Okay, I think it's now 12:30, so we can probably start the meeting. Good afternoon, everyone. My name is Lilli Riikonen, and I'm from Investor Relations. Welcome to Exel Composites Q4 results call. I'm here today with CEO Paul Sohlberg and CFO Mikko Rummukainen, who will give you a presentation on the quarterly results and also key highlights of the year. After the presentation, you will have the opportunity to ask questions. You can do so by simply raising your hand or opening your mic, or you can use the chat box if you so prefer. Please note that this meeting will be recorded, and the presentation material will be available on our IR site after the presentation or the meeting. I think we have some more people joining us. I think everyone's in. We have very active participation today, so that's good news.
Okay, but I would like to give the stage to Paul. Paul, please go ahead.
Excellent. Thank you, Lilli, and good afternoon, everybody, and welcome on my behalf as well. Like I said, Mikko and I will give you an update on the Q4 results and what we've been up to, as well as talk a little bit about the full year that ended. Lilli, if you'd like to move the slide, please, and we'll go straight into the executive summary. Let's start with the highlights from the fourth quarter. That was for us a strong end to a solid year overall. By that, I mean our order intake, revenue, and adjusted operating profit all improved significantly year on year, while at the same time our fixed cost decreased. From the solid year point of view, we also had quite decisive execution on our transformative strategy.
We continued well through the year, and we have quite some highlights also for the fourth quarter in that respect. I'm pleased also to see that despite the slightly cautious market, we did progress well with customers. The order backlog was up almost 15% year on year, as well as we secured multiple new customers across various of our customer industries. If we then look at the revenue growth, we had quite brisk or significant growth in the buildings and infrastructure sector, in the industrial, as well as the energy customer industry as well. It's particularly pleasing to see that the buildings and infrastructure has started slightly to come back after being quite slow for a good amount of time preceding this period. On the profitability side, we improved thanks to a plethora of activities running around optimizing capacity, cost control.
We've been quite frugal across the year, both in all operational spend, hiring, and things like this, as well as then operational measures at the plants where we can optimize and continue with a frugal approach. In terms of the strategy implementation, we have two important major highlights. The first one I want to mention, and we'll be talking about that a little bit more later, is that the team responsible for bringing up the new India factory, they delivered that within time and on budget, which I want to congratulate them on, because when you are building a greenfield factory, the fact that it comes up on plan and within budget, that's a good achievement. We are happy with that. The factory is now operational. We've started production there as well, and we are looking forward to ramping up even more production during this year.
The other major milestone that was achieved was the conclusion of the social plan negotiations with the unions and the employer representatives in Belgium. Unfortunately, we had come to the conclusion that we will need to close the Belgian plant to address a longer period of loss-making activities, and then to drive activity and efficiency in the remaining factory network. Also here, I want to take the opportunity to thank the teams and everybody involved in that. It's been quite a tough decision and a tough journey there. I think it was very well handled in terms of how the negotiations went. The case for change was very clear to everybody involved. I think after all, it went quite expediently and in a good collaborative manner. Thank you to everybody for working on this tough decision.
As a final thing, I want to note here in the executive summary is that we've also given the invite for the AGM, which is in March. There, people usually tend to look for the dividend proposal. This year, at this point in time, the board proposes that we will reinvest the dividend in the business and that no dividend would be distributed for 2024. With that, that's an executive summary. We'll come back to some of these points in a little bit more detail, but I'd like to hand over now to Mikko to talk you through the numbers, please. Mikko, go ahead.
Thanks, Paul. As Paul said, a strong end to a solid year. Looking at the order intake, we achieved year-on-year growth of 22%. Revenue also increasing year-on-year 14%. Operating profit in Q4, that was affected by the decision to close a Belgian factory. The closing itself is expected to happen end of Q1, but the expected costs were booked in Q4. When we look at the adjusted operating profit, that was positive at EUR 0.2 million. So the difference is effectively the Belgian. And adjusted operating profit reached 0.7%. If we further look at our order intake, Lilli, if you flip to the next page. Q on Q, strong order intake, despite that the markets were somewhat cautious at the end of the year. There was some uncertainty about global economic development, which had been quite low, affecting metrics like PMI index.
Also, at the end of the year, we saw customers and many businesses overall waiting what may happen once the Trump administration steps in, what sort of trade tariffs and barriers might come, and many decisions were pending. Overall, order intake full year was again up 7% at EUR 104.9 million. Order backlog further improving from 2023 to 2024 at 15% positive change and EUR 34 million order book. If Lilli, you take the next slide. Looking at our business portfolio, where we saw growth happen, the strongest growth at the end of the year was buildings and infrastructure. We also saw positive change in our industrial and energy customer industries. What we're quite pleased is the growth in buildings and infrastructure because in Finland, in Scandinavia, all over the world even, buildings and infra has been in a very difficult situation as a whole market.
We did see some reduction in the transportation and others partly due to lower production in our Belgian factory. Energy is something that was affected by the shift of the business from the U.S. to Asia. Lilli, next please. Looking at the profitability, our profit improvement actions are paying off. We achieved positive adjusted operating profit to, as Paul said, plethora of reasons, better capacity management, being able to reduce costs despite growing in order intake and revenue. That was a rare achievement, if one can say so, that activity increases but costs go down. In Q4, we did see some small reduction in our profitability, and that was partly from the Belgian factory. We booked a total of EUR 1.7 million of one-time cash costs and EUR 2.5 million write-downs to our Q4 results.
Once the Belgian closure is complete, we expect that to deliver EUR 1.8 million annual cost savings. Part of those savings will be visible now in 2025. Now, if we go into our business unit achievements, I'll hand it over back to Paul.
Okay, thanks, Mikko. Let's start with the Engineered Solutions business unit. The headline here is several significant orders in transportation and energy. I'll talk to you in the next slide about one of the transportation orders in particular. I'll start a little bit with the market and the revenue. In Q4, revenue increased compared to the previous quarter. We saw demand picking up. I think this is a good achievement given that the first or the start of the second half and the last summer was not all that good after quite an okay first half. We did do quite a lot of work in the customer interface, which then led to orders coming in there. We saw this in the form of two larger orders and a good uptick in the general business environment for ESBU.
These two orders, I'll talk to the FLYING WHALES in the next slide. The other one was a larger conductor core order. That's promising and, of course, pleasing as well because we have been seeing more and more activity in this energy transmission and distribution sector. We look forward to seeing more activity there going forward as well. The other major item, of course, which we mentioned already was the Belgium closure. This belongs to the ESBU. Unfortunately, as a consequence of these decisions, the employment of 50 people will end. At the same time, it will enable us with the closure of Belgium to optimize production and the roles of the other factories and increase the utilization in the other factories with that. It's a good decision and a necessary means that we wanted to and we needed to do.
Also, just as I mentioned, the turnaround and the progress in the U.S. is going well. The refocusing that we announced earlier has progressed particularly in the customer interface where we have secured multiple new customers and seeing also an improving business environment in general in that part of the world. Lilli, if you want to go to the next one, please. Talking about FLYING WHALES, just to give you a little bit of a glimpse, you might remember from last year, this is when the customer engagement started with an R&D contract earlier. Now what we have done, we have signed the continuation of that, which includes now the further R&D activities and development of the actual tube sets for the first of these airships to be built.
As you may remember, it's one of these players that are planning to build these large capacity airships to kind of decarbonize and revolutionize transport of heavy loads. For us, of course, it's an interesting project as such. It belongs in the transport sector. What is particularly relevant for us, that this is a flagship example of the type of early and very demanding R&D and engineering work that we want our Engineered Solutions business unit to be doing. I mean, this is exactly up their alley in very demanding thin-walled carbon fiber tubing. For us, this is also one of the examples where Exel can really shine. I mean, we are, I want to say, the only one or the very few companies in the world who can do this.
I think it's a very good flagship example of this type of activity that's actually coming through from the strategy. It also, because it's aeronautics, has quite high or very high quality and timeliness requirements, which is exactly also the type of work we want to be doing in this business to really be working with customers that are pushing us to be better and better. We'll then, of course, need to go through, and we are already working on that, going through rigorous quality certification processes to be able to supply these tubes. In the future, maybe it's a little bit longer out, but in the future, when all goes well, we are looking for this to be a significant business for Exel Composites. If you can just imagine how much of the carbon fiber tubes each of these ships will require.
If there are many of them, then the potential is there. That's why we are wanting to work closely on this. Okay, very well. Let's go, Lilli, to the Industrial Solutions business unit. I think here we have also the highlight, obviously, is the Indian factory that we took into operation. The other highlight, maybe covering the whole year last year, is the multiple customer engagement that the Industrial Solutions business unit was able to secure with large flagship type of customers. If you remember last year, we secured the multi-year agreement with Foton, the big bus maker. We signed a multi-year agreement for helihoist systems for the offshore turbines with one of the major turbine OEMs. We actually signed or we secured two customer engagements for carbon fiber spar caps to be delivered out of the India factory.
One is unnamed and the other one is with Vestas. All of these, we expect to start to deliver revenue starting in 2025 and then, of course, growing in the future. If we just look at the market position or the situation there, we saw the same type of trend, which is in ESBU, is that the market did develop favorably. We saw more positivism. It's still cautious. We still need to continue working on that and also see where the global economy and geopolitics are going to see when we can see a clear improvement taking place. In terms of the revenue, we had a small fluctuation between the quarters there, but we expect this to develop well going forward with these customer engagements. Lilli, if you want to go to the next, please.
Okay, we have been talking about this already a couple of times, but it is significant for us. If you remember, it's a greenfield plant near Goa in India. We did, as we had promised, we made the factory operational by the end of this year. They are also fully moved out of the previous factory, which is now, from our point of view, closed. The new factory, of course, is optimized for serving the wind power customers in volume operations going forward. We expect that the spar cap deliveries will start in this quarter and then continue ramping up through the year, first with the first unnamed customer and then later in the year with Vestas. Lilli, next one, please. Okay, then coming to the guidance. We expect that revenue will increase and our adjusted operating profit will increase significantly this year compared to last year.
The guidance is based very squarely on the current backlog and also the mix of the backlog, as well as the outlook that we have right now with the customers in terms of their own forecasts, timing of orders, and how they turn into revenue. That is the revenue basis. For the adjusted operating profit, of course, this is an area where we have been working quite significantly and we have more things up our sleeve, which we will be implementing this year. It is also more in our hands than purely the outside market, which is driving more to some extent the revenue. That is why there is a good reason to say that there will be a significant increase in the adjusted operating profit this year, just in terms of background of the guidance. Lilli, if you want to go to the next one, please.
Okay, then just one highlight as well. You might have seen this on social media or in the press. We had some success on the Nordic Business Diversity Index 2025. This is a research house that analyzes the companies listed on the Nordic exchanges and their diversity from board and management point of view across four different dimensions. We were pleased to be recognized as number one in Finland in the small cap companies category and number five in the Nordics. We placed last year as well. This was now an improvement. We are, of course, happy to be recognized by this as well. For us, obviously, I mean, diversity, it is important to make sure that we have good representation from all different backgrounds and walks of life.
The other thing, of course, with diversity is what it brings particularly to business is a higher chance to see things from different angles, thus understanding the world and what is happening there and opportunities and issues better. So we're happy with this as well. Okay, Lilli, let's move, please. Okay, and then just highlights. You remember we've been kind of carrying forward a list of activities that's been done. Now we dropped off the 2023 activities and here we just have the 2024 ones. As a recap on what the team has been doing and the reason for why I'm very pleased with the implementation and decisive implementation we've been taking is in this year only. You remember we put in place a completely new operating model with two business units, simplifying our structure and the way we operate significantly.
We organized into two fully end-to-end accountable business units and we're already seeing the benefits of that. Also, the change was well accepted, so it's working well. We have here, I'm mentioning the same for the public ones, three significant or four significant customer engagements that were kind of closed last year. So that's good as well. I mean, the strategy to work more in the early phases to work with big customers that will push us and who can deliver larger volumes, it's working well as well. We did deliver the India factory as we had promised. We did a lot of the public and non-public activities on the implementation of strategy. I mean, Belgium we talked about. We had the quite successful rights issue or offering earlier in the year and also new financing agreements to strengthen our financial position.
Just as an example here, we continue to work significantly also on the sustainability and moving composites as an industry and Exel towards more of the bio-based use and more sustainable solutions. Just as an example, we launched commercial scale and significant use of bio-based resins across our operations. What's particularly pleasing with that is that we're seeing it's bringing multiple dimensions of value. I mean, one is, of course, that customers like it. It drives their sustainability challenges or their targets, ours as well. We're also seeing from our point of view that we can actually drive more value from that than with some of the ordinary resins. That's a good thing from a commercial perspective as well.
With that, I'd like to move over to just the summary page with the next engagements we'll have and then open the floor for your questions and comments. Please go ahead. Lilli, if you can please manage the questions as I cannot see the hands on my screen.
Yes, I think you can just open your mic and ask your questions. The first question comes from Joona Harjama.
Hi, thank you for. Hello, can you hear my voice?
Yes, now we can hear you. Thank you.
Perfect. Perfect. Thank you for the presentation. I have a few questions. Firstly, about the revenue guidance. Given that your order book was 15% higher than a year ago, but you guide only increasing revenue instead of, for example, significantly increasing.
I just wanted to ask what level of revenue growth you would like to see to update your guidance wording to significantly increasing. Should it be, for example, double-digit growth or, I mean, I just see the guidance a bit conservative considering the order book situation, historical lead times, and also the expected economic growth this year. Can you comment anything about this?
Yeah, yeah, thanks. Thanks, Joona. Mikko, you can also add, but if I start. Yeah, obviously I said that the revenue guidance is based on the order book and also the outlook we have from customers at this point in time. Yes, the order book is higher than before. However, what we have not spoken about is the timing of how some of that revenue will arrive. That needs to be taken into account as well.
The other part is that we're still quite early in the year. While we do see positive signs in the customer interface, we do not see that materializing strongly into a strong or very differential growth that we have been expecting for this point in time. That is why I think it's fully aligned with what we are having in our books and what we're seeing the guidance considering the timing of the revenue. Mikko, do you want to add something to that?
We've not opened or defined exactly the criteria. I will not comment on a specific number of what it would take to eventually say it will increase significantly. Obviously, this is early in the year. One of the reasons for what happened in Q4 end of last year was about the global uncertainty.
We have all read the news about what is happening in the U.S. and trade barriers, tariffs coming in. There is some risk to all companies in the world working across borders that some disruptions may appear.
Okay, perfect. Thank you. I have two more questions about a bit more political or geopolitical side. How do you see the Trump tariffs and the possible effects on your business, if it has any? What is your view on that?
Yeah, obviously, like any other company out there, we have been analyzing and discussing this quite intensely over the past months there. Of course, I guess we all were looking at what will actually be the outcome of these tariffs. I mean, we saw the game that is going on with, okay, announcing the tariffs and then maybe blocking them or freezing them for some period of time.
Whether it's a negotiation tactic or how much will actually be there. Now, with that in mind, it's good to note that we do have manufacturing operations in the U.S. As a consequence, not before the transition of power, but now after the transition of power, we have seen increased activity from customers in the U.S. market towards our interest for local manufacturing there. The other part, which is good, that we do not have a huge amount of imports. I mean, some obviously, but not a huge amount of imports from outside of the U.S. into the U.S. We might not be that touched directly by the tariffs. I will not go as far as to speculate what the impact will be on logistics costs and the availability of shipping and things like this. I think that remains to be seen.
In our environment, we're following the situation closely to see if it can unlock additional business or new business or return of business to the US factory.
Okay, thank you. One more final question. Can you quantify the possible effects of the political strikes in Finland to your business at all, or what kind of effect you would see?
I mean, of course, I think like everybody, we're hoping that there's a resolution soon. We have already been affected by the strikes. If there are more announced, we will need to revisit that. If you just imagine that you have the Finnish one or both of the Finnish factories striking one week a month, for a number of weeks, that would be a significant impact to us. We are hoping to avoid that.
The time period associated with this whole thing is such that it does not make sense to try and switch production elsewhere in the matter of a few months. Hopefully now we have had already strikes, there is some impact. If this continues, let's say if it would continue for multiple months that you have a week or two or 10 days or whatever, then it could be quite significant in the short period.
Okay, many thanks. That is all from me.
Yeah, thank you.
Who is next? I do not see any hands raised, but you can open your mic or you can use the chat box as well.
If there are none further today, I guess we will thank you very much for your attendance and your questions. We look forward to seeing you at the next engagement at the very least.
Thank you very much for joining today and have a great weekend once we get there.
Thank you.