Near-term Prospects and Uncertainties

Outlook for the year 2024 | 26 April 2024

Net sales in 2024 are estimated to be at the same level as in the previous year, and operating profit is estimated to be at the same level or better compared to the previous year. 

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Previous outlook for the year 2024 | 9 February 2024

Net sales in 2024 are estimated to be at the same level as in the previous year, and operating profit is estimated to be at the same level or better compared to the previous year.

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Previous outlook for the year 2023 | 26 October 2023

Net sales and adjusted operating profit in 2023 are estimated to be at the same level as in the previous year even though the comparison period includes net sales from the renewable energy sources business in the amount of EUR 35.4 million.

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Previous outlook for the year 2023 | 26 July 2023

Net sales and adjusted operating profit in 2023 are estimated to be at the same level as in the previous year even though the comparison period includes net sales from the renewable energy sources business in the amount of EUR 35.4 million.

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Near-term uncertainties | 26 April 2024

General economic uncertainty may affect the level of economic activity among customers, which may reduce the demand for L&T’s services.

Higher costs, such as the rising prices of fuel and energy, and potential changes in interest rates may have an impact on the company’s financial performance.

The Finnish Waste Act was amended in July 2021. Under the reforms to the Waste Act, municipalities take on a larger role in organising the collection of packaging materials and biowaste from housing properties. As a consequence of the reform, L&T’s direct customer agreements with housing properties on the separate collection of packaging waste and biowaste will be transferred to municipalities for competitive bidding gradually between 1 July 2022 and 1 July 2025. L&T estimates that, as a result of municipalisation, approximately EUR 30 million of the Finnish waste management market will be moved out of the scope of free competition between 2024 and 2026. L&T participates in the competitive tendering of municipal contracts and is a significant operator in municipal contracts. Nevertheless, L&T estimates that the overall impact of the change will be negative for the company.

The company has several ERP system renewal projects under way. Temporary additional costs arising from system deployments and establishing the operating model may weigh down the company’s result.

Production costs may be increased by challenges related to employee turnover and labour availability.

The geopolitical situation involves continued uncertainty due to Russia’s war of aggression. The indirect impacts on overall economic activity in Finland and Sweden may have a negative impact on net sales and profit.

The Group company Lassila & Tikanoja FM AB is a claimant and a defendant in legal proceedings in Sweden concerning unpaid receivables invoiced from a former customer of the Group. In June 2022, Lassila & Tikanoja FM AB took legal action in the District Court of Solna against the former customer company of L&T, demanding payment for unpaid receivables. At the end of the financial year, the amount of receivables on the company’s balance sheet was approximately EUR 1.5 million. The former L&T customer company in question has rejected Lassila & Tikanoja FM AB’s claims and the payment obligation, and brought a counterclaim demanding compensation totalling approximately SEK 144 million from Lassila & Tikanoja FM AB. The dispute is still pending. Lassila & Tikanoja considers the counterclaim to be without merit and has not recognised any provisions in relation to it.

More detailed information on Lassila & Tikanoja’s risks and risk management will be provided in the 2023 Annual Review and in the Report by the Board of Directors and the consolidated financial statements.

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Previous near-term uncertainties | 9 February 2024

General economic uncertainty may affect the level of economic activity among customers, which may reduce the demand for L&T’s services.

Higher costs, such as the rising prices of fuel and energy, and potential changes in interest rates may have an impact on the company’s financial performance.

The Finnish Waste Act was amended in July 2021. Under the reforms to the Waste Act, municipalities take on a larger role in organising the collection of packaging waste materials and biowaste from residential properties. As a consequence of the reform, L&T’s direct customer agreements with residential properties on the separate collection of packaging waste and biowaste will be transferred to municipalities for competitive bidding gradually between 1 July 2022 and 1 July 2025. As a result of municipalisation, approximately EUR 30 million of the Finnish waste management market will be moved out of the scope of free competition and to municipally owned companies between the years 2024-2026. The Environmental Services division participates in competitive tendering for municipal contracts and is a significant player in municipal contracts, but the Group estimates that the overall impact of the change will be negative.
The company has several ERP system renewal projects under way. Temporary additional costs arising from system deployments and establishing the operating model may weigh down the company’s result.

Production costs may be increased by challenges related to employee turnover and labour availability.

The geopolitical situation involves continued uncertainty due to Russia’s war of aggression. The indirect impacts on overall economic activity in Finland and Sweden may have a negative impact on net sales and profit.

The Group company Lassila & Tikanoja FM AB is a claimant and a defendant in legal proceedings in Sweden concerning unpaid receivables invoiced from a former customer of the Group. In June 2022, Lassila & Tikanoja FM AB took legal action in the District Court of Solna against the former customer company of L&T, demanding payment for unpaid receivables. At the balance sheet date, the carrying amount of the receivables in the Company’s balance sheet was approximately EUR 1.5 million. L&T’s former customer company in question has rejected Lassila & Tikanoja FM AB’s claims and the payment obligation, and brought a counterclaim demanding compensation totalling approximately SEK 116 million from Lassila & Tikanoja FM AB. The dispute is still pending. Lassila & Tikanoja considers the counterclaim to be without merit and has not recognised any provisions in relation to it.

More detailed information on Lassila & Tikanoja’s risks and risk management is provided in the 2022 Annual Review and in the Report by the Board of Directors and the consolidated financial statements.

Previous near-term uncertainties | 26 October 2023

Higher costs, especially fuel prices, may have a negative impact on the company’s financial performance. Fluctuations in the price of oil influence both fuel costs and the prices of oil-based secondary raw materials, such as recycled plastic and regenerated lubricants.

Potential interest rate hikes may increase the company’s interest costs.

The company has several ERP system renewal projects under way. Temporary additional costs arising from system deployments and establishing the operating model may weigh down the company’s result.

Challenges related to the availability of labour may increase production costs.

The measures and recommendations issued by the authorities to restrict the COVID-19 pandemic, and the resulting customer-specific production restrictions and adjustment measures, are still expected to cause disruptions in service production during 2022. COVID-19 may lead to increased sickness-related absences, which can cause disruptions in L&T’s service production and increase costs.

As the company has no operations or holdings in Russia, Belarus or Ukraine, and there are no significant Russian-owned companies in the customer base, the immediate effects of the war in Ukraine will be minor. However, indirect impacts on overall economic activity in Finland and Sweden may have a negative impact on net sales and profit.

More detailed information on Lassila & Tikanoja’s risks and risk management will be provided in the 2021 Annual Report and in the Report of the Board of Directors and the consolidated financial statements.

Information:

Previous near-term uncertainties | 26 July 2023

General economic uncertainty may affect the level of economic activity among customers, which may reduce the demand for L&T’s services.

Higher costs, such as the rising prices of fuel and energy and potential interest rate hikes may have a negative impact on the company’s financial performance.

The company has several ERP system renewal projects under way. Temporary additional costs arising from system deployments and establishing the operating model may weigh down the company’s result.

Production costs may be increased by challenges related to employee turnover and labour availability.

The geopolitical situation involves continued uncertainty due to Russia’s war of aggression. The indirect impacts on overall economic activity in Finland and Sweden may have a negative impact on net sales and profit.

The Group company Lassila & Tikanoja FM AB is a claimant and a defendant in legal proceedings in Sweden concerning unpaid receivables invoiced from a former customer of the Group. In June 2022, Lassila & Tikanoja FM AB took legal action in the District Court of Solna against the former customer company of L&T, demanding payment of approximately SEK 18 million for unpaid receivables. In March 2023, the former L&T customer company in question rejected Lassila & Tikanoja FM AB’s claims and the payment obligation, and brought a counterclaim demanding compensation totalling approximately SEK 102 million from Lassila & Tikanoja FM AB. The dispute is still pending. Lassila & Tikanoja considers the counterclaim to be without merit.

More detailed information on Lassila & Tikanoja’s risks and risk management will be provided in the 2022 Annual Review and in the Report by the Board of Directors and the consolidated financial statements.