Raute Corporation’s Press Conference May 11, 2011 · 5/11/2011 · Profit for the period -1.3...
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www.raute.com Welcome Raute Corporation’s Press Conference May 11, 2011
Transcript of Raute Corporation’s Press Conference May 11, 2011 · 5/11/2011 · Profit for the period -1.3...
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WelcomeRaute Corporation’s Press Conference
May 11, 2011
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AgendaInterim report January 1 - March 31, 2011
Raute- Business environment
- Markets- Customers
Summary
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Interim reportJanuary 1– March 31, 2011
May 11, 2011Tapani Kiiski, President and CEO
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Markets
Business environment:• Market situation in the wood products
industry continues to improve slowly
• Most plywood and LVL mills already operate with normal utilization rate
• North America still slow
Raute:• Demand at the normal level considering
the market situtation; however, emphasis on smaller projects and especially on modernizations
• Competitive situation is good
• RautePro TwinPeel peeling station, based on a new concept, was introduced at the trade show in Shanghai– Penetrating the Chinese market for
plywood machinery
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MEUR 1-3 2011 1-3 2010
Net sales 14.6 10.4
Operating result -1.4 -1.4
Order intake:• Project deliveries• Technology services
227
223
Order book 48 37
5555
1-3/2011 in brief
• Order intake at a good level
• 12 MEUR order for plywood mill machinery to Russia in January
• Net sales increased 40%
• Growth mainly in March
• Order book increased by 15 MEUR from the beginning of the year
• Operating result in the negative
• Additional costs accrued from some projects in the installation phase
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0
20
40
60
80
100
120
140
2006 2007 2008 2009 2010 1-3 2011
Q1 Q2 Q3 Q4MEUR
Order intake
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Order intake 1-3 2011
Technologyservices
24 %
Project deliveries
76 %
Asia-Pacific
1%
Russia61%
SouthAmerica
7%
North America
5%
Europe 26%
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Net sales
0
20
40
60
80
100
120
2006 2007 2008 2009 2010 1-3 2011
MEUR Q1 Q2 Q3 Q4
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Net sales 1-3 2011
NorthAmerica
13%
SouthAmerica
6%
Asia-Pasific28%
Europe33%
Russia20%
Technologyservices
44%
Projectdeliveries
56%
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Order book
0
10
20
30
40
50
60
70
80
90
2006 2007 2008 2009 2010 1-3 2011
Q1 Q2 Q3 Q4
MEUR
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-15,0
-10,0
-5,0
0,0
5,0
10,0
2006 2007 2008 2009 2010 1-3 2011
1-3 1-6 1-9 1-12MEUR
Operating profit
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Operating cash flow
-20,0
-15,0
-10,0
-5,0
0,0
5,0
10,0
15,0
20,0
2006 2007 2008 2009 2010 1-3 2011
1-3 1-6 1-9 1-12MEUR
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Investing in the future
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
2007 2008 2009 2010 1-3 2010 1-3 20110 %
1 %
2 %
3 %
4 %
5 %
6 %
7 %
8 %
MEUR
R&D expenditureCapital expenditure R&D costs
R&D expenditure of net sales, %Capital expenditure of net sales, %
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0
100
200
300
400
500
600
700
2006 2007 2008 2009 2010 31.3.2011
Number of personnel
Effective, averagePersonnel, average
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Income statement and key figures
MEUR 1-3 2011 1-3 2010 2010
Net sales 14.6 10.4 62.9
Operating profit -1.4 -1.4 1.3
Financial income and expenses -0.1 0.0 -0.2
Profit before taxes -1.6 -1.4 1.1
Income taxes 0.3 0.4 0
Profit for the period -1.3 -1.0 1.2
Earnings per share, EUR -0.32 -0.24 0.29
Operating cash flow 1.4 2.9 -6.1
Return on investment (ROI), % -13.3 -9.9 5.1
Gearing, % -47.0 -54.3 -39.8
Equity ratio, % 52.4 44.1 50.7
Personnel (in books) 476 506 495
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Balance sheetMEUR 31.3.2011 31.3.2010 31.12.2010
Intangible assets 1.2 1.7 1.3
Tangible assets 8.7 8.8 8.9
Other non-current assets 3.0 3.6 2.3
Inventories 5.2 4.8 4.6
Accounts receivables and other receivables 13.6 11.5 11.8
Cash and cash equivalents 23.0 30.4 24.1
Non-current assets classified as held for sale
- 1.6 -
Total assets 54.7 62.4 53.0
Equity 22.9 22.1 24.2
Non-current liabilities 9.9 14.6 10.4
Advance payments received 11.0 12.3 5.2
Current liabilities 10.9 13.4 13.2
Total equity and liabilities 54.7 62.4 53.0
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Earnings per share
-2,50
-2,00
-1,50
-1,00
-0,50
0,00
0,50
1,00
1,50
2,00
2006 2007 2008 2009 2010 1-3 2011
Earnings per share DividendEUR
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Return on investment (ROI)Return on equity (ROE)
-40 %
-30 %
-20 %
-10 %
0 %
10 %
20 %
30 %
40 %
2006 2007 2008 2009 2010 1-3 2011
1-12 ROI
1-12 ROE
1-3 ROI
1-3 ROE
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-80 %
-60 %
-40 %
-20 %
0 %
20 %
40 %
60 %
80 %
2006 2007 2008 2009 2010 31.3.2011
Equity ratio and gearing
Equity ratio Gearing
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0
200
400
600
800
1000
1200
1400
1600
1800
2000
2006
2007
2008
2009
2010
31.3.
2011
Households76 %
Management7 %
Companies5 %
Institutions8 %
Foreign2 %
Nominee-registered
2 %
ShareholdersDevelopment of the number of shareholders
Ownership, March 31, 2011
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40,638,8
29,9
25,6
57,5
51,5
0
10
20
30
40
50
60
70
2006
2007
2008
2009
2010
31.3.
2011
12,85
6,40
9,7010,15
7,47
14,35
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
16,0
2006 2007 2008 2009 2010 31.3.2011
Closing price at Dec. 31 Average price
Series K shares appreciated to the value of series A shares.
Market value, MEUR Share price, EUR
Market value
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Outlook for 2011
Business environment:• Uncertainty related to the permanent
recovery of the markets continues
• Demand for wood products not yet recovered to the pre-recession level
Raute:• Demand for investments and services
in the wood products industry expected to further pick up slowly; however the pre-recession level will not be permanently reached in the near future– Improvement investments are likely to
further increase
– Several larger investment projects under preparation
• Profit outlook for 2011 unchanged– Net sales will increase
– Operating result expected to be positive
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Q & A
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RauteBusiness environment
MarketsCustomers
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Markets
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PLYWOOD CONSUMPTION75.2 million m3 (2009)by end-use category
• Construction 48%• Furniture 20%
• Packaging 9%
• Transport 9%
• Flooring 9%• Others 5%
Source: Indufor
Wood products industry• Size of the markets is EUR
150 billion a year
• Investments in veneer, plywood and LVL industry are some EUR 500-550 million a year
VENEER PRODUCTION78,2 million m3 (2009) by market area
• APAC 71%• NAM 14%
• LAM 6%
• EMEA 6%• CIS 3%
Source: Indufor
Raute is a technology company serving the wood products
industry worldwide.
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Raute as a part of the wood-processing value chain
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Project deliveries:• Mill-scale projects, separate production
lines, machinery and equipment
• Automation, machine vision, measuring technology
Technology services: • Consultation and business support services• Maintenance and spare parts
• Modernizations
Raute’s customers• Veneer industry• Plywood industry
• LVL industry
• Decorative veneer industry
Raute generates added value for its customers’businesses by supplying solutions to facilitate profitable and environmentally sustainable production of wood products.
Veneer, plywood and LVL are used mainly in construction and furniture as well as in the transport vehicle and packaging industries.
Raute’s solutions
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Raute’s customers
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Raute isa global market leaderas a machinery supplier for new capacity in the
plywood and LVL industry
A typical Raute customer isa veneer, plywood or LVL mill, the smallest of which are private family businesses, while the largest are a part of large consolidated forest groups manufacturing not
only plywood and LVL, but also e.g. pulp, paper and sawn timber
Internationalization and integration between markets to start in the plywood industry.
New companies are enticed to the industry typically by unused, to harvesting height grown forest resources for which they are looking for a profitable use.
Raute’s markets share on all machinery investments in the plywood industry is estimated to be 15-20 percent.
Raute has an especially strong market position in the LVL industry, as approximately half of the world’s LVL is produced with machines spplied by Raute.
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Business environment
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Demand for wood products is driven by• General increasing standard of living
• Construction regulations
• Availability and price of wood
• Economic cycles
Wood products industry• From large consolidated forest
groups to small private family businesses
• New mills tend to be larger than the traditional ones
• Internationalization and integration not very far
• New companies are entices to the industry by to harvesting height grown forest resources
• Emerging markets to play a greater role
Challenges and opportunities of wood products industry• Cost-efficient and ecological production methods
• Increasing use of plantation trees
• Quality requirements and standardization of end products
Raute’s competitors are typically small or medium-sized companies
• operating locally or regionally
• focusing on only one or a few processes
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Raute’s competitive advantages• State-of-the-art technologies and innovations
• Know-how of the entire wood panel production process
• Long-term experience of global project deliveries
• Full range of technologies and services
• Unique supply of maintenance and spare parts services
• Local presence globally
• Raute is the only public listed company in its sector
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Europe
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Europe
• The Finnish plywood industry is traditionally strong
• In future, the focus will be on projects targeted in enhancing production efficiency and quality
Raute and Europe
• Raute is the largest player in Europe
• Target to be further a recognizable company and to have a reputation as a long-term partner
Finland 779Italy 310France 265Spain 251Latvia 155Poland 145Sweden 80Romania 60Bulgaria 23Estonia 22Czech Republic 22Portugal 19Greece 17Lithuania 16Germany 16Slovenia 13Belgium 10Switzerland 8Others 45Total 2 254
Source: Indufor
Plywood production in Europe 2009 (1 000 m3)
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Russia
3131
Russia• Extensive raw material
resources and develping economy
• Strong market area where plywood production has doubled over the last years
• Exportation of and domestic demand for plywood are expected to rise
Raute and Russia• Raute is the market leader in
Russia
• Extensive forest resources and developing economy in Russia create good growth potential
• Raute has growth potential also in technology services
Veneer production 2 450Veneer consumption 1 147
Source: Indufor
Veneer production and consumption in Russia 2009 (1 000 m3)
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Asia-Pasific area
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China
• The largest plywood producing country in the world
• Production is based on old and manual labor extensive technology
Other Asia-Pasific area
• Plantation forests enable new growth for the plywood industry
Raute and Asia-Pacific area
• Handling small-diameter plantation wood is Raute’s strength
• In China, the higher demands on end product quality offer possibilities. Goal is to become a significant player in China
China 36 220Malaysia 9 207Indonesia 3 353Japan 2 586India 2 154Republic of Korea 667New Zealand 416Singapore 280Philippines 235Pakistan 174Australia 130Thailand 120Myanmar 115Others 177Total 55 834
Source: Indufor
Plywood production in Asia-Pacific area 2009(1 000 m3)
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South America
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South America
• One of the largest growth areas of the plywood industry
• Strong growth and development
Raute and South America
• Opportunities are offered by the structure of the local forest industry, abundant forest plantation wood resources and investments made in products with a high degree of processing
• Raute has a strong position in Chile and promising deliveries to Brazil
• Growth is expected to continue in the area
Plywood production 4 540Plywood consumption 2 148
Source: Indufor
Plywood production andconsumption in South America2009 (1 000 m3)
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North America
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North America
• The second largest plywood producing and largest LVL producing country in the world
• Recovery from recession takes time
• Investments directed mainly at modernizations
Raute and North America
• Local players control the equipment market
• Raute has growth potential in comprehensive, strategic investments and technology services
• Raute aims at establishing its position in the area with its automation know-how
Plywood production andconsumption in North America2009 (1 000 m3)
Plywood production 10 942Plywood consumption 13 636
Source: Indufor
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Changes as opportunities
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Europe
• Developing current capacity
Africa
• Local further processing of wood
Russia
• Upgrading production technology
• Exploiting forest resources
• Export products
Trends• Renewable wood as raw
material on rise
• Higher environmental awareness and tightening regulations
• More cost-efficient manufacturing methods necessary to face tightening competition
• Energy prices up
• Emerging markets to play a greater role
Asia-Pacific area
• Plantation forest resources
• In China, increased quality requirements and “industrialization”
South America
• Plantation forest resources• Modernization
North America
• Replacement investments, when economy recovers
From Raute’s perspective• Increasing use of wood boosts for demand for wood proucts technology• Emerging markets to play a greater role
• Raute must identify individual customer needs and be able to offer, in addition to state-of-the-art technology, solutions where automation is not a decisive factor creating a competitive edge.
• Share of technology services, especially in traditional markets, to increase
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Raute’s key objectives
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Key strategic objectives• Continuous improvement of
profitability
• Adaptation to cyclical economic fluctuations
• Controlled growth
Financial goals• Good profitability over the
entire economic cycle
• Growth faster than the market
• Good financial solvency
• Competitive return to investors
Profitable solutions for all customer needs.
Growth
Profitability
Adaptation to cyclical economicfluctuations
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Strategy
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The preferred solution provider with attractive offerings to meet different
customer segment needs globally
The trusted local life cycle partner for production process optimization
Among three leading suppliers in selected emerging markets
through targeted product range
Cost-efficient and agile processeswith good quality
across the global network
Preferred company for competent people to achieve together
Growth
Adaptation to cyclical economic fluctutation
Profitability
Profitable solutions for all customer needs
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Raute’ Board of Directors
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Erkki Pehu-Lehtonenb. 1950, M.Sc. (Eng.)Chairman of the Board 2009–Board Member 2009–
Erkki Pehu-Lehtonen wasSenior Adviser to the Boardof Pöyry Plc in 2008–2010and President and CEO in 1999–2008.
Main simultaneouspositions of trust:Board Member:Tekla Corporation 2006–Metso Corporation 2010–
Sinikka Mustakalliob. 1952, ResearcherVice-Chairman ofthe Board 2004–Board Member 1998–Chairman of the Supervisory Board 1996–1998
Sinikka Mustakallio has been President of WoMOy since 2001.
No simultaneouspositions of trust.
Ilpo Helanderb. 1942, M.Sc. (Eng.)Board Member 2008–
Ilpo Helander was President and Chairmanof the Board of OyElectrolux Ab and SeniorVice President of Electrolux Europe in 1991–2004.
Main simultaneouspositions of trust:Board Member:Neo Industrial Plc 2007–Reka Kumi Oy 2007–Teknos Oy 2007–CT-Logistics Oy 2008–Finndomo Oy 2010–Talent-Center Oy 2010–
Risto Hautamäkib. 1945, M.Sc. (Eng.)Board Member 2009–Member of the Board’s WorkingCommittee
Risto Hautamäki wasPresident of MetsoPaper in 2005–2007 andPresident and CEO ofTamfelt Corporation in 1995–2005.
No simultaneouspositions of trust.
Mika Mustakalliob. 1964, M.Sc. (Econ.), CEFABoard Member 2004–
Mika Mustakallio has been President of MORSSoftware Oy since 2006and a bank risk manage-ment specialist. Since2001, as an entrepreneur,he has been creatinginnovative real-timerisk management systems for banks.
No simultaneouspositions of trust.
Pekka Suominenb. 1976, M.Sc. (Econ.)Board Member 2010–
Pekka Suominen has been Project Manager of Talentum Events since 2007.
No simultaneouspositions of trust.
Mr. Erkki Pehu-Lehtonen, Mr. Risto Hautamäki, Mr. Ilpo Helander, Mr. Mika Mustakallio, and Mr. Pekka Suominen are independent of the company. Vice-Chairman of the Board, Ms. Sinikka Mustakallio, who has been Chairman of Raute Corporation’s Supervisory Board 1996-1998 and member of the Board of Directors since 1998, is dependent on the company. Mr. Erkki Pehu-Lehtonen, Mr. Ilpo Helander and Mr. Risto Hautamäki, are independent of major shareholders.
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Raute’ Executive Board
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Tapani Kiiskib. 1962, Licentiate in Technology, M.Sc. (Eng.)President and CEO, March 16, 2004–With the company since: 2002–Member of the ExecutiveBoard since:March 16, 2004Employment history:Raute Corporation 2002–2004: Technology Director; SalesDirector; KCI Konecranes International Plc 1994–2002: various positions, such asCIO; Kone Corporation, Kone Cranes 1985–1994: various positions, such asR&D Manager, R&D Director
Arja Hakalab. 1957, M.Sc. (Econ.), MBAChief Financial Officer;Deputy to President andCEO, October 8, 2003–With the company since: 1990–Member of the ExecutiveBoard since:January 1, 2001Employment history:Raute Corporation 1990–2003: Administrative Director; Luhta Oy 1985–1990: Controller
Timo Kangasb. 1965, EngineerGroup Vice President, Technology Services,October 1, 2004–With the company since: 2004–Member of the ExecutiveBoard since:October 1, 2004Employment history:Raute Corporation 2004: Maintenance ServiceManager; YIT Corporation,1999-2004: various positions, such as KeyAccount Manager; AreaManager
Bruce Alexanderb. 1959, B.Sc. (For.), MBAGroup Vice President, North American Business Operations; President,Raute’s NA companies,March 6, 2000–With the company since: 2000–Member of the ExecutiveBoard since:June 1, 2004Employment history: International Forest Products Limited, 1988–2000, various positions, sush asCorporate DevelopmentManager, DivisionalManager
Petri Strengelln. 1962, M.Sc. (Eng.)Group Vice President,Technology and Operations,October 11, 2004–With the company since: 1987–Member of the ExecutiveBoard since:June 1, 2004Employment history:Raute Corporation 1987–2004: various positions, such as EngineeringManager, ProductionDirector
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Raute’s largest shareholders
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LARGEST SHAREHOLDERS ON MARCH 31, 2011 Number of Numb er ofseries K series A
shares shares Total(20 votes (1 vote number
per share) per share of shares1. Sundholm Göran - 601 433 601 4332. Suominen Jussi Matias 48 000 74 759 122 7593. Mustakallio Kari Pauli 60 480 59 500 119 9804. Suominen Pekka 48 000 62 429 110 4295. Suominen Tiina Sini-Maria 48 000 62 316 110 3166. Siivonen Osku Pekka 50 640 53 539 104 1797. Mandatum Henkivakuutusosakeyhtiö - 96 900 96 9008. Kirmo Kaisa Marketta 50 280 41 826 92 1069. Sijoitusrahasto Alfred Berg Small Cap Finland - 86 314 86 31410. Lisboa De Castro Palacios Hietala M - 85 000 85 00011. Keskiaho Kaija Leena 33 600 51 116 84 71612. Mustakallio Mika Tapani 49 180 34 670 83 85012. Särkijärvi Anna Riitta 60 480 22 009 82 48913. Mustakallio Ulla Sinikka 47 240 30 862 78 10215. Relander Harald Bertel - 62 500 62 50016. Mustakallio Marja Helena 43 240 18 162 61 40217. Kirmo Lasse 30 000 26 200 56 20018. Särkijärvi-Martinez Anu Riitta 12 000 43 256 55 25619. Särkijärvi Timo 12 000 43 256 55 25620. Suominen Jukka Matias 24 960 27 964 52 924TOTAL 618 100 1 584 011 2 202 111Share of total amount of shares, % 62,4 52,6 55,0Share of total voting rights, % 62,4 52,6 61,1Nominee-registered 85 994 85 994Other shareholders 373 061 1 343 592 1 716 653TOTAL 991 161 3 013 597 4 004 758
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Summary
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Summary
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• Raute is a solutions provider for the plywood, veneer and LVL industry and has a leading position in the field.
• Recession was very severe to Raute’s customer industries, and also to Raute. Recovery is ongoing, but continued positive development is still on an uncertain basis.
• Focus of markets to shift, shifting continues• Emerging markets to grow• Role of services to increase on traditional markets
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Q & A
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Thank you for your interest!
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Contact informationTapani Kiiski
President and CEO+358 400 814 148
Arja HakalaCFO
+358 400 710 387
