Review by the President and CEO

Kjell Forsen

Vaisala’s President and CEO Kjell Forsén

“’Vaisala’s second quarter performance was solid, and operating result improved even though customers and suppliers were affected by the COVID-19 pandemic and related economic slow-down. Vaisala’s priority has been to protect the health and safety and wellbeing of employees and to ensure business continuity in order to fulfill customers’ needs. I am grateful to Vaisala personnel for excellent work and adaptability during the immensely difficult situation. I appreciate flexibility and cooperation of our customers in adjusting to changes and restrictions in supply chains. I would also like to thank our suppliers and partners for their commitment and adaptability in this unprecedented situation.

Second quarter orders received decreased by 2% compared to previous year due to weakened order intake in Industrial Measurements business area and especially in APAC region. Orders received in Weather and Environment business area were at previous year’s level as a result of strong order intake in Europe.

Second quarter net sales decreased by 5% in both business areas. In Industrial Measurements business area, net sales growth was good in APAC region and especially in China as a result of the COVID-19 pandemic easing up. However, net sales decreased both in Americas and EMEA regions more than offsetting the growth in APAC region. In Weather and Environment business area, net sales decreased mostly in APAC region. Gross margin was good at 54.5% despite volume decrease and largely as a result of strategic improvement actions carried out in digital services.

Industrial Measurements business area’s flagship markets, high-end humidity and high-end carbon dioxide were most hit by consequences of the COVID-19 pandemic such as suspension of customers’ operations and delayed decision making, whereas service business developed positively during the first half. Deliveries for liquid measurements and continuous monitoring systems did not meet expectations, whereas power industry applications continued high growth and their net sales doubled during the second quarter compared to previous year.

In Weather and Environment business area, project deliveries proceeded well despite challenges due to the COVID-19 pandemic. On-going large projects brought two thirds of business area’s project net sales during the first half of the year. Growth of wind lidar business was slow partially due to issues related to the COVID-19 pandemic. Refocus and reorganization of the digital business was completed successfully last year, and consequently profitability has risen to a new level. During the second quarter, Vaisala decided to discontinue unprofitable assessment consulting services provided to renewable energy segment. Vaisala Digital will now in line with its strategy fully focus on the forecasting and weather data services that Vaisala’s customers in the renewable energy sector depend on. The renewable energy segment remains a strategic growth area for Vaisala, and it will also continue to offer remote sensing lidar products that enable optimized operations and development activities.

I will step down from my position as President and CEO of Vaisala and retire by the end of this year. I warmly welcome Kai Öistämö to Vaisala. We will together ensure smooth transition of responsibilities when Kai will start in this position latest in the beginning of October.

Vaisala continues to assess impact of the COVID-19 pandemic and related economic slow-down on its operations, performance and results for the rest of the year. Biggest concern for Weather and Environment business area is market development in South East Asia, Middle East, Africa and Latin America. In Industrial Measurements business area, recovery of industrial instrument orders will depend on customers’ possibility to restart their operations. Vaisala estimates that its full-year 2020 net sales will be in the range of EUR 370–405 million and its operating result (EBIT) will be in the range of EUR 34–46 million.”

Kjell Forsén

President and CEO

Half Year Financial Report January-June 2020, July 21, 2020​