CFO’s review

Profitable, as per strategy

2021 was another year for the books for VEO. Despite being the first full year of COVID-19, with supply chain challenges in availability and a shortage of materials, VEO’s financial performance this year was on an excellent level. In 2021, VEO’s EBIT improved for the third year in a row, rising by 158 000 EUR to 2.3 MEUR. Likewise, the net cash flow was decidedly positive for the second consecutive year, despite a challenging market situation.

 

Extensive strategy work

The reasons for a fruitful year are several, but strategy work played an important role in VEO’s successes in 2021. Last year, VEO finished the execution of a three-year strategy, covering the years 2019-2021. This strategy managed to steer the company’s results to a profitable year-on-year clear after a difficult 2018. While wrapping up one strategy period, the entire company worked intensely on also creating a new strategy for the upcoming period until 2025. As part of this work, the finance team developed a financial modelling tool that facilitates strategic planning. The new strategy, approved by VEO’s board of directors in December, shows a clear path for all teams to follow:

“This extensive project has created a good, systematic foundation to further develop VEO’s capabilities in the energy sector and to further strengthen our financial performance. Through segment-level and country-specific financial modelling and target setting, we have clarified our targets, main priorities, and competitive advantages that will increase our profitability even further”, explains VEO’s CFO, Petri Mäkinen.

 

Value-adding finance as an integral part of the business

Another contributing fact to VEO’s profitability in 2021 was the continued integration of the finance team and VEO’s business units, making the work of the team known to more people in the organisation. During the year, the finance team further developed VEO’s pricing tool, improving cash flow understanding on a project level and supporting better cash flow throughout the company. Additionally, the team also took steps forward in managing the company’s working capital and in its cooperation with the sourcing and manufacturing functions. Mäkinen sees collaboration as one of the main accomplishments of the finance team in the past few years:

“Our team has succeeded in developing processes that enable faster and more accurate fast-based decision making, adding value to the entire group. We have turned our focus from looking at past figures to predicting future numbers. This is possible thanks to the trust that our CEO, the board of directors, and the different teams have put in us. Good cooperation with external stakeholders, such as banks, credit insurance companies and our auditor, also facilitate the work we do.”

 

Pandemic uncertainty, but great growth in the UK and in Scandinavian hydro

Considering the unique operating environment during the pandemic, 2021 offered both highs and lows for VEO to take on. Going into 2021, VEO had a record high order backlog, but the continued uncertainties impacted client behaviour in the market, and in the first six months of the year many postponed their investments. Luckily, the market picked up again in the second half of 2021, ending the year on a high note.

The public economy in the UK saw an all-time high growth rate since post-World War II, which reflected positively also on VEO’s business in the country. In 2021, VEO’s turnover in the UK nearly doubled, and both order intake and profitability increased in this market. To create more efficient reports on VEO’s business in the UK, the finance team started a project in 2021 to better integrate the local ERP system to the reporting used in the rest of the group.

As an important part of VEO’s operations, the Scandinavian hydro business increased in profitability in 2021, giving assurance that VEO is moving in the right direction also in this market. In Sweden, the successful merger of TechTeam360 into VEO AB in 2020 was followed by a service provider change for financial accounting and payroll service in VEO’s Scandinavian subsidiaries in 2021. The change has improved the quality of service delivered to the business and has created a more efficient organisational setup.

 

Highly valued team

In addition to causing a material shortage and rising prices, the ongoing pandemic in 2021 kept the financial team working remotely and made price developments difficult to predict. Mäkinen is happy with his hard-working team that has overcome several challenges in the past two years:

“We have been able to push forward several development projects with great success, despite working remotely and despite the challenging circumstances. There is a shortage of competent people in our industry, and it is important for our continued success to be able to keep our valuable performers and recruit new talent as we grow.”