AKI OJANEN, CEO OF ASPO GROUP, COMMENTS ON THE THIRD QUARTER
(published in the Interim report on October 29, 2020)
Given the prevailing market situation, Aspo Group’s third quarter results exceeded our expectations, thanks in particular to our strong performance in September. Telko segment achieved the best quarter in its history, as both Telko and Kauko, reported as part of the segment, significantly improved their operating profit. In September, we estimated that ESL Shipping would produce a loss during the third quarter. However, industrial demand picked up towards the end of the review period, driving ESL Shipping’s results close to zero. Leipurin has defended its operating profit level well in bakery raw materials. Currently, it seems that the most significant negative effects resulting from the coronavirus pandemic on the Group’s businesses are starting to be behind us.
Overall, 2020 has been very unusual and challenging. The negative impact caused by the pandemic on our businesses were the highest between April and August, when demand for raw materials and transportation in our customer companies decreased unusually fast. The decrease in net sales was historically steep until the end of the third quarter. In September, however, there were signs of a rapid market recovery, especially in the operating environments of Telko and ESL Shipping. We reacted rapidly and determinedly to this spring’s market changes, and our businesses were able to serve their customers without any interruptions and to protect their financial performance. However, it is obvious that, due to these exceptional circumstances, we will fall clearly short of our profit-making potential. This will especially be reflected in ESL Shipping’s results.
We provided a new financial guidance for 2020 in mid-September when the strength of the positive turnaround was still challenging to assess. As the outlook for the rest of the year has clarified, we raise the lower limit of our guidance, and now our financial guidance is as follows: Aspo’s operating profit will be EUR 14–16 million in 2020.
We are actively making preparations for the time following the coronavirus crisis, with the aim of strengthening our market positions and growing profitably. After the end of the review period, Telko announced a business acquisition, with which it strengthens its position in strategically important lubricant operations of a high profit margin in Sweden and Norway.
Throughout the pandemic, I have been satisfied with our ability to react rapidly to the weaker market situation and adapt our operations to changes in demand. Our free cash flow has remained strong, which also supports Aspo’s strategic development and solid dividend distribution.