Q3 2020

    The company performed well in a changing market situation

    Solteq Group’s third-quarter revenue was EUR 13.3 million, up by 2.3 percent. The increase in the comparable revenue – when the absence of the SAP ERP business is taken into account – was 8.5 percent. About a fifth of this revenue was derived from outside Finland. The company's own software products and related services contributed around a third and digital services around two thirds of revenue.

    The company’s profitability was very good in the third quarter: operating profit improved, year-on-year, by 383.7 percent, standing at EUR 1.4 million. The operating profit margin was 10.3 percent. The company’s EBITDA was EUR 2.7 million – up by 108.9 percent year on year. The EBITDA margin was 20.4 percent.

    The company has been closely following and assessing the impact of the COVID-19 pandemic on its business. Although the pandemic slowed down sales to some extent in several business areas and in the Nordic subsidiaries, there was overall growth driven by the customer orders secured the year before, the capability to deliver, and success in obtaining new customers in the utilities sector. So far, the pandemic has had no negative impact on the company’s performance as a whole. The excellent performance in the third quarter was also supported by the streamlining measures taken earlier this year and the resulting cost savings.

    To ensure a going concern and sufficient funding, the company announced on September 24, 2020 the issuance of a new unsecured senior bond with fixed interest rate and a nominal value of EUR 23.0 million and the voluntary redemption of a bond that will mature on July 1, 2021. The new bond was issued after the review period, and the proceeds obtained from it were used to redeem the old bond. The new bond will mature on October 1, 2024. Annual interest of 6.0 will be paid on it, and it can be redeemed before the final maturity date.

    The company has performed well in a challenging and unpredictable market situation. The organization’s operational capacity and the safety of its stakeholders were ensured by measures adopted in the early stages of the pandemic. The business outlook is expected to remain unchanged for the rest of the year.

    2019 Financial statement

    The Group’s business grew moderately, thanks to our foreign subsidiaries, and profitability increased: Solteq Group’s revenue was 58.3 million euros, operating profit 5.7 million euros and adjusted operating profit 3.5 million euros. Revenue grew by 2.5%, operating profit by 131.6% and adjusted operating profit by 13.7%.

    3.9 million euros was invested in developing our own software products and services. Product development focused on Utilities solutions; Point-of-Sale software; and autonomous robotics. During 2019, the Utilities business grew by 25%; we launched the first customer deliveries of the new Point-of-Sale solution; and within autonomous robotics, we tested Solteq Retail Robot in a real store environment with S Group. In December 2019, Solteq Retail Robot was chosen as the best potential innovation in the Quality Innovation Award competition.

    The company's own software products and related services contributed around a third and digital services around two thirds of the Group’s revenue. In October 2019, we announced a change in the Group’s segment structure, dividing the business operations into Solteq Software, which is based on the company’s own products, and Solteq Digital, which comprises IT expert services based on client products. The new segment structure, effective from the beginning of 2020, creates a better match with the Group's business structure and revenue model and promotes business management.

    The company’s revenue in Finland did not grow compared to the year before. The main reason for this was the delay in launching a few major customer projects towards the end of the year. The company has also been in the middle of a particularly challenging customer project that has been ongoing for several years; delivery for this project was interrupted by six months, and restarted again during 2019. Due to the postponements in these customer projects, the Finnish revenue and operating profit did not develop as well as expected during the second half of the year.

    International business and profitable innovation form a significant part of our growth strategy and were among our priorities for 2019. Our foreign subsidiaries developed well in 2019, driven by digital services. The revenue of our foreign subsidiaries grew organically by 26% compared to the previous year, accounting for 21% of consolidated revenue.

    The company's digital services consisted mainly of eCommerce and information management solutions and operational systems delivered to large and medium-sized customers. Demand for our eCommerce solutions remained stable. There was clear growth in demand for information management solutions, with particularly good growth within Microsoft-based operational systems.

    In 2020, the company will continue to develop its international business and its own cloud-based software products and services, and to invest in selected client products. As part of this strategy, a business transfer agreement was completed at the end of 2019, resulting in the transfer of Solteq's SAP ERP business to Enfo Oyj as of January 1, 2020. Via this agreement, Solteq Digital's operational system deliveries have become increasingly focused on Microsoft-based solutions.

    Our business outlook remains unchanged. The company was reorganized according to the new segment structure as of January 1, 2020. This will enable more efficient operations, and we expect these measures will improve our performance in 2020. Investments in our own product development have begun to be realized in the form of successful customer deliveries, and we forecast that our industry-specific products will continue on a positive commercial path.


    CEO, Olli Väätäinen
    +358 50 557 8111