Lassila & Tikanoja plc

Lassila & Tikanoja plc: Interim Report 1 January–31 March 2025

Lassila & Tikanoja plc
Stock exchange release
29 April 2025 at 8:00 a.m

Lassila & Tikanoja plc: Interim Report 1 January–31 March 2025

GOOD START FOR THE YEAR IN FACILITY SERVICES

Unless otherwise mentioned, the figures in brackets refer to the corresponding period in the previous year.

• Net sales for the first quarter were EUR 175.5 million (185.0). Net sales decreased by 5.1%.
• Adjusted operating profit was EUR 2.7 million (0.0), representing 1.5% (0.0) of net sales.  Operating profit was EUR 3.7 million (-1.7), representing 2.1% (-0.9) of net sales.
• Net cash flow from operating activities after investments was EUR 6.6 million (-9.4).
• Earnings per share were EUR 0.09 (-0.02) and net cash flow from operating activities after investments per share was EUR 0.17 (-0.25).
• The preparation for the partial demerger, initiated in December 2024, progressed as planned during the review period.

Outlook for the year 2025

Net sales in 2025 are estimated to be at the same level as in the previous year, and adjusted operating profit is estimated to be at the same level or better compared to the previous year.

PRESIDENT AND CEO EERO HAUTANIEMI:

“Net sales for the first quarter of 2025 totalled EUR 175.5 million (185.0). Adjusted operating profit was EUR 2.7 million (0.0). Adjusted operating profit improved substantially in Facility Services Finland and Sweden and remained at the same level as the comparison period in Circular Economy Business. Net cash flow from operating activities after investments was strong and improved by EUR 16 million from the comparison period.

In Circular Economy business, profitability remained at the level of the comparison period, despite the challenging business environment affecting the demand for circular economy services in the first quarter. Especially in the construction industry customer segment, the demand for recycling and waste management services decreased compared to the comparison period. In the hazardous waste business line, demand remained stable. In the environmental construction business, the weak economic situation in the Finnish construction market was reflected in a decrease in the volumes of material flows delivered to material treatment centres. The efficiency measures implemented in 2024 helped to adjust the costs of service production to the current market situation.

In Facility Services businesses, profitability improved despite the decrease in net sales. In Facility Services Finland, the decrease in net sales was affected by a mild winter as well as planned optimisation of the customer portfolio. The demand for digital services, such as data-driven cleaning services and AI-assisted energy efficiency services, remained strong. Measures to streamline the cost structure and efficiency of the operations continued, leading to a clear improvement in the division's operating profit. In Facility Services Sweden, operating loss decreased as expected during the first quarter. Measures to simplify operating models and adjust the cost level continued. The new customer contracts won in late 2024, along with ongoing efforts to enhance profitability, provide a solid foundation for achieving a turnaround in Facility Services Sweden in 2025.

In December 2024, the company initiated the planning of the possible separation of its circular economy businesses and facility services businesses into two independent listed companies. The plan is to separate the circular economy businesses into a newly listed company through a partial demerger of Lassila & Tikanoja plc. It is expected that the separation of the circular economy and facility services businesses could increase shareholder value by enabling both businesses to pursue their own strategies and growth opportunities more effectively. The preparation for the partial demerger progressed as planned during the review period.

Lassila & Tikanoja renewed its operating model in 2024. Continuing the operating model work, the company launched an efficiency programme aiming for improved performance at the beginning of 2025, encompassing both the circular economy and facility services businesses. The efficiency programme aims for an annual performance improvement of at least EUR 8 million by the end of 2026 compared to the 2023 level, including the impact on the annual cost level of having two separate listed companies. During the review period, the measures of the efficiency programme progressed as planned.”

GROUP NET SALES AND FINANCIAL PERFORMANCE

January–March
Net sales for the first quarter totalled EUR 175.5 million (185.0), representing a year-on-year decrease of 5.1%. The organic decrease in net sales was 5.2%. Adjusted operating profit was EUR 2.7 million (0.0), representing 1.5% (0.0) of net sales. Operating profit was EUR 3.7 million (-1.7), representing 2.1% (-0.9) of net sales. Operating profit included items affecting comparability totalling EUR 1.0 million. Operating profit was increased by a change of EUR 1.6 million in the fair value of the deferred consideration related to the acquisition of Sand & Vattenbläst i Tyringe AB (“SVB”). Operating profit was decreased by costs affecting comparability totalling EUR 0.6 million consisting mainly of expenses arising from the preparation of the partial demerger, expenses related to business acquisitions as well as expenses related to the ongoing efficiency programme. Earnings per share were EUR 0.09 (-0.02).

Net sales decreased in all divisions. Adjusted operating profit improved in Facility Services Finland and Sweden and remained at the same level as the comparison period in Circular Economy Business. Operating profit improved in all divisions.

The share of the profit of the joint venture Laania Oy amounted to EUR 1.7 million (2.1) in the first quarter of the year.
  

¹ The figure for the first quarter of 2024 has been adjusted. The adjustment relates to the correction of an error made in the 2024 financial statements concerning the figures for 2023. More information about the error correction is presented in the 2024 consolidated financial statements.

NET SALES AND OPERATING PROFIT BY DIVISION


Circular Economy Business


January–March
The net sales of the Circular Economy Business for the first quarter were EUR 89.5 million (93.0). Adjusted operating profit was EUR 2.5 million (2.6). Operating profit was EUR 4.1 million (2.3). Operating profit was increased by a change of EUR 1.6 (-0.2) million in the fair value of the deferred consideration related to the acquisition of Sand & Vattenbläst i Tyringe AB (“SVB”). The change in the fair value is due to the increase of SVB’s net interest-bearing liabilities in the first quarter of 2025. 

In Circular Economy business, profitability remained at the level of the comparison period, despite the challenging business environment affecting the demand for circular economy services in the first quarter. Especially in the construction industry customer segment, the demand for recycling and waste management services decreased compared to the comparison period. In the hazardous waste business line, demand remained stable. In the environmental construction business, the weak economic situation in the Finnish construction market was reflected in a decrease in the volumes of material flows delivered to material treatment centres. The efficiency measures implemented in 2024 helped to adjust the costs of service production to the current market situation.

Facility Services Finland

January–March
The Facility Services Finland division’s net sales for the first quarter totalled EUR 58.3 million (63.3). Operating profit was EUR 2.1 million (-0.1).

In Facility Services Finland, the decrease in net sales was affected by a mild winter as well as planned optimisation of the customer portfolio. The demand for digital services, such as data-driven cleaning services and AI-assisted energy efficiency services, remained strong. Measures to streamline the cost structure and efficiency of the operations continued, leading to a clear improvement in the division's operating profit. In the cleaning business, profitability remained stable, and in property maintenance business, profitability improved substantially compared to the comparison period.

Facility Services Sweden

January–March
The net sales of Facility Services Sweden amounted to EUR 28.3 million (29.5) in the first quarter of 2025. Operating profit was EUR -1.5 million (-2.1). Operating profit before the amortisation of purchase price allocations of acquisitions was EUR -1.1 million (-1.8).

In Facility Services Sweden, operating loss decreased as expected during the first quarter. Measures to simplify operating models and adjust the cost level continued. The new customer contracts won in late 2024, along with ongoing efforts to enhance profitability, provide a solid foundation for achieving a turnaround in 2025.

FINANCING

In the first quarter of 2025, net cash flow from operating activities totalled EUR 10.9 million (1.9). Net cash flow from operating activities after investments totalled EUR 6.6 million (-9.4). During the review period, a total of EUR 0.2 million in working capital was tied up (6.2 tied up). Net cash flow from operating activities after investments for the review period was improved by positive development in profitability and net working capital as well as decrease in investments year-on-year.

At the end of the review period, interest-bearing liabilities amounted to EUR 184.2 million (208.3). Net interest-bearing liabilities totalled EUR 148.5 million (180.3). The average interest rate on long-term loans, excluding lease liabilities, was 3.4% (4.0%).

The EUR 100.0 million commercial paper programme was unused at the end of the review period (EUR 10 million in use in the comparison period). The account limit totalling EUR 10.0 million and the committed credit limit totalling EUR 40.0 million were not in use, as was the case in the comparison period.

Net financial expenses totalled EUR -1.8 million (-1.8). The effect of the discounting of environmental provisions decreased net financial expenses by EUR 0.3 million in the comparison period. The effect of exchange rate changes on net financial expenses was 0.2 million (-0.0). Net financial expenses were 1.0% (1.0) of net sales.

The equity ratio was 33.4% (33.3) and the gearing ratio was 76.1% (86.1). The Group’s total equity amounted to EUR 195.2 million (209.3). Equity was reduced by dividends of EUR 19.1 million distributed for the financial year 2024, which were paid to shareholders on 7 April 2025, in accordance with the decision of the Annual General Meeting held on 27 March 2025.Translation differences caused by changes in the exchange rate of the Swedish krona affected equity by EUR 1.6 million. Cash and cash equivalents at the balance sheet date totalled EUR 35.6 million (28.0).

DIVIDEND DISTRIBUTION

The Annual General Meeting held on 27 March 2025 resolved that a dividend of EUR 0.50 per share, totalling EUR 19.1 million, be paid on the basis of the balance sheet that was adopted for the financial year 2024. The dividend was paid to shareholders on 7 April 2025.

CAPITAL EXPENDITURE

Gross capital expenditure for the review period totalled EUR 3.8 million (11.1). The capital expenditure consisted primarily of machine and equipment purchases, as well as investments in information systems. Investments in the first quarter were approximately EUR 4 million below the planned level due to a deferral to subsequent quarters. Acquisitions accounted for approximately EUR 2 million of the gross capital expenditure in the comparison period.

SUSTAINABILITY

In March, Lassila & Tikanoja published its Annual Report 2024, which includes a sustainability report in accordance with the Corporate Sustainability Reporting Directive (CSRD). L&T’s sustainability indicator, carbon footprint, developed more favourably than expected. The reduction in carbon footprint can be attributed to the increased use of renewable fuels and unusually warm winter.

Progress towards sustainability targets

¹ Figures for the first quarter of 2024 have been adjusted.

PERSONNEL

In the first quarter of 2025, the average number of employees converted into full-time equivalents was 5,857 (6,305). At the end of the review period, L&T had a total of 7,519 (7,686) full-time and part-time employees. The increase in personnel in Facility Services Sweden was primarily due to the commencement of two new customer contracts.

SHARES AND SHARE CAPITAL

Traded volume and price

The volume of trading in L&T’s shares during the review period was 1.7 million shares, which represents 4.3% (5.5) of the average number of outstanding shares. The value of trading was EUR 14.2 million (19.6). The highest share price was EUR 9.14 and the lowest EUR 7.88. The closing price was EUR 8.37. At the end of the review period, the market capitalisation excluding the shares held by the company was EUR 319.7 million (335.9).

Own shares

At the end of the period, the company held 601,542 of its own shares, representing 1.6% of all shares and votes.

Share capital and number of shares

The company’s registered share capital amounts to EUR 19,399,437 and the number of outstanding shares was 38,197,332 at the end of the review period. The average number of shares excluding the shares held by the company was 38,166,416.

Shareholders

At the end of the financial year, the company had 24,317 (25,255) shareholders. Nominee-registered holdings accounted for 13.9% (8.7) of the total number of shares.

Flagging notifications

Lassila & Tikanoja received a notification from Nordea Funds Ltd on 31 January 2025, according to which its voting rights in Lassila & Tikanoja increased above 5 percent on 30 January 2025. Nordea Funds Ltd’s direct holding in Lassila & Tikanoja is 1,912,244 shares, which is 4.93% of Lassila & Tikanoja’s total shares and votes increased to 1,946,154, which is 5,02% of total voting rights.

Lassila & Tikanoja received a notification from Nordea Funds Ltd on 17 March 2025, according to which its voting rights in Lassila & Tikanoja decreased below 5 percent on 14 March 2025. Nordea Funds Ltd’s direct holding in Lassila & Tikanoja is less than 5% of Lassila & Tikanoja’s total shares and votes decreased below 5% of total voting rights.

Authorisations for the Board of Directors

The Annual General Meeting held on 27 March 2025 authorised Lassila & Tikanoja plc’s Board of Directors to decide on the repurchase of the company’s own shares using the company’s unrestricted equity. In addition, the Annual General Meeting authorised the Board of Directors to decide on a share issue and the issuance of special rights entitling their holders to shares.

The Board of Directors is authorised to purchase a maximum of 2,000,000 company shares (5.2% of the total number of shares). The repurchase authorisation is effective for 18 months.

The Board of Directors is authorised to decide on the issuance of new shares or shares which may be held by the company through a share issue and/or issuance of option rights or other special rights conferring entitlement to shares, referred to in Chapter 10, Section 1 of the Finnish Companies Act, so that under the authorisation, a maximum of 2,000,000 shares (5.2% of the total number of shares) may be issued and/or conveyed. The authorisation is effective for 18 months.

RESOLUTIONS BY THE ANNUAL GENERAL MEETING
The Annual General Meeting of Lassila & Tikanoja plc, which was held on 27 March 2025, adopted the financial statements and consolidated financial statements for the financial year 2024, discharged the members of the Board of Directors and the President and CEO from liability and adopted the Remuneration Report for the Company’s governing bodies. The Annual General Meeting resolved on the use of the profit shown on the balance sheet and the payment of dividend, the amendment of the Articles of Association of the Company, the composition and remuneration of the Board of Directors, the election and remuneration of the Auditor, the election of the Sustainability Reporting Assurance Provider and authorising the Board of Directors to decide on the repurchase of the Company’s own shares and on a share issue and the issuance of special rights entitling to shares.
The Annual General Meeting resolved that a dividend of EUR 0.50 per share be paid on the basis of the balance sheet adopted for the financial year 2024. It was decided that the dividend be paid on 7 April 2025.
The Annual General Meeting resolved, in accordance with the Board's proposal, to amend the Articles 4, 16 and 13 of the Company’s Articles of Association as follows:

• Article 4 is amended so that the Board of Directors may consist of no less than three (3) and no more than eight (8) members, instead of the previous no more than seven (7) members.
• Article 6 is amended so that in addition to the auditor, the Company shall have a sustainability reporting assurance provider.
• Article 13 is amended so that the assurance report on sustainability reporting shall be presented at the Annual General Meeting and the Annual General Meeting shall elect a sustainability reporting assurance provider, in addition to the issues specified in the previous Article 13 of the Articles of Association.

The Annual General Meeting confirmed the number of members of the Board of Directors as eight (8) in accordance with the proposal of the Shareholders’ Nomination Board. Teemu Kangas-Kärki, Sakari Lassila, Jukka Leinonen, Juuso Maijala, Anni Ronkainen, and Pasi Tolppanen were re-elected and Tuija Kalpala as well as Anna-Maria Tuominen-Reini were elected as new members to the Board until the end of the following Annual General Meeting. Jukka Leinonen was elected as the Chairman of the Board and Sakari Lassila was elected as the Vice Chairman.
The Annual General Meeting elected PricewaterhouseCoopers Oy, Authorised Public Accountants, as the auditor of the Company until the close of the next Annual General Meeting. PricewaterhouseCoopers Oy has announced that it will name Samuli Perälä, Authorised Public Accountant, as the auditor with principal responsibility.
The Annual General Meeting elected PricewaterhouseCoopers Oy, Authorised Sustainability Audit Firm, as the sustainability reporting assurance provider of the Company until the close of the next Annual General Meeting. PricewaterhouseCoopers Oy has announced that it will name Samuli Perälä, Authorised Sustainability Auditor, as the responsible authorised sustainability auditor.
The resolutions of the Annual General Meeting were announced in more detail in a stock exchange release on 27 March 2025.

BOARD OF DIRECTORS

The members of Lassila & Tikanoja plc’s Board of Directors are Tuija Kalpala, Teemu Kangas-Kärki, Sakari Lassila, Jukka Leinonen, Juuso Maijala, Anni Ronkainen, Pasi Tolppanen and Anna-Maria Tuominen-Reini. Lassila & Tikanoja plc’s Annual General Meeting held on 27 March 2025 elected Jukka Leinonen as the Chairman of the Board and Sakari Lassila as the Vice Chairman.

In its constitutive meeting held after the Annual General Meeting, the Board of Directors elected the members of the Audit Committee and the Personnel and Sustainability Committee from amongst its members. Teemu Kangas-Kärki (Chairman), Sakari Lassila, Tuija Kalpala and Anna-Maria Tuominen-Reini were elected to the Audit Committee. Jukka Leinonen (Chairman), Juuso Maijala, Pasi Tolppanen and Anni Ronkainen were elected to the Personnel and Sustainability Committee.

PARTIAL DEMERGER AND THE EFFICIENCY PROGRAMME

On 13 December 2024, the company announced, that the Board of Directors of Lassila & Tikanoja plc has decided to initiate the planning of the possible separation of its circular economy businesses Environmental and Industrial Services and facility services businesses into two independent listed companies. The plan is to separate the circular economy businesses into a newly listed company through a partial demerger of Lassila & Tikanoja plc.

According to the Board of Directors’ preliminary assessment, the separation of the circular economy and facility services businesses could increase shareholder value by enabling both businesses to pursue their own strategies and growth opportunities more effectively.

The Board of Directors of Lassila & Tikanoja estimates that planning the possible partial demerger will take approximately 12 months starting from December 2024. The preparation for the partial demerger progressed as planned during the review period. The possible partial demerger and listing of the circular economy businesses requires the approval of the Extraordinary General Meeting of Lassila & Tikanoja plc.

As part of the preparation for the partial demerger, Lassila & Tikanoja has assessed the financial structure of the potential separate listed companies. According to preliminary estimates, the EUR 75 million bond issued by Lassila & Tikanoja plc would be transferred to the receiving company, i.e., the Circular Economy Business company, in the demerger.

Lassila & Tikanoja renewed its operating model in 2024. Continuing the operating model work, the company launched an efficiency programme aiming for improved performance at the beginning of 2025, encompassing both the circular economy and facility services businesses. The efficiency programme aims for an annual performance improvement of at least EUR 8 million by the end of 2026 compared to the 2023 level, including the impact on the annual cost level of having two separate listed companies. During the review period, the measures of the efficiency programme progressed as planned.

EVENTS AFTER THE REVIEW PERIOD

Lassila & Tikanoja received a notification from Nordea Funds Ltd on 7 April 2025, according to which its voting rights in Lassila & Tikanoja increased to 5 percent on 4 April 2025. Nordea Funds Ltd’s direct holding in Lassila & Tikanoja is 1,911,570.00 shares, which is 4.92% of Lassila & Tikanoja’s total shares and votes increased to 1,942,180.00, which is 5% of total voting rights.

NEAR-TERM RISKS AND UNCERTAINTIES

General economic uncertainty may affect the level of economic activity among customers, which may reduce the demand for L&T’s services.

Changes in costs, such as the price of fuel and energy and interest rates, may have an impact on the company’s financial performance.

The Finnish Waste Act was amended in July 2021. Under the reforms to the Waste Act, municipalities take on a larger role in organising the collection of packaging materials and biowaste from housing properties. As a consequence of the reform, L&T’s direct customer agreements with housing properties on the separate collection of packaging waste and biowaste will be transferred to municipalities for competitive bidding gradually between 1 July 2022 and 1 July 2025. L&T estimates that, as a result of municipalisation, approximately EUR 30 million of the Finnish waste management market will be moved out of the scope of free competition between 2024 and 2026. L&T participates in the competitive tendering of municipal contracts and is a significant operator in municipal contracts. Nevertheless, L&T estimates that the overall impact of the change will be negative for the company.

The company has several ERP system renewal projects under way. Temporary additional costs arising from system deployments and establishing the operating model may weigh down the company’s result.

Production costs may be increased by regional challenges related to employee turnover and labour availability.

The geopolitical situation involves continued uncertainty due to Russia’s war of aggression and the U.S. customs policy. The indirect impacts on overall economic activity in Finland and Sweden may have a negative impact on net sales and profit.

Lassila & Tikanoja announced in December 2024 that the company’s Board of Directors has decided to initiate the planning for the separation of the company’s circular economy businesses, i.e., Environmental and Industrial services, and facility services businesses into two independent listed companies, with the circular economy businesses being separated into a new listed company. The planning and related measures for the partial demerger may include risks related to, for example, the retention of skilled personnel, customer relationships, costs, and the execution of potential transactions.

The Group company Lassila & Tikanoja FM AB is a claimant and a defendant in legal proceedings in Sweden concerning unpaid receivables invoiced from a former customer of L&T. In June 2022, Lassila & Tikanoja FM AB took legal action in the District Court of Solna against the former customer company of L&T, demanding payment for unpaid receivables. At the end of the review period, the amount of receivables on the company’s balance sheet was approximately EUR 0.7 million. The former L&T customer company in question has rejected Lassila & Tikanoja FM AB’s claims and the payment obligation, and brought a counterclaim demanding compensation totalling approximately SEK 144 million from Lassila & Tikanoja FM AB. The dispute is still pending. Lassila & Tikanoja considers the counterclaim to be without merit and has not recognised any provisions in relation to it.
      
More detailed information on Lassila & Tikanoja’s risks and risk management is provided in the 2024 Annual Review and in the Report by the Board of Directors and the consolidated financial statements.

Helsinki 28 April 2025
LASSILA & TIKANOJA PLC

Board of Directors
Eero Hautaniemi
President and CEO

For additional information, please contact:
Eero Hautaniemi, President and CEO, tel. +358 10 636 2810
Joni Sorsanen, CFO, tel. +358 50 443 3045

Lassila & Tikanoja is a service company that is putting the circular economy into practice. Together with our customers, we keep materials, manufacturing sites and properties in productive use for as long as possible and we enhance the use of raw materials and energy. This is to create more value with the circular economy for our customers, personnel and society in a broader sense. Achieving this also means growth in value for our shareholders. Our objective is to continuously grow our actions’ carbon handprint, our positive effect on the climate. We assume our social responsibility by looking after the work ability of our personnel as well as offering jobs to those who are struggling to find employment, for example. With operations in Finland and Sweden, L&T employs approximately 7,400 people. Net sales in 2024 amounted to EUR 770.7 million. L&T is listed on Nasdaq Helsinki.

Distribution:
Nasdaq Helsinki
Major media
www.lt.fi/en/

Attachment

• Lassila-Tikanoja-Interim-Report-Q1-2025