Tornator’s turnover reached €195M in 2023, up 18.4% from €164.6M in 2022, driven by higher timber deliveries, good prices; fair value of group's forest assets increased to €3.5B from €3.1B

February 12, 2024 (press release) –

(GlobeNewswire) - Tornator Oyj

Financial statements release 9 February 2024 at 8 am

Tornators strong growth continued in 2023 turnover reached 195 million, balance sheet grew to 3.6 billion

SUMMARY 1 JAN31 DEC 2023 Turnover increased to 194.9 million (+18.4%). High demand pushed up the selling price of wood.

The fair value of the groups forest assets increased to 3.5 billion (3.1 billion).

Operating profit at fair value was 442.9 million (572.0 million) and net profit was 340.6 million (541.9 million). Equity rose to 2.2 billion, and return on equity at fair value was 16.5%.

Adjusted operating profit amounted to 141.8 million (130.2 million), and the adjusted net profit stood at 96.7 million (94.8 million).

The equity ratio remained strong at 60.1% (60.4%).

The company acquired almost 24,000 hectares of new forest assets in Finland .

The Climate Program and Biodiversity Program moved forward with multiple projects underway.

In a difficult market environment, the company raised competitive long-term debt financing both in Finland and internationally.

Thanks to interest rate hedging, higher market interest rates led to a moderate increase in borrowing costs, with the average hedged interest rate at 2.5% (1.6%).

CEO Henrik Nieminen :

The combination of motivated staff, committed customers, and a strategy built on sustainability delivered record results. In the fight against climate change, sustainably managed forests offer excellent solutions in terms of both carbon sinks and carbon stocks. The rise in market interest rates and cost inflation had no material impact on the companys cash flows or the execution of its strategy. Tornators performance is more stable than in many cyclical businesses, and investment in the company has proven to be a very good hedge against inflation. War in Ukraine had no negative financial impact on the companys business and we continued to support Ukraine by enabling aid shipments to Ukrainians affected by the Russian invasion.

Tornators strong and diverse growth

Last year was a significant year of growth for Tornator in many senses.

The companys core business was strong, and thanks to the favourable market conditions the turnover reached a new high of almost EUR 200 million . Helped by the rising market prices of timber, our companies in Finland , Estonia and Romania achieved the best operating results in their history. We invested over EUR 100 million in future growth opportunities by acquiring almost 24,000 hectares of new forest in Finland . We also implemented our strategy through biological forest growth. We accelerated forest growth by timely fertilisation and forest management. We enabled renewable energy production on our lands through numerous wind and solar power agreements.

We also grew in terms of the number of employees: as Tornators operations expanded, we needed more professionals, and we successfully recruited plenty of new expertise to the company. We have become a major employer in sparsely populated areas, and Tornator ranks among the 25 largest corporate taxpayers in Finland . Naturally, growth and record results do not come about on their own, and we are aware that everyone at Tornator has worked hard to reach these challenging goals. We want to ensure that our operations and work are sustainable for our employees as well. To do this, we will continue to invest in the wellbeing of everyone in the company.

Existing and new partnerships as enablers of growth

Good turnover and growth would not be possible without excellent collaboration with our main customer, Stora Enso . In both timber trade and silviculture services, our strategic partnership worked as planned. Another crucial enabler of growth is finance, where Tornators key partners are its trusted banks. Despite difficult market conditions, in 2023 we participated vigorously in the capital markets by acquiring competitive, long-term debt financing both in Finland and internationally.

Contractors engaged in silviculture operations are an essential part of Tornators partner network. The development of contractor relationships is one of Tornators strategic goals. The company wishes to grow together with partners that share its values. We are determined to support our contractors in matters such as occupational safety. Digital development is a significant part of Tornators strategy, and we are aware that we cant do everything on our own. We need to extensively seek out expertise from outside our organisation as well. Our collaboration with our ICT partners remains strong. In addition, we work continuously with universities and research institutions by offering our forests as research laboratories, contributing to the development of climate and biodiversity work, among other benefits. In return, we gain access to external expertise and research data.

Good capabilities to meet increasing sustainability reporting requirements

It is crucial for the forestry sector to better demonstrate the positive climate impact of its operations and ensure the preservation of biodiversity. An example of this is the biodiversity plan published by the wood processing industry in 2023. As a pioneer in sustainable forestry, Tornator released its own climate and biodiversity programs as early as 2021, and they were actively implemented in the reporting year. We increased the amount of continuous cover forestry in our forests by identifying areas that are best suited for this method. As a result of the project, we increased the total area of continuous cover forest to 20,000 hectares. Additionally, the collaboration between Tornator , Stora Enso and WWF to protect running waters was continued. Among other improvements, this involves the removal of barriers to fish migration and the construction of spawning gravel beds.

Due to upcoming EU legislation, sustainability reporting requirements are becoming considerably tougher. Tornator conducted a double materiality assessment of the sustainability of its operations, identifying the main sustainability-related impacts along with their risks and opportunities. We investigated the perspectives of various stakeholders regarding the key sustainability factors. The responses clearly highlighted issues related to climate and biodiversity, which remain a long-term focus for Tornator . We are confident that Tornator is well prepared to operate and report in accordance with the new European standards.

Set up for success

Making predictions after a record year is difficult, and in an unstable economic climate there may be pressure on factors such as timber prices. There have been reports of layoffs in the forest industry, and disruptions in the Finnish labour market have been widespread since the beginning of the year. Nevertheless, Tornators outlook for 2024 is positive. We believe that the demand for wood will remain reasonable, and our goal is to grow profitably and sustainably. Tornators increased forest area has improved the companys wood sales opportunities. We increased sales to meet urgent customer needs after the start of the Russian invasion of Ukraine and the halt in timber imports. In the long term, Tornator will adhere to a sustainable felling plan, where sales volumes are consistent and annual felling remains below the growth rate of the forests. This creates optimal forest management conditions, ensuring the transfer of forest assets to future generations in an even more productive state. We continue to develop our business in silviculture services, and we lease land for wind and solar power generation.

Our strategy has proven to be effective, and no significant changes are considered necessary as the current strategy period concludes in 2024. However, it is clear that sustainability will be emphasised even more in the future. It will also allow the company to achieve a competitive advantage. Tornators management is firmly committed to promoting responsible business, and we continue to educate our personnel in this area.

Success is always the result of a combination of factors. I want to express warm thanks to our staff, customers and partners. Together, in 2024 we can add further chapters to the impressive story that is Tornator .

Henrik Nieminen , CEO

Turnover and results

The groups turnover was 194.9 million (164.6 million), a change of +18.4%. Timber deliveries increased, and the prices were good. Elevated market interest rates, inflation, and the Russian invasion of Ukraine did not have significant negative impacts on the companys business. A total of 91.6% of turnover, worth 178.5 million, consisted of timber sales income (147.8 million, or 89.8%). The turnover of silviculture services increased by 25.1%, reaching 14.5 million (11.6 million). In addition, the proceeds from land and plot sales amounted to 1.8 million (5.2 million). Other operating income of 4.9 million (11.7 million) includes income from various sources, such as land usage fees and rents, conservation area compensation, and the sale of soil materials. In the comparison year, other operating income also included income from realised and estimated future additional purchase prices of sold wind power projects. However, the change in revenue estimates was negative during the reporting period, and the amount is presented in other operating expenses.

Operating profit at fair value amounted to 442.9 million (572.0 million), and profit for the financial period was 340.6 million (541.9 million). The fair value of the forest assets increased significantly more in the comparison period than in the reporting period, explaining the decrease in operating profit. The change in the fair value of biological assets increased operating profit by +295.7 million (+462

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