Lamor Corporation Plc Company release 31 October 2023 at 09:00 a.m. EET
Lamor Interim Financial Report 1 January–30 September 2023: Large projects progressed well – decision-making regarding new projects delayed
This release is a summary of Lamor’s Interim Financial Report 1 January–30 September 2023. The complete report is attached to this release as a pdf file. It is also available on the company website at lamor.com/investors.
July–September 2023 in brief
- Revenue decreased by 9.2% year on year to EUR 31.1 million (34.2)
- EBIT was EUR 1.6 million (3.0)
- Adjusted EBIT amounted to EUR 3.0 million (3.1) or 9.6% of revenue (9.0%)
- Net cash flow from operating activities was EUR -7.3 million (-5.8)
- Earnings per share (basic) was EUR 0.01 (0.07)
- Orders received decreased by 58.2% and amounted to EUR 13.5 million (32.4)
- Impairments from the Russian business amounted to EUR 1.2 million
January–September 2023 in brief
- Revenue decreased by 12.0% year on year to EUR 87.7 million (99.7)
- EBIT was EUR 5.4 million (9.2)
- Adjusted EBIT decreased by 39.2% and amounted to EUR 6.9 million (11.4) or 7.9% of revenue
- Net working capital at the period-end was EUR 59.2 million (38.8)
- Net cash flow from operating activities was EUR -15.0 million (-7.2)
- Earnings per share (basic) was EUR 0.08 (0.16)
- Orders received decreased by 55.3% and amounted to EUR 34.0 million (76.0)
- Order backlog at the period-end was EUR 146.1 million (221.2)
CEO Mika Pirneskoski:
The financial result of the third quarter 2023 was as expected. The revenue for the third quarter was 31 million euros, which is slightly below the comparison period (34 million euros). The revenue for the first nine months was 88 million euros, which is 12% less than in 2022. A significant portion of our revenue is still being generated from our service projects in the Middle East. During the comparison period, a significant portion of the revenue was generated from environmental cleanup projects in South America.
As the year 2023 progressed, the increased volume was also reflected in increased profitability. Our adjusted EBIT margin for the third quarter was 9.6%, which increased our adjusted EBIT margin for the whole year to 7.9%.
Good progress in the large projects continues
The remediation works in the Kuwaiti soil cleanup projects have progressed very well and we were able to reach a remediation target for 1 million tons in the beginning of October. Alongside the ongoing bioremediation works, we are about to start soil washing activities for the more contaminated soil. These activities are also progressing as planned.
As an acknowledgement for our successful performance in Kuwait, we have started activities in October to treat additional soil volumes on another remediation site as a subcontractor, together with our project partner Khalid Ali Al-Kharafi & Bros. Co. This subcontracting is a clear indication of how excellent performance creates further business opportunities. We expect to sign a contract relating to this project in November. Lamor’s share of the upcoming contract is estimated to be approximately 8 million euros.
The environmental preparedness project in Saudi Arabia is in the maintenance phase. The first contract period ends during the spring of 2024. Potential extension of the contract will be resolved, at latest, by the end of Q1 2024.
We received two important orders in our technology business during the third quarter; we will supply inbuilt oil spill response equipment in Asia and potable water treatment solution in South America. We see a significant potential in water treatment solutions in the coming years, especially in South America, where the availability of clean water varies significantly.
Groundbreaking of the plastics chemical recycling facility in Kilpilahti
We had the groundbreaking ceremony for our chemical recycling facility in August in Kilpilahti, Porvoo, Finland. The ceremony was attended by all technology and value chain partners of the project. We also communicated that the product will be sold to Shell for further refining into a suitable raw material for chemicals producers. These agreements are important to us considering our target to build a 40,000 metric tons chemical recycling capacity for plastics recycling in Finland, as well as 100,000 metric tons project portfolio on a global level during our strategy period.
Our project is progressing according to the plan. The construction work has begun, and the first technology deliveries will arrive in Kilpilahti during the first quarter of 2024. After the delivery, the installation and commissioning work will begin. The current plan is that production, and its optimization shall commence during the summer of 2024.
Strategic targets and growth outlook
We strengthened the execution capabilities of our strategy in August by issuing a EUR 25 million green bond. This is a very important step for us in the public debt capital market. In addition, we communicated our aim to move to the main market of Nasdaq Helsinki during 2023. We believe that the move will have a positive impact on the company’s position in the capital market and support long-term shareholder value creation.
During the quarter our Chief Development Officer Johanna Grönroos and SVP, Europe and Asia Magnus Miemois resigned from their positions. Both will continue in their roles until the end of 2023. We will communicate the new composition of the management team once it has been confirmed.
We completed our annual strategy review, and analysis of the progress of strategy execution, during the quarter. We are still in an early phase of our strategy period, and as the result of the review, we decided to keep the strategic targets unchanged. The review strengthened our understanding that the amount of identified commercial leads has increased significantly during the past year. Currently the most important action is to focus on the ongoing and upcoming tenders that are critical in achieving our strategic growth targets. There are further delays in some of the ongoing tenders process and the order intake has not developed as expected in 2023, hence we will continue to actively pursue to win new orders.
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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 31 October 2023 at 10:00 a.m. EET. 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 https://lamor.videosync.fi/q3-2023-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 world’s leading providers of environmental solutions. For four decades, we have worked to clean up and prevent environmental incidents on land and at sea.
From environmental protection to material recycling: Our innovative technologies, services and tailored solutions, ranging from oil spill response, waste and water treatment to soil remediation and plastic recycling, benefit customers and environments all over the world.
We are capable of vast and fast operations thanks to our connected ecosystem of local partners, steered by our experts. We have over 500 employees in more than 20 countries. In 2022, our turnover was 128 million euros. Lamor's share is listed on the Nasdaq First North Premier Growth Market Finland marketplace maintained by Nasdaq Helsinki (ticker: LAMOR). Further information: www.lamor.com
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