Lamor Corporation Plc Company release 4 May 2023 at 09:00 a.m. EEST
Lamor Interim Financial Report 1 January–31 March 2023: The year started as expected - large projects progressing as planned, and the full-year guidance remains unchanged
This release is a summary of Lamor’s Interim Report for 1 January–31 March 2023. The complete report is attached to this release as a pdf file. It is also available on the company website at investors.lamor.com.
January - March 2023 in brief
- Revenue decreased by 47.1% year on year to EUR 22.8 million (43.2)
- EBIT was EUR 0,2 million (4.5)
- Adjusted EBIT decreased by 96,7% and amounted to EUR 0.2 million (6.5) or 0.9% of revenue
- Net working capital at the period-end was EUR 47.9 million (35.6)
- Net cash flow from operating activities was EUR -8.8 million (-7.7)
- Earnings per share (basic) was EUR -0.02 (0.07)
- Orders received decreased 70.2% and amounted to EUR 10.8 million (36.3)
- Order backlog at the period-end was EUR 188.7 million (225.8)
CEO Mika Pirneskoski:
The years 2021 and 2022 have been successful for Lamor. First, the year 2021 in terms of order intake growth, and then the year 2022 in terms of revenue and profitability growth. When comparing the first quarter revenue of EUR 23 million, with these earlier successes, this may seem disappointing. The revenue for the first quarter was, however, in line with our expectations. The company’s business model includes participating in projects relating to sudden environmental incidents which take place irregularly. The comparison period included two such environmental incident operations, one in Peru and one in Ecuador, generating a revenue of approximately EUR 29 million in the period. When taking this into account, we remain on a remarkable growth track with the revenue related to our base business. The lower revenue for the first quarter and the growth investments lowered the operating profit. However, we expect the situation to improve during the latter part of the year.
During the first quarter, our large projects in Bangladesh, Kuwait, and Saudi Arabia progressed as planned. The manufacturing of the vessels and equipment for the projects in Bangladesh have continued according to the plan and the first deliveries will be made during the second half of the year. The enabling works for the Kuwaiti projects were finalised as scheduled and the remediation activities in the treatment area have also begun. The remediation work of the contaminated soil will significantly affect the revenue generation of the project during the second half of the year. The environmental preparedness project in Saudi Arabia is in the maintenance phase and the amount of working capital tied to the project has started to decrease, as expected.
Our project to build a chemical recycling plant of plastics in Kilpilahti area in Porvoo, Finland is progressing as per the plan. Selection of technology providers and other commercial negotiations have been progressing well and we expect to start the construction by the end of the first half of the year. At the time of the first closing of the transaction, Lamor´s share of the company grew slightly and currently Lamor holds 55% of the shares in Lamor Resiclo Oy being responsible for building and operating the facility.
The cornerstones of the updated strategy
Our strategy updated in November 2022 targets towards long-term growth and a leading position in chosen market areas and environmental solutions. Lamor has identified a significant growth potential in all its market areas but is during the 2023–2025 strategy period focusing on achieving growth and an established market position especially in the Middle East and South America. We target to be the preferred partner of our customers in solving their environmental challenges.
On a more concrete level, we aim to start businesses with a positive net impact in three new markets by the end of the strategy period. In addition, we are looking to win five significant projects to solve global environmental challenges. With our new business, we are working towards building a 100,000 tonne project portfolio to solve the global challenge of plastics recycling by the end of the strategy period.
We are seeing positive momentum in all these strategic initiatives. Currently there are significant tenders out in the Middle East and South America, and success in these tenders would contribute significantly to reaching two of the strategic targets. In accordance with our strategy, we have advanced establishing our market position in Saudi Arabia and Kuwait and identified new potential countries with business opportunities in the Middle East as well as in South America.
To make our strategy work, we need to continue the work with our unique globally local partner network business model. In addition, the collaboration between the market area organisations and the global functions is extremely important. With the network and internal collaboration, we can provide our customers the best possible knowhow and technological solutions. With the help of the local partners, we can enable efficient scalability as well as ensure that our solutions are tailored as per the local operating environment. This approach helps us in the transition from project deliveries to continuous local operations and provide added value to our customers and partner network.
All hands on deck
We keep our guidance for 2023 unchanged. Currently we have approximately a total of EUR 96 million in the order book or as revenue recognised for the year 2023. In addition, we have enough projects in the sales funnel which we believe will help us bridge the gap during the latter part of the year.
The development activities of the organisation shall continue throughout the year, but the primary mission for the Lamor management team is to succeed in early victories to reach our strategic targets. The amount of our identified business opportunities and the ongoing tender processes and expected tender requests is bigger than ever before in Lamor´s history. Our success in these tendering processes is crucial for Lamor.
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Guidance for 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 will be arranged on 4 May 2023 at 10:00 a.m. EEST. The January-March 2023 result will be presented by CEO Mika Pirneskoski and CFO Timo Koponen. 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/q1-2023-result.
A recording of the webcast will be available later at the company’s website at investors.lamor.com/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, tel. +358 50 590 7667
Lamor in brief
Lamor is one of the leading global providers of environmental solutions. Lamor provides its customers with equipment used for oil recovery, waste management and water treatment as well as versatile environmental solutions and services, such as clean-up and preparedness services related to oil spill response and oil spills, services for the treatment of waste and tailored and adapted 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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