CEO Aarne Simula’s review January–March 2023
A strong start to the year, adjusted operating profit rose to 3.1 million euros
“The first quarter of 2023 was a strong one for Wetteri, with our adjusted operating profit rising to 3.1 million euros. We were able to efficiently clear our record backlog to invoicing and delivered no less than 583 new passenger cars to our customers. Once again, our multi-brand strategy showed its strength: thanks to our broadest representation of passenger car brands in Finland, we were able to navigate the availability bottlenecks with great success and keep delivering new cars to customers at a steady pace. At the same time, the brisk delivery rate of new cars gave Wetteri quality trade-in cars to meet the upsurge in demand, and the tight purchase market gave us no trouble.
The EU used car market has picked up, while inflation and the interest level still continue to affect new car sales. We believe that, as the interest rates level out and inflation slows down, we will see major growth in demand for both new cars and high-quality used vehicles. The average age of cars in Finland is already 13 years. The aged car population is a growth driver and will create demand and organic growth. Tax incentives are also increasing demand for new, low-emission vehicles. For us, the boom in used car sales has been especially evident in the demand for used cars in the higher price bands.
Heavy-duty vehicles sales have also grown in early 2023. In Finland, the first registrations of heavy vehicles increased by more than a fifth compared to the previous year. Wetteri’s heavy vehicle business developed favourably, and our strong order book supported a solid invoicing rate. The order book for new lorries grew and had reached 20.1 million euros by the end of the first quarter.
Maintenance agreements have an important role in customer engagement and business stability in the heavy vehicle business. In the period under review, our maintenance agreement coverage was approximately 84.5 per cent for lorries, which is an excellent result. From the Group perspective, maintenance services play an important role in balancing business risks. In the first quarter, maintenance and spare parts sales grew by more than 29 per cent from the corresponding period in 2022.
The first business acquisitions in our growth strategy
The first quarter of this year saw many significant events for Wetteri’s growth strategy. In March, the deal was closed for Autotalo Hartikainen joining Wetteri. This acquisition gave our company a solid foothold in the eastern Finnish market. The consolidation of our operations has proceeded in a spirit of positive cooperation. The integration is facilitated by compatible business models and strong cultures of entrepreneurship in both companies.
Next, we will enter western Finland through Pori and Rauma, with the well-established dealership AutoPalin joining Wetteri by 31 May 2023. This business acquisition will mark a significant expansion in Wetteri’s geographical presence and make our company one of the largest Volvo and Mercedes-Benz retailers in Finland.
Our staff already numbers more than 900 people, most of them working in maintenance and approximately a quarter employed in sales and administrative duties. Wetteri employees typically have long careers and are committed to our common goals. Our committed staff with high expertise is an important success factor and the key to customer satisfaction. That is why we want to keep investing in long employment relationships, developing the competence of our personnel and well-being at work going forward as well.
This spring, we have seen a number of cases demonstrating the consolidation that is revolutionising the automotive industry. Wetteri has embarked on implementing its growth strategy boldly and rapidly, but in carefully considered steps. We have identified companies with business models and cultures compatible with Wetteri. This ensures smooth integrations and real synergies.
We aim to be the largest and most profitable company in the Finnish automotive sector by 2025 and work hard every day to achieve this goal. This year, we are looking into opportunities for financing our growth, broadening the company’s ownership base with a share issue targeting institutional investors, private investors and Wetteri personnel.”