Lehto Group Plc
28 April 2022 at 7.35 (EET)
Lehto has signed an agreement to sell its pipeline renovation business. Lehto will report pipeline renovation business as discontinuing operation in the financial reports that lowers the net sales and operating result of continuing operations.
The sale of pipeline renovation business will decline Lehto’s net sales from continuing operations by approximately EUR 36 million and operating result from continuing operations by approximately EUR 5 million.
In addition to effects caused by the sale of pipeline renovation business Lehto estimates that the war in Ukraine has caused risks related to the general market demand and material prices. These risks cannot be exactly estimated but Lehto is taking these into account in 2022 financial guidance.
Lehto estimates that Net Sales from continuing operations in year 2022 will be slightly lower than in 2021 (EUR 404.1 million in 2021) and operating result from continuing operations will be EUR 15-20 million negative (EUR -24.0 million in 2021).
Previous outlook published on 17 February 2022
According to Statistics Finland building cost rose by 10.2% in December 2021 from one year back and the costs of materials went up by 14.8%. Lehto has ongoing or starting projects with fixed sales price and the significant increase of construction costs will have negative effect on projects’ profitability also in year 2022. Lehto has changed its pricing, purchasing and contractual practices so that the company can better mitigate cost risks.
Lehto is converting some consumer housing projects to investor projects where net sales and margins are booked according to percentage of completion. This causes some net sales, margins and cash flows from the projects to accumulate earlier in year 2022 instead of 2023.
The most important target for the year 2022 is to improve profitability where the project risk management in all entities is the key thing. The company will continue the earlier commenced actions of managing the project risks and improving the operative efficiency. These actions are estimated to have positive effect on profitability, starting from the second half of 2022, but especially on year 2023.
Lehto estimates that Net Sales from continuing operations in year 2022 will be at level of 2021 (EUR 435.9 million in 2021) and operating result from continuing operations to be EUR 5-10 million negative (EUR -24.0 million in 2021).
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