Norrhydro's turnover grew strongly in the first half of 2022, despite challenging market conditions. Growth was strongest in the segments of construction, mining and material handling machinery and equipment. Demand in the forest machinery industry also increased, driven by the good price development for forest industry products and high utilisation rates of machinery. Only in the marine segment did demand fall slightly.
I am particularly pleased that in challenging conditions we were able to increase our market share by offering new product groups to our existing customers. With our new factory about to be completed, our cylinder manufacturing capacity will double, and we will be in a stronger position to seek additional growth with new customers.
During the spring, material and logistics costs increased significantly, affecting our relative profitability in the year's first half. However, we will be able to pass on the cost increases to product prices with a lag of around 3–6 months. There were also delays in component availability and logistics, but we still managed to deliver all products to our customers as planned.
Business growth, higher raw material prices and increased inventories increased our working capital needs. However, we are quite satisfied with the result, considering the raw material price development and the market situation. The war in Ukraine and the closure measures in China continue to add to the uncertainty in the markets.
In addition to the manufacture of hydraulic cylinders, the development of our new digital services continued well in the first half of the year. We have several active development projects in our portfolio, and we have identified several new customers interested in our digital services. Although these projects are still some way from going into series production, the progress has been encouraging, and we believe that there will be demand for our digital services from both existing and new customers.
Our latest digital concept is NorrData, which we started developing early this year. NorrData is a continuation of our digital products and it supports, in particular, the NorrDigi® motion control system. With NorrData, we process data from machines and equipment into a service product that enables our customers to improve their business productivity and equipment availability. With the development of NorrData, we are preparing for a future in which intelligent machines with large amounts of data become more common, and the processing and efficient use of data becomes an important part of everyday operations.
Our new environmentally friendly production facility is on track for completion, despite minor delays in equipment deliveries, and we will start ramping up production at the end of August. The plant will reduce emissions from our production by an estimated 20 per cent compared to today, increase our capacity and enable us to start mass production of NorrDigi®.
The ramp-up and the production shutdown caused by the move will continue to affect our operations in the second half of the year, but our order book is at a good level, and we are confident as we approach the end of the year. The biggest price increases for materials and components seem to be over, and we will be able to pass on the earlier ones to sales prices with a slight delay.
With this in mind, I welcome our new CEO Matias Parviainen, who will start at Norrhydro in November. With his strong management experience, Matias is well placed to continue and develop Norrhydro's successful future.
I will also continue with Norrhydro's growth story: in my role as Chairman of the Board, I will focus on driving Norrhydro's growth strategy.
Cargo-in: +358 40 618 4054
Norrhydro Group Oyj
Headquarter & production
FI-33840 Tampere, Finland
FI-70210 Kuopio, Finland