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Ponsse´s Financial Statements for 1 January - 31 December 2020

Ponsse´s Financial Statements for 1 January - 31 December 2020

JUHO NUMMELA, PRESIDENT AND CEO (16 February, 2021)
The year 2020 started with growing uncertainties. The first part of the year was characterised by a trade war, unrest in labour markets, bark beetle damage in Central Europe and the impact of the slowing market cycle. Our strong order book gave us an excellent buffer for the early year’s challenges.

The real shock came at the end of the first quarter when the impact of the coronavirus pandemic started to materialise. Our company reacted quickly to the difficult situation, and we were able to alleviate the impact of the crisis. As societies started to close down due to restrictions, it became very difficult to forecast our operations.

Despite the challenging situation, we were able to maintain our net sales at a good level and to achieve a profitability of approximately nine per cent and an excellent cash flow of EUR 74.8 million. In the autumn of 2020, we delivered the 16,000th PONSSE machine made in Vieremä to a customer of ours.

What from our company’s point of view started as problems with the availability of spare parts, soon escalated into a crisis in demand for our products. Uncertainties over the impact of the rapidly worsening crisis slowed the markets considerably during the first half of the year. The uncertainty had a large impact on forestry companies. Our order book nearly halved during the second quarter year-on-year, and Russian markets, in particular, were the first to slow considerably. Towards the summer, our customers started, however, to show more urgent demand for machines, and we were able to return our factory to two shifts in the middle of June.

During the second half of the year, the market situation improved as the operations of our customers started to return to normal. The slow recovery in Asia gave a start to harvesting operations in Russia, and our situation slowly started to improve. During the third quarter, markets started to recover globally, and the availability of components normalized. Market recovery continued until the end of the year. Considering the situation and driven by our strong order book at the beginning of the year, our performance was excellent. Finally, demand for trade-in machines also returned to a good level and, at the same time, our after sales services climbed back to their normal growth track. Recovery from the coronavirus crisis was much quicker than expected.

Thanks to the recovery of the markets, our order books improved slowly towards the end of the year. Our order books amounted to EUR 174.9 (256.8) at the end of the year.

In accordance with our forecasts, forest machine sales volumes fell by approximately 20 per cent compared to the previous year. Among Ponsse’s business areas, the recovery of the trade-in machine sales and after sales, in particular, at the end of the year was a great relief in addition to the recovery of new machine sales. The stock of trade-in machines is still higher than normal, but the good sales of trade-in machines at the end of the year improved the cash flow from business operations significantly. Thanks to our customers’ good work situation, our after sales returned to their normal level after the drop during the second quarter.

In 2020, Ponsse’s cumulative net sales amounted to EUR 636.6 (667.4) million, which is a good result considering the situation, with a small decline of 4.6 per cent. The operating profit amounted to EUR 57.1 (67.3) million, and it equalled 9.0 (10.1) per cent of net sales. Cash flow from business operations amounted to EUR 74.8 (43.7) million, which was excellent. We kept working capital well under control during the year.

Coronavirus restrictions were visible in all our operations across the world. Decisions were made to ensure the health and safety of our customers and all Ponsse employees. The goal was to keep service centres and the factory as clean of coronavirus as possible. The transition of office employees to remote working in the spring exceeded all our expectations, and we were able to protect our employees’ health while continuing our development activities as normal. Our factory remained free of infections, and our employees’ exemplary approach to responsibility paid off. Working life and operating methods have changed permanently at Ponsse. We will return to our offices after the pandemic, but we want to hold on to the proven opportunities of remote working and use electronic channels more than before in communicating and contacting.

Since 2010, we have invested EUR 141 million in R&D and EUR 235 million in fixed assets. Continuous and purposeful development is an integral part of Ponsse’s operations. Our global distribution and after sales network is developing rapidly. We are developing the organisation and operating methods of our network systematically, and aiming to expand effectively to new market areas. The daily activities of the Ponsse network’s sales and after sales keep our customers satisfied and ensure our long-term success. At the same time, we are making significant investments in our R&D and manufacturing network to keep the development of our productivity and ability to produce quality as high as possible.