CEO’s review on Q2 2023

“Wetteri had a strong first half of the year, and our revenue grew to EUR 200 million, with an increase of 41% year-on-year. During the first half of the year, our revenue increased because of deliveries from the order backlog for new passenger cars and higher sales of used cars. Growth in the Passenger Cars segment was 44%. The Heavy Equipment business also recorded a strong result in the first half of the year, and the segment’s revenue increased by 29%. Our maintenance, spare parts and repair shop services also fared well throughout the first half of the year, and the segment’s revenue grew by 55% year-on-year. I would like to thank all our staff for this good result.

Our good performance clearly reflects the strength and stabilising impact of Wetteri’s business model. Our business model covers the entire life cycle of a vehicle, from the sale of new and used passenger cars, commercial vehicles and heavy equipment to a wide range of maintenance, spare parts and repair shop services. This is an effective way to manage business risks and generate a stable revenue stream over business cycles.

Our goal is to be the largest and most profitable player in the automotive sector by the end of 2025. Wetteri has a good and proven growth strategy, which we implement with determination but prudently. In the first half of this year, we carried out two business acquisitions: Autotalo Hartikainen in eastern Finland became part of Wetteri in March, and AutoPalin in the Satakunta region in western Finland joined Wetteri in early June. These business acquisitions provided us with new brands to represent, strengthened our position as a representative of our current brands and improved our ability to serve larger customer segments in passenger cars, commercial vehicles and heavy equipment.

A historical transformation is shifting structures and operating models in automotive sector. Operations will be centralised to larger units with better profitability. This trend has manifested itself in many ways this year. Wetteri is involved in the consolidation of the Finnish automotive sector, and its growth is fuelled by the sector’s transformation. New business acquisitions will be made, and well-managed, high-quality acquirees are available in the automotive sector. We select our acquirees carefully: their revenue growth potential and profitability and the synergies to be achieved are assessed meticulously.

We also invested in organic geographical growth during the first half of the year. In response to the significantly increased demand for used cars and to expand our geographical presence, we opened new used car centres in Joensuu and Raisio. In July, we opened a used car centre based on the Wetteri Premium concept in Oulu, and our newest location – our 39th – is a used car centre opened in Oulunportti, a growing hub for car sales. In the used car trade, Wetteri is self-sufficient in used cars: strength: we are quite self-sufficient in used cars: When we sell a new car, we get a used car in return for our stock. Our ability to meet the demand in different segments is excellent, even in terms of different types of motive power. Our sales of used cars increased almost 26 % during the review period, compared to the same period in 2022.

High interest rates and inflation have increased consumer uncertainty, which has been reflected in the demand for cars. In the media, the automotive sector is currently shown in a rather gloomy light, but the situation may be much brighter at the operator level. Powerful marketing campaigns and our high-quality offering have attracted interest from car buyers, and completed deals are at a good level. The value of the passenger car backlog was almost 72 million euros at the end of June.This year, the number of first registrations of new passenger cars is expected to be 82,000, which is still below the longterm average.

Combined with the ageing car fleet in Finland, the current level of first registrations is creating enormous potential for organic growth in the automotive sector. There are signs of inflation declining, and interest rate increases are thought to be largely over. This trend will increase consumer confidence and purchasing power, as well as interest in buying cars. Interest in buying cars will also be increased by fully electric versions of best-selling vehicle types and generally shorter delivery times.
Wetteri has an ambitious growth target, and our strong strategy will help us achieve our target. During the autumn, we will also explore opportunities for funding growth, expanding the company’s ownership base and strengthening self-sufficiency through a share issue for institutional investors, private investors and Wetteri’s personnel.”