In 2017, the net sales of the Koskisen Group continued to grow, amounting to slightly more than EUR 270 million. Compared to the previous year, net sales increased by slightly more than 2 per cent. The group’s core businesses, Timber Industry and Panel Industry, saw the biggest increase in net sales. Wood products processed by Koskisen were exported to 70 different countries, and exports accounted for 56 per cent of the group’s net sales. At the close of the year, the group had 1,062 employees, which is 25 fewer than in the previous year.
The Group’s comparable operating profit for 2017 was EUR 9.1 million (EUR 4.2 million in 2016). The Group’s equity ratio strengthened and was 30.2%, including capital loans, at year-end. Result development varied greatly between the group’s core businesses.
Compared to the previous year, the profitability of Sawn Timber Industry increased substantially. Profitability was boosted especially by high market prices and solid demand in the second half of the year. Furthermore, despite occasional problems in log availability, the unit managed to maintain its production output as planned. Softwood log prices continued to climb, which burdened the profitability of the group’s Sawn Timber Industry business.
In Panel Industry, the development was two-fold. Demand for chipboard developed positively, increasing profitability. However, at the beginning of 2017, the group's plywood business suffered from high raw material prices and in Q4, from poor availability of birch logs. Plywood continued to be in strong demand in the marketplace, but due to the poor availability of raw materials, we were unable to confirm all orders and had to postpone a number of deliveries. As a result, the operating profit for the group’s plywood operations was clearly weaker than expected.
The development of Housing Industry operations continued as planned throughout the year and, as a result, we started to see an increase in the unit’s profitability. We may still be a ways away from reaching our targets, but our ongoing development efforts, the measures we have already taken and the positive prospects in the wood construction market provide excellent conditions for increasing the profitability of our Housing Industry operations.
Birch Products Industry saw a major organisational change in summer 2017, when Koskisen decided to discontinue its birch sawmilling operations and gluelam panel production in Hirvensalmi. Consequently, the unit was renamed Thin Plywood Industry. In addition to major changes in the unit’s organisation, there was a complete refocus towards developing the profitability of its remaining operations, namely its veneer and thin plywood business.
For Wood Procurement, 2017 was a challenging year. Due to difficult weather conditions in autumn and winter, there were times when it was impossible to procure sufficient amounts of wood for our operations. Softwood availability was not affected as much, which meant that the planned sawn timber volumes could be achieved almost completely. However, poor birch log availability caused downtime in our plywood production, especially in the last quarter of 2017. The purchase prices for logs had increased and the sales prices for energy wood and pulp wood had decreased, which affected Wood Procurement’s operating profit.
2017 saw the launch of a group-wide growth programme, which aims at increasing the group’s earning power, strengthening its financial position and ensuring sufficient capacity for future investments. In addition to discontinuing the birch sawmilling and gluelam panel production as discussed above, the programme involved selling certain non-core assets, streamlining Group Services and combining Chipboard Industry and Plywood Industry into a new unit: Panel Industry. The group’s long-term financing was also reorganised. In the course of the year, each of the planned measures was successfully completed, providing Koskisen with a solid foundation for new investments and future growth.
The overall index of the work satisfaction survey conducted among the Group’s personnel in 2017 improved slightly compared to the previous year’s results and was 3.77 (on a scale of 1–5), which is higher than the industrial average. We will continue our efforts to improve well-being and satisfaction at work in the coming years.
The NPS figure, which measures customer satisfaction, improved significantly since the previous survey and was 54 in 2017. This value exceeds the target we had set, and we raised the bar even higher for the coming years. Customers especially value Koskisen’s customer service and the high quality of the company’s products.
Improving occupational safety continued to be a priority for the group. The group’s lost time injury frequency was 22.4 (injuries resulting in one or more lost work days per million man-hours). Despite not fully meeting our target for the year, we managed to improve our performance in this top-priority KPI by approximately 35 per cent compared to the previous year. This is thanks to our systematic safety work during the year. In the coming year, we will further increase our targets, and continue to improve occupational safety within the whole group.
In 2017, group investments totalled approximately EUR 7 million. The most substantial investments included the commissioning of a new CNC processing line in Panel Industry’s unit in Poland and the commissioning of a new automatic patching machine, which was incorporated in the plywood production process used at our Järvelä facility.
In 2017, several change and investment projects were successfully completed within the group. Furthermore, the group’s profitability and revenue developed in the right direction. This would have been impossible without the efforts of our staff and for this, I would like to convey my thanks. It is wonderful to see the high level of commitment among our staff to their own work, and consequently, to the future of the entire group.
Koskisen’s suppliers also deserve a big thank-you. Most of all, I would like to thank our customers. We at Koskisen are proud of how closely we are able to work with our customers, and our goal is to fulfil even their most challenging needs. We will continue to do our best to deepen and strengthen the co-operation with our customers and partners.
In Koskisen’s key markets and industries, the outlook for 2018 is positive. Demand for group products is expected to remain strong and, in the near future, to grow even stronger. Our efforts to ensure sufficient cost-competitiveness will provide a solid foundation for improving the group's profitability.
Chief Executive Officer