The miracle of Uusikaupunki and one of Finland’s largest factories is listing on the stock exchange. A pioneer in electric cars (Fisker Karma) and, in addition to contract manufacturing of cars, also sees growth opportunities in batteries. I’m keeping a close eye on this with interest.
From Saabs and Talbots to Boxsters and Mercedes. What does the future hold?
A peculiar nuance is that once listed, there will be two companies with very similar names. Hopefully, the tickers will be sufficiently different. A bit like Rautaruukki (SSAB) and Ruukki Group (Afarak) back in the day.
I don’t think it’s that significant because it’s a contract manufacturer. Availability is, of course, a risk if manufacturing has to be completely halted due to material shortages.
It’s a crucial point to consider when assessing risks. This year and last year, we saw examples of production shutdowns in car manufacturing due to component shortages.
It’s harder to assess the situation on the battery manufacturing side. Does the end customer handle material procurement there, or does VA (Valmet Automotive) manage it themselves?
Yep. This is exactly what I was referring to with my comment. Interruptions are the problem, not so much component costs. Even if the end customer is not responsible for procurement, they are likely still responsible for material costs.
Was there still material coming, e.g., I couldn’t find the price in the material.
A couple of things caught my eye that made me wonder. Can anyone explain the following?
The financial data was limited? Where is the current EPS figure? Balance sheet? Full income statement?
What is gross sales? Why is it significantly larger than the generally used first line, Revenue?
If the material states “prioritize profitable growth over dividends,” this is a disappointment for a dividend investor.
With these thoughts, it’s not a paper for me. The company itself is interesting to follow.
As a local, I’m impressed by the company’s clear commitment to responsibility in its daily operations, visible even to outsiders. Even though I don’t work for the company, it sets an excellent example in HR activities, combating climate change, and environmental protection in general; responsibility permeates its culture. They were also effective in their COVID measures; despite being Finland’s largest factory with a very multinational staff, production ran smoothly. If I understand correctly, production isn’t currently at full capacity because the MB GLC production ended, and Sion/Sono and other upcoming, more significant models are expected to reach full production only in the latter half of next year. According to local news, the company/city is building or renovating over 10,000 square meters of production facilities in addition to the existing ones. If the pricing is reasonable, I will acquire a 3-5% stake in my portfolio. My current direct stock investments, in order of size, are Gofore, Neste, Tietoevry, Huhtamäki, Fodelia, Kahoot, Inderes, Nordnet, Spinnova, and Move About. So, Valmet Automotive would fall between Kahoot and Inderes.
Yes, I personally imagine that this was just a notice that they are coming. And some listing prospectus (IPO document) that will include, among other things, the subscription schedule and price will come separately. But I’m no IPO expert
It’s also questionable how the company aims for high revenue growth after experiencing a contraction in revenue.
The company states it aims for 1,000m in revenue and guides for revenue decline in 2023.
My own experiences with the company’s organizations and ESG efforts are controversial.
To quote my boss on an ESG project that ultimately didn’t happen even though the payback period was 2 years. “I wish those grant funds had been paid back”
The company’s ability to predict the future has proven poor. An example of this is the continuous cycle of layoffs, recruitment, furloughs, etc., in Uusikaupunki. Labor is hired only to be laid off 6 months later.
The Lightyear 1 car project sounds and feels like a disaster waiting to happen in my eyes.
Production predictability has also suffered significantly in Salo. In 2021, a new line was ramped up, and production went to 3 shifts with intense recruitment. In 2022, production was then scaled down back to 1-2 shifts.
Component shortages were also suffered in places in 2021. But worse than the shortage itself was poor internal organizational communication; 1-2 days beforehand, it wasn’t necessarily known whether there would be components for production and if production would have to be scaled down.
This indicates poor organizational competence.
Many skilled employees also left the company for Tesla’s factory in Germany.
This doesn’t mean the company can’t make a profit, but in my opinion, it’s such a fast-paced and contradictorily managed rollercoaster that I’m staying out. I might even go short.
These are also valuable insights and good points regarding production situations in the recent past and how they were reacted to.
My own vague memory of various newspaper articles supports the idea that it’s a rather cyclical operation, perhaps even based on individual mega-orders. So, when deals with Mercedes have gone well, capacity (both equipment and personnel) is running at full throttle, but then at times, there’s been a need to hit the brakes again, sometimes quite quickly.
This is interesting, was there no schedule for when the offering starts?
In Uusikaupunki (Ugi), the staff turnover has apparently been high, and as I understand it, suitable apartments for workers have been difficult to find within a reasonable distance. Electrifying the Turku - Uusikaupunki (Ugi) railway and reviving civilian traffic would certainly help in finding good personnel. Some people even commute there by bus from Pori now.
Battery production is done for Mercedes, Volvo, and Geely.
The company has not talked much about its order backlog publicly before. As for Volan, all batteries for Mercedes/BMW are in production. For Volvo, those new high-voltage batteries. But that line is poorly automated, and throughput is small, in the order of hundreds of batteries per day.
I would point out that those production lines are highly customized to produce battery packs for a single producer; if the producer doesn’t want batteries, production cannot quickly pivot.
This causes great fluctuation and complicates production planning. → AND A BIG RISK.
I would add that the logistics chain has not gotten any easier in recent years. A large part of the battery components came by train from China through Russia to St. Petersburg, from where apparently by road.
Everyone surely understands the current geopolitical risks related to China and Russia.
Air freight is not an option for these products. Companies do not want batteries on their planes.
The risks associated with high labor turnover should not be underestimated.
One more question for the more experienced folks: how do you feel about Varma’s 40 million and Ilmarinen’s 30 million commitment? Should we be worried or pleased about CATL’s approximately 20% ownership?
CATL ownership is related to those batteries coming from China; I think they were actually CATL.
I don’t remember, Valmet Automotive practically just “assembles” those battery packs.
I think the 48V battery pack had 6x8V batteries that come from China.
CATL sells those same battery components to other producers who also produce batteries for BMW, VW, and Mercedes.
I can’t say anything else about the ownership. I’d prefer a European one, of course…
I have the same impression of this. In addition, considering that large manufacturing contracts like these are usually, in my understanding, about 5 years long, the business risk level is high due to cyclicality. For example, is there any visibility that after the Mercedes GLC contract ends, the volume will return even close to the level of recent years in the near future?
Margins are also tight in car manufacturing, and I believe improvements to the bottom line will only come from enhancing one’s own operations. How much potential is there in this in the longer term? At least the work is slow.
I quickly dug up some info on Google myself:
“Gross sales consist of cash, credit cards, debit cards, and credit sales. These can be misleading if reported as a single line item because they overestimate the actual amount of sales.” “Sales discounts are early booking discounts. For example, paying 5% less if the buyer pays within 10 days of the invoicing page. The discount only applies to cash received from the customer, as it is a mystery to the seller which buyer receives the discount.”
Source: Bruttomyynti ja liikevaihto - LIIKETOIMINTA 2026
That difference is absolutely outrageous, so it’s not some kind of assumed cash discount. Presenting it that way is indeed peculiar; it seems like a technical line item. Does it only tell something to a sales manager? If someone can elaborate further, I’d be grateful. A small detail, but a big line.
Having followed the company’s share of Uusikaupunki’s corporate tax revenues over the years, profitability and its fluctuations are certainly one of the significant challenges. The modest equity ratio also reflects this. I do believe that the company’s operations and management have improved over the years, though my place of residence probably makes me look at things through rose-tinted glasses. Since completely new facilities are being built for Sion production, I assume that some new production will be negotiated for the GLC lines. Otherwise, they would probably be assembled in existing facilities. It will likely take over a year from the time the agreement is announced until production begins. It is also essential how the assembled products (Mercedes-Benz, AMG, Lightyear, and Sion) sell to customers; the batteries are probably flying off the shelves.
Is the schedule public? Such a pumping operation, layoffs and recruitment, yet they complain about labor shortages. In addition, problems have been heard from the staff’s side; people are not staying. On the other hand, I have considered, for example, onboarding as a strength. Are there problems in leadership then? They will start to show in the product as well. I find the technology/battery business more interesting than car manufacturing itself, if only it has a competitive position and strength.
