Key Figures 2013

Net sales

Operating profit (EBIT)

EBIT as percentage of net sales, %

Equity ratio, %

Number of personnel

Personnel by country, %

CEO's Review

ceo

President and CEO Olli Pohjanvirta, how was the year 2013 for Nurminen Logistics?

The company’s financial development was not satisfactory. We fell short of our objectives in terms of both net sales and operating result. Our operating result excluding non-recurring items amounted to EUR 1.6 million, compared to EUR 5.6 million in 2012.

The market situation apparently was not the easiest one for a logistics company?

The general economic gloominess continued in the Finnish market, which was naturally also reflected in our operations. In addition, our growth in the internal markets of Russia and its neighbouring countries was lower than expected. Nevertheless, we are among the three largest companies in almost all of our service segments in Finland, such as forwarding, and we are the market leader in covered wagons in rail transport between Finland and Russia.

How did Nurminen react to the soft development?

In 2013, we carried out considerable restructuring of operations and improved the efficiency of our operations to better match the prevailing situation. Among other things, this meant the development of the processes at the Vuosaari terminal, closing down our Vainikkala terminal, trimming personnel expenses and also reforms in the senior management of the company. I am certain that we are heading into 2014 as a considerably more competitive company.

Did anything positive happen at Nurminen Logistics during the past year?

A lot. We achieved pleasing successes in project transport services related to major industrial investments. In railway transport deliveries, we secured new customers in Russia towards the end of the year. In Finland, our market share remained unchanged in spite of the challenging conditions. In addition, the satisfaction of our customers with our services remained high, which shows that our employees are committed and exceptionally skilled.

What makes your company a success?

Due to structural changes and efficiency improvement measures carried out last year, we are well prepared for better profitability. Our strategy will not change, but the rate at which we implement it will. This year, we aim to increase the number of our own wagons registered in Russia. We will also invest in our Russian organisation with the aim of securing new significant customer accounts. We will increase our special transport and project business. We will develop our partner network in the key markets. Our success in the international market will guarantee competitive service to our Finnish customers as well.

What is Nurminen Logistics’ outlook for 2014?

The company’s net sales will increase and operating profit will improve. We have been the only foreign railway operator in Russia since 2001. We know the local logistics market and society well. We expect considerable growth in the internal railway market in Russia and the CIS countries as well as international project transports. We will achieve results through our own activity – regardless of the tight market situation. I would like to thank our personnel, customers, partners and others in our network for their smooth cooperation and commitment. Together we are heading towards a more efficient future in logistics.

"I am certain that we are heading into

2014

as a considerably more competitive company"

signature

Olli Pohjanvirta

President and CEO

Highlights

More than

450

loads one third of which are special transports

Approximately

350

thousand tonnes of paper and cardboard through the Vuosaari terminal

5

new significant accounts in the internal traffic of Russia and CIS countries

Strategy

Nurminen Logistics’ vision is to be the most reliable and high-quality provider of rail transport and a significant provider of logistics project transport services and solutions in Russia, its neighbouring countries and Finland. The strategy of Nurminen Logistics is to grow in the developing transport markets of Russia and its neighbouring countries both organically and through investments and acquisitions. The company’s extensive experience in the Russian logistics market and own modern fleet of rolling stock play a key role in the implementation of this strategy. Further competitive advantages include the company’s cost-effective, high-quality and flexible transport services that meet Western standards. In all its market areas, Nurminen Logistics offers comprehensive logistics solutions that create added value for the customer in the form of time and cost savings.

Strategic objectives for 2015

  1. New, significant accounts in Russia
    • Taking advantage of the rapidly growing and liberalising Russian rail transport market. Total market size EUR 25 billion, of which Nurminen’s key target market of covered wagon transport represents EUR 2.5 billion.
    • Strengthening the company’s market-leading position in railway exports from Finland to Russia and its neighbouring countries.
  2. Growth through selected acquisitions and projects
    • Focused investments and acquisitions in growing markets and segments
    • Developing service concepts that create synergies for the company and added value for customers.
  3. Improving profitability
    • Internationalisation and growing profitable business operations
    • Developing operational productivity and efficiency.

Long-term financial objectives

  1. Growth: Growing at a faster rate than the market, on average over 15% per year. Over 50% of net sales from the growth markets of Russia and the other CIS countries.
  2. Profitability: The company will improve its profitability, reaching an operating profit margin of 10% and return on equity of 20%.

Nurminen Logistics' strategy

Values

Develop and improve – for the benefit of the customer

Trust and be trustworthy

Operate profitably

Entrepreneurship means responsibility

Competetive advantages

High service quality, reliability and flexibility

Strong expertise in logistics between Finland and Russia and within Russia

Customer service on par with Westetn standards

Modern, company-owned fleet and wide partner network

Objectives

1.

New, significant accounts in Russia


2.

Growth through selected acquisitions and projects


3.

Improving profitability

Destination

To be the most reliable and high-quality provider of rail transport and a significant provider of logistic project services and solutions in Russia, its neighbouring countries and Finland

Board of Directors

Tero Kivisaari
Tero Kivisaari

b. 1972

Master Degrees in Science and Economics

Chairman of the Board since 2013, Member of the Board since 2010

Independent of the company and significant shareholders

Jan Lönnblad
Jan Lönnblad

b. 1952

M.Sc. (Econ.)

Member of the Board since 2011

Independent of the company and dependent of the significant shareholders

Juha Nurminen
Juha Nurminen

b. 1946

M.Sc. (Econ. & Bus. Adm.)

Member of the Board since 1971*, Chairman of the Board in 1997*–2010

Independent on the company and dependent of the significant shareholders

Jukka Nurminen
Jukka Nurminen

b. 1979

Managing Director of John Nurminen Events B.V.

M.Sc. (Econ. & Bus. Adm.)

Member of the Board since 2009 (deputy member of the Board in 2008)

Independent on the company and dependent of the significant shareholders

Alexey Grom
Alexey Grom

b. 1971

First Vice President of FESCO Transportation Group

Executive MBA

Member of the Board since 2013

Independent of the company and significant shareholders