We are opening a completely new chapter, in which we increasingly aim to make use of the opportunities provided by technological advances, digitalisation and building automation.
The new company provides an excellent opportunity for development
Caverion had a good and eventful year in 2013. It was characterised by great changes and new opportunities.
The most important event of the year was naturally the establishment of our new company at the end of June and the listing of our share in the Helsinki Stock Exchange. As an independent listed company, we can focus even better on what we excel in: providing user-friendly and energy-efficient solutions and services for properties and industry.
We started our independent journey from a good position and not from scratch: we already had a long history behind us and proven competence in our business segments and countries. A favourable outlook for service and maintenance, our position as a technical forerunner and the extensive potential for growth in German-speaking regions gave our new company a great start.
Developing the business across country borders
From the very beginning, our employees have received the new company with an open mind. I have been very happy to see the enthusiasm, energy and competence with which our employees have been building Caverion.
During the year we developed our business operations – service and maintenance business and project business – strongly across country borders. We initiated extensive development efforts to improve our efficiency but also to utilise the synergy that comes from the ideas and excellence that we have in our countries of operation.
Working together has already borne fruit: we have created joint processes, tools and service concepts. It is good to continue from here.
Positive signs in the market
The market for our services and solutions remained stable in 2013, despite the general uncertainty that characterised the world economy.
It is true that customers continued to be slow in making decisions on new investments, but positive signs could nevertheless be seen. After the stagnation experienced in 2012, new investments in building systems increased in 2013, and the situation in the project business market was relatively good in most of our countries. Stable demand for service and maintenance continued. The uncertain economic circumstances were mainly reflected in the lower demand for additional service and maintenance work. Demand for energy efficiency services continued steadily.
EBITDA improving according to plan
In our first half year of operation, we mainly concentrated on building the new company and improving profitability in Northern Europe through our own efficiency measures. We cut our fixed costs by streamlining the organisation and improved the efficiency of the processes and methods in our service business. Even though our EBITDA decreased compared with 2012, our profitability improved according to plan quarter by quarter throughout the year.
We focused on releasing working capital that was tied to operations and on improving our cash flow by means such as more efficient invoicing. By year-end, we had already achieved a very strong cash flow, which supported our financial position.
In Northern Europe, we selected our projects more carefully than before. This had a positive effect on our profitability, but at the same time it also decreased our revenue. Revenue in service and maintenance was lower than expected and the postponement of project start-ups in Germany also had an impact on revenue.
However, our order backlog at the end of the year was stronger than in 2012; growth was seen particularly in Central Europe. We expect the strengthened order backlog to have a positive effect on revenue development in the first half of 2014.
Focus on business that provides genuine added value
The key objective of our strategy for 2014–2016 is to improve profitability. By achieving this fundamental goal, we will have good opportunities to seek growth in service and maintenance, Design & Build projects and new advanced projects and services. In addition, the fragmented market provides opportunities for growth through selected acquisitions, particularly in German-speaking regions.
Benefitting from the opportunities of digitalisation
We have advanced to a stage where we need new skills and ideas. We are opening a completely new chapter, in which we increasingly aim to make use of the opportunities provided by technological advances, digitalisation and building automation. I welcome my successor Fredrik Strand with a positive and expectant mind. I firmly believe that he will bring to the company exactly the experience we need, particularly in the use of information technology as part of service business.
Our aim is to be known for our technological special expertise and use it to enhance our competitiveness.
Digitalisation is one of the key megatrends in our business, as is the increase of technology in buildings and the climate change-driven, increasing need for energy-efficient solutions. In fact, automation and remote monitoring are the keys to energy efficiency. Remote monitoring and control of building systems will enable maintenance of properties to be genuinely based on actual conditions.
More than 10,000 properties in six countries are already connected to Caverion’s property control room. We aim to expand the coverage of remote monitoring and systematically develop the content of these services.
Our future looks good. We believe that the market for our services and solutions will develop favourably.
Alongside service business, we will continue to develop our project business and, particularly, Design & Build projects. In addition to comprehensive deliveries, our strengths include our own solutions and technologies and in-house product development. Our arrowhead know-how includes technical systems for demanding properties, such as laboratories, hospitals and clean rooms.
In industrial services, demand for outsourced service and maintenance has picked up in the market, which will provide us with good opportunities to develop our services for industrial customers.
Occupational safety heading in the right direction
Good financial performance is essential for our existence. However, this does not mean that we are not able or willing to act responsibly at the same time.
For us, responsibility means that we strive to promote a sustainable, energy-efficient living environment with the products and services we offer to our customers, among other issues.
For our employees, we want to first and foremost offer a safe and healthy working environment, where everyone feels good and healthy. We have been investing in occupational safety for many years, and the number of occupational accidents has steadily decreased each year. I am very happy to say that the positive development continued in 2013 and the number of occupational accidents decreased from the previous year. There is still work to be done in this field, but the direction is the right one.
I want to warmly thank Caverion’s shareholders, customers, partners and employees for their trust and our journey together. Caverion’s strategic direction is clear: we aim to be the leading and most efficient building systems company in Europe. This goal is not a modest one, but I firmly believe that our company has excellent possibilities to be successful also in the future.