Interim Report for 1 January 1 – 31 April 2020 (published 30 April 2020)
Operating environment during the first quarter in 2020
The overall market and demand situation was stable in most of Caverion’s countries until early March. Towards the end of the quarter, the market situation started to weaken due to the outbreak of the corona virus pandemic. However, the spread of the virus still had only a limited impact on the financial performance of Caverion in the first quarter, while the business was rolling almost at a normal pace. Caverion did not experience any major constraints from the supply chain perspective either.
However, in order to minimise the negative financial impacts from the pandemic on its operations, Caverion already launched 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 have also decided to voluntarily lower their compensation. The President and CEO of Caverion has 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 has on 30 April 2020 also decided, upon management’s suggestion, to postpone the commencement of PSP 2020-2022 incentive plan, latest until the beginning of the year 2021.
The demand for Services continued being strong until mid-March. The impacts of the coronavirus pandemic started to be visible towards the end of the quarter. In the Industrial Solutions division, the corona situation postponed most annual spring and summer shutdowns in Finland until autumn, which is estimated to be the next high season for industrial shutdowns.
There was still a general increasing interest for services supporting sustainability, such as energy management and advisory services.
The market for Projects remained mostly normal during the first quarter as a whole, although the impacts of the coronavirus pandemic started to be visible towards the end of the quarter. There was only a limited amount of work site closures in Caverion’s Projects business during the period. However, towards the end of the quarter there were some more delays in the negotiations of new contracts, due to coronavirus related precautions.
In the residential construction market segment, there were indications of the market slowing down, also affected by the progress of the coronavirus pandemic. In the non-residential construction segment, which is more relevant for Caverion, the market remained more stable.