Proventia Group Corporation's Business Review January-September 2023

July-September 2023 in brief

• The Group’s net sales decreased by 25.3% from the previous year to EUR 11.5 (15.4) million.
• Operating profit was EUR 0.7 (0.8) million.
• Profit for the period was EUR 0.3 (0.6) million.

January-September 2023 in brief

• The Group’s net sales decreased by 1.8% from the previous year to EUR 38.5 (39.2) million.
• Operating profit increased to EUR 2.8 (1.4) million.
• Profit for the period was EUR 2.0 (1.0) million.

President and CEO Jari Lotvonen:

In the third quarter, the unstable world situation continued and the market was marked by an expectant mood. Compared to the third quarter of the previous year, our net sales decreased by 25.3%, which was largely due to the project-like nature of the Test Solutions business and the significant entries as income in the comparison period. Despite the decline in net sales, the operating profit margin for the third quarter increased from 5.2% to 6.0%. Net sales for January–September were almost at the previous year’s level and, as a result of successful cost management, the operating profit margin increased from 3.5% to 7.2%.

We continued our strategy work in the third quarter and in this context, we also decided to change the name of the Powertrain Systems and Components business area to Off-road Machinery Systems and Components business area. This business includes Proventia’s emission control systems, thermal components and batteries, all of which are primarily used for various machinery applications and their engines.

Net sales of the Off-road Machinery Systems and Components business increased by almost 18% in January–September compared to the previous year. Demand for emission control systems and thermal components in the OEM customer segment remained at a good level. Production volumes of the new product have increased at our Czech plant during the year, and the desired serial production volume will be reached in the coming months. Our production is also preparing for serial production of products coming to the market next year. We successfully commissioned the Czech factory’s solar power plant, which now generates a significant part of the factory’s electricity consumption. Customer pilot projects of battery systems for non-road machinery also continued as planned.

As expected, the net sales of the Test Solutions business decreased from the comparison period. In accordance with our strategy, we have focused on the test solutions of EVA product family and thereby improved the profitability of the business. The EVA product family, which is aimed at the development and testing of batteries, has attracted interest in the market. As proof of this, we received a customer order worth EUR 1.9 million from the EVA solution in August. In addition, after the end of the review period, we have received orders for four EVA test solutions, totaling EUR 8.5 million. The systems will be delivered during 2024 and 2025.

We continued working on our sustainability programme, for example, by integrating sustainability aspects into our strategy and developing a sustainability policy that outlines our key sustainability principles and commitments that guide our operations.

Key figures

Sums in EUR	7-9/2023	7-9/2022	1-9/2023	1-9/2022	1-12/2022
Net sales	11,472,154	15,365,624	38,468,787	39,192,664	51 692 324
Change in net sales, %	-25.3%	42.3%	-1.8%	11.9%	11,0%
Operating profit	687,720	796,905	2,753,470	1,357,603	1 902 521
Operating profit, %	6.0%	5.2%	7.2%	3.5%	3.7%
Earnings per share (EPS), undiluted	0.02	0.04	0.12	0.07	0.10
Earnings per share (EPS), diluted	0.02	0.04	0.12	0.06	0.09
Return on equity (ROE), %	11.7%	7.2%	11.7%	7.2%	7.7%
Equity ratio, %	68.9%	66.2%	68.9%	66.2%	65.3%
Return on capital employed (ROCE), %	16.4%	12.1%	16.4%	12.1%	11.7%
Interest-bearing liabilities	850,000	1,485,000	850,000	1,485,000	1,320,000
Net debt	-5,718,339	-1,068,725	-5,718,339	-1,068,725	-3,494,052
Investments	392,233	1,009,755	2,071,408	2,257,783	3,247,518

Outlook

Net sales and the operating profit in 2023 are expected to increase from 2022. In 2022, net sales were EUR 51.7 million, and the operating profit was EUR 1.9 million.