President and CEO Jouni Heinonen

Good revenue and ebit improvement in Q3 2022

Q1-Q3 2022 Business Review, 3 November 2022

In the third quarter of 2022, Exel’s revenue increased slightly from the comparison period. The growth was particularly driven by the Transportation customer industry, and also the Machinery & Electrical and Equipment & Other Industries achieved a higher revenue, although the growth slowed down from the previous quarter. The growth in these industries compensated the decrease in revenue in the Wind Power, Telecommunications, Defense and Buildings & Infrastructure customer industries. Our broad customer portfolio evens out the industry-specific fluctuations. The revenue growth was driven by the North America region and the sales also increased in Europe.

In terms of profitability, the profit-making ability of the business unit in the United States, which burdened the comparison period, has now reached a new, better level. Overall, Group’s operating profit clearly increased from the previous year. During the year, we have succeeded quite well in transferring the exceptionally increased material costs to our prices, and at this stage it seems that the most significant increase in material costs is now behind us. However, visibility into next year’s energy and material cost development is still limited.

The clear competitive advantages of composite materials and Exel’s strong global foothold in the pultrusion market give us a good starting point to seek growth, particularly with the help of our extensive production network and product range. The green transition is a significant opportunity for us. The world needs more renewable energy, more energy-efficient buildings, and lighter vehicles, all of which require the use of composite materials. We are able to support our customers in this important transition. In addition to this, we have identified additional new opportunities. A good example is the electrical conductor market in the Buildings & Infrastructure customer industry; the market will be opening up as a result of a key patent expiring.

We also continued to develop our own operations. The reorganization and consolidation of the Chinese units was completed when Exel signed an agreement on 23 August 2022 for the sale of the closed factory property in Nanjing, China. As a result of the sale, we will receive a gross compensation of around 6.8 million euros, of which the first installment was paid when the contract was signed. The rest will be paid when the ownership is transferred, which is estimated to take place during the last quarter of 2022.

Exel’s order backlog has remained at a reasonable level in absolute terms, despite the unstable macroeconomic environment. In January-September revenue increased 8 percent from the comparison period, and our operating profit has already surpassed last year’s total. Our long-term demand outlook is positive, although in the short term there is general uncertainty in customer demand due to the war in Ukraine and the inflationary environment.

Finally, I would like to thank Riku Kytömäki, who was the CEO of our company until the end of September. During his time, between 2014 and 2022, Exel has grown into a leading player in the global pultrusion composite market.