Vaisala - Annual Report 2005

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How would you describe the year 2005 for Vaisala?

2005 was a good year for us. Net sales grew 11% and result nearly 20%. We had a couple of weaker years before this. Now demand increased. Internal measures to improve efficiency also had a positive impact on the result.

What is the outlook for 2006? Will the same trend continue?

Even if the 2005 result is good, I'm cautious in my estimates. I expect the result to remain on the previous year's level in 2006. There are some clouds in the sky. The slowdown of the national economies in the United States and Germany causes some concern.

There have been many extreme weather phenomena like tsunamis and hurricanes lately. How does this influence Vaisala's business?

The task of national weather services is to issue warnings on extreme weather, which poses a threat to people and property. Vaisala provides the equipment for weather observations, which form the basis for the forecasts. When these kinds of extreme weather phenomena occur, questions about the local measurement equipment and its capacity and condition are raised. With some delay, this generates new business for Vaisala.

Vaisala has become to be known for its position as the leading provider of environmental measurement equipment. Can any new trends be identified in the field?

Precision weather is a clear growing trend. Weather can be forecast more and more accurately regarding both time and place. For many end-users, nowcasts and under 24 hour forecasts are much more useful than traditional weather forecasts. The greatest potential for improved forecasting lies in nowcasting, rather than forecasting the weather days ahead. Thanks to modern media like internet and mobile phones, information can be sent to users very fast. We have invested great efforts in this field, and are ready for action when demand starts to grow.

What are the main business drivers in Vaisala's business?

The development of national economies is an important driver. Many of our customers are in the public sector, and investments depend on the amount of tax money collected. Another important driver is the customers' need to constantly improve their services, for example, when it comes to forecasting extreme weather.

Globalization forces companies to continuously improve efficiency. Vaisala has also outsourced some of its operations. Is this a permanent trend now?

As globalization proceeds, also the networking between organizations increases. Vaisala has participated in this networking for a long time already. We seek the kinds of partners and operating locations which provide business benefits in either costs or know-how. Vaisala is a global actor, so we don't have preferences in locations. The transfer of operations is part of normal continuous business development. Companies must act proactively to ensure their competitiveness. This is what we are doing.

Price competition is fierce in almost all fields of the economy. What is the situation like in Vaisala's markets?

Maybe not as fierce as in some businesses, but yes, we compete continuously, and also in prices. However, even more than with price, we compete with product performance. Costs are obviously fought in all businesses.

Growth is an important prerequisite for a global business. Vaisala is on a growing path. How about the future - what are the prospects for further growth?

Vaisala has always strived to grow faster than the growth in demand. Growth has been challenging in the past few years, but 2005 was a step to the right direction. I believe that precision weather and nowcasting will open doors for true growth for Vaisala in the future. We are well prepared for this.

How would you summarize Vaisala's current strategy?

Our approach to our customer base is well focused. We strive for global market leadership in all our businesses through high technology and product leadership. Our value proposition covers innovations, reliability and solutions to customer problems. Our three divisions are organized according to business-specific models. Each business model is optimized along the requirements of that business, and operations are constantly improved. We partner with leading global actors. We have the leading expertise and a reliable team.