At the end of the year, the turnover of the forest machine manufacturer increased. However, there was a decrease in the dividend from the previous year.
The forest machine manufacturer, Ponssen, saw an improvement in its turnover and profit in the last quarter of the year (October–December) as compared to the same period a year ago.
In the final quarter of the year, the company reported an operating profit of 13.8 million euros and a turnover of 242.8 million euros. This shows an improvement as compared to the same period a year ago when the company had an operating result of 11.7 million euros from continuing operations and a turnover of 224.6 million euros.
According to the database Factsetin, the three analysts who follow the company had forecasted an average operating result of 13.7 million euros and a turnover of 199.4 million euros for the last quarter of the year.
At the end of the quarter, the company’s order book was valued at 229.5 million euros, a decrease compared to the same time a year ago when it was 353.7 million euros.
The company’s profit per share in the quarter was EUR 0.27, and the board proposed a dividend of EUR 0.55 per share. This shows a decrease from a year ago, in the same period, when the company’s profit per share in continuing operations was 0.36 euros per share and the proposed dividend was EUR 0.60 per share.
Analysts had expected an average result per share of 0.46 euros and a proposed dividend per share of 0.60 euros.
The company noted that the loss of the Russian market was clearly visible and that there were ongoing difficulties with Ponsse’s Brazilian subsidiary, Ponsse Latin America Ltda. However, Ponsse stated that the situation of the Brazilian subsidiary is showing signs of improvement.
For the full year, the company’s net sales increased to 821.8 million euros, up from 755.1 million euros the previous year. The operating profit also saw a slight improvement, increasing to 47.2 million euros from 46.6 million euros.
The company predicts that the operating profit in euros in 2024 will be at the same level as the operating profit in 2023, which was 47.2 million euros.
CEO Juho Nummela stated in the results bulletin that the market situation was relatively good at the start of the year, but the weakening outlook for the forest industry soon began to affect their customers’ investment decisions. He noted that the forest machinery market was simultaneously affected by the uncertainty caused by inflation and interest rate hikes, as well as declining economies in different parts of the world. The difficulties of the clear drivers of our business, the sawmill industry and the chemical forest industry, were quickly reflected in forest machine sales. Weakened purchasing power reduced private consumption and dampened the demand for lumber, cardboard and pulp. Despite all this, their customers were very well employed, and especially in Finland and Sweden, timber harvesting operations are operating at full capacity.
The CEO added that the Ponssen Vieremä factory has been delivering machines normally throughout the year. The availability of parts improved during the year and was at an excellent level by the end of the year. This improvement was due to a general decrease in demand in machine and equipment manufacturing and measures taken in their supplier network. They changed their procurement strategy and built alternative procurement channels for critical components.
The order flow in the second half of the past year was weaker than the comparison period, but during the last quarter, the order flow picked up a bit, amounting to 194.2 million euros.
Changes in the Strategy
On the morning of the earnings announcement, the company also revealed that it is planning to renew its operating model. The intended operating model is designed to form an organization that is focused on sales and maintenance services. This organization is expected to be divided into five market areas namely the Nordic countries including the Baltics, Europe, South America, North America and Asia, Australia and Africa.
The company believes that its current operating model does not sufficiently support global operations and this has resulted in challenges for the cost structure. The new operating model is planned to be implemented on June 1, 2024.
Simultaneously, the company announced changes in negotiations. According to preliminary estimates, the planned measures could lead to a reduction of approximately 120–140 jobs worldwide, and new roles may also be created. Preliminary forecasts suggest that the planned measures could lead to annual savings of around 10 million euros in full from 2026. The estimated effects in Finland may concern the reduction of a maximum of 50–60 tasks, possible new tasks, job description changes and a maximum of two weeks’ layoffs for the personnel subject to change negotiations during 2024.
