President and CEO Riku Kytömäki
In the second quarter of 2021, order intake continued strong as market demand in various customer industries increased. Along with another strong quarterly order intake, revenue increased compared to the previous year. Adjusted operating profit was, however, behind last year.
Revenue increased during the second quarter in almost all customer industries. The conductor core application was driving the growth in Buildings and Infrastructure. The key source of growth in Defense customer industry was the camouflage net support pole application. In Equipment and other industries, we saw a Covid-19 related rebound in the business volumes of a large number of customers. In Wind power, the revenue in the second quarter was slightly lower than last year. Our order backlog, however, indicates that the growth of Wind Power will continue during the second half of the year.
From a geographical perspective, the revenue increase in North America and Europe reflects the shipping locations of the above-mentioned growing applications rather than the development of demand in the individual geographical markets.
Despite the revenue increase, adjusted operating profit declined in the second quarter compared to the previous year. The operating profit was negatively impacted by low profit margins during the ramp-up of certain high-volume products and increased raw material costs. We expect the profitability to improve in the second half of the year both in terms of pricing as well as production efficiency once the production is fully ramped up. Last year, the second quarter was impacted by approximately EUR 0.3 million of Covid-19 pandemic related grants, which did not repeat this year.
In June 2021, the Board of Directors reconfirmed Exel’s strategy in its annual strategy review. The main strategic focus areas as well as the company’s long-term financial targets and dividend policy remained unchanged. We have continued to make good progress in all focus areas with focus on strategic growth initiatives and operational efficiency improvements particularly in selected manufacturing units in the Group. One of the main targets in the strategy work has been to further integrate sustainability in all Exel’s operations and business. Sustainability is a key element in our vision and purpose, which were updated at the end of last year. Our purpose is to solve challenges and help customers save resources with composites, and our vision is to be the first choice for sustainable composite solutions globally.
Customer activity and demand in the composites market has clearly increased. Our performance in the first half of 2021 and the record-high order backlog provides a good foundation for increasing revenue and improving profits during the rest of the year.