Destia to withdraw from Northern Norway
Alpha Veg AS, the Norwegian subsidiary of Destia, decided to declare bankruptcy due to a long history of heavily unprofitable operation caused especially by two long maintenance agreements. The board of the subsidiary decided today to open bankruptcy proceedings following from Destia’s decision to discontinue capitalising the operation of Alpha Veg. The arrangement is not likely to affect Destias 2012 profit remarkably. Destia will continue to focus on improving its business in Finland.
Destia started operations in Norway in the beginning of 2009. The strategic objective of the company was then to expand the area of operations. Destia won two area-wide maintenance projects in the competitive tendering with prices that were remarkably lower than the general market level.
– Destia entered the Norwegian market with the intention to expand its area of operations in the winter maintenance of traffic routes also to the Cap of North. Destia had a vision for a possibility to create profitable business also in Norway. Unfortunately, after three years of unprofitable operations we have to state that we didn’t succeed according to our expectations. We will focus now on improving our core business in Finland, says Destia’s CEO Hannu Leinonen.
Economical problems with the operations in Norway appeared already in the spring of 2010. The development measures that were carried out in the following year did not result in sufficient improvement of the operations. In the fall of 2011 it was apparent that the targets were too high and the company didn’t have the preconditions to succeed in the Norwegian market.
Before the decision to discontinue capitalising the operation of the Norwegian subsidiary Destia investigated the other options. The contracts with the client, however, could not be dissolved and negotiations to sell the business were discontinued unsuccessfully in the end of February 2012. The decision made today to withdraw from the Norwegian market entails that Destia’s resouces will focus in Finland.
For further infomation:
CEO Hannu Leinonen, tel. +358 20 444 4000
Destia Ltd is a Finnish infrastructure service company. Destia constructs, maintains and designs traffic routes, industrial and traffic environments, but also complete living environments. Our services cover the whole spectrum, from comprehensive overground operations to subterranean construction.
Destia Group’s turnover was almost 500 million euros in 2011. Destia employs about 1800 people. Destia – Building the Bigger Picture. www.destia.fi
Alpha Veg AS is Destia’s fully owned Norwegian subsidiary. Alpha Veg employs 35 people.