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Report by the Board of Directors

Strategy

The key theme of L&T’s strategy is to work with our customers to transform our consumer society into an effective recycling society. We do this by producing service solutions that promote our customers’ material, energy and cost efficiency, which helps us create profitable growth for both our customers and ourselves. 

Our vision is to be our customers’ preferred partner in environmental, industrial, property, and forest services. As a service company, L&T’s success is built on the wide range of skills of our personnel and our extensive service offering, which is seen by our customers as one L&T.

In conjunction with our annual strategy review in 2016, we updated the strategies of our divisions with a focus on the background assumptions behind strategy and the way internal changes and changes in the business environment have affected these assumptions. For Renewable Energy Sources, we updated the division’s entire competitive strategy. We also extended the strategy assessment period to 2020. Based on the assessment, it was not necessary for us to significantly change the company’s strategic direction or financial targets, but we did make some additional specifications to the overall strategy. Going forward, we will continue to focus on improving productivity but, to support our growth targets, we will also increase our focus on the development of new service products, digital solutions and enhancing the customer and employee experience.

Changes in the business environment are making the need for renewal mor​e urgent 

It appears that the Finnish economy will recover slower than expected in the next few years, and competition remains intense in all of our main markets. This forces us to critically examine our cost structure and continuously seek ways to increase profitability and ensure our future competitiveness. In 2016, we held statutory employer–employee negotiations and adapted our organisation to the increasingly changing market situation. At the same time, we simplified our organisational structures and expanded the decision-making authorisations of our businesses.​

The digital transformation is posing many challenges to the traditional model of service production across many industries, including ours. We believe that the successful companies of the future will be those that have the agility and flexibility to adapt to the ongoing changes. To ensure that we can effectively take advantage of the opportunities presented by the digital transformation, we will significantly increase our investments in digital solutions, which will be developed using agile methods and customer engagement.

Our customers expect us to deliver continuously improved services, expertise and quantifiable added value with regard to cost efficiency, energy efficiency and material efficiency. At the same time, the circular economy and digitalisation are providing us with new opportunities for the development of services and the customer experience. In 2016, we implemented systematic customer experience management at both the Group level and the division level, and we strengthened our service development resources. We see a strong link between managing the employee experience and the customer experience as, in a service company, the two are closely intertwined. 

Development steered by strategic priorities 

We implement our strategy through development programmes and projects that are based on our chosen strategic priorities. In 2016, we made consistent progress in our previously launched strategic programmes aimed at enhancing workforce management and the Facility Services division’s operating model. We also launched a new programme aimed at improving the customer and employee experience.

Workforce management 

• We implemented flexible working hours and a shift planning system in our cleaning units. 

• We implemented digital working hours recording the Environmental Services division.

• We launched a project to implement flexible working hours and a shift planning system in process cleaning.

• We implemented a centralised resource allocation organisation to support optimised shift planning in cleaning and property maintenance. 

Efficient operating model 

• The new operating model for Facility Services and the enterprise resource planning system that supports it were finalised for property maintenance and deployed in two pilot units in Espoo and Turku. The deployment of the system will continue in 2017. 

• The planned next step is to extend the model and the system that supports it to cleaning and the maintenance of technical systems. The work has already begun for these service lines.

Customer and employee experience 

• We implemented systematic customer experience management at both the Group level and the division level. 

• Going forward, our goal is to improve our ability to keep abreast of customer needs and develop our operations based on feedback received from customers. We actively focus on day-to-day development in cooperation with customers and in a way that supports our customers’ business goals. Together with our personnel, we agree on concrete and quantifiable customer promises that guide our work and make our culture even more customer-oriented. At the same time, we aim to ensure that the experience and mental state of our personnel support the creation of an excellent customer experience.

Financial targets

 
 
 
 
 
 
 
 
Target 2020
2016
2015
2014
2013
 
Growth
5.0%
2.4%
1.0%
 -4.3%
 -0.9%
 
Return on invested capital
20.0%
17.4%
16.5%
15.4%
10.6%
 
Operating profit
9.0%
7.6%
7.7%
7.6%
5.0%
 
Gearing
0–70%
17.3%
19.8%
25.2%
30.4%

 

Lassila & Tikanoja plc

  • Valimotie 27
    P.O. Box 28
    FIN-00380 Helsinki

 

  • Telephone +358 10 636 111
    Fax +358 10 636 2800
    Business ID 1680140-0