18.08.2023
KRONUS’ Turnover Reaches 124.7 Million Euros in 2022
Andrejs Dikins
Chief Executive Officer
The turnover of KRONUS in 2022 has increased by 42% to 124.7 million euros, while profit has reached 10.59 million euros. Despite the rapid growth and record high performance observed for two years in a row, we already started investing in risk diversification projects last year in preparation for the recession that the entire industry is expected to experience this year.
Last year we demonstrated excellent results, strengthening our position of the year 2021. It has to be said that the strongest performance was achieved in the first half of the year, when after Covid-19, demand continued to grow in all sectors and the impact of the Russian-led war in Ukraine was not yet felt. Whereas, already in the second half of the year, we experienced market fluctuations: a slowdown in our sector, which had a negative impact on demand. The unstable situation, mainly linked to the geopolitical situation, energy resource prices and high inflation, led to preparations for a recession. Being realistic, in 2022 we already started to implement ambitious risk diversification projects and measures to minimise the impact of the looming crisis.
We observe that our negative forecast is coming true – the sector will be in crisis this year and next, further impacted by inflation, the decline in construction and war. The world’s major economies are also in recession: The USA, Europe, and China. Unfortunately, the negative scenario is also affected by a factor which we could not have foreseen: in a situation where demand for timber and wooden packaging has fallen, some market players are acting unfairly. EU enforcement authorities have received reports that a number of companies have failed to comply with sanctions imposed by the European Union. By misleading customers and other market players, these companies incorrectly indicate the country of origin of the wooden material, hiding the fact that – despite the sanctions – the material is imported from Russia and Belarus, and claiming that the products originate from Kyrgyzstan and Kazakhstan. As a result, the product is sold significantly below market price, therefore distorting competition and forcing other market players to find alternative solutions.
In 2022, we continued to invest in the wooden packaging segment and develop the gardening product segment. Wooden packaging and gardening products have been and will continue to be our main field of specialisation. However, in response to the shortage of raw materials in the metal processing market, and with the aim of diversifying risks, last year we established a new metal processing plant under our own wing. We invested 2.2 million euros in the production facility, and a total of 25 new workplaces were created. Already in the first months, production was at 100% capacity, supplying both KRONUS’ own production, i.e., making of pallet collar accessories, as well as other companies in the Baltic states and Finland with steel products and tapes.