Vaisala Oyj

Good afternoon and welcome to Vaisala's third quarter analyst presentation. My name is Kai Yystöme. I am the president and CEO of Vaisala. I've been in the job now for three weeks, so pretty much brand new. Very excited to have you all here. And with me we have our chairman of the board, Raimo Voipio. And our CFO, Karina Muurinen.

Good afternoon.

And our head of IR, Paula Liimatta. Good afternoon, everyone. The economic downturn triggered by the COVID-19 has obviously been the backdrop for our business and business environment. When we look at what that has meant to Vaisala, I would highlight two parts. Obviously, the emerging economies have suffered through this kind of economic turmoil, like any economic turmoil more than developed markets. as well as then for us as kind of close to our business is the airport segment, where the air travel obviously has been significantly down because of all the restrictions and the behavioral change. And those have obviously impacted our business and especially our order intake, as you soon will see. That being said, our operational performance in terms of profitability has remained strong, and much like what we said in the second quarter, we have been operating very well in this relatively difficult environment. When we look at our key numbers for third quarter, The order, starting from orders received, they were down by 19%, driven by weather and environment, business unit and Middle East and Africa, the emerging markets, and then the airport segment. The impact of the value, then there was a specific case which I'm going to highlight here and a couple times later is we renegotiated a big deal to Argentina which we announced earlier in the year we renegotiate the scope and the value of the Argentinian deal and that caused a negative correction in the order book and in the order intake by 5.6 million euros in Industrial measurement, the order intake actually increased by 2%, very much following a strong order intake in Asia-Pacific. Order book declined by 13%, very much driven by weather and environment, weak order intake, especially in the big projects in weather and environment, and Again, the Argentinian renegotiating of that contract had a very significant impact on the order book. Actually, the one-fourth of the decline was caused by that. Net sales decreased by 11%. where, again, a bigger contributor was weather and environment, and that was driven by the weak order intake earlier in the year, again, in bigger projects and in the airport segment especially. In industrial measurements, the net sales increased in APAC following a week. Sorry. I'll go in the net. So in industrial measurement, net sales increased in APAC following strong orders in second quarter. Then gross margin improved by 2.5 percentage points, and there are three reasons for the increased gross margin. First of all, it's a different mix, i.e. lower percentage in the project part of a business. Then the second contributor was a significant improvement on the digital business side in the weather and environment business area. following the restructuring of the business earlier in the year. And then the third portion is the higher share of industrial measurement in the total Vaisala mix. And then when we look at the operating result, very strong operating result for Vaisala in third quarter. And apart from the higher gross margin, the operating expenses were down significantly. Mainly due to the restrictions on the COVID-19 example would be travel expenses were significantly down. Then if we go into the orders received and take a look at that on a Vaisala level, the orders received decreased by 19%. And if we take the comparable exchange rates, the decline was 16%. The decline was most significant in, as I said, in Middle East Africa and in Latin America in weather and environment business area. And obviously, again, the Argentinian renegotiating had a significant impact. Orders received actually increased in APAC in both of the business areas, both in weather and environment as well as in industrial measurements. When we look at the industrial measurement business area alone, the order intake actually increased by 2%. And if we take on comparable rates, that actually was 6% of the increase. And when we look at – and where that came from, that came especially from APAC, where actually the orders came up by 19% during the quarter for industrial measurements. Then when we look at the order book, again, same kind of a trend. Order book decreased by 13% year on year. When we look at where that came from, again, whether an environment business area was driving that minus 15%, whereas in industrial measurement, we actually were up by 7% year on year. And the Argentinian renegotiation, again, had just a reminder, a big impact on that. Then moving on to net sales. The net sales followed the trend, decreased by 11%. Again, if we look at the comparable rates, 9%. Net sales decreased in all regions, and when we look at the regional split on net sales now, it's almost equal split between Americas, Europe, Middle East, and Africa, and APAC. The net sales was really driven by the significant drop on the project business in weather and environment. Actually, it was down by 48% year on year. Again, we have to remember that the third quarter in 2019 was a strong quarter. there was a strong project business quarter. So the comparable is just as a reminder. The other kind of important maybe part of the net sales, which Karina will come back soon, is the fact that now the industrial measurement share of the entire business actually increased due to the Relative underperformance on the project business on the weather and environment side. Now, I'd like actually now ask Karina to walk through the profitability and the cash flow on the quarter. Karina.