CEO Jukka Poutanen:

(Published on August 4, 2022 in the Half Year Financial Report)

jukka poutanen

Turnover increased in both the cable and rubber industries. About 50 % of the turnover increase in the cable industry is explained by rising metal prices. The rubber industry's turnover in March was EUR 2.9 million, the largest in Reka Rubber's history. Also in June rubber industry reached turnover of EUR 2.9 million.

The rise in energy prices and availability have not affected the company's market demand so far. Wind power construction is believed to continue to accelerate.

Strongly increased procurement prices, global material shortages and logistics challenges have required an increase in inventory to ensure availability and guarantee delivery reliability to customers.

There is still a clear delay in passing on increased acquisition costs to customer prices in both industries.

The impact of metal prices on the value of inventories and the net effect of metal and currency hedging supported in January-June 2022 the cable industry's EBITDA by EUR 0.4 million, compensating sharply and still rapidly rising acquisition costs, which can only be passed on to customer prices with a delay.

Both industries have had procurement and delivery capacity challenges. COVID-19 and supply chain logistics have required a lot of effort to ensure material deliveries.

The cable industry has succeeded in serving customers reliably despite ongoing sourcing challenges. The delivery capacity of the rubber hose production in Poland was weak at the beginning of the year and there were problems also in second quarter, although delivery volumes were significantly higher than before.

The main focus of the remedial measures on hose production in Poland is to increase the production capacity of hose production and to streamline the production process. The changes made are already visible in the delivery volumes, but the personnel situation has remained challenging. The share of temporary labor has been increased. The expansion of the rubber industry's space in Poland was operational as planned during April.

Investments in current assets are reflected in the operating cash flow, which was EUR 0.1 million at the end of June.

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.

Green Bond funded projects have been taken forward and new ones are ongoing. Green bond investor letter was published in March 2022.

In the cable industry, 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.

We publish the key figures without IAS 19 defined benefit pension liability entries, as changes in the discount rate fluctuate the IAS 19 figures. Now that the reference interest rate rose by a couple of percentage points, there is no longer an uncovered liability.

Read the Half Year Financial Report Release here: Reka Industrial Plc: Profitable growth