CEO's Review

The economy did not recover in 2014 – if anything, uncertainty only increased. The early part of the year saw a slight market recovery, money is now exceptionally inexpensive and the backlog of new construction and renovation continues to grow. The conditions for long-term investments are ideal. Towards the autumn new kinds of uncertainties were brought up by the strong decline of oil price that influenced the macro economy, as well as by the deepening conflict at the doorstep of Europe, our core market. The future seems increasingly difficult to forecast.

A new phase in the history of Oras Group began in October 2013, when Hansa joined Oras and the new Group was formed. Now we have the first full financial period behind us, and the entire organization has been closely involved in the building of the new company that has doubled its size. The open-minded approach of our personnel has enabled a fast integration. In January 2014 the new Oras Group management team was appointed. The team is a comprehensive and international group of experienced experts in the industry. Nomination of the middle management team followed shortly. Already by the end of February a matrix organization was put in place in the entire Group.

During the spring we conducted a comprehensive study on company culture. The purpose of the study was mainly to support the definition of the mission and vision for the new Group, and above all, that of common company values. In product development and product portfolio management the Group resources were joined to serve both brands of the company, Oras and Hansa. The first results of this work were introduced at the trade fairs in Essen and Nuremberg in Germany already in the spring: we launched an extensive line-up of electronic products under Hansa brand.

The first common annual closing, common subcontractor negotiations, sales reporting and implementation of systems that enable effective internal communication were also among the integration steps taken already in the first half of the year. A lot of effort was put into open communication and into ensuring the distribution of timely and accurate information among the personnel. All countries with manufacturing units were provided internal communication in their own languages, in addition to English, the official Group language.

All overlapping sales organizations were integrated and the first roll-out of the common enterprise resource planning system took place already in May in one of our sales countries. During the year we implemented six mergers and one change of company form: Hansa Metallwerke AG was changed to a company form that fits the new Group structure better. The new name of the company is Hansa Armaturen GmbH. Despite the impressive number of integration activities during the financial period, our organization was also able to focus on effective work with customers.

Oras Group net sales grew by 2.1 per cent, from 252.7 M€ in 2013 (pro forma) to 258.1 M€, in spite of the challenging market. Most importantly, the growth was achieved with products that genuinely add value to the market. The operative EBIT increased considerably, from 22.1 M€ (pro forma) to 30.4 M€, being 11.8% (8.7% pro forma) of net sales. The balance sheet returned to normal level after the financial arrangements of the acquisition were realized according to the plan.

Our way forward

Structural integration is crucial for the improvement of competitiveness and efficiency. However, long term success is determined by the definition and common understanding of the company’s mission, vision and strong company values – and first and foremost, by how we live those values.

We have entered a three-year phase of building our Group Power on a clear business idea. The integration continues on an immaterial level; a lot of resources will be invested especially in the implementation of company values. Our goal is to provide suppliers, customers and other key stakeholders with the experience of Oras Group as a company that is different, genuinely driven by values, and a consistent and reliable partner.

Of course it is obvious that the implementation and development of common tools and processes continues for a few more years. However, the direction of the development of operations and ways of working is clear – we aim to strengthen our partnership with professional customers and in order to do so we make a clear choice for the benefit of the professional channel. Together we are able to provide superior service for the increasingly demanding consumers. Regarding our product portfolio, our ambitious target is to develop products and services that bring added value to distributors, installers and end users alike. By working in a consistent and sustainable manner, with the support of a clear choice of customers and a portfolio of advanced sanitary fittings, we will be able to differentiate ourselves from the competition.

The journey towards a true European contender is interesting and encouraging. Clear strategic choices have defined the focus of our work for the next few years and give us direction both externally and internally.

I am proud of the achievements of our organization so far and would like to extend a warm thank you to each one of you. A big thank you goes also to our business partners – you have shown your willingness for long-term co-operation with us, in order to build common competitiveness and act for the benefit of the market!

Pekka Kuusniemi
President and CEO