Lamor Corporation Plc Company release 25 July 2023 at 09:00 a.m. EEST
Lamor Half-Year Financial Report 1 January–30 June 2023: Large projects contributed to a good performance in the second quarter
This release is a summary of Lamor’s Half-Year Financial Report for the period January - June 2023. The complete report is attached to this release as a pdf file. It is also available on the company website at www.lamor.com/investors.
April–June 2023 in brief
- Revenue increased by 52.1% year on year to EUR 33.8 million (22.2)
- EBIT was EUR 3.7 million (1.7)
- Adjusted EBIT increased by 108.5% and amounted to EUR 3.7 million (1.8) or 11.0% of revenue
- Net cash flow from operating activities was EUR 1.1 million (6.4)
- Earnings per share (basic) was EUR 0.09 (0.01)
- Orders received increased 31.3% and amounted to EUR 9.6 million (7.3)
January–June 2023 in brief
- Revenue decreased by 13.4% year on year to EUR 56.7 million (65.4)
- EBIT was EUR 3.8 million (6.2)
- Adjusted EBIT decreased by 52.4% and amounted to EUR 3.9 million (8.3) or 6.9% of revenue
- Net working capital at the period-end was EUR 51.0 million (28.8)
- Net cash flow from operating activities was EUR -7.7 million (-1.4)
- Earnings per share (basic) was EUR 0.07 (0.08)
- Orders received decreased 53.1% and amounted to EUR 20.4 million (43.6)
- Order backlog at the period-end was EUR 163.0 million (220.2)
CEO Mika Pirneskoski:
We returned to the growth path during the second quarter of 2023. The second quarter revenue grew by approximately 52 per cent compared to the comparison period and was roughly 34 million euros. The revenue growth was primarily due to the start of the remediation activities in Kuwait and the good progress of the Bangladeshi project.
The revenue for the first six months was nearly 57 million euros, which is approximately 13 per cent below the comparison period. Our business model includes participating in projects relating to sudden environmental incidents which take place irregularly. The comparison period included two such environmental incident operations. If we exclude these two projects, we have continued our business growth also during the first half of the year. The lower revenue during the first quarter of the year combined with our growth investments have lowered our operating profit, but our profitability increased during the second quarter of the year as expected. We expect the positive trend, especially in terms of profitability, to continue during the second half of the year.
Good progress in large projects
The soil remediation projects in Kuwait progressed well during the second quarter. We were able to transport more contaminated soil to our treatment centers than expected and the bioremediation process worked more efficiently than anticipated. This had a positive impact on the second quarter’s revenue. The favourable progress of the projects has been enabled by the extraordinary performance of our committed project team and we expect the project to continue performing well.
We were not successful in the tendering of the second phase of the Kuwait soil remediation project (SKETR) due to very tight price competition. Our good performance in the first phase increases, however, our possibilities to take part in the second phase of the remediation work as a subcontractor.
The Bangladeshi project has progressed to a stage, where the customer has reviewed certain parts of the partial deliveries, and the project is progressing as planned for both the equipment and vessel scopes.
The environmental preparedness project in the Kingdom of Saudi Arabia is in its maintenance phase and the amount of working capital tied to the project has decreased as planned.
Chemical recycling of plastics as a driver of Lamor’s future growth
Our project to chemically recycle waste plastics in Kilpilahti, Porvoo, Finland, jointly with Resiclo Oy, is progressing as planned. The design phase is being finalised and in June the building permit for the facility was approved. The actual construction work shall commence in August. Currently, we estimate that the commissioning of the first phase will take place approximately in mid-2024. During the second quarter, we also disclosed the news about a capital loan from the Finnish Climate Fund, which secures the project funding of the first phase. As a part of the equity investment finalised in July, Lamor’s participation in the project company will increase to 70 %.
In the first phase, we plan to build a 10,000-ton chemical recycling capacity for plastic waste in Kilpilahti, but our medium-term target is to build a 40,000-ton chemical recycling capacity in Finland. With the help of the Finnish concept facility and our global network, we aim to build similar facilities in our strong markets. The long-term target is to build a capacity of 200,000 tons by 2030.
There is a requirement for the petrochemical industry to increase the use of recycled feedstock as a part of the industry’s actions against climate change. With the help of chemical recycling of plastics, the need for virgin crude oil will decrease in the future. Lamor wants to be a part of the solution for this significant challenge.
Winning new projects in a key role during the second half of the year
The revenue for the second quarter of 2023 was strong as expected and the profitability also increased compared to the first quarter. We maintain our previously communicated guidance for 2023. It is, however, possible that the weak economic prospects and high inflation may also affect Lamor’s business opportunities.
The schedules of the tendering processes have been delayed and the amount of order intake has not been as high as expected during the first half of the year. The number of identified prospects and on-going tender processes is, however, very high and we expect to be able to disclose new projects during the remaining part of the year provided that the tender processes progress as expected.
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Guidance for 2023
In accordance with the guidance published on 28 February 2023, Lamor estimates that its revenue for 2023 will be in the range of EUR 120–135 million and that the adjusted operating profit (EBIT) margin for the full year 2023 will be in the range of 8–11%.
Lamor has a strong order backlog for 2023. Since a significant part of the revenue is generated by large service project deliveries, any major changes in the project progress would have an impact on revenue and profit for 2023.
Lamor is participating in several major tendering related discussions and expects requests for tendering to open and the decisions in the tenders to be made during 2023. The timing of the tenders as well as Lamor’s success in the processes will have an impact on the revenue and profitability in 2023.
Lamor has recruited a significant number of new professionals in 2022. This will support reaching the company’s long-term financial targets but will increase the relative share of fixed expenses in 2023.
Lamor follows closely the changes in the geopolitical environment in its operating countries. These changes may have either a negative or a positive impact on Lamor’s business, for instance through changes in the schedules or cost structures of the projects.
Webcast for shareholders, analysts, and media
Webcast for shareholders, analysts and media on the results of the first half of the year will be arranged on 25 July 2023 at 10:00 a.m. EEST. The webcast includes a Q&A session, and participants can ask questions in English and Finnish via the event chat room. The webcast can be followed at lamor.videosync.fi/q2-2023-results.
A recording of the webcast will be available later at the company’s website at lamor.com/investors/reports-and-presentations.
Mika Pirneskoski, CEO, Lamor Corporation Plc, tel. +358 40 757 2151
Timo Koponen, CFO, Lamor Corporation Plc, tel. +358 40 749 2986
Danske Bank A/S, Finland Branch
Lamor in brief
Lamor is one of the leading global providers of environmental solutions. Lamor provides its customers with versatile environmental protection and material recycling solutions and services, such as clean-up and preparedness services related to oil spill response and environmental incidents, services for the treatment of waste, recycling of plastics, and tailored and adapted soil and water treatment solutions. Lamor operates together with its local partners, offering a wide selection of solutions, which can be tailored according to the needs of each customer, and aiming to clean the world, for which the company has worked since its incorporation. The company's share is listed on the Nasdaq First North Premier Growth Market Finland marketplace maintained by Nasdaq Helsinki under the trading code LAMOR. Further information: www.lamor.com.
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