Near-term uncertainties | 29 April 2025
General economic uncertainty may affect the level of economic activity among customers, which may reduce the demand for L&T’s services.
Changes in costs, such as the price of fuel and energy and 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 regional challenges related to employee turnover and labour availability.
The geopolitical situation involves continued uncertainty due to Russia’s war of aggression and the U.S. customs policy. The indirect impacts on overall economic activity in Finland and Sweden may have a negative impact on net sales and profit.
Lassila & Tikanoja announced in December 2024 that the company’s Board of Directors has decided to initiate the planning for the separation of the company’s circular economy businesses, i.e., Environmental and Industrial services, and facility services businesses into two independent listed companies, with the circular economy businesses being separated into a new listed company. The planning and related measures for the partial demerger may include risks related to, for example, the retention of skilled personnel, customer relationships, costs, and the execution of potential transactions.
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 L&T. 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 review period, the amount of receivables on the company’s balance sheet was approximately EUR 0.7 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 is provided in the 2024 Annual Review and in the Report by the Board of Directors and the consolidated financial statements.
Information: