Reka progressing industrial rubber strategy following cables exit

Aura, Finland – Reka Industrial has reported a strong improvement in earnings (EBITDA) for 2023, helped largely by its now-divested cables business.

The Finnish supplier, now solely focused on rubber-product manufacture, more than doubled annual earnings to €37.6 million, up from €15.2 million in 2022.

Revenue, however, fell by more 54% year-on-year to €92 million, reflecting Reka's sale last April of its cables business to Nexans Group.

In 2023, the Reka Rubber segment’s turnover remained stable at €30.6 million, while earnings fell by more 53% year-on-year to €1.2 million.

Segment profitability, said Reka, was affected by increases in labour, materials, component and service costs as well as delayed pass-through of higher costs to customers.

Reka said it made “several key recruitments” in the Rubber segment during the year, especially in sales, product development and procurement to support future growth.

Meanwhile, Reka Rubber has raised productivity of its operations: transferring production of injection moulded products from Poland to its Aura plant at the end of 2022.

The transfer was completed in the first half of 2023, with the Polish production unit in Dopiewo now concentrating on the manufacture of 'black hoses' and silicone hoses.

To increase capacity for 'black hoses', Reka is installing a new €1.3-million extrusion line at the factory in Poland – expected to start production by this August.

In addition to the extrusion-line investment, Reka has signalled plans for “smaller capex both in Finland and Poland” to support growth and productivity.

“In 2023, Rubber segment invested in growth and clarifying the roles of factories created good conditions for the development of productivity and capacity growth,” Reka stated.

Investments and recruiting, added the Finnish group, will continue during the current year.

However, Reka noted that general economic conditions and uncertainty are reflected in the order volumes and shortened order lead-times of the Rubber segment’s customers.

The company said it will progress its ‘near-term’ strategy to mainly invest in low-risk projects and 'short-term deposits'.