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Vapo’s profitability improved in spite of reduced turnover

The turnover of the Vapo Group decreased in 2009, even if demand for local fuels stayed good. The turnover was MEUR 573.7. The figure for the previous year was MEUR 631.8.

Vapo’s operating result recovered and amounted to MEUR 38.0, which is 6.6 percent of the turnover (MEUR 21.1). The best results were achieved by Local Fuels and Garden & Environment. Vapo Pellets and Vapo Timber Oy improved their results but still remained in the red.

The basic demand for peat was good, but the mild winter decreased the need for heating fuel. The use of peat in the production of condensate electricity decreased. In spring 2009, the sales were affected by a regional peat shortage. The situation improved when new deliveries got under way in May.

In summer 2009, peat production was normal, and the stock situation after the previous rainy summers improved. The total peat production amounted to 25.5 million m3, of which 21.5 million m3 was produced in Finland, 1.9 million m3 in Sweden, and 1.65 million m3 in Estonia.

In Finland, wood fuel deliveries amounted to 2.7 TWh (2.9 TWh).

The increased pellet production in the European market and growing imports caused oversupply, increase in stocks, and a downward pressure on prices. The mild winter also reduced demand. There were occasional problems in obtaining raw material.

Vapo continued expanding the pellet business by purchasing Statoil’s pellet delivery operations in Denmark.

Vapo’s wood and peat pellet deliveries totalled 563 000 tonnes (620 000 tn).

The growth in heat and power sales was weakened by the decreased energy needs of industrial customers, warm weather, and the low market price of electricity. Additional sales were generated in Finland by 4 new heating plants and 13 pellet heating plants that started operations in 2009. Three heating plants started up in Poland, and one in Estonia.

Heat and steam deliveries to customers totalled 1 703 GWh (1 779 GWh). Electricity sales amounted to 309 GWh (315 GWh).

The consumer and landscaping business of Garden & Environment developed positively, and Vapo strengthened its position as the market leader in the Nordic countries. Owing to low stocks, demand for raw materials and bedding could not be fully met, and the stocks still remained low after the production season.

The weak economic situation also affected the professional gardening business.

Vapo ceased horticultural substrate production in Spain and concentrated on sales. The recession reduced the amount of waste in construction and industry. No significant changes took place in the composting business.

As to sawn timber, the weak market situation continued in the traditional export markets. Vapo Timber Oy responded to the situation by reducing production. The sawn timber deliveries totalled 426 000 m3 (525 000 m3). The average decrease in the sales prices compared with the previous year was 9 percent.

In late spring, a glimmer of growth could be seen in the prices of sawn timber. Scarcity of raw material, however, hampered sawmilling. The price of roundwood is still too high in view of the financial standing of the sawmilling industry.

The financing situation of the Vapo Group was stable. The equity ratio was 39.5 percent (42.2 percent).


The gross investments of the Vapo Group amounted to MEUR 80.9 (M EUR 83.3). The most important investment targets were the basic and development investments in peat production, and investments in heat and pellet heating plants.

In 2009, the average number of employees in the Vapo Group was 1 451 (1 780). A total of 877 (948) employees worked in Finland, and 574 (832) in the other countries of operations. The switch to contracting caused the most significant impact on the number of personnel in the Baltic States.

Osuuskunta Metsäliitto sold its 49.9 per cent share in Vapo Oy to a consortium led by EPV Energia Oy. The consortium took the name of Suomen Energiavarat Oy.

Near Future Outlook

Demand for local fuels will continue to grow. Especially wood will be used in increasing quantities, and this trend will also mean an increase in the demand for peat, in view of reliable deliveries and even quality. The development of demand in the pellet business will be positive. The excess supply of pellets will be consumed in the current cold winter period. In Finland, the peat pellet market is expected to grow. In the sawmilling industry, the economic situation is taking a slow turn to the better, but the scarce supply and high price of raw material will impede the development. Underutilisation of capacity will continue.

At an annual level, the turnover of the Vapo Group is expected to increase slightly and the relative profitability improve from the previous year.