Operating environment

Interim Report for 1 January –  30 September 2020 (published 5 November 2020)

The outbreak of the corona pandemic has 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 to 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, while the second wave of corona started to be more visible at the end of the third quarter, again increasing the risk exposure. On a positive note, Caverion has not experienced any major constraints from the supply chain perspective.

In order to minimise the negative financial impacts from the pandemic on its operations, Caverion has 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. 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.

Services

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 work orders, negatively impacting revenue and profitability. Government restrictions and the impacts to 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, while the second wave of corona started to be more visible at the end of the third quarter. In division Industry, the corona situation also postponed several annual spring and summer shutdowns in Finland until late autumn and 2021, which are estimated to be the next high season for industrial shutdowns. Pricing environment also tightened 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.

Projects

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. The government restrictions and the impacts to 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, while the second wave of corona started to be more visible at the end of the third quarter.

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.