A challenging year due to slowdown in demand
The demand was at a low level in the forest and fiber sector during 2023. In Ahlstrom and Munksjö, our focus has been on managing the cash flow, as well as liquidity, and on cost efficiency and commercial excellence. At Suominen, the commercial and operational improvements started to contribute to better profitability towards the end of the year. Increased interest rates slowed down the demand also for investment goods. At M&J Recycling and Glaston, revenue was solid, but the order backlog decreased during the year. At Detection Technology, the demand improved in the second half of the year and the actions to improve cost efficiency had a positive impact on the performance. The integration of Enics and GPV has proceeded well and the financial performance of GPV was satisfactory.
In the forest business, strong prices continued throughout the year and, as we have also increased the share of delivery sales to our customers, the financial performance was strong. Despite the good pricing environment, we continued to increase the biomass in our forests as we continued to harvest less than the annual growth of trees. In the real estate business, our portfolio of quality assets has endured the market pressures well. Through active portfolio management, the utilisation rate has increased, and cash flow improved. In Q4, the GO21 office building in the centre of Tampere was completed and the building is fully let.
The share repurchase program in A. Ahlström was completed during Q4. The program was oversubscribed, and 300,000 shares were acquired.
Implementing our new strategy
The strategic core in our renewed strategy is built around industrial companies in the Forest & Fiber and the Environmental technologies sectors. Within the strategic core, we integrate synergistic businesses into a selected number of world-leading specialist platforms. In December, we acquired Metsäkonepalvelu Oy as a new platform company in the Forest & Fiber sector. Metsäkonepalvelu is the largest harvesting services platform in Finland and also has a strategic foothold in the Swedish market.
The strategic core is supported by diversification into financial assets, real estate, and the forest business. By diversifying, we can manage liquidity and maintain stable and predictable cash flow. In real estate we actively develop, own and manage, certified high-quality assets in central locations, and aim for long lease agreements with established tenants. We actively and efficiently manage our forests to achieve best-in-class profitability, and predictable cash flow, while ensuring long term vitality and biodiversity. During 2024, we will continue to define our unique way of working, the Ahlström Way, together with our professionals.
I would like to thank all the employees for the good work done and the shareholders and Board for the trust and support. I am eager to continue to execute this strategy together with all of you.
Jyrki Vainionpää
President and CEO
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