Half-year Financial Report for 1 January – 30 June 2020 (published 6 August 2020)
Operating environment in the second quarter and during the first half of 2020
The overall market and demand situation continued to weaken in April due to the corona virus pandemic. There were more of our workforce absent 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, while government restrictions and the impacts to Caverion’s business started to clearly ease up in June. On a positive note, Caverion did not experience any major constraints from the supply chain perspective.
In order to minimise the negative financial impacts from the pandemic on its operations, Caverion continued its 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 coronavirus pandemic, the President and CEO and the top management of Caverion also decided to voluntarily lower their compensation. The President and CEO of Caverion lowered his monthly base salary by 20 percent for six months and postponed the payment of his bonus payment for the financial year 2019 by six months. The Board of Directors of Caverion decided also on 30 April 2020, upon management’s suggestion, to postpone the commencement of PSP 2020-2022 incentive plan, latest until the beginning of the year 2021.
The impacts of the coronavirus 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. In division Industry, the corona situation also postponed several annual spring and summer shutdowns in Finland until autumn, which is estimated to be the next high season for industrial shutdowns. Pricing environment also tightened in Services during 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 coronavirus pandemic were more visible between mid-March and the end of May, while government restrictions and the impacts to Caverion’s business started to clearly ease up in June. There were more of our workforce absent as well as more work site delays and closures.
The demand for new construction projects was negatively impacted by the corona pandemic, however less for renovation construction. Pricing environment generally tightened in Projects during the second quarter. Stimulus packages did not yet impact general demand.