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Vapo wants to grow and help others grow too

As part of the implementation of the new strategy, the company will change the current holding company model based on subsidiaries in different countries so that, in the future, each division will be responsible for its operations as a whole in the areas of Finland, Sweden and Estonia. Under the new model, Vapo Group’s divisions will be Grow & Care, specialising in growing media, recycling, the wholesale of raw peat and the production and sales of bedding peat, Energy, specialising in the production of solid fuels and the generation of heat, power and steam as well as offering various fuel and energy solutions, and New Businesses, which will develop new products from peat and other natural materials. The new structure will be adopted at the beginning of the next financial year on 1 May 2018.

Shared Supply Chain Management for the Group

A key reform in the new structure will be the founding of Supply Chain Management, a function that will be in charge of the management and development of the entire Group’s supply chain. Its responsibility areas will include the peat production, logistics services and purchases as well as environmental, quality and occupational safety issues of all Group companies in all countries in which the Group operates. Establishing comprehensive supply chain management from raw material sources to customers and centralising functions at Group level is expected to create significant synergies.

Supply Chain Management will be headed by Petri Järvinen, M.Sc. (Tech). He will transfer to the position from Coop Sweden AB, where his responsibilities included the entire company’s supply chain, logistics and quality functions. Prior to Coop Sweden, Järvinen was in charge of planning the global supply chain of Mölnlycke Health Care (2013–2016). During his long career, he has also worked for Nokia (2007–2013) in executive positions related to the development of the global supply chain as well as for Unilever (1993–2007) in, for example, the Netherlands, the UK and Scandinavia in strategic and operational executive positions related to supply chain planning, logistics and customer service. He has also been a member of Posti Group’s Board of Directors since 2014. He will report to Vapo CEO Vesa Tempakka on his responsibility areas.

According to CEO Tempakka, the new business strategy is based on change trends in the operating environment, the company’s expertise and resources. Urbanisation and population growth will increase the demand for food. In addition, increased interest in the food safety, the production of local food and the attractiveness of living environments will create demand for business related to growing. “We will combine in the Grow & Care division all Vapo Group’s peat products, excluding energy peat products, in other words agricultural peat, substrates, horticultural peat sales, fibers, composting, recycling and bedding peat.” The division’s turnover will be approximately EUR 120 million, and it will be headed by Juha Mäkinen. Mäkinen is currently the CEO of Kekkilä Oy.

The Energy division’s turnover will be ca. EUR 280 million. Advanced energy solutions and renewable biofuels will account about 50 per cent of the division’s operating result. “Over the next few years, we aim to substantially increase the business based on industrial and municipal energy solutions and the offering of renewable biofuels. We will also continue offering and developing services to meet the needs of our customers. Examples of typical services are remote operation services offered to all energy producers, which are based on the most advanced operations centre in the sector, as well as ash and logistics services,” Tempakka says.

The Energy division will be headed by Markus Hassinen, who is currently Business Area Director of Vapo Heat and Power.

“We believe there will be a great need for peat over the next decades, as peat is so versatile that it will be by far the best transitional fuel on the journey towards carbon-neutral energy production. By making these changes, we are preparing the company to be independent from the energy use of peat within the time frame during which fossil fuels will be abandoned in our markets,” Tempakka says.

All new development projects, such as those based on peat and other natural materials, will be centralised in Vapo Group’s New Businesses division. The most advanced projects are the production of peat-based activated carbon and the manufacture of various fibreboards from natural fibres. The market for activated carbon in the area of air and water purification alone is growing rapidly and is already worth several billions of euros globally. The Carbons business unit, which is intended to produce activated carbon, will be headed by Jaakko Myllymäki. Other projects aimed at new business will form the Ventures business unit which is to be headed by Mia Suominen. The New Businesses division will report directly to CEO Tempakka.

New structure to be adopted on 1 May 2018

According to CEO Tempakka, the business structure reform will accelerate and ensure the implementation of the new strategy as quickly as possible. The reform also involves the centralisation of Group services, with the aim of improving customer experience by means of shared models and processes as well as achieving synergies across business units by eliminating overlaps. “Our aim is that, for customers, the only indication of the changes in the business structure will be increased efficiency and improved service,” Tempakka says.

Tempakka continues that the reorganisation of operations is estimated to have no impact on the number of employees needed at Vapo Group. Moreover, it will not affect the Group’s current legal corporate structure. “We are not looking for fast cost savings or personnel reductions; instead, by implementing the planned reforms, we want to ensure that we have an effective operating model that will secure our profitable growth in the future. Our aim is to achieve significantly higher turnover and better profitability at the Group level,” Tempakka explains. Vapo Group’s turnover for the previous financial year from 1 May 2016 to 30 April 2017 totalled about EUR 400 million and operating profit was EUR 20 million. The Group has approximately 700 employees.

For further information, please contact:
–     Vesa Tempakka, Chief Executive Officer, Vapo Oy, tel. +358 400 726 727
–     Ahti Martikainen, Director, Communications and Public Affairs, Vapo Oy, tel. +358 40 680 4723

Link to a photo gallery with photos of people mentioned in this newsletter: https://vapo.materialbank.net/NiboWEB/p/scpc/12970497/218722/fi