The outbreak of the corona pandemic had a major impact on the operating environment in 2020. The overall market and demand situation started to weaken in mid-March. Thereafter Caverion experienced more workforce absences as well as more work site delays and closures especially in April-May. Most of Caverion’s operating countries were also locked down in the early part of the second quarter, after which government restrictions and the impacts on Caverion’s business started to clearly ease up in June. At the beginning of the third quarter, the corona pandemic was well contained in most Caverion countries, after which the second wave of corona became more visible at the end of the third quarter, again increasing the risk exposure. In the fourth quarter the situation was more stable compared to the second quarter, but the corona pandemic impacted operations more than in the third quarter. This was visible particularly in the Projects business, whereas the Services business remained more stable. On a positive note, Caverion did not experience any major constraints in the supply chain during the year.
In order to minimise the negative financial impacts from the pandemic on its operations, Caverion implemented cost saving actions and adapted its resources. In most of the operating countries, the key flexibility measures were the use of temporary lay-offs and the reduction of subcontracting. Furthermore, due to the lengthened corona crisis and the resulting downturn, Caverion carried out proactive streamlining and adjustments of its operations during the fourth quarter. These actions included personnel reductions, reorganisation and operating model development. Due to the increased uncertainty around the market outlook as a result of the corona pandemic, the President and CEO and the top management of Caverion also decided to voluntarily lower their compensation for 2020 in the spring of 2020.
The impacts of the first wave of the corona pandemic were more visible between mid-March and the end of May, at which time there were site access restrictions and less ad-hoc works, negatively impacting revenue and profitability. Government restrictions and the impacts on Caverion’s business started to clearly ease up in June. At the beginning of the third quarter, the corona pandemic was well contained in most Caverion countries, after which the second wave of corona became more visible at the end of the third quarter. In the fourth quarter, however, market demand in Services was rather stable and comparable to the third quarter. In division Industry, the corona situation postponed certain annual shutdowns in Finland until 2021 despite increased activity in the fourth quarter. Overall pricing environment tightened somewhat in Services as of the second quarter.
There was still a general increasing interest for services supporting sustainability, such as energy management and advisory services.
The impacts of the first wave of the corona pandemic were more visible between mid-March and the end of May. There were more workforce absences as well as more work site delays and closures. However, the previous order backlog supported the Projects business revenue in the second quarter.
At the beginning of the third quarter, the corona pandemic was well contained in most Caverion countries, after which the second wave of corona became more visible at the end of the third quarter. In the fourth quarter, there was somewhat further reduced business activity in Projects.
The demand for new construction projects was negatively impacted by the corona pandemic, however less for renovation construction. Pricing environment generally tightened in Projects as of the second quarter. Stimulus packages did not yet impact general demand during 2020.
Built environments are a major source of carbon emissions today:
We consider digitalisation and sustainability as the key themes driving our future growth. Sustainability needs, in particular, are growing rapidly. Furthermore, other megatrends such as increasing use of technology and urbanisation are supporting Caverion’s growth.
Changes in the EU legislation (EBPD) with increased focus on sustainability and carbon neutrality are driving industry growth. Government and EU-level corona-related stimulus packages are focusing development efforts toward sustainable investments over the coming years. Customers are expecting greener solutions and sustainability is becoming a decision criterion.
New consulting services (such as SRI, energy efficiency) and new digital services offer our customers:
We have taken into account the EU taxonomy requirements applicable to listed companies as of the beginning of 2022. The next goal is to align non-financial reporting and targets with the EU taxonomy. We will publish the first taxonomy reporting regarding the year 2021 in 2022.
New data-driven analytics and new technologies emerging enable developing smart, resilient buildings and cities that are technologically enabled, connected and agile and that both improve the operational efficiency of the buildings/cities and enhance the quality of life for theirs for residents.
Further digitalisation will benefit us in many ways through our solutions: