Near-term risks and uncertainties

COVID-19 pandemic’s impact on Vaisala’s business is depending on the duration and severity of this exceptional situation. Vaisala’s delivery capability may deteriorate due to disruptions in suppliers’ operations, absence of own production employees or disruptions in incoming and/or outgoing logistics. Demand may fluctuate materially by country or customer segment and customers’ recovery from the exceptional situation varies a lot. Effects of the pandemic on customers’ cash flow can be significant and lead to credit losses. Exceptional situation may also cause delays or interruptions in Vaisala’s operations, e.g. in project deliveries and R&D.

Uncertainties in international trade policies or political situation may reduce or delay demand for Vaisala’s products and services. Customers’ preference for local manufacturing may reduce demand for Vaisala’s products and services.

Obstacles related to market acceptance, sales channel development, or regulatory certification of new products and services may postpone realization of Vaisala’s growth and profitability targets. Customers’ budgetary constraints, complex decision-making processes, changes in scope, and financing arrangements may postpone closing of infrastructure contracts in Weather and Environment business area. Cyber risk and downtime of IT systems may impact operations and delivery of digital solutions.

Measures taken to mitigate impacts of the COVID-19 pandemic
Ensuring employees’ wellbeing and their health and safety has been the most important focus area during the COVID-19 pandemic. To enforce containment actions and safe work environment for production workers, access to factories has been limited. Remote working practices were introduced in all offices and office environments have been adapted to meet local recommendations and regulations.

Effective delivery of products and services has been crucial while customer organizations have dealt with staff shortages, closures of offices and factories and health protection measures. Remote customer meetings, electronic signatures, re-routing of shipments, remote acceptance testing and cooperation with local field service companies and their remote support are examples of measures, which have been taken to fulfill customer expectations.

Supplier relationships and cooperation
Vaisala has numerous suppliers, technology providers and outsourcing partners. Strategic suppliers, which are critical to ongoing business operations, have been assessed for their business continuity and information reliability. Purchase orders, delivery schedules and changes in lead times have been assessed to ensure timely receipt of components. Inventory levels for most critical components were increased by two-three months availability.

Vaisala has communicated regularly with multiple stakeholders: employees, customers, suppliers and authorities. Objective has been to ensure clear and transparent communication how Vaisala manages possible impacts of the COVID-19 pandemic, and to ensure continuity of core operations, including support and services for customers without endangering employees, customers and other stakeholders. Digital marketing efforts have been intensified to compensate for absence of conventional marketing events.

Vaisala’s financial position and liquidity have been assessed. New term loan agreement was negotiated in order to provide more flexibility.

Scenario planning
Vaisala has done scenario planning and contingency planning in order to make sound decisions in a highly volatile operating environment. Vaisala has identified risks related to delivery capability and demand outlook as well as diverse challenges emerging in the operating environment. Scenario plans and related assumptions have been continuously updated and followed up.

Financial Statement Release January-December 2020, February 19, 2021