CEO's Review

My first full calendar year as CEO of Teknos Group is now behind us and it is time for a recap. In 2016, we celebrated round-number anniversaries in several countries, such as Poland, Norway, the UK, and Russia. We have thus a longstanding tradition of operating close to our customers. At group level, the last 18 months has been a period of intense change and development.

For customers

Our customers are our bread and butter, and we want to understand and serve them in the best way possible. In 2016, we carried out a customer satisfaction survey in Finland – in 2017 it will be Sweden's and Denmark's turn. Other Teknos countries will follow. Customers find Teknos to be a reliable and competent company that produces high-quality products and bases its operations on identifying the customer's needs. Our customers are looking for unique and more innovative products and solutions as well as better training opportunities.

The above development objectives have been put on the table. For example, we will reform and expand our training provision during the second half of 2017 with the opening of our new training center in Rajamäki. Our R&D department's continuous and systematic efforts aim at ensuring and improving product quality. To support our R&D, we have a separate innovation group that develops new and unique coatings and solutions. As an example of innovative products, I would like to single out our TEKNOPUR 300 elastomeric coating. Based on polyurea technology, this coating is extremely fast-curing, has excellent chemical resistance, and is well suited for immersion and waterproofing.

Our sales and customer service teams are continuously in contact with our customers. They listen very attentively to the customer's wishes and needs and pass on any development suggestions to our product development. Our job is to address our customers' coating-related challenges.                                  

Competitive advantage from our personnel

The strengthening our organization played a key role in 2016. During the year, we hired 100 new employees into our business and support functions, and, by the end of the year, Teknos employed more than 1,300 people in 19 different countries.

Last year we carried out an employee opinion survey (EOS) that covered the entire personnel of the group. The results were very pleasing. Our personnel is committed to Teknos and our employer brand is particularly good. Our personnel believes in the success of our company and is willing to recommend Teknos as an employer. Some development areas were also discovered – improvement of communication and leadership, to name a couple.

I believe that the intranet, new digital workspaces, and other tools that we introduced last year will bring the desired improvement in our cooperation across segments and countries. In 2016, we also launched the Human Capital Management system project. Once completed, it will standardize HR practices across countries and provide supervisors with new tools for monitoring and managing the careers of their personnel. In addition, the new system will help us meet the requirements of the new Personal Data File Decree.

However, we, the people, play a more important role than any tool, and I challenge our entire personnel to keep an open mind about changes, explore the possibilities provided by the new tools, increase personal interaction, and share information.

Continuous improvement – a daily challenge

In 2016, we worked towards the harmonization and development of the quality of processes as part of our continuous improvement practice. By capitalizing on best practices, assessing and streamlining processes, and getting things right first time we can ensure our future competitiveness and will be able to offer better services and products to our customers. The 5S methodology is used in our production and lab. As in earlier years, Lean Six Sigma trainings were organized in 2016 and will continue in 2017, as necessary.

Towards the end of 2016, our own mentoring program got off the ground, and I expect the program to start in full speed during 2017. I believe that mentoring will help in the passing down of tacit knowledge from experienced employees to new ones. New employees, in turn, bring along new approaches and ideas and challenge old practices. At the beginning of 2017, we launched our own trainee program which is intended for graduating or newly-graduated young employees.

Two acquisitions that support our bold growth strategy were completed in 2016. During summer, we acquired the industrial coatings business from Feidal Coatings in Germany, and in the autumn we strengthened our position in industrial wood coatings market by acquiring Drywood Coatings, a Dutch company manufacturing water-borne coatings for wooden surfaces. In addition to the Netherlands, the Drywood acquisition boosted our presence in Norway in the Architectural Coatings market.  In 2016, we opened a new company in Croatia.

International acquisitions are on the agenda in 2017, too, but we also aim to achieve growth through organic strategies. We are looking for organic growth both from existing customers and through lead generation. The development and launch of new and innovative products and services that meet the customers' needs are prerequisites for growth.

According to our customer satisfaction survey, we need to strengthen our brand which, on the other hand, plays an important role in the generation of business leads. Brand strengthening efforts have begun and can be seen by our stakeholders in renewed web pages, among others. These new pages have already been introduced in several countries.

Future trends

Safety, hygiene, and sustainable development are emerging and important themes in coatings and business activities. We play several roles. Teknos is part of the HygTech Alliance which offers the world's first holistic hygienic product package for public spaces.

Sustainable development is concretely reflected in our operations. Our paint and coating solutions are designed to protect surfaces from the effects of the environment and thus extend the life of the object. High-quality paintwork is durable, reducing environmental impact. We focus on product development where environmental aspects are looked after in all stages of the product's life cycle, from choosing raw materials to waste treatment. A very good example of this is the BIORA interior paint, which has been granted the right to use the Nordic Ecolabel, 'The Swan'.

The long-term development work we have done over several years has already produced good results and our future prospects are good. We have a great year before us again!

Paula Salastie

CEO

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