The past year has been surprisingly good, with a de facto net profit reaching a new record. Given the geopolitical and trade policy situations, this is more than acceptable. There have been no major problems, other than a sharp drop in the volumes of goods in transit from Russia. However, markets did not improve significantly, this was particularly noticeable in the construction sector in which Uponor Infra is active. The primary reason for the good result was Mirka’s growth, and the focus on higher-value products. In addition, the fall in the value of the Euro against the most important export currencies was a factor.

THE GROWTH PROSPECTS FOR THE GLOBAL ECONOMY ARE WEAK
In today’s world, there are no prospects of really significant growth in any segment. The world is marking time, and the best that can be hoped for is that things won’t get worse. There is some risk of a new worldwide recession, even before we have managed to extricate ourselves from the last one.

In particular, the Finnish economy appears to be facing its fifth year of recession, despite the fact that, as usual, the economic forecasts are suggesting a slight increase in GDP. Any substantial growth in the global economy is hidden in the mists of the distant future. None of the serious problems have been solved, and we are continuing to kick all our problems into the long grass.

Wars and violence are widespread, and the flood of migrants into Europe is growing. Radical national political movements are seeing their chance and are winning votes in many countries. People are clinging to the past, and do not realise that global politics are being restructured by force of circumstance. Within a few years, we will be living in a new, transformed world. The process will be difficult and disruptive, and will demand a new understanding by individuals in every country.

WE CANNOT TURN THE CLOCK BACK
The way things were is over, at least in the mature economies. By that, I mean that the long period of growth, which the global economy enjoyed from the 1960s, and the financial and technological explosion of the last decades of the old century, are dead. Now we have to adjust to realities.

Many of the political promises of social welfare will have to be reconsidered, since society will not be able to afford them. We have reached the ceiling of viable tax rates, and there can be no return to restrictions on the movement of capital. In addition, the age structure of the population in most developed countries has become a serious problem, with an automatic decline in the size of the workforce. This will demand an increase in the degree of employment.

KWH’S SOLUTION: FLEXIBILITY AND CONSTANT RENEWAL
In such a world, it will be difficult to navigate successfully through the hidden rocks. At KWH, we have been preparing for this for many years. Our long-term strategies are built on flexibility, constant renewal through dynamic innovation and readiness to transform our operation in response to the demands we face, whatever these are. In the past year, we were forced to make some adjustments to our manufacturing capacity to reflect demand, but, overall, we have managed to avoid the worst-case scenario. At Group level, the trend was positive.

KWH’S FUTURE IS BRIGHT
The budget for 2016 promises continuing growth in both sales and profits. It even looks possible that our profits might set a new record. We are continuing to invest at a level far above depreciation replacement, and we are building up our capacity for better times to come.

The Group’s ambition to grow through corporate acquisitions has not been as successful as intended, but we will continue with this strategy alongside organic growth, which is expected to increase in 2016.

Peter Höglund, Group President