FROM UNCERTAINTY TO RECORD NUMBERS

 

Year 2022 constituted another year of turmoil – also for VEO. The aftermath of COVID-19, together with the launch of a Russian full-scale invasion of Ukraine, resulted in cost inflation and extended delivery times in materials, which significantly burdened VEO’s comparable operating profit. Despite the challenges, the year ended in the highest order intake in VEO’s history.

 

Looking at VEO’s business in 2022, the year can be divided in two: the first half of the year was one of uncertainty, while the second half was saved by a significant increase in demand and timely actions from VEO’s team. VEO did not have on-going projects in Russia and Ukraine, but in addition to lower sales margins, the market uncertainty in H1 led to fewer orders than budgeted in the beginning of the year. The team at VEO was, however, quick to introduce correcting measures to ensure a better H2.

 

“As we identified the challenging situation during Q1 and gave out an early warning, we decided on two main actions to mitigate further profitability decreases: we put our focus on sales and increased control on our fixed costs. Both actions succeeded extremely well and resulted in a record-high order intake and a positive net result despite the low revenue”, explains VEO’s CFO, Petri Mäkinen.

 

MOVING INTO A FUNCTIONAL ORGANISATION STRUCTURE

 

In 2022, VEO began carrying out the first part of its 2022-2025 strategy. The main element of this work was to implement a company-wide organisational change from the previous three main business units to a functional organisation structure with fifteen business segments. The change was done in phases to enable a smooth transition with minimal impact on on-going project execution. First up was the automation unit, which started operating according to the functional model already in the beginning of 2022. It was followed by the Product Engineering and Engineering functions later in the year. Now, only the Project Management and Sales functions remain and stand to be renewed in early 2023.

 

“The organisational change was implemented to optimise resource usage, decision making, process alignment and accountability, and to support VEO’s strategy to further improve profitability in the coming years. Already in 2022, we were able to increase our profitability by focusing our sales efforts and resource allocations on the most profitable projects. With less people involved, our decision making also improved.”

 

In addition to its organisational changes, VEO’s new strategy puts an increased focus on internationalisation and increasing market shares in the countries where it operates. In 2022, VEO was able to win important large projects and market shares both in Norway and Sweden. The UK market also developed favourably last year, and there, as a group, VEO received its largest single order to date. Another key achievement of 2022 was the integration of the UK business into the group’s ERP finance model, which replaces manual work and speeds up financial reporting.

 

A BRIGHT OUTLOOK FOR 2023

 

Thanks to the high order intake of 2022, VEO is starting 2023 with a record-high opening backlog. This positions VEO to deliver a good result with improved profit ability in the coming year. VEO’s focus and expertise in renewable energy projects is also favourable in the current market conditions: “More than 95% of VEO’s projects are renewable energy projects, projects that increase energy efficiency or projects that reduce energy usage. VEO is well-positioned to meet the European decarbonisation target and we believe that its importance for our customers will further accelerate in the coming years.”