Group net sales and financial performance
Net sales for 2016 increased by 2.4% to EUR 661.8 million (EUR 646.3 million). Operating profit totalled EUR 50.5 million (EUR 49.9 million), representing 7.6% (7.7%) of net sales. Earnings per share were EUR 1.13 (EUR 0.98).
Net sales grew by 6.6% in Industrial Services organically, 1.9% in Facility Services, mostly organically, and 3.2% in Environmental Services, due to acquisitions. The net sales of the Renewable Energy Sources division declined by 6.6% due to the low demand for wood-based fuels.
Profitability improved particularly in Facility Services and was also higher than in the comparison period in Industrial Services. The operating profit of Environmental Services and Renewable Energy Sources showed a substantial decline.
The Group’s earnings per share was favourably affected in the second quarter by a legally valid decision handed down by the Administrative Court, according to which the payment of approximately EUR 16.7 million made by the company in 2014 under the L&T Recoil Oy guarantee commitment is tax-deductible as far as the payment is not available from the bankrupt's estate. In previous financial reports, the company has treated the payment as a non-tax deductible item due to the matter being unfinished. The decision had a favourable impact of EUR 0.09 on earnings per share.
The Environmental Services division’s full-year net sales grew by 3.2% to EUR 264.8 million (EUR 256.5 million). Operating profit totalled EUR 31.3 million (EUR 35.8 million).
Previously completed acquisitions and stronger demand for waste management and in the construction sector in particular increased the division’s net sales.
The division’s operating profit was affected by significant changes in the business environment, such as a decline in the market for recyclable paper and the responsibility for household packaging materials being shifted to producers. The volumes and prices of secondary raw materials and solid recovered fuels were also at a low level.
The Facility Services division’s full-year net sales grew by 6.6% to EUR 82.1 million (EUR 77.0 million). Operating profit totalled EUR 7.8 million (EUR 6.8 million).
The division’s net sales grew particularly in environmental construction. Net sales also increased in process cleaning and environmental construction. The net sales of hazardous waste management remained at the previous year’s level. The division’s growth was entirely organic.
Profitability increased in all service lines, especially in environmental construction. Operating profit improved substantially in process cleaning and sewer maintenance. The improvement in profitability was made possible by strong demand and the enhanced efficiency of operations.
The Facility Services division’s full-year net sales grew by 1.9% to EUR 288.3 million (EUR 282.9 million). Operating profit amounted to EUR 13.5 million (EUR 8.1 million).
Net sales grew in renovation services, maintenance of technical systems and cleaning, but declined in property maintenance.
The Facility Services division’s other service lines substantially improved their profitability thanks to efficiency improvement measures, but the profitability of cleaning declined notably as a result of price competition remaining intense. The recovery of the construction market was reflected in higher demand for renovation services and maintenance of technical systems.
Renewable Energy Sources
The full-year net sales of the Renewable Energy Sources division were down by 6.6% to EUR 36.8 million (EUR 39.4 million). Operating profit totalled EUR 1.5 million (EUR 2.1 million).
The year-on-year decline in the division’s net sales and operating profit was mainly attributable to the low demand for forest energy due to the short heating season, the weak profitability of electricity produced from wood chips and the low price of competing fuels.