Reka Rubber's first quarter results hit by slowdown in demand

Aura, Finland – Reka Industrial has seen a major decline in first quarter results, mainly due to the divestment of its Reka Cables business to Nexan Group at the end of April 2023.

The Finnish group, which now only consists of Reka Rubber, posted earnings (EBITDA) at breakeven, compared to a prior-year gain of €4.1 million. Group sales declined 86% year-on-year to €7.4 million.

Excluding the divested business, Reka Rubber’s sales for the first three months of the year fell 16% year-on-year to €7.4 million, with earnings down 75% to €200,000.

Profitability was affected by decreasing volumes and the delay in passing through higher costs to pricing for customer.

The “general financial situation and uncertainty in markets reflected in order volumes and shortened order lead-times of Reka Rubber customers,” said president and CEO Sari Tulander.

The “challenging market situation “is estimated to continue at least until autumn, Reka's leader added in the 23 April statement.

Tulander, however, noted that Reka Rubber had a “strong position” in its selected markets, and that it was developing market-share and acquiring new customers.

Reka Rubber is also focused on "transferring cost increases to customer prices and developing productivity and profitability,” the presient & CEO added.

In addition, Reka Rubber is investing in future growth through “a profitable product offering and efficient production technology.”

As previously reported by ERJ, Reka started to transfer production of injection moulded products from Poland to its Aura headquarters in late 2022.

The Polish production unit in Dopiewo now concentrates on manufacturing 'black hoses' and silicone hoses.

To increase capacity for 'black hoses', Reka has also ordered a new €1.3 million extrusion line for the factory in Poland, which is slated for start-up by August 2024.

In his most recent statement, Tulander said the production lines and machines ordered by Reka Rubber will be installed mainly after summer.

Investments and recruitment to increase production capacity and profitability will also be continued, according to the company leader.