Finnish drilling tool manufacturer Robit says the war in Ukraine and “strong cost inflation” have increased uncertainty in its “operating environment”, but it believes this year’s sales and earnings will improve on FY21 after announcing the highest invoicing month in its history in March.
March quarter sales revenue climbed 14.2% year-on-year to €26.3 million, but EBITDA was down at €0.9m (€1.62m). Negative EBIT was “mainly caused by increased material and freight costs”.
“The company will continue systematic work to improve profitability through material cost saving projects and more accurate pricing. The impact of these projects will be realised mainly during this year,” Robit said.
The company believes demand in its core mining and construction markets will remain at a “good level, but the risks for regional weaking of demand have increased”.
“For the time being, Robit does not accept new export orders from Russia or Belarus, which have accounted for under 8% of the company’s net sales.
“Demand in the mining segment is supported by the positive development of metal prices. Demand in the construction industry is supported by the good working situation in the construction industry markets relevant to Robit and the significant financing decided for the construction industry globally. The risk of economic downturn, particularly in Europe, may weaken the demand in the construction industry.
“The company estimates that the COVID-19 restrictions will have a limited impact on demand for Robit’s products during 2022.”
Former CFO and CEO since March this year, Arto Halonen, said the company’s growth continued to be strong in the Americas, where “systematic work to develop the distributor network and new mining accounts brought growth”.
He said improving cash flow was a primary goal for the company this year.
“Managing the company’s working capital is key to strengthening cash flow,” Halonen said.
“Improvement measures will focus on three key areas: optimising the product range and inventories and assessing payment terms. We are taking steps to reduce the range of products and in particular the number of items that we stock. We are actively seeking to shift demand towards a more targeted range of products, and to implement product development projects to narrow and modularise our product selection.”
Helsinki-listed Robit’s share price has fallen nearly 40% so far this year, dragging its market value down below €54m.