Mar 10, 2023
Proventia Group Corporation's Financial Statements release Jan-Dec 2022
January–December 2022 in brief
- The Group’s net sales increased by 11.0% from the previous year to EUR 51.7 (46.6) million.
- Operating profit was EUR 1.9 (4.0) million.
- Profit for the period was EUR 1.5 (3.2) million.
- The Group had 196 (163) employees at the end of December. Of these, 149 worked in Finland, 44 in the Czech Republic and 3 in the UK.
October–December 2022 in brief
- The Group’s net sales decreased by 8.4% from the previous year to EUR 12.5 (11.5) million.
- Operating profit was EUR 0.5 (0.5) million.
- Profit for the period was EUR 0.5 (0.4) million.
(The figures in brackets refer to the same period in the previous year.)
President and CEO Jari Lotvonen:
Our net sales increased by 11 percent despite challenging market conditions. We met the demand in full, but challenges in the availability of components continued to be reflected in our customers’ production volumes, which limited growth. During the year, the impacts of the Russian attack on Ukraine were strongly reflected in the global economy. Uncertainty and geopolitical tension continued throughout the year, and inflation accelerated. The general increase in costs reduced profitability. The operating profit decreased from 9 percent in the comparison period to 4 percent in 2022.
During 2022, net sales of the Test Solutions business increased by 69 percent compared with the previous year. The growth was driven by individual large projects. Despite the strong net sales growth, the profitability of projects was significantly lower than estimated at the time of the sale. The increase in the prices of materials and more demanding new customer projects significantly reduced the profitability of the Test Solutions business year-on-year, which had a significant impact on the group’s result as a whole. Improving the profitability of the Test Solutions business is our key goal for 2023.
In sales, we decided to focus on products needed in the development and testing of batteries and hydrogen fuel cells. During 2022, we received new orders for a test solution for battery cell performance and lifetime testing, as well as a test chamber for hydrogen fuel cell systems.
Net sales in the Powertrain Systems and Components business remained close to the previous year’s level. Growth was limited by challenges in the availability of customers’ components and materials. During 2022, the Powertrain Systems and Components business mainly prepared for starting the production of customer projects and ensuring delivery capacity.
We entered into several significant agreements concerning the design and manufacture of emission control systems for our OEM non-road machine customers. The development of these products started in 2022. The projects will proceed to production at the Czech plant in 2024 and thereafter. In addition, emission control technology designed by Proventia was licensed for manufacture at a third-party plant from 2025 onwards.
In product development, we have started preparing for the requirements of the Tier 5 and EU Stage VI emission legislation, which are expected to enter into force between 2028 and 2030. The importance of smart control will further increase in the operation of future emission systems, and we will continue to invest in control unit development.
In the retrofit customer segment, demand was weak during the 2022 financial year as expected, and net sales decreased. In major European cities, retrofit projects decreased in public transport, but field tests have started in Asia that may develop into projects and lead to a significant increase in net sales in this customer segment. The demand for retrofit systems for non-road machines has also increased.
The need for thermal insulation solutions has increased, and a significant portion of net sales came from insulation for engine and pipe components. The demand for thermal insulation is increasing with energy efficiency requirements and the demand for emission control systems. We have developed insulation technology and have invested in using 3D printing in the manufacture of tools and prototypes, for example. We are also expanding our thermal insulation production to the Czech Republic.
In electric powertrain products, we focused on the battery systems of non-road machines. At the Bauma trade fair in October, we launched a new battery product, the ePRO500+ battery, which is suitable for hybrid and electric non-road machines and can also be used alongside fuel cells in hydrogen-powered non-road machines. With our customers, we have started pilot projects on battery system product development. We believe that battery systems will become a significant power source for non-road machines in the future, alongside internal combustion engines.
We have invested in the ramp-up of our Czech plant, and we produced serial production test series in the last quarter of 2022. In the coming years, production at the Czech plant will multiply when products developed in previous years proceed to serial production from 2023 onwards. As expected, our investments in ensuring production and delivery capacity have impacted our profitability in 2022.
We have continued the development of our sustainability work, which started in 2021. We recognise the significance of sustainability for our business operations, and we are committed to developing our operations in line with the principles of sustainable development.
We are participating in the GREEF project, which aims to help companies reduce the environmental impacts of their operations and products and to drive companies towards the goals of low-carbon operations and growth in exports.
In 2022, Proventia’s sustainability was verified for the first time in line with the international EcoVadis rating system. We achieved a Silver rating. We calculated greenhouse emissions from our own operations and purchased energy in 2022. We are also developing the calculation of our indirect emissions. We have also actively sought to commit our suppliers to sustainability.
In the short term, global turbulence and the availability of components may slow growth and reduce profitability. In the long term, the company’s markets are expected to develop positively. Stricter emission regulations, electrification, hydrogen and renewable fuels support Proventia’s long-term strategy and growth.
The need to develop and test new technologies and power sources continues to increase in test system markets. In its Test Solutions business, Proventia focuses on improving profitability. In marketing and sales, the company focuses on test solutions for batteries and hydrogen fuel cells.
The green transition in non-road machines supports growth in Proventia’s Powertrain Systems and Components business. Emission regulations will become even stricter globally. The non-road machinery market is growing, and emission control systems will be applied in an increasing number of engine categories. Fossil fuels will be replaced with renewable fuels and will enable the use of internal combustion engines until the end of their life cycles. In recent years, Proventia has invested in product development in customer projects and in increasing production capacity at its Czech plant. Projects will proceed to serial production from 2023 onwards, which will be reflected in higher net sales in the coming years.
Electrification and the emergence of hydrogen technology will increase the need for battery technology in non-road machines.
Proventia is actively involved in developing new technologies to reduce the local and carbon dioxide emissions of non-road machines, regardless of the technology used as a power source.
Net sales and the operating profit in 2023 are expected to increase from 2022. In 2022, net sales were EUR 51.7 million, and the operating profit was EUR 1.9 million. However, it is still difficult to make estimates, and the current market conditions are increasing uncertainties over the future.
Attachment: Financial statements release (PDF)
CEO, Proventia Group Oyj
puh. 0400 68 4072
Proventia Group is an internationally operating Finnish technology company, which provides solutions and services in the engine, machine and vehicle industries to combat climate change and to solve the air pollution problem. Proventia develops and manufactures modular test facilities for the product development of batteries and vehicles as well as systems and components that reduce the emissions and increase the energy efficiency of non-road machines. Proventia takes people, the environment and future generations into account in all of its operations, with zero emissions being the company's vision.
The company employs approximately 190 industry professionals in Finland, the Czech Republic, and the UK. www.proventia.com