Koskisen expands its Kore business with an investment of around 3 MEUR in Poland

Translation: Original comment published in Finnish on 6/5/2024 at 7:36 am EEST.

The investment and the related expansion of the leased premises are aimed at capitalizing on the healthy growth prospects in the logistics sector. We believe that investing in the growth of the small but growing and relatively capital-light Kore business is a sensible move for Koskinen. However, this is a modest investment for Koskisen and does not create any immediate pressure to change the company's forecasts.

In addition to investing in equipment, the company is expanding the surface area of its production facilities in Poland

Wood products company Koskisen announced yesterday that the company is expanding its operations and investing approximately 3 MEUR in its Kore business, which manufactures interior solutions for light commercial vehicles. The investment will focus on machinery for the new production unit in Skwierzyna, Poland, such as CNC machines and other equipment needed for production. The already completed production facilities have been leased on a long-term basis with a purchase option.

With the new production unit, the production facilities of the Kore business will grow from the current 3,000 m3 to 8,000 m3. The new facilities will enable the company to scale its production capacity to more than double. The investment supports the expansion of Kore's product range into new end uses and the expansion of the current market area.

Key market drivers support the investment in the new production unit.  Growing logistics volumes, strong growth in e-commerce deliveries and electrification are increasing the demand for light commercial vehicles and wood panels used in their equipment and interior solutions. Kore products, which include floor and lining components, wheel arches and accessories for light commercial vehicles, are manufactured from plywood and other materials according to customer requirements.

Koskisen started producing interior solutions for light commercial vehicles under the Kore brand in Toporów, Poland, in 2010.  The production unit currently employs about 70 people. The personnel requirement for the new unit to be established in Skwierzyna is approximately 30–40 employees. The Kore business is part of the Panel industry segment.

We welcome the growth of the Kore business

We estimate that the Kore business is a relatively small but growing and fairly high value-added specialty segment for Koskisen and its Panel industry segment. The Kore processing business is also relatively capital light compared to Koskisen's more traditional wood products businesses. In its updated strategy in the Q1 report, Koskisen identified maximizing revenue from interior solutions for light commercial vehicles and acquiring new public transportation customers as a key focus area, and we see the investments to grow the Kore business as a clear contribution to this area of the strategy. Against this backdrop, we are preliminarily positive on the company's plans to grow Kore. The investment is small for Koskisen and does not create immediate pressure to change our projections, but we will adjust our forecasts for Koskisen in the coming years to take full account of the investment in our next update.