CEO AKI OJANEN COMMENTS ON THE FOURTH QUARTER AND THE FINANCIAL YEAR 2016
(Q4 2016 release published on February 15, 2017)
All in all, 2016 was a good and dynamic year. The growth of Aspo's net sales and operating profit accelerated during the second half of the year. We expect this positive development to continue and our financial guidance for 2017 estimates the operating profit to be EUR 22–27 (20.4) million in 2017.
We developed the management of our subsidiaries on many levels. Their Boards of Directors were strengthened, Mikko Laavainen was appointed Managing Director of Leipurin Plc, starting from March 1, 2016, Kauko revised its identity in accordance with its strategy, and Telko invested in its regional strategy and both expanded and grew heavily in eastern markets. ESL Shipping received a decision on an EU funding of at most EUR 5.9 million for energy efficiency and environmental investments in vessels. The company carried out extensive groundwork for the future development of its results.
The shipping company faced an exceptionally challenging operating environment in 2016. Unhealthy levels of international cargo prices also reduced the results of ESL Shipping. Even though other vessel categories improved their profitability, the losses produced by Supramax vessels during the spring and summer reduced the full-year results. However, the operating profit of EUR 4.1 (4.5) million produced during the fourth quarter can be regarded as a good achievement, considering the market situation. We estimate that the productivity of Supramax vessels is higher in 2017 than what it was in 2016.
Telko was able to significantly improve its net sales and profitability during the fourth quarter. We already saw in the spring that the decline in the Russian economy had stopped and expected the market situation to improve. Telko's strong investments in growth paid off in the eastern markets in the form of an increase in net sales of 26%. Its operating profit improved during the quarter to EUR 2.5 (1.9) million. Telko improved its profitability, particularly in the western markets.
The profitability of Leipurin is far from its potential, even though its operating profit improved during the fourth quarter to EUR 0.7 (0.4) million. Leipurin continued its strong growth in Russia, where its profitability remained high, with the operating profit rate being approximately 9%. Machine operations produced a loss in 2016. Heavy investments in improving the competitiveness of machine operations and entering new market areas resulted in a record-high order book at the end of the year, which ensures that the result of machine operations can develop positively in 2017.
Aspo's administrative costs reached the target level in 2016. The improved outlook for different businesses and the higher cost efficiency enable us to be determined and move forward in 2017 towards reaching our financial targets by 2020.