Lamor Financial Statements Release 2023: Large projects progressed well; geopolitical situation slowed the order intake

16.2.2024 09:00:01 EET | Lamor Corporation Oyj | Financial Statement Release

Lamor Corporation Plc                      Stock exchange release              16 February 2024 at 9:00 a.m EET

Lamor Financial Statements Release 2023: Large projects progressed well; geopolitical situation slowed the order intake

October–December 2023 in brief

• Revenue increased by 24.3% year on year to EUR 34.8 million (28.0)
• EBIT was EUR 3.0 million (0.8)
• Adjusted EBIT amounted to EUR 4.0 million (1.2) or 11.6% of revenue (4.5%)
• Net cash flow from operating activities was EUR 2.3 million (0.7)
• Earnings per share (basic) was EUR 0.01 (-0.03)
• Orders received decreased by 12.4% and amounted to EUR 10.0 million (11.4)
• Impairments from the Kazakhstan business amounted to EUR 0.8 million

January–December 2023 in brief

• Revenue decreased by 4.0% year on year to EUR 122.5 million (127.7)
• EBIT was EUR 8.4 million (10.0)
• Adjusted EBIT decreased by 13.2% and amounted to EUR 10.9 million (12.6) or 8.9% of revenue
• Net working capital at the end of period was EUR 62.2 million (41.5)
• Net cash flow from operating activities was EUR -12.7 million (-6.5)
• Earnings per share (basic) was EUR 0.09 (0.13)
• Orders received decreased by 49.7% and amounted to EUR 44.0 million (87.4)
• Order backlog at the end of period was EUR 124.2 million (203.1)
• The Board of Director proposes that no dividend be distributed for the financial year 2023

CEO Update

For Lamor, the year 2023 brought with it some great successes but also certain identified needs for improvement. We succeeded in the execution of our large projects in a great way. Our soil remediation projects in Kuwait, the service project for oil spill response preparedness in Saudi Arabia, and the waste handling and oil spill technology delivery project in Bangladesh all progressed as planned – or even better than anticipated. On the other hand, the launching of new customer tender processes and decision-making related to the ongoing tenders were significantly delayed, and we did not win any major tenders during the year. This affected the order intake in 2023, the revenue of the financial year, and the development of the financial results.

Our revenue in 2023 amounted to 123 million euros, decreasing by 4.0 percent from the previous year. Our adjusted EBIT in 2023 was approximately 10.9 million euros or 8.9 percent of revenue. Compared to the previous year, our adjusted EBIT margin decreased by approximately 1.0 percent. As anticipated, the investments for our future growth, for instance in the form of recruitment, weakened our profitability. Although our financial results were in line with our guidance, the order backlog did not develop as we had hoped for. The value of new orders received in 2023 was 44 million euros, which was 49.7 percent less than in 2022. The most significant new orders in 2023 related mainly to equipment delivery projects.

Effects of the geopolitical situation and increased environmental awareness

The geopolitical situation in 2023 was challenging. Due to political instability, many countries in Southern America have suffered from conflicts. This has led to postponements of tender processes and investment decisions in the region. In the Middle East, especially in the Red Sea region, the situation has become even more tense, causing serious threat to the shipping, and the general security situation in the region. Furthermore, the Russian war in Ukraine unfortunately continues. These conflicts and human disasters have affected and will continue to affect in many ways the general market conditions and our business. In addition to the deteriorating the security situation in general, these conflicts significantly increase the risk of oil spills in, for example, the Red Sea, the Arabian Sea, the Persian Gulf, and the Baltic Sea.

Although the situation has been in many ways challenging during the past year, environmental awareness and tightening regulation emphasise that solving environmental problems must be tackled with determination, whatever the situation. This supports our long-term growth, which is based on a strong increase in the demand for environmental protection, soil remediation and chemical plastics recycling solutions, but at the same time, it can affect our business in the form of changes in project schedules and costs.

The importance of successfully delivered large projects for our future growth

Lamor always strives to find the best possible solution to the customer's environmental problem, considering both sustainability and cost-effectiveness. The large projects we delivered in 2023 are good examples of this. Successful large projects are important references in our future growth path and support us in ongoing tenders and identified commercial opportunities. The timing of and success in tenders will affect our revenue and profitability not only in 2024, but also thereafter.

In soil cleaning, the best solution is always case-specific, because each contaminated soil, environment and climate always differ from another. The solution we developed for Kuwait's extreme conditions turned out to be even more effective than we expected. It is a unique combination of biological and mechanical processing, with which the oily soil can be cleaned. In addition, in December we were able to start the ramp up phase of another treatment method, the soil washing plant. This method is used for cleaning more severely contaminated soil.

In accordance with our Red Sea environmental protection service project contract, we have strengthened oil spill response capabilities in the coastal areas of Saudi Arabia. We continued to maintain the preparedness level by securing the operational capability of the oil spill response vessels and aircraft, as well as the operational readiness of the oil spill response equipment. In addition, we trained more than 2,000 local experts in oil spill preparedness in case of possible environmental incidents. Our current contract will expire mid-year 2024 and the possible continuation of the contract is still open.

Our Bangladesh projects, the aim of which is to increase oil spill response preparedness and waste management capabilities in the Mongla Port, have progressed as expected. The agreed delivery scope includes a Port Reception Facility to manage and process various types of waste originated in the ships, offering a new kind of reference for Lamor.

Our chemical plastic recycling project is at an important phase. We tested the process functionality especially during the last quarter of the year, planned its optimisation, and started the construction of our actual pilot facility in Kilpilahti, Porvoo, Finland. The plan is to start the production of recycled oil and the production process optimisation at the facility during the second half of 2024. The duration of these phases will affect our financial results particularly for 2024.

For Lamor, safety is a very important element of our project implementation. Despite the increased magnitude of our projects, we reached the milestone of uninterrupted three million safe working hours in January 2024. This means that no occupational injuries resulting in lost working time in our operations have been reported since February 2023.

Towards the next growth leap

In 2023, we carried out significant capital market transactions that support our long-term growth. In August, we issued a 25-million-euro green bond and in November we moved to the main list of Nasdaq Helsinki. Both transactions are important steps for us, supporting us on our targeted growth path in our strategic period.

The rapid transformation from a family business to a main listed company on Nasdaq Helsinki, significant growth and expansion into new markets and business areas has put us in a new situation. The number of our personnel has increased strongly during 2023 and taking the next growth leap a new kind of management, organisation, and measurement from us.

To reach the target, we decided to supplement our Group Leadership Team in February 2024 and to clarify the operating models and responsibilities of both the Group Leadership Team and the rest of the organisation. It may take time for the effects of the reforms to become visible, and we will review our strategy and our long-term financial goals during the year 2024.

I would like to extend my warm thank you to Lamor’s personnel, partners, stakeholders, and shareholders for the past year 2023. The success of our growth strategy requires a lot of work from all of us, as well as favourable development of demand and order backlog. However, I trust our skilled, committed teams, and our good references, and look to the future with optimism. The world needs responsible solutions for environmental protection, soil remediation and material recycling, and we are solving these critical issues for our environment with our customers.

Key figures

Guidance for 2024

Lamor estimates that its revenue for the financial year 2024 will be at least at the same level as in 2023 (2023: EUR 122.5 million). Due to the uncertain market situation and uncertainty regarding the schedule of large tenders, Lamor does not provide guidance for profitability.

Board of Directors’ proposal for profit distribution

The parent company’s distributable funds on 31 December 2023 EUR were 26,397,933.18 of which net profit for the financial year was EUR –7,250,634.80. The Board of Directors proposes to the Annual General Meeting that no dividend be distributed and that the result for the financial year 2023 be entered in the retained earnings.

Webcast for shareholders, analysts and media

Webcast for shareholders, analysts and media on the results for the financial period 2023 will be arranged on 16 February 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/q4-2023/register.

A recording of the webcast will be available later at the company’s website at lamor.com/investors/reports-and-presentations.

Further enquiries

Johan Grön, CEO, Lamor Corporation Plc
tel. +358 40 5464186, johan.gron@lamor.com

Timo Koponen, CFO, Lamor Corporation Plc
tel. +358 40 749 2986, timo.koponen@lamor.com

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.

Environmental protection, soil remediation and material recycling: Our innovative technologies, services and tailored solutions, ranging from oil spill response, waste management 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 600 employees in more than 20 countries. In 2023, our turnover was 123 million euros. Lamor's share is listed on the Nasdaq Helsinki (ticker: LAMOR). Further information: www.lamor.com

Attachments

• Lamor Financial Statements Release 2023.pdf