The business environment remained challenging in 2014, which led to Componenta’s net sales being 3% lower than in the previous year. Operating profit excluding one-time items and exchange rate differences of balance sheet items, however, improved due to the successful implementation of the Group’s efficiency program and the achievement of cost cutting and profitability improvement targets.
The net result for the financial year was modest due to high one-time items and exchange rate differences of operative balance sheet items, which included costs associated with the reorganization of operations and the closure of units, as well as impairment of fixed assets in various operating countries.
Componenta renewed its capital structure in August - September. The Group’s short-term financing was replaced with long-term loan agreements, which led to longer maturities and will result in lower annual borrowing costs. We also carried out two share issues, which increased the company’s equity ratio and improved liquidity. This created a sustainable foundation for the company’s continued development.
The productivity and profitability improvement program that covers all Group functions will continue in 2015. The overall target of the efficiency improvement program is EUR 45 million improvement compared to the level of 2012. Of this target, EUR 27.5 million was achieved by the end of 2014. The efficiency improvement measures that have already been implemented, and the measures to be implemented in 2015, are estimated to further improve our result by EUR 17.5 million in 2015 and 2016. The program significantly improves Componenta’s competitiveness by improving productivity and reducing fixed costs, while also decreasing the consumption of energy and raw materials. Consolidating our production operations in larger units and reducing the number of production lines will improve our utilisation rates. In 2014, we completed the previously initiated transfers of casting and machining production, which led to the closure of the Pietarsaari foundry in July. As part of the development program, we also developed our operating methods and internal processes. We strengthened our customer project management by establishing a Project Management function, we reshaped the management and organizational structures of our units, and strengthened our management resources and competencies.
In late 2014, we launched Group-wide quality and customer service improvement projects aimed at the comprehensive development of the quality of our supply processes, reducing quality costs, increasing the efficiency of our customer service processes, and improving the quality of our customer service further. The projects will continue in 2015.
In 2014, we achieved good success in the sales of new product projects. Several years of investments in engineering expertise and resources, as well as in tools and product development partnerships with customers, produced good results. Our efforts to achieve the target we set a year ago—achieving EUR 100 million in organic growth through new products and solutions in selected customer segments and accounts by 2016—have progressed well. At the beginning of 2015, Componenta’s order book was 2% higher than in the previous year, and our market share, particularly in the heavy trucks, machine building and agricultural machinery segments has grown and will continue to grow in 2015 and 2016.
In spite of the changes and uncertainty in the markets caused by the Ukrainian crisis, the decrease in the prices of energy and raw materials, low interest rates and the improved competitiveness of the euro balance out the development of the economy and the markets. These developments, combined with the active capital market decisions of the European Central Bank, create the conditions for turning the economy around and for the positive development of our business in 2015.
I would like to extend my warmest thanks to our customers, owners and personnel for their commitment and valuable cooperation!
President and CEO