According to Kreate’s management, the small number of tenders due to the COVID-19 pandemic led to a clear tightening of competition in the operating environment during the financial year ended 31 December 2020. The increase in the number of tenderers in all business areas has lowered the price level of construction projects and created challenges for the players in the industry. The number of tenderers has remained moderate only in projects that are technically challenging and require special know-how. According to the management, Kreate’s strategic focus on the execution of demanding projects has provided a competitive edge in the tightened market conditions.

Kreate’s Board of Directors has set the following financial targets in connection with the listing. The financial targets are forward-looking statements and are not guarantees of Kreate’s financial performance in the future. Kreate’s actual future results may differ materially from those expressed or implied by these forward-looking statements as a result of many factors.

Kreate’s Board of Directors has set the following financial targets:

  • Net sales of EUR 300 million in 2024 through a balanced combination of organic growth and selective bolt-on acquisitions;
  • EBITA margin of above 5 per cent in the medium term; and
  • Net debt to EBITDA below 2.0x.

Result guidance

The Finnish infrastructure construction market has shown stable growth historically. In 2020, the estimated market size was approximately EUR 7 billion, and it is expected to remain stable or decline slightly in 2021. Management estimates that the COVID-19 pandemic has postponed the start of certain infrastructure projects during 2020 and resulted in overall lower backlog of projects in the market going into 2021. In the near term, demand is expected to be particularly driven by urbanisation, infrastructure renovation debt, and public sector projects.

Kreate expects that its revenue (2020: around EUR 235 million) will decline in 2021 compared to 2020. As at 31 December 2020, Kreate’s order backlog stood at around EUR 135 million (31 December 2019: EUR 177.2 million). Of this, around EUR 111 million is expected to be realised during 2021 (31 December 2019: EUR 130.3 million during 2020).

During the last 3 years, Kreate has generated on average EUR 107 million of additional revenue during a financial year on top of order backlog at the beginning of the year. Management estimates that, as of 31 December 2020, the expected profitability of the order backlog has been on a normal level.