rubber industry is currently working with customers on prototypes and pre-kits for products needed for electric commercial vehicles. Related volume deliveries will begin in 2023.

Read Financial Statement Release here: Reka Industrial Plc: Profitable growth