Koskisen announced investment to improve thin plywood production efficiency

Translation: Original comment published in Finnish on 8/29/2023 at 5:34 am EEST

The replacement investment increases the pressing capacity of thin plywood in Hirvensalmi and improves the energy efficiency of production. We estimate that the investment only increases Koskinen’s total capacity slightly, and the news does not affect our view of the share.

The replacement investment improves the production process of thin plywood and increases capacity

On Monday, Koskisen announced that it had invested in its thin plywood production unit in Hirvensalmi. The investment is a replacement investment by nature but the updated production capacity will bring clear efficiency gains, increase the company’s thin plywood pressing capacity by a quarter, improve the quality level of the products, and enable a wider product offering. Efficiency gains can be achieved, e.g., by rationalizing and improving the energy efficiency of the production process. The company plans to introduce the updated thin plywood production capacity at the turn of August-September.

The capacity increase of thin plywood does not change Koskisen’s big picture

The press release did not include the euro-denominated value of the investment, but on Koskisen Group’s scale we do not suspect the investment to be very high, as thin plywood revenue accounts for a very small share of Group revenue (under 5% in 2021). However, the investment is yet another small step in line with the company’s growth strategy, which increases production capacity and improves capital use efficiency. The efficiency improvement and growing thin plywood production capacity is positive news, especially in the current situation, where demand for birch plywood products has remained strong and supported the company’s performance. The sales of Koskisen’s Panel Industry segment that is performing strongly is dominated by sales of regular plywood and chipboard, so the strengthening of thin plywood production capacity does not affect our recently updated view of the share.