Destia's Year 2014  

Destia's Year 2014

DESTIA IN 2014:

PROFITABILITY ON A GOOD LEVEL, POSITION STRENGTHENED IN THE LEADING BUSINESS GROWTH AREAS AND OCCUPATIONAL SAFETY IMPROVED TO A NEW RECORD HIGH

In 2014, our operating result was good, in spite of a reduction in revenue and a challenging market situation. The operating environment deteriorated, but demand in the infrastructure sector remained moderate in the year gone by. For Destia, 2014 was a contradictory year. The poor success last year and early this year in tendering for large projects caused a revenue challenge to which were unable to respond. We have, however, been excellent at maintaining profit in our projects.

The reduction in investments in house-building construction and by private operators has particularly adversely affected the infrastructure market. The deceleration in the whole construction market was evident in the low workload in infrastructure design, among other things. Competition for projects remained fierce throughout the year.

A significant part of our revenue comes from projects spanning several years, which create stability for our business. Large road projects requiring special expertise and infrastructure maintenance constitute our core business. The focuses of our growth are the track and rock businesses as well as energy construction. I am satisfied with the positive development of our order book in the year gone by. In spite of fierce competition, we increased our order book, both in our core businesses and in the focus areas of our growth strategy.

Destia’s position improved in all leading growth areas. In the railway market in particular, we achieved strong growth during 2014. Destia’s position strengthened, and half of Finland’s network of railways is now maintained by Destia. In rock construction, we continued successfully to strengthen our position and resources: the workload for rock construction is greater than the revenue in the year gone by. In energy infrastructure too, we succeeded in increasing our order book and strengthening our expertise.

Destia’s order book is larger than the previous year and spread over more years than before, which gives a solid starting point for 2015.

Our occupational safety improved: accident frequency at a record low

We continued to invest in the development of our personnel in order to achieve Destia’s strategic objectives. Our strong investment in the development of expertise, customer work and occupational safety has yielded results. As a result of training, project management and profitability have developed favourably. In 2014, in training we focused on the development of consistent and goal-oriented customer work, which is evident as an improved order book in comparison with the previous year and an improvement in customer satisfaction.

At the core of what we do is occupational safety. In recent years, we have focused particular attention on its development. I am very satisfied with the significant improvement in our occupational safety. Our accident frequency is at a record low: 9.3 occupational accidents per one million working hours.

Destia a responsible pioneer in the sector

Digitalisation is one of the key factors affecting our operations. We are a pioneer in the sector in model-based production, in which we take advantage of 3D digital models in the design of structures, the planning of production and in the use of work machinery. In the year gone by, we utilised model-based production at more than 40 sites. Of our sites, almost 200 have been implemented using work machine automation. We believe that digitalisation offers excellent opportunities to make technological leaps and improve productivity throughout the infrastructure sector.

Our expertise in modelling was also recognised during 2014 when the Tikkurilantie project that we implemented was honoured both nationally and internationally at the Tekla BIM Awards ceremony. This project was the first major modelling project in the infrastructure sector.

The infrastructure sector and indeed the whole construction industry are in the midst of great change. Urbanisation, climate change and, in particular, questions of responsibility concerning the environment and safety are affecting the development of the operating environment. These trends have significant impacts on the demand for Destia’s products and services. Our aim is to be the number one choice for our customers and number one in the infrastructure sector in Finland. The implementation of strategy requires responsible operation, both from us and from our partners.

In 2014, we summed up Destia’s corporate responsibility programme. It is based on both our own assessment and that of our stakeholders of the themes fundamental to responsibility. Our corporate responsibility programme guides our daily work and management in Destia.

For the first time, we reported our corporate responsibility in accordance with the Global Reporting Initiative (GRI) reporting guidelines. The GRI G4 version core-level report from 2014 is part of our Annual Report.

Our objective: growth by winning in the market

In summer 2014, Destia’s entire shareholding was transferred to private ownership through a corporate acquisition, which clarified our role as a producer of infrastructure services. In recent years, we have single-mindedly been strengthening our business, and have thus created a solid foundation on which we can now build profitable growth under private ownership.

Our strategy is to grow profitably on the infrastructure market by providing excellent customer work and putting our own expertise to good use. In the year gone by, we confirmed our financial objectives for the business planning period 2014−2016. Our aim is an average of 5% revenue growth per year and, by the end of 2016, we are targeting 4% operating profit, 15% return on investment and 40% equity ratio.

We will continue with the purposeful development of our personnel, in terms of both consistent and goal-oriented customer work and uniform operating practices, not forgetting occupational safety. We hope that our efforts will be visible to our customers as better and value-added service and will thereby create a foundation for profitable growth.

The measures we have taken to improve our order book, customer work and project management are establishing a firm foundation for the positive development of revenue. We expect that in 2015 our revenue will increase slightly, but that the operating result will fall short of the previous year.

Thank you for 2014

I would like to thank each and every Destia employee for the year gone by – professional and committed workers can achieve a result even in challenging times. Let’s continue in the same way.

Thanks to our customers, subcontractors, owner and other partners for their faith in us. Let’s co-operate successfully this year too by building the bigger picture piece-by-piece, with honesty, courage and skill.

 

 

Hannu Leinonen

President and CEO