CEO's review

CEO's review 2019

2019 was a year of reforms for Empower. We invested in increasing the efficiency of our operations, got the business operations of the new Smart Factory in Hamina off to a good start and increased the turnover of the Baltic region and Energy Intelligence business. In fact, the Energy Intelligence business area reached a level at which growing it further would require expanding into other countries. This led to a decision to divest the business. The turnover for the year fell strongly due to the end of project-like work for two major customers.

The profits of the Power business were burdened by losses from some projects and the fact that the year-start expectations did not match the number and volume of the realized projects. With regard to profit, the year could be referred to as a gap year of constricting project operations. However, several agreements with long-term customers were successfully extended. Going forward, we will focus on the construction of electrical substations, power lines and wind farms, and the outlook is very good in all of these markets. A total of 1,000 MW of new wind power alone will be added to the Finnish main grid, so the need for strengthening the main grid and adding new electrical substations is undergoing significant growth.

Our turnover in the Baltic countries increased slightly in 2019, and significant investments in the power line market will be made there. Investments in the Estonian railway network and investments by other Baltic countries in rail traffic promise us favorable expectations with regard to the Power business.

In the Connectivity business, the construction of the 5G network started in the fall, and strengthening the 4G network continued further. However, profit was burdened by investments in the optic fiber network being lower than expected. The future is looking better. Over the next couple of years, investments in mobile networks can be expected to increase further, in addition to which investments in the fiber network will increase.

The turnover of the Smart Industry business area decreased, which was mainly due to a contraction in projects realized for customers. The relative result, however, improved year-on-year. The work will continue with other operators, and both on-going customer negotiations and the long-term outlook are favorable.

Divestment of the Energy Intelligence business

The Energy Intelligence business increased by EUR 3 million. The company’s fifteen years of product development work has resulted in an energy information management system that is supreme of its kind. The next natural development phase was expansion in the Nordic and other European countries. However, the growth would require such big investments that divesting this business was seen as the best solution. We found a new owner for this service package that can realize the expansion strategy. The decision was made during 2019, the sale was closed in March 2020, and it will be completed during the summer 2020.

Digital solutions played an important role in product development in 2019. We worked hard to increase the efficiency of our internal operations with digital tools and modern operating methods. Now, many new solutions that increase our operational efficiency have gotten off to a good start. We are developing new kinds of digital products and product families also to sell them to customers based on agreements, thereby increasing our external turnover. During the second half of the year, we launched a few pilot projects on the new digital products with our customers, and they have progressed favorably. Our investments in this sector have been significant, and we believe in a significant growth in turnover from digital products going forward.

The focal point of research and development activities, as well as investments, were mainly in the Energy Intelligence business area and the development of digital solutions in 2019. The launch of the operations of the Smart Factory maintenance center in Hamina was a significant investment. The premises of the Hamina factory and digital modern solutions utilizing smart technology attracted a lot of positive attention. The maintenance and testing of electric motors and coiling business are well under way there, and sales negotiations on the remaining capacity are underway.

Together towards growth through determined work

The profit for the early spring and fall of 2019 was burdened by the fact that we worked hard to turn unprofitable operations to the black or bring them to a close. We succeeded well in these measures. As for the future, we believe that Empower’s expected relative profit will increase.

The balance sheet and liquidity will be improved by the confirmation of the Energy Intelligence sale, and the future of the remaining business operations seems promising in the market. The value of our overall investments will increase, and our order book is at a strong level for several years. The investments of the Power and Connectivity business areas are growing, and the Smart Industry businesses have great prerequisites for new service agreements and thereby growth in turnover. In fact, we are seeking growth in all businesses.

I want to take this opportunity to thank our customers, partners and skilled personnel for successful cooperation in 2019. The coronavirus pandemic that was a surprise to the entire world will cause its own challenges for 2020, but we firmly believe that we can resolve them together. We want to be part of building a smart society with digitization, smart solutions and long-term expertise.

Mikko Vaahersalo

CEO, Empower Group

Annual Report 2019

Empower Group's Annual Report and Financial Statements for 2019 can be downloaded as a PDF file.