Luotea Oyj

Hello everyone and welcome to Lassila & Tikanoja's half-year result webcast. The webcast is hosted by Elletti's CEO Eero Hautaniemi and our new CFO Joni Sorsanen. There's an opportunity to ask questions at the end of the presentations by using the phone or via the chat functionality. But before we start, would you Joni like to introduce yourself briefly?

Yes, absolutely. So hello everyone. My name is Joni Sorsanen and I started as CFO of L&T Group in the beginning of July and I joined the company from Konsti PLC where I also acted as CFO. I have roughly 15 years of experience from Finnish listed companies, such as Gramo, Caverion and Konsti, all of which are so-called decentralized service businesses. And my target here at L&T is to help the company in planning and implementing the new operating model, whereby we would like to increase the cooperation between our divisions and the group functions. And I will also focus on developing the overall financial steering of the company going forward. Okay, but Eero will begin the actual agenda of this webcast.

Yes. Thank you, Joni, and a warm welcome to our team. And I'm really happy that Joni was able to join us already here in the Q2 earnings release. Right, but let's get into our agenda and first start with what is in focus in the first half of 2024. Overall, the economic situation in Finland has been slow. and especially slow in the construction industry, but also across other customer segments like the hotels in certain areas of retail, we have seen a lot of slowness and also in general, industrial and engineering companies, the beginning of 2024 hasn't been that hot. We do not foresee that the economy is recovering much by the end of the year. Hopefully 2025 will be a stronger year. When it comes to our businesses in environmental services, we did strengthen our position amongst the producer responsibility organizations and also got quite a few municipal contracts due to the municipalization wave that we have been experiencing since 24 after the new waste law legislation was passed in 2021. In industrial services, we had a strong first half of 24. Demand was good and we did succeed quite well in our resourcing. In facility services in Finland, the turnaround is progressing really well. And in Sweden, despite of our hard work, we have still work left. And the results were not that much visible in the first half of this year. Hopefully we can see some results now in the second half of 2024. When we look at the net sales development, we can see that in environmental services, we had a slight decline in sales, 1%. But considering the market conditions and especially the slowness of the construction industry, I'd say that is a pretty good result. In industrial services, very strong first half of the year, almost 10% higher than previous year. But when it comes to the facility services in Finland, we can see that we have, as planned, ended certain customer contracts, and that is visible in the top line development. Obviously, the general slowness of the economy impacts as well. In Sweden, we lost a large customer at the end of 23, and that is now very visible in the top line development especially. Adjusted operating profit. We had a pretty strong second quarter. And also, first half development was better than a year ago. And this is especially due to strong performance in industrial services and facility services, Finland. In environmental services, we were a little bit behind last year's performance. as expected, and in Sweden, the development in the second quarter was improving, even though the numbers do not fully show that improvement. And as I said, hopefully in the second half of the year, we can see that improvement also in the numbers. But overall, as I said, a good development, especially in the second quarter, but the whole first half of the year was good, considering the market conditions. Then let's move on to environmental services. As I said already, economic environment was challenging and the political strikes that we had in Finland at the end of first quarter, beginning of second quarter, did impact our volumes and also slightly to our profitability. Demand and price level of recycled raw materials has now stabilized and Maybe there are slight positive signs in the development, but nothing significant so far. And when we look at the overall economic development, I do not expect to see a quick recovery in the recycled raw material prices either. We did strengthen our position, especially amongst the producer responsibility organizations and municipal contracts. And that helped us to offset the decline in construction customer segment, but also in the hotels and retail segment. Also, what did help us when it comes to the profitability development was that our restructuring and efficiency measures progressed well and helped us to offset the impact of the municipalization and also the decline in certain B2B segments. In industrial services, very strong first half of the year. And the seasonality was slightly different this year compared to the previous year. We saw a very big second quarter and probably we will not see as big third quarter this year as we did last year. So the seasonality is a little bit different. But as said, the second quarter was really strong. There were quite large maintenance breaks, planned maintenance breaks. with our customers and our staffing and manning was done very successfully and that helped us to have a strong result in process cleaning. Also in hazardous waste and environmental construction we had a very good first half of the year. As we said already in connection on the first quarter earnings release, we did expand north of Sweden. in April and that will help us to strengthen our position in the Swedish market. We have now some 100 professionals working for us in industrial services in Sweden. And our plan is to continue to develop that business and our position in Sweden. In Facility Services Finland, The hard work that we have been doing the past couple of years is yielding results, and I'm really pleased with that. We have had a fairly successful second quarter of this year, and there is a visible improvement in profitability in all of our business lines within Facility Services Finland. Obviously there's still work to be done and work continues, but now the development has been strong and the starting point for the second half is much better than it has been in the past few years. In Sweden, as I said earlier, the one big thing that is affecting us is this loss of a large customer end of last year. And that shows really well in the top line development, where we have had a significant decline, almost 20%. We have done restructuring measures. and we have expedited our restructuring measures. And I hope that they will show in the profitability in the second half of the year. But certainly our number of employees has declined significantly if we compare to the same period last year, we have almost 200 employees less and that is sort of reflecting the decline in the top line. And also we have other measures to improve the margins and efficiency and all of those combined should be visible in the second half of this year. I will move on now to the sustainability and take two highlights from our sustainability work. First of all, our customer satisfaction, our NPS score has increased quite significantly and it has increased in all of our business lines. And that makes me very pleased because, as I said, the market is challenging and it is very good to see that we have been able to fulfill our customers' need and expectations much better than earlier. And especially in environmental services and industrial services, the development has been very strong. Also, the occupational safety improvement has been significant. Our TRIF is 20 compared to 26 a year earlier. And especially in the facility services Finland, we have seen very significant improvement in the work safety. And that is due to very systematic and hard work that has been done all over the organization. And obviously we will continue that work. And I'm optimistic that we will exceed our target for this year and get closer to already 26 targets if the current development continues. But as I said, the work needs to continue. This is a continuous effort and will never end. Also, our sick leaves have declined from previous year. So overall, very good development in the sustainability area. Now, I'd like to hand over to Joni, and he will go through the highlights of the financials.