Finnvera issued on 10th May 2017 a EUR 750 million 15-year bond. The subscriptions quickly rose to about EUR 1.5 billion with over 50 investors.STOCK EXCHANGE RELEASE 12.5.2017 10:00The 15 year bond issue was Finnvera’s longest so far.Lead managers for the issue were Citi, Deutsche Bank and Goldman Sachs. The greatest demand came from investors in Germany and France.Finnvera uses the funds for financing the domestic SME sector as well as export credits.The bond was issued under Finnvera’s EMTN (Euro Medium Term Note) programme. The programme is guaranteed by the State of Finland.The rating of Finnvera’s EMTN Programme corresponds to the rating assigned to the State of Finland for its long-term liabilities. The rating given by Moody’s to Finnvera is Aa1 and that given by Standard & Poor’s is AA+.Additional information:Ulla Hagman, CFO, tel. +358 29 460 2458Mikael Nordgren, Head of Treasury, tel. +358 29 460 2467
The only security that a company providing services generally has is its cash flow.It has long been predicted that services will save Finland’s exports. Services related to information technology, in particular, are growing rapidly and account for over 40 per cent of all exports of services, which total nearly EUR 18 billion year 2015.According to Finnvera’s experts, exports of services require much more creative financing solutions than traditional exports of goods.- Often a company incurs costs before it has even started to produce the service. While an exporter of goods can use, for instance, machines and equipment as collateral, the only security in exports of services is often the company’s cash flow, says Finance Manager Jani Tuominen of Finnvera.This is a vital difference when negotiating for financing. - In exports of services, we concentrate on earnings and business logic. Attention is paid, among other things, to the agreements that the company makes and the type of cash flow it has, Tuominen continues.When exporting goods, it is often simpler to find a solution for financing.- When goods are exported, we can usually look at the company’s history. The company’s financial statements and key indicators reveal how it has exported similar products before. With an exporter of services, we cannot necessarily see the same from the periodic key figures, Ilkka Soininen, Finance Manager responsible for the exports of goods at Finnnvera, explains.A vacillating lineThe rise in exports of services does not show all that clearly in Finnvera’s statistics because, increasingly often, exports of services are included in exports of goods. Finnvera always tailors financing solutions to suit each individual enterprise, which means that the security for exporting goods and the security for exporting services do not necessarily differ from each other.- At present, the services exported are really diverse, as many companies engaged in traditional trading in goods also sell services. For instance, companies in the machine and equipment industry sell maintenance for the equipment, Tuominen says.In his view, the rise in exports of services is due in part to the economic situation. In addition, the market has changed, and more and more services are sold.- Exporters of services usually need a steady presence on site in the buyer’s country. This is especially true for large markets, such as the United States, where many service companies wish to gain a foothold. Singapore, the modern hotspot for business in Asia, also attracts exporters of services.Growth by taking risksSmarp, a software company specialised in employee communication, has been exporting its services for over four years. Finnvera’s support has played an important role for this service company since its inception as a start-up.- Financing has enabled us to take risks, and without risk we wouldn’t have been able to grow, says Roope Heinilä, CEO of Smarp.Smarp has now over 50 employees.According to Heinilä, Smarp has entered international markets by establishing its own offices, by distributing through local partners and by selling their product directly from Finland. Exports have required help, especially when the company has founded offices abroad.Aside from Helsinki, Smarp has now a foothold in Stockholm, London and New York. Next, the company will look to Asia.- Above all, exports must be considered according to the target country. As an exporter, we want to be available on site when the goal is to meet potential customers face-to-face. For example, on the Indonesian market this has not been sensible so far, but in the UK it is vital.FACT: Export financingFinnvera has a wide selection of alternatives for loans, domestic guarantees and export credit guarantees, which can be used to assemble a suitable financing solution for the exporter. Finding a suitable financing solution always depends on each individual case. Loans. Short-term loans are often appropriate financing solutions for exporters or services and goods. For instance, the Internationalisation Loan is intended for financing a Finnish SME’s business abroad. Domestic guarantees. Guarantees granted by Finnvera can be used as security for loans received from banks and other providers of financing, as well as for other contingent liabilities. For instance, by means of an Export Guarantee, an exporter can acquire pre-delivery or post-delivery financing for working capital from a bank. Finnvera can guarantee, for example, accounts with overdraft facility, limits, and accounts with bank guarantee. Export credit guarantees. A Letter of Credit Guarantee protects a confirming bank against commercial or political risks associated with a confirmed letter of credit, whereas a Bill of Exchange Guarantee is best suited for transactions valued at less than EUR 2 million. The Export Receivables Guarantee is intended for short-term exports. It can be used by exporters to insure their receivables from a foreign buyer against credit losses. Text: Pi Mäkilä
International recognition to Finnvera for financing the world’s largest biomass-fired power plantThe arrangement of financing plays an increasingly important role in export trade negotiations, and this trend has gained strength in recent years. The more difficult and the more international the market an enterprise strives to enter, the more probable it is that the buyer sees financing as an edge in competition. The financing solution tailored for the world’s largest biomass-fired power plant, to be constructed in England, brought Finnvera the international Deal of the Year award. Flexible and innovative financing models were also commended by an international team of consultants that assessed Finnvera’s export financing.According to the assessment commissioned by the Ministry of Economic Affairs and Employment, the export financing system implemented by Finnvera in Finland is of a high standard. The international team of consultants considered that Finnvera’s management of risks and responsibilities is at an excellent level in international comparison. Finnvera manages risks both through careful analysis when granting credits and by constantly monitoring the exposure situation. Finnvera has acted in an innovative manner and, in response to demand, has introduced new products and service processes to the market.The assessment report published in March points out that, owing to the structure of Finnish industry, exports are strongly concentrated in a few sectors. This underlines the importance of Finnvera’s risk management system. Moreover, individual export transactions, such as orders for cruise vessels, may be very large.The key task is to support the Finnish exporter’s competitivenessA good example of a flexible financing solution tailored to local conditions is the project where Finnvera provided buyer credit financing for the design and delivery of a boiler plant by the Finnish company Amec Foster Wheeler Energia Oy for the world’s largest biomass-fired power plant in Middlesbrough, England.Construction of the power plant is in progress, and the plant is scheduled to begin commercial operation at the start of 2020. The 299 MW power plant will be fuelled by wood pellets and chips. Construction of the power plant is estimated to cost approximately GBP 650 million (about EUR 750 million). Finnvera’s share of the financing is roughly GBP 100 million (about EUR 115 million).The financing of biomass-fired power plants is challenging in England. One reason for this is the new type of business model. In this model, the proceeds from the plant are based on the CfD feed-in tariff used for renewable energy in the UK. The supply of fuel rests on long-term agreements. Long credit periods are another challenge for financing. The special needs associated with the project were taken into account in the financing solution of the MGT Teesside project, and the export credit agency played a pivotal role in the provision of supplementary financing.- The export credit is financed by Pension Insurance Corporation of the UK, and the credit risk associated with the power plant company is guaranteed by Finnvera. This is not a typical arrangement in a situation where an export credit agency is involved, but thanks to the solution, agreement on the power plant project was reached. We are very proud that this financing project brought Finnvera the Deal of the Year award at the international Trade Finance Awards event. It is especially important for us to support the success and competitiveness of Finnish exporters on international markets, says Executive Vice President Jussi Haarasilta of Finnvera.For more information: Finnvera to provide financing for a large biomass plant in the UKAn international assessment report gives Finnvera a good gradeLate in 2016, the Ministry of Economic Affairs and Employment commissioned a study on the responsibilities, risks and impacts involved in export financing. The assessment was made by an international team of consultants that has solid experience of export financing. Represented on the team were two consulting firms – Antitrust&TradeRx GmbH (ATRx) and International Financial Consulting Ltd. (IFCL) – and Northumbria University.
Norwegians don’t know all the things Finnish companies can do.Norway is seriously overshadowed by Sweden, if the indicator used is exports by Finnish companies. According to the statistics compiled by Finnish Customs, exports to Norway total about EUR 1.5 billion per year, whereas trade with Finland’s western neighbour, Sweden, is valued at nearly six billion.Companies’ enthusiasm to head for the Norwegian market has long been modest, even though Finns enjoy a good reputation in their neighbouring country.- Norwegians often turn their eyes elsewhere, not to Finland in the east. Success on the export market therefore requires local presence. Trade is based on trust. Many companies start exporting to faraway destinations, even though this involves challenges and requires a lot of money and time, says Regional Director /Norway Markus Laakkonen of Finnvera.- A company planning exports should look closer first. Surveys conducted among companies indicate that interest in neighbouring areas has increased. For instance, Norway has regularly ranked the 3rd or 4th as a destination of interest among Finnish companies, he continues.The traditional oil, gas and energy sectors have long attracted enterprises to Norway. Demand in seafaring, fishing and building has also increased lately.Norway is now looking boldly to the future. One example is the country’s strong input into electric vehicles: the Norwegian Government is planning to ban the sale of traditional diesel or petrol-fuelled cars by the year 2025.Laakkonen says that potential exists in many other sectors as well. Economic growth in Norway dipped last year, but according to forecasts, the gross domestic product will increase by about 1.7 per cent this year.Wealth also gives Norway leeway to make investments in infrastructure and health services.- Norway invests heavily in the reform of health services. Finnish healthcare companies would therefore be in great demand in Norway. Know-how and efficiency, in particular, are selling points for Finnish healthcare companies, Laakkonen points out.The blue economy is risingEven more interesting than economic growth is the increase in Norway’s population. According to population forecasts, Norway is one of the fastest growing countries in Europe.- When the population increases, new roads, transport solutions and schools are needed. This creates opportunities for Finnish companies because the natural conditions in Norway are very similar to those in Finland, says Ambassador Erik Lundberg.He believes that Norwegians are now looking to the sea, in particular.- Oil and gas supplies won’t last forever, and Norway must constantly seek new renewable energy solutions. Opportunities are seen especially in what is called the blue economy: the marine industry, the fish industry and the energy sector.The health sector is also reaching out to the sea. As one topic being studied at present in Norway, Lundberg mentions the health effects of seaweed.In Lundberg’s opinion, Finnish companies have been slow in seeking their way to Norway, because in both countries the other party is known rather poorly.- Norwegians don’t know what Finns can do, and vice versa. In numerous sectors, however, there are many points of contact and areas that would offer good opportunities for cooperation.Stiff competitionLundberg emphasises that the Nordic countries, in general, should have more cooperation. Some innovation cooperation has already been launched between universities.- For example, Slush has also been noticed in Norway, and interest in the Finnish start-up sector has risen.Except for the agricultural and food sectors, Norway is part of the EU internal market. Protectionism occurs mainly in those areas.- Norway is quite an open economy. However, it is good for a company dreaming of the Norwegian market to keep in mind that competition is fierce. One must show up well prepared, and solid trust must first be built with the locals.FACT: Norway Gross domestic product: About EUR 486 billion (2015). Finland’s gross domestic product is EUR 207 billion (2015). Gross domestic product per capita: EUR 93,270 (2015). Finland’s gross domestic product per capita is EUR 37,827 (2015). Economic growth: 1.6% (2015). Inflation: 2.3% (2015). Exports: EUR 105 billion (2015). Imports: EUR 71 billion (2015). The total value of Finnish exports to Norway in 2015 was about EUR 1.55 billion. Principal sectors: Industry and services. Norway’s main export products are oil, natural gas, machinery, metals, chemicals and fish. Currency the Norwegian Krone: The exchange rate is EUR 1 to NOK 9.16. More information about Finnvera’s export credit guarantees is available here.Sources: Ministry for Foreign Affairs, Focus Economics, Finnish CustomsRead more: The electric car boom attracted a Finnish company to Norway
CEO of Parking Energy Ltd: Norwegians don’t have similar know-how in high technology.Norway’s heavy input into new technology, and especially into the development of electric vehicles, has also aroused the interest of Finnish companies working in this sector.It’s about time, too: only a handful of Finnish companies have been established in Norway. Currently, a couple of hundred Finnish companies operate locally in Norway. Despite its geographical proximity, Norway is only Finland’s 13th largest foreign trade partner.Parking Energy Ltd, specialising in the charging technology, looks to Norway with optimism. Jiri Räsänen, CEO of Parking Energy Ltd, sees huge potential on the Norwegian market.- Norway is the clear number one on the world’s electric car market, and it’s therefore only natural that we would head for the Norwegian market. With a population roughly the same as Finland, the country now has nearly 150,000 electric cars, says Jiri Räsänen, CEO of Parking Energy Ltd.One in five Norwegian cars runs on electricity, and the Norwegian Government is planning to ban the sale of traditional diesel and petrol-fuelled cars by the year 2025. For companies such as Parking Energy, the market is tens of times larger than in Finland. At present, there are only about 4,000 electric cars in Finland.Communication worksThe Helsinki-based company is also attracted by Norway’s purchasing power and the long-lasting building boom.- From our perspective, the situation is excellent, as there doesn’t seem to be as much competition in new products as there is in the traditional fields. Know-how of high technology is not quite the same as in Finland; nor is the corporate culture in the service sector as wide as, for instance, in Sweden, Räsänen explains.He feels that the Finnish company has been received well in Norway. Exports have been facilitated by the fact that a few other Finnish companies specialising in the recharging of electric cars have already acted as trailblazers.- So far the country has seemed very straightforward. It’s been easy in Norway to get to talk with the local decision-makers and representatives of the electricity sector. Dealing with the authorities is surprisingly similar to that in Finland, and contacts on the whole are very uncomplicated, Räsänen says.- Norway complies with the EU Directives on many issues, but owing to the Norwegian bedrock, electrical earthing is slightly different from elsewhere in Europe. With the exception of this minor hitch, we haven’t had any problems entering the market, he continues.FACT: Norway Gross domestic product: About EUR 486 billion (2015). Finland’s gross domestic product is EUR 207 billion (2015) Gross domestic product per capita: EUR 93,270 (2015). Finland’s gross domestic product per capita is EUR 37,827 (2015). Economic growth: 1.6% (2015). Inflation: 2.3% (2015). Exports: EUR 105 billion (2015). Imports: EUR 71 billion (2015). The total value of Finnish exports to Norway in 2015 was about EUR 1.55 billion. Principal sectors: Industry and services. Norway’s main export products are oil, natural gas, machinery, metals, chemicals and fish. Currency the Norwegian Krone: The exchange rate is EUR 1 to NOK 9.16. More information about Finnvera’s export credit guarantees is available here.Sources: Ministry for Foreign Affairs, Focus Economics, Finnish CustomsRead more: Norway - peeping out behind Sweden and focusing on the new
On 7 April 2017, Finnvera’s Annual General Meeting elected new members to the company’s Board of Directors and Supervisory Board.Pentti Hakkarainen, Member of the Supervisory Board, ECB Banking Supervision, was elected to serve as the new Chairman of the Board of Directors. Pekka Timonen, Director General, continues as the First Vice Chairman.The Second Vice Chairman is Terhi Järvikare, Director General, who was elected to the Board as a new member.Ritva Laukkanen, MBA, was also elected to the Board as a new member.The members continuing on the Board of Directors are Kirsi Komi, LL.M., Pirkko Rantanen-Kervinen, B.Sc. (Econ.), and Antti Zitting, Enterprise Counsellor.Antti Rantakangas, Member of Parliament, continues as Chairman of Finnvera’s Supervisory Board and Krista Kiuru, Member of Parliament, continues as Vice Chairman.The new members elected to the Supervisory Board are Pia Björkbacka, Adviser, Trade and Industrial Policy, andOlli Rantanen, Head of Legal Services.The members continuing on the Supervisory Board are Eeva-Johanna Eloranta, Member of Parliament, Lasse Hautala, Member of Parliament, Laura Huhtasaari, Member of Parliament, Timo Kalli, Member of Parliament, Kari Kulmala, Member of Parliament, Leila Kurki, Senior Adviser, Kari Luoto, Managing Director, Veli-Matti Mattila, Chief Economist, Ville Niinistö, Member of Parliament, Carita Orlando, CEO, Eero Suutari, Member of Parliament, Christel Tjeder, II Vice Chairman, Tommi Toivola, Senior Adviser, and Sofia Vikman, Member of Parliament.The Annual General Meeting adopted the Consolidated Financial Statements and the Parent Company’s Financial Statements for the period 1 January–31 December 2016, discharged the Supervisory Board, the Board of Directors and the Chief Executive Officer from liability, and approved the proposal made by the Board of Directors for the use of the parent company’s profits.KPMG Oy Ab was re-elected Finnvera’s regular auditor with Juha-Pekka Mylén, Authorised Public Accountant, as the principal auditor.Inquiries:Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400Risto Huopaniemi, Senior Vice President, Legal Affairs and Administration, tel. +358 29 460 2520
India’s telecommunications sector is experiencing aggressive competition. Finnvera believes that export companies will set their sights this year on five countries, in particular.Among the new, opening markets, the greatest demand will focus on Argentina and Iran. In addition, demand for Finnvera’s guarantees is predicted to increase in India and Mexico. The fifth country on the list is Russia.In these countries, investments associated with the modernisation of infrastructure, in particular, will provide export opportunities for Finnish companies as well.- In India, for instance, export credit guarantees at their best exceeded 600 million euros, but exports have been declining during the past three years, says Senior Adviser Outi Homanen of Finnvera, who specialises in Asia.- However, it has been gratifying to note during the past six months that demand is picking up.She points out that Iran is in a different position from the rest of the quintet. The country is still subject to broad sanctions that hinder exports and restrict the financing of exports. Sanctions against Russia are not as restricting in this regard.Finnvera guarantees export credits granted to foreign companies so that Finnish enterprises can trade with them. One contract may involve hundreds of millions of euros. According to Homanen, Finnvera is needed especially when the repayment period of export credits is too long for the bank’s risk-taking.- In other respects too, the importance of guarantee institutions has risen in the 2010s. Banks are still cautious after the last economic crisis, Homanen explains.Demand for Finnvera’s export credit guarantees and special guarantees rose last year by 50 per cent, to almost EUR 15 billion. Demand for export credits, in turn, increased by as much as 74 per cent, to EUR 12.5 billion. In particular, the increased demand was driven by shipyards and the telecommunications and forest sectors.Risk assessments also on siteWith respect to export credit guarantees, Finnvera’s task is to understand what is happening on the market, while also assessing risks. Some risk assessments are conducted on site.Last year, Finnvera’s representatives together with client enterprises in the telecommunications sector alone visited India, Russia, Nigeria, Dubai, Mexico, Argentina and Brazil.In India, telecommunications operators have seen a fivefold increase in 3G and 4G customers within a few years. New competitors have emerged among the operators, such as the extremely aggressively campaigning Reliance Jio, which has operated in India for about a year.Reliance Jio was one reason why Finnvera and Nokia set off on a joint trip to India last autumn.- India has always been an extremely competed and price sensitive market. With many people, the volumes are large. Major investments for operators are now underway in India. For instance, the 3G network is being updated to a 4G network. Such situations often require discussions on financing, which Finnvera is also asked to attend, says Finance Manager Antti Saviaho, who is responsible for the telecommunications sector in Finnvera.However, not all local operators need export credit agencies.- Internationally large players often have access to their own financing options, Saviaho points out.During the visit last autumn, Finnvera met about half a dozen Nokia customers. Some of them were old customers, some newer acquaintances.- We had good meetings together with the exporter, and we got much additional information about the market situation in India. We actually met all of the operators, and it was interesting to note that they all saw the market situation and the related big changes in a slightly different way.According to Gergely Abraham, responsible for Asia Regional Treasury & Structured Finance at Nokia, Finnvera’s presence in the target country benefits all parties.- It is often vital for Nokia’s local customers and pivotal for Nokia’s competitiveness in terms of financing. In a way this is a question of highly efficient door-to-door marketing, which helps us to meet all the principal parties to the contract, Abraham says.FACT: This is how export financing operates Finnvera strives to ensure the competitiveness of Finnish companies on the export market by providing exporters and their financiers with an export financing system that is of the same level as in Finland’s main competitor countries. The buyer benefits from competitive financing terms. With regard to export credit guarantees, Finnvera’s task is to understand what is happening on the market. Trips taken together with clients help Finnvera to assess risks, improve Finnvera’s recognisability and promote Finnish exports. The service model is the same for all large exporters in various sectors. For granting export credit guarantees, countries are classified into eight categories on the basis of their assessed credit quality. Export credit guarantee activities are regulated by a number of international rules and agreements. Finnvera’s authorisation to provide export financing was raised at the turn of the year. The authorisation to grant export credit guarantees rose from EUR 19 billion to EUR 27 billion, while the authorisation to finance export credits and to provide interest equalisation rose from EUR 13 billion to EUR 22 billion. Each financing decision is always based on careful assessment and analysis. In addition, Finnvera assesses its portfolio on a regular basis. So far, operations have generated nearly EUR 1.8 billion in buffers to cover any losses that might be realised in the future. Read more about export credit guarantees hereRead more about export credits hereRead more about export credit guarantee products here
Finnvera and the European Investment Bank (EIB) have signed a Memorandum of Understanding on cooperation with the European Investment Advisory Hub (EIAH).The cooperation covers such issues as the exchange of information and the sharing of good operating models. It can also mean participation in the EIAH working groups, discussions and, for example, in initiatives intended for the exchange of information or development of a national advisory service.The European Investment Bank and the European Commission have launched the European Investment Advisory Hub as part of the Investment Plan for Europe. The aim of the Investment Plan is to remove obstacles to investments in Europe, to provide visibility and technical assistance to investment projects and to make smarter use of existing financial resources. So far twenty European countries have signed a Memorandum of Understanding with the EIB. As part of the Investment Plan for Europe, Finnvera also maintains advisory service (esir.fi) for the European Fund for Strategic Investments (EFSI).“The cooperation improves the possibilities of Finnish investment projects to make use of the European Investment Advisory Hub. A central feature of this participation is also the development of cooperation with other national Team Finland actors,” says Pauli Heikkilä, CEO of Finnvera.The Memorandum of Understanding will be in effect until the end of 2020.Additional information:Valtteri Vento, Programme Manager, Finnvera plctel. +358 29 460 email@example.com
As in previous years, we have published our annual report online.Each year we also report on corporate responsibility. Our corporate responsibility report is included in the annual report. Finnvera has compiled the reports in accordance with the G4 Guidelines of Global Reporting Initiative (GRI). In our reporting, we concentrate on key issues in terms of the company’s operations and its stakeholders and we adhere to the reporting guidelines of State-owned companies whenever applicable.The annual report is published in Finnish and in English.Open the annual report.
Stock Exchange ReleaseThe Financial Statements, the Report of the Board of Directors and the Statement on the Corporate Governance and Steering System published by the Finnvera Group on 28 February 2017 contained some incorrect information. These errors have no effect on the bonds issued by the company or on the ability of the issuer, Finnvera plc, to repay its loans.The final versions of the Finnvera Group’s Financial Statements, Report of the Board of Directors and Statement on the Corporate Governance and Steering System 2016 are appended to this release.The corrections made: (information before the correction in brackets)Report of the Board of Directors- Balance Sheet on 31 December 2016The parent company’s long-term liabilities as per 31 December totalled EUR 5,175 million (4,962 million).Notes to the Financial Statements- Note B1 Credit risks, figures given in EUR 1,000Debt securities; 193,425 (208,919)- Note B11 Liquidity risk, maturity of assets, liabilities and guarantees, figures given in EUR 1,000Presentation of figures on the row ‘Assets, liabilities and derivatives, net’ has been corrected for the reference year 2015.- Note E3 Investments, figures given in EUR 1,000Investments in associated companies, totalFinnvera Group 31 Dec 2015; 19,860 (2,058,655)Finnvera plc 31 Dec 2016; 0 (2,153,299)Finnvera plc 31 Dec 2015; 0 (2,178,721)Investments totalFinnvera Group 31 Dec 2015; 2,058,655 (19,860)Finnvera plc 31 Dec 2016; 2,153,299 (0)Finnvera plc 31 Dec 2015; 2,178,721 (0)Statement on the Corporate Governance and Steering System- FundingRating given by Moody’s to Finnvera Aa1 (Aaa)Finnvera Group’s H2/2016 and Financial Statements 1 Jan-31 Dec 2016 (PDF)Statement on Corporate Governance and Steering System 2016 (PDF)Additional information:Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400Ulla Hagman, Senior Vice President, CFO, tel. +358 29 460 2458Also read: Financial Statements of the Finnvera Group 1 January–31 December 2016 (PDF)
A year of reviving demand and new authorisationsThe world economy showed some positive signs in 2016, although political events created a degree of uncertainty. Finnish companies also reported greater demand and increasing investments, and individual large export deals gave much-needed impetus to Finland’s otherwise sluggish exports. Owing to the anticipated increase in demand for export financing services, and to respond to higher exposures, Finnvera’s authorisation to provide export financing was raised markedly. In addition, Finnvera received new mandates, such as the Growth Loan for financing projects undertaken by rapidly growing SMEs and midcap companies. New financing solutions relating to the promotion of small export transactions were also introduced on the market during the year.Business operations and the financial trendThe volume of loans and guarantees offered by Finnvera to SMEs and midcap companies in 2016 was 7 per cent less than in the year before. However, financing for growing and internationalising companies and for transfers of ownership picked up in line with the strategy. Financing offered for growing and internationalising companies rose by 6 per cent from the previous year, while financing for transfers of ownership rose by 21 per cent.Demand for export credit guarantees and special guarantees increased by 50 per cent in 2016, to EUR 14.6 billion. Demand for export credits rose to EUR 12.5 billion, which was 74 per cent more than a year ago. Although interest in export credit guarantees, special guarantees and export credits perked up, the offers given by Finnvera for export credit and special guarantees and for export credits fell by 34 per cent and 82 per cent, respectively. The reason was that some projects or their credit agreements were still being negotiated at the closing of the financial period. Finnvera Group 1 Jan–31 Dec 2016 1 Jan–31 Dec 2015 Change % Offered financing, MEUR Loans and guarantees 845 906 -7 % Export credit guarantees and special guarantees 4 438 6 760 -34 % Export credits 760 4 131 -82 % 31 Dec 2016 31 Dec 2015 Change % Outstanding commitments, MEUR Loans and guarantees 2 261 2 285 -1 % Export credit guarantees and special guarantees 18 426 17 436 6 % Export credits 4 782 4 240 13 % 1 Jan–31 Dec 2016 1 Jan–31 Dec 2015 Change % Net interest income and net fee and commission income, MEUR 194 197 -2 % Operating profit, MEUR 69 114 -39 % Profit for the period, MEUR 70 111 -37 % 31 Dec 2016 31 Dec 2015 Change % Balance sheet total, MEUR 9 498 8 418 13 % Equity, MEUR 1 207 1 121 8 % -of which non-restricted reserves, MEUR 955 871 10 % 31 Dec 2016 31 Dec 2015 Change %-point Equity ratio, % 12,7 13,3 -0,6 Capital adequacy, Tier 2 , % 24,3 19,6 4,7 Cost-income ratio, % 27,0 28,3 -1,3 The Finnvera Group’s profit for July–December 2016 was EUR 77 million. Financial performance improved by EUR 84 million when compared against the loss of EUR 7 million entered for January–June 2016.The main reasons for the improvement in financial performance from the first to the second half of the year were the smaller losses from export credit guarantee operations and the smaller provisions for losses recorded by the parent company, Finnvera plc. In July–December, export credit guarantee losses and provisions for losses totalled only EUR 2 million, whereas the losses entered and the provisions made in January–June came to EUR 66 million. During the first half of 2016, a provision of EUR 55 million for guarantee losses was made for Oi S.A. of Brazil when it transpired that the receivables from the company involve an obvious risk.The profit of the Finnvera Group for 2016 was EUR 70 million (111 million). This was EUR 41 million, or 37 per cent, less than in the previous year. As was pointed out above, the reasons for the weaker performance were the parent company’s export credit guarantee losses as well as provisions for losses that were realised during the first half of the year and were markedly greater than those entered the year before.The profit of the parent company, Finnvera plc, for 2016 stood at EUR 65 million (95 million), of which large corporates business accounted for EUR 33 million (82 million) and SME and midcap business for EUR 32 million (38 million). The performance of the large corporates business declined clearly from the previous year, while the performance of SME and midcap business was at a good level for a second year in a row. Finnvera Group H2/2016 H1/2016 Change H2/2015 2016 2015 Change Change MEUR MEUR % MEUR MEUR MEUR MEUR % Net interest income 24 27 -11 28 50 56 -6 -10 Fee and commission income and expenses (net) 77 67 16 68 144 141 3 2 Gains/losses from items carried at fair value -10 -10 0,3 -15 -20 -21 -1 -6 Net income from investments 0,2 0,1 16 0,4 0,3 0,1 0,2 133 Other operating income 12 0,2 - 2 12 2 10 - Administrative expenses -22 -22 -4 -22 -44 -44 0,1 0 Depreciation and amortization -2 -1 157 -1 -2 -1 1 124 Other operating expenses -2 -3 -31 -3 -4 -6 -1 -22 Net impairment loss on financial assets -0,2 -65 -100 -0,2 -66 -15 51 348 Impairment loss on other financial assets -2 0 - 0 -2 0 2 - Operating profit 77 -7 - 58 69 114 -44 -39 Profit for the period 77 -7 - 57 70 111 -41 -37 Outlook for financingThe economic expectations of SMEs have taken a slightly upward turn, which is believed to reflect positively on financing granted by Finnvera to SMEs in 2017. This will probably be seen particularly clearly in financing for growth companies, but the rising trend in financing intended for investments by growing and internationalising enterprises may also continue following the turn that occurred in 2016. It is assumed that financing granted by Finnvera for transfers of ownership will continue at the same solid level as in 2016. It is generally believed that the bond activities of SMEs and midcap companies will gain slightly more momentum and will also be reflected in Finnvera’s financing.Financing solutions offered to buyers play a pivotal role in exports of capital goods sold by large corporations. Demand for export credit guarantees and export credits is expected to rise from the previous year, but the total amounts depend on the timing of individual large export transactions. Ships, telecommunications and the forest industry are still anticipated to account for the bulk of demand associated with large corporations’ exports. Among the new, opening markets, the greatest demand is likely to focus on Iran and Argentina. Exposures for Russian trade declined in 2016 as buyers postponed investments, but new demand is expected in 2017. Other countries where the demand for Finnvera’s guarantees is expected to rise are India and Mexico. In these countries, reforms associated with the modernisation of infrastructure will provide export opportunities for Finnish companies. In Finland, the progress of large investment projects promoting exports have an impact on the demand for guarantees.The year 2017 is expected to be a year of growing demand. It is thought that implementation of the strategy throughout the Group will proceed as planned and that operations will be self-sustainable in the current financial period as well. The uncertainty factors associated with economic trends make it difficult to predict financial performance. If more risks materialise than has been anticipated, the situation may weaken considerably from what is projected.CEO Pauli Heikkilä:“Finnvera’s year 2016 was driven, above all, by the greater demand for export financing and the substantial increase in transfers of ownership. Development of Team Finland activities continued and as a result of this work, 370 internationalising enterprises received tailored service proposals. The Finnish Parliament’s decisions to raise Finnvera’s authorisations guarantee that we’ll be able to contribute to the success of Finnish enterprises on the international market in the coming years as well.With regard to the formation of financial performance, the past year stands out among the preceding years. In terms of domestic financing, the structure of the credit portfolio – and hence the financial result – were at a good level. In contrast, with respect to export credit guarantees, the year 2016 saw the realisation of one major risk. A large Brazilian telecommunications company filed for debt restructuring and, for this reason, Finnvera’s performance at the company level was lower than in past years. Finnvera’s statutory mission is to bear some of the credit risks that are inevitable in all export transactions.It is likely that 2017 will be characterised by increasing demand for Finnvera’s export financing services. In SME financing, transfers of ownership will remain at a high level. Finnvera will serve as an intermediary organisation for the European EFSI financing. The international operating environment will remain uncertain. In order to spur domestic growth, we need long-term improvements in the structure of the Finnish export sector and in cost competitiveness.”Additional information:Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400Ulla Hagman, Senior Vice President, CFO, tel. +358 29 460 2458Financial Statements 1 January – 31 December 2016 (PDF)Statement on the Corporate Governance and the Steering System 2016 (PDF)
Stiff competition but almost endlessly opportunities on the marketDubai and Abu Dhabi of the United Arab Emirates (UAE) attract a growing number of Finnish enterprises. There is demand especially in the health and technology sectors.- The United Arab Emirates is a peaceful, stable and fairly predictable market area. Dubai and Abu Dhabi have great plans involving large sums of money, says Senior Adviser Jarkko Haapiainen of Finnvera.One of the most important plans concerns the generation of energy.One of the ten largest crude oil producers, the UAE plans to produce 75 per cent of its energy cleanly by the year 2050. Meeting this target requires the adoption of new technologies.According to Haapiainen, Dubai, in particular, is already dependent on imports of high technology.The health sector, in turn, is growing in the wake of health tourism.Dubai has the aim of becoming a leading health tourism city by 2021. At the same time, westernised lifestyles have brought with them lifestyle-related diseases. In consequence, the main goal of the UAE’s national agenda is preventive medicine.Build your networks firstAt present, the United Arab Emirates is Finland’s second largest export market in the Middle East, closely behind Saudi Arabia. About 50 Finnish companies have a registered office in the UAE. In addition, many Finnish companies operate there through local agents.Laura Strandberg, Finance Manager at Finnvera, cautions against rushing to the market in Dubai without good relations. Competition is truly tough because everyone wants their piece of gold in the Middle East.- Before breaking through in Dubai, a company must build a comprehensive network of relations. Building a network calls for patience and may easily take a couple of years. Relationships cannot be created by e-mail.Good partnerships are also needed for navigating through the local legislation, which is amended frequently. Credit insurance and the need for financing both before and during delivery are accentuated, since payment periods are long and the cash flow may be put to test.- On this type of market, it is essential to know the legislation. For example, at least 51 per cent of the ownership of a foreign company must be in local hands. However, a company owned entirely by foreigners can be established in an area known as a free zone. A local distributor is then needed for sales, Strandberg explains.Despite legal intricacies and competition, the United Arab Emirates have much potential, especially for Finnish SMEs.- There is plenty of supply, but at the same time everyone acts as a trailblazer for others. As an area, Dubai operates a bit like Singapore in the Far East. It’s a positive place for foreign operators.The situation in the Middle East is constantly changing. Having shed some of its economic sanctions, Iran is stepping up competition over investments. Qatar also has its own plans, especially for attracting tourists. In five years, Qatar will host the FIFA World Cup in football.The local distributor plays a key roleFootbalance, a company making custom insoles, launched exports to Dubai a little over a year ago.- Dubai is a really interesting market area because of the big money there, says Erkki Hakkala, founder of Footbalance.The first thing that Footbalance did was to draw up a comprehensive marketing plan with a local distributor; this helped the company to get started. The distributor was also helpful in building relations.- Among other things, we learned that setting up one’s own subsidiary is absolutely not what you do at first, Hakkala explains.According to Hakkala, cultural differences have also given rise to amusing situations, as the conversation culture in Dubai is very different from the Finnish one.- At one business meeting, for example, we spent all day touring with our local hosts. We went sightseeing and were offered a dinner with the whole local family. Only in the wee hours of the morning did we start talking about business.Hakkala still sees great potential for growth in Dubai and in the rest of the Emirates. At present, Footbalance has gained a foothold in two of the largest shopping malls in Dubai as well as in Abu Dhabi.- The situation looks good. The Emirates is a place where big opportunities may open really quickly. Help for getting started is available from the local Finnish community and expert organisations, Hakkala advises.FACT: United Arab EmiratesFinnvera has classified the United Arab Emirates into country category 2/7, which means good credit quality. Gross domestic product: About EUR 367 billion (2014). Finland’s gross domestic product is EUR 207 billion (2015). Gross domestic product per capita: EUR 39,579 (2014). Finland’s gross domestic product per capita is EUR 37,827 (2015). Economic growth: 3.1% (2015). Inflation: 3.6% (2015). Exports: EUR 349 billion (2014). Imports: EUR 225 billion (2014). Finland’s exports of goods to the UAE totalled EUR 263 million in 2016. Principal sectors: Services, tourism, construction and oil production. The UAE is among the ten largest producers of crude oil. The daily output is about 3.2 million barrels. Currency, the Dirham: The exchange rate is EUR 1 to AED 3.67. More information about Finnvera’s export credit guarantees is available here.Sources: Ministry for Foreign Affairs, Focus Economics, Finnish CustomsText: Pi Mäkilä
SMEs strongly oriented towards growth are keen to develop their business through company acquisitions. Financing is sought for investments but also – slightly more than before –for working capital.SMEs see a slightly brighter future, though the positive outlook has not been very strong. Despite the slow trend, the share of strongly growth-oriented enterprises has remained steady, and roughly one SME in ten characterises itself as strongly growth-oriented. Interest in company acquisitions is reflected in financing needsOne in five SMEs sees company acquisitions as potential accelerators of growth. It is particularly positive to note that nearly one in three strongly growth-oriented enterprises is interested in expanding its business through acquisitions within the next few years. The interest in company acquisitions also impacts on the need for external financing, since about 80 per cent of these enterprises indicated that potential expansion would require financing.“The survey found that about half of SMEs had no plans for transfer of ownership in the future. On the other hand, 40 per cent said that they will wind up enterprise activities within the next ten years. We want to be there to ensure that sellers start preparing for transactions in good time and companies seeking growth do not miss a deal for lack of financing. There are solutions in place for financing transfers of ownership and company acquisitions,” says CEO Pauli Heikkilä of Finnvera.Transfers of ownership are also reflected in measures to develop enterprise value. SMEs interested in transfers of ownership and company acquisitions are active in monitoring the value of the enterprise, whereas other enterprises show clearly less interest in this.No essential change in the availability of financingThe availability of financing is still at a good level, and slightly over one out of five small businesses reported that they had applied for financing from a bank or some other source. Growth-oriented enterprises in particular have maintained a high level of interest in external financing. SMEs intend to apply for financing for various investment needs and also for growth inputs. Underlying the plans to apply for financing are the quickening economic growth, the assumption that growth will continue, and the consequent increase in investment activity. In this respect, the outlook has improved slightly more since the previous barometer survey. On the other hand, expectations are somewhat uncertain, as indicated by the slightly greater share of enterprises that plan to apply for financing and use it for working capital.The Federation of Finnish Enterprises, Finnvera and the Ministry of Economic Affairs and Employment jointly conduct an SME Barometer Survey twice a year, the purpose being to study the operations and economic environment of small and medium-sized enterprises. The barometer for spring 2017 is based on responses given by about 4,800 SMEs.https://www.yrittajat.fi/suomen-yrittajat/tutkimukset/pk-yritysbarometrit/pk-yritysbarometri-12017-549090Additional information:Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400Jonna Myllykangas, Information Officer, tel. +358 29 460 2740
Finnvera plc is selling about 80 per cent of its holding in Seed Fund Vera Ltd. This deal is one step in the process where Finnvera gradually gives up its venture capital investments.The holding is being sold to Innovestor Kasvurahasto I Ky, a Finnish limited partnership. Finnvera will remain an owner of Seed Fund Vera Ltd, with a holding of about 20 per cent. The Fund attracted interest among both Finnish and foreign buyers. Innovestor’s offer corresponded most closely to the seller’s objectives.Now that there will be a new private company on the venture capital investment market, the arrangement ensures the continuity of the Fund’s investment activities and provides better opportunities to obtain further financing for the portfolio companies.Underlying the deal is the policy decision made by the Ministry of Economic Affairs and Employment, whereby responsibility for the development of early-stage venture capital investments, which used to be vested in Finnvera, has been transferred to Tekes Venture Capital Ltd.The Seed Fund has activated private investment“From the perspective of its impact, Finnvera’s early-stage investment has been important. Through the Fund’s activities, portfolio companies have acquired a total of EUR 350 million in private capital. Of this total, business angels have accounted for about EUR 90 million. These sums are important even in international comparison,” says Pauli Heikkilä, CEO of Finnvera.The sale of Seed Fund Vera Ltd will bring much private capital and know-how to the Fund. This will add stability to the further development of the portfolio companies. The current portfolio companies will gain more networks and new kinds of opportunities for growth.Finnish Industry Investment and Tekes will share responsibility for the State’s venture capital investmentsFrom now on, Finnish Industry Investment Ltd and Tekes will bear the primary responsibility for the State’s venture capital investments. Of these two, Tekes Venture Capital Ltd, which is administered by Tekes, focuses on early-stage investments through investment funds.Seed Fund Vera Ltd began operations in 2005.Additional information:CEO Pauli Heikkilä, Finnvera plc, +358 29 460 2400
The Board of Directors of Finnvera adopted a Code of Conduct for Finnvera on 15 December.Code of Conduct is an internationally established term that is used when describing the business principles – both ethical and legal – that companies themselves have defined and their management has expressed publicly.Finnvera’s operations are closely regulated. Several principles, policies and guidelines have therefore arisen over time to assist compliance with the requirements. The Code of Conduct serves as Finnvera’s joint set of rules. It brings together both the ethical principles and legal rules that we adhere to in our operations and to which we are committed. By using the Code of Conduct we also want to tell outsiders what type of an organisation we are.The Code of Conduct is available here.
The seminar ‘Support for export growth – the role of the State of Finland’, organised by Finnvera on 23 November 2016, focused on the State’s role in ensuring the success of Finnish enterprises in international competition.The seminar was opened by Pauli Heikkilä, CEO of Finnvera, who underscored that Finnvera wants to offer Finnish companies the same starting points as those offered by the export credit agencies of competitor countries in their own countries.“The playing field is increasingly challenging. We compete against bigger players, such as Germany, Sweden and Italy,” Heikkilä said.However, Heikkilä stressed that it is not the purpose, nor desirable, to compete on the terms of export financing.“This should be restricted by international agreements. But until that happens, Finland and Finnvera have to meet the challenge.”Demand for Finnvera’s export financing has increased steeply in recent years. In fact, Parliament is currently debating a Government proposal that would raise Finnvera’s statutory limits for export financing from the current EUR 19 billion to EUR 27 billion.“We can ask whether Finland can afford not to offer its enterprises the same type of services as international competitors do,” Heikkilä pondered.In his address, Topi Vesteri, Deputy CEO of Finnvera and President of the Berne Union, discussed the role of export credit agencies in the changing landscape of world trade.“Globally, exports have grown most rapidly in China. In consequence, Chinese public financial institutions have become the largest providers of export financing. The playing field is less level than ever before because the international rules only apply to OECD members. Now it’s interesting to see whether the Trump Administration will close public export financing in the United States or whether it sees the opportunity to create jobs through exports,” said Vesteri.Panellists: Statutory limits must be sufficiently highThe importance of the State for exports was also discussed by two panels. The members on the first panel were Ilona Lundström, Director General of the Enterprise and Innovation Department, Ministry of Economic Affairs and Employment; Pentti Pikkarainen, Director General of the Financial Markets Department, Ministry of Finance; Tommi Toivola, Chief Policy Adviser, Confederation of Finnish Industries; and Peter Zettinig, Researcher, University of Turku.The panellists considered it important to ensure that the State contributes to the success of Finnish export enterprises. They would like to see more input to support the export efforts of SMEs. However, the panel underlined that risks need to be balanced.The second panel concentrated on the perspective of companies. The panellists were Jan Meyer, CEO, Meyer Turku; Timo Ihamuotila, CFO, Nokia Corporation; Kari Hietanen, Executive Vice President, Corporate Relations and Legal Affairs, Wärtsilä Corporation; and Hannu Puhakka, Managing Partner, MB Funds (Kotka Mills).The panel recognised that Finnvera very often has a major role in bringing export transactions to a successful conclusion. It is therefore important that the statutory limits for export financing are high enough for Finnish companies to do well in the ever more stringent international competition.Jan Meyer, CEO of Meyer Turku, pointed out that when large Finnish companies win major deals, the benefits also trickle down to an extensive network of subcontractors.“The orders for ships secured by the Turku shipyard have a strong positive impact on the SME sector. When smaller enterprises have the opportunity to swim in our tail water, up to 15,000 jobs can be created in Finland,” Meyer said.Additional information:Tarja Svartström, Senior Vice President, Corporate Communications and HR, tel. +358 40 826 2006Finnvera provides financing for the start, growth and internationalisation of enterprises and for protection against export risks. We strengthen the operating potential and competitiveness of Finnish enterprises by providing loans, domestic guarantees and export financing services. The risks involved in financing are shared between Finnvera and other providers of financing. Finnvera is a specialised financing company owned by the State of Finland. It has official Export Credit Agency (ECA) status. www.finnvera.fi
Team Finland is again a main partner of Slush, one of the world’s leading events for growth companies. The technology and growth company event will be held from 30 November to 1 December 2016 at the Messukeskus Expo and Convention Centre in Helsinki, Finland. Now being held for the ninth time, the event brings together companies, international opinion-leaders, investors and the media.Team Finland’s experts will be available at the Team Finland booth in Hall 6. We provide growth companies with information on funding, and growth and internationalisation opportunities. We also advise foreign companies and investors on investment opportunities in Finland, a country with cutting-edge technological know-how.We share our booth with Finnvera, Finpro, Tekes, Finnish Industry Investment, Finnish Patent and Registration Office, the Ministry for Foreign Affairs, Finnfund, Finnpartnership, Enterprise Europe Network and the Registered Association Finnish-Russian Chamber of Commerce.We invite you to our booth to meet Team Finland’s experts and explore the services we offer.Team Finland team.finland.fiSlush slush.org
Companies should pay attention to economic sanctions and currency shortages in some export destinations.In recent years, Finnish enterprises have been active in finding new export destinations where they need various financing arrangements.Finnvera has financial commitments or guarantee applications pertaining to 102 countries. As many as half of these are classified as exotic. Raija Rissanen, Vice President, Country and Bank Risks at Finnvera bases her definition of an exotic country on distance, culture and differences in operating environment.The new destinations have also aroused many questions that companies hope to have answered by financial institutions. In particular, the questions apply to economic sanctions and currency shortages.“These are fairly new issues for companies. If a company wants a pre-payment from the buyer, it’s worth considering which channels to use for the transfer. Banks do not accept money from all countries. Now there are also more and more countries that have profitable enterprises but cannot get foreign currency for paying their import invoices,” Rissanen lists.As examples of emerging economies that suffer from sanctions, Rissanen mentions Cuba and Myanmar. These countries have invested heavily in tourism. Russia and Iran are more traditional export destinations that are also subject to economic sanctions.Currency shortages, in turn, plague Nigeria, Egypt and Venezuela. Previously, Argentina also suffered from the same problem.Even though Finnvera has financial commitments in more than a hundred countries, Rissanen still finds many potential destinations where Finns are conspicuous by their absence.“For instance, the financial situation is good in small countries of the Caribbean and Asia.”Major changes in destinationsCommitments as such do not tell the whole truth about the destinations of Finnish exports. Rather, they indicate the priorities of guarantee and financing needs.There have been many changes in export financing since the start of the millennium. Apart from the emergence of exotic countries, virtually the whole top of the list has changed.“At the turn of the millennium the list was topped by China, Thailand and the Philippines. Now, Russia, Brazil and the USA are there. India and Turkey are also rising,” Eeva-Maija Pietikäinen, Head of Trade Finance, lists.In her view, the reasons are clear. China arranges the financing of orders itself, and Russia’s country exposure has accumulated after the mid-2000s. The rise of the United States, in turn, is an indication of large ship orders.“Exposure statistics reflect large projects that show in our records for years. Most of our commitments concern buyer credits. This means that the credit is granted directly to the Finnish exporter’s buyer-customer abroad. The bank provides the financing and Finnvera shares the risk with the bank,” Pietikäinen explains.“Such credits are often worth tens or even hundreds of millions euros,” she continues.The greatest figures are derived from telecommunications, orders for various machines and equipment, shipbuilding, the forest and energy industries, but the role of SMEs is accentuated in the number of transactions.According to Pietikäinen, to protect their sales receivables, companies use credit insurance and letters of credit for the smallest transactions SMEs have not yet found the newest countries where the economy is booming.“SMEs export mostly to European countries where companies must turn to private providers of credit insurance. EU legislation prohibits Finnvera from granting credit insurance for exports to European countries and a few countries outside Europe. From our point of view, Russia is the most active credit insurance market for SMEs,” says Pietikäinen.Finnvera’s outstanding guarantee commitments for export financing amount to EUR 16.5 billion.FACT: Protection mechanisms for SMEs It pays for SMEs to use secured payment terms when doing business, or to protect their sales receivables, in order to avoid credit losses. The most common protection mechanisms are credit insurance, letters of credit and the Bill of Exchange Guarantee. Credit insurance: Finnvera grants credit insurance directly to the export company. The exporter signs an agreement with Finnvera. The insurance is suited to continuous, short-term trading.EU legislation prohibits Finnvera from granting credit insurance for exports to European countries and a few countries outside Europe. See the list here.If the risks are realised, the insurance includes a self-risk portion of ten per cent. The company can seek compensation after a payment delay of 90 days provided that the claim is uncontested.Credit insurance also suits small transactions: For example, Finnvera has credit limits of EUR 10,000.Letter of credit: A letter of credit means that the buyer-customer’s bank undertakes in writing to pay the purchase price to the seller, i.e. the bank issues the letter of credit. Similarly, the seller has an agreement with its own bank, which confirms the letter of credit. The bank, in turn, can share the risk associated with a foreign bank with Finnvera by applying for Finnvera’s Letter of Credit Guarantee. In all cases, the exporter does not necessarily know that a Letter of Credit Guarantee has been used.Bill of Exchange Guarantee: A Bill of Exchange Guarantee is ideal for fairly small capital goods transactions and continuous exports.The bill of exchange serves both the exporter and the buyer because the exporter is paid in cash while the buyer is given payment time. Finnvera’s Bill of Exchange Guarantee, in turn, protects the bank from any credit losses that might arise.The exporter applies for the guarantee from Finnvera and submits credit data and financial statements on both the buyer and the guarantor, if any, over the past three to four years.It is essential that the financing is planned well in advance before the export transaction. In this way it is possible to select the payment method that suits each deal.Read more about the Credit Risk Guarantee and the Export Receivables GuaranteeAlso, read more about the Bill of Exchange GuaranteeSee Finnvera’s country categories hereText: Kimmo Koivikko
As a result of Argentina’s favourable prospects, the country’s risk classification has been upgraded to category 6/7. After an absence of 15 years, Argentina has returned to the international financial market. The new Government appointed late last year has settled the country’s old debt disputes and has been quick to launch political and economic reforms that lean towards the market economy.“Argentina’s economic situation is still fragile after a long period of economic isolation, but the direction is right. Thanks to recent developments, the country is again eligible for guarantees. The country’s economy is expected to show an upturn next year and the political situation is likely to remain relatively stable, although getting the entire economy onto a sustainable basis will still take time,” Senior Adviser Mika Relander reflects.Difficulties in the Brazilian economy are seen as greater risks, and the country’s risk classification has therefore been downgraded to 5. The slowdown of the Brazilian economy is already in its fifth consecutive year, and together with the political crisis, the outlook has remained uncertain. However, the worst is believed to be over in Brazil, and the economy is predicted to grow slightly next year. The new Government is also expected to make proposals for measures to invigorate the economy.“In the longer term, Brazil is a strong and diverse economy that has the prerequisites for emerging from the recession through domestic demand. However, to achieve stronger growth, Brazil needs both structural reforms and a favourable price trend for commodities important to the country’s exports,” Relander says.Brazil is Finnvera’s third largest market with a country exposure of about two billion euros.Country classification has an impact on the collateral requirements set by Finnvera for financing export trade. In its operations, Finnvera complies with the minimum premium rates determined by the country category.Finnvera takes an active part in the activities of the OECD group of country risk experts, which classifies countries at least once a year.See Finnvera’s country classification map.Additional information:Mika Relander, Senior Adviser, tel. +358 29 460 2725
A theme year may bring new opportunities for the cleantech sector. An upturn in the economy is anticipated.After the dismal past year, Finnish companies are anxiously awaiting positive signals from Russia.During this autumn, individual enterprises have actually had better news to report, but the road to the peak years is still long.Trade between Finland and Russia hit some sort of rock bottom last year, when exports fell by nearly one third on the previous year, to EUR 3.2 billion. In the best years of this millennium, the value of goods crossing Finland’s eastern border exceeded EUR 7.5 billion.According to Finnvera’s experts, the most positive feature of the Russian economy is that the bottom has been reached. Forecasting institutions predict that the economy will grow by about one per cent next year. Growth is fuelled by global oil prices, which also affect the rouble.“Inflation has slowed down and industrial production shows an upswing. In addition, Russia is experiencing a real tourist boom from Asia,” Senior Adviser Outi Homanen lists.In the same breath, she points out that the political situation adds uncertainty to forecasts.Timo Pietiläinen, Head of Finnvera’s Representative Office in Russia, has been surprised at how ready Russians have been to compromise on their own standard of living.In his view, a real change would require an annual growth rate of over three per cent.“Investments are virtually frozen. No economic reforms have been made. These are big problems in the long term,” Pietiläinen says.Pietiläinen is based in St. Petersburg, so he is well aware of Russian investment needs.Finnish companies are able to sell machinery and equipment, for example, to the food industry and agriculture. In addition, Russia needs subcontractors for the maritime industry.“Next year will be the Year of the Environment in Russia, which will open doors for cleantech companies. Otherwise demand focuses on fairly traditional sectors. However, it is possible to export products profitably from here to the Western market if labour and costs are in the local currency, but income is received in a foreign currency,” Pietiläinen believes.As good examples he mentions enterprises that have become established in Russia and specialise in the wood processing and building products industries.Present at difficult timesOn 20 October, the Finnish-Russian Chamber of Commerce held a Finnish Business event in Moscow, where 67 Finnish companies and business organisations were present. In all, the event was attended by about 400 guests.According to Executive Vice President Jussi Haarasilta of Finnvera, one message of the event was that Finnish companies strive to keep trade relations alive even in difficult times.“Russians are really cautious in their investments. Our exposure has decreased and we have good opportunities to help Finnish enterprises. The largest sectors from Finnvera’s perspective are ICT and the forest industry,” Haarasilta explains.Homanen shares Haarasilta’s view. Companies engaged in business with Russia know the local customs and trading partners well. There are few newcomers.“We receive inquiries but projects proceed very slowly,” Outi Homanen says.She recommends credit insurance for short-term trading.“Guarantees are granted for good buyers even though payment defaults have increased. We’re careful when determining the buyer’s creditworthiness.”Timo Pietiläinen also underlines the importance of having an expert on Russia if a Finnish company wants to do business with Russians.“It pays to ensure that the expert has up-to-date information. Know-how is quickly outdated,” Pietiläinen says.FACT: Russia Finnvera’s country risk category for Russia is 4/7, i.e. decreased credit quality. Credit insurance and medium-term and long-term export credit guarantees can be granted for Russia, taking into account the sanctions imposed by the EU. Gross domestic product: Approximately EUR 1,078 billion. Finland’s gross domestic product is EUR 207 billion. Gross domestic product per capita: EUR 7,501. Finland’s gross domestic product per capita is EUR 37,827. Economic growth: -3.7% (2015). The forecast for the current year is -0.9%–1.8%. Consensus forecast for next year +1.0%. Inflation: 12.9%. Exports: EUR 472 billion. Finland’s imports from Russia totalled EUR 6.0 billion. 73% of this were energy products. Imports: EUR 292 billion. Finland’s exports to Russia totalled EUR 3.2 billion. The largest group consisted of chemical substances and products (24.4%). Principal sectors: Agriculture (about 5% of the GDP), industry (about 40% of the GDP, including the coal, oil, gas, mining, chemical and metal industries) and services (about 55% of the GDP, including trade, repair services, real estate agencies and leasing services). Currency, the Rouble: The exchange rate is 1 euro to 68.6 roubles. More information about Finnvera’s export credit guarantees is available here.Sources: Statistics Finland, World Bank, Focus Economics, Finnish Customs.Text: Kimmo Koivikko
Topi Vesteri, Deputy CEO of Finnvera, was re-elected President of the Berne Union – the International Union of Credit and Investment Insurers.The selection was made at the Annual General Meeting of the Berne Union in Lisbon. Chief Operations Officer Mandisi Nkuhlu of ECIC SA, the Export Credit Insurance Corporation of South Africa, was elected Vice-President.The Berne Union members include both State-owned export credit agencies and private and multilateral insurers of credit and political risks. The 82 members represent 73 countries, which together account for 90 per cent of the world’s population.In 2015, the Berne Union’s member organisations insured export transactions for a total of over USD 1.8 trillion.“The world trade volumes reported by WTO fell by 13 per cent between 2014 and 2015. The reason is the drop in raw material prices and the consequent highly cautious investment atmosphere. The increased geopolitical risks and economic sanctions have also had an impact on declining trade volumes. However, the volume of the Berne Union members fell considerably less, only by seven per cent. I consider this an indication of the Union members’ balancing role in world trade,” Topi Vesteri says.Since the onset of the financial crisis in 2008, the Berne Union members have provided USD 35 billion for indemnifying export companies and financing banks against risks.“However, when the premiums charged for risk-taking and the recovery of the claims paid are taken into account, the operations are profitable,” Vesteri points out.Additional information:Topi Vesteri, Deputy CEO, tel. +358 29 460 2676
Finland and Iran have signed a Memorandum of Understanding, which is the first step in efforts to facilitate the financing of Finnish companies’ export projects.For Finland, the memorandum was signed by Executive Vice President Jussi Haarasilta of Finnvera. The signing ceremony took place during the visit to Iran by the President of the Republic Sauli Niinistö.Haarasilta anticipates that Finnish companies will gradually have better export opportunities to Iran.“Following the dismantling of economic sanctions, Finnvera has already provided guarantees for trade with Iran. For us to be able to contribute to the financing of increasingly large business deals, both Finland and Iran must show strong commitment. The signing of the Memorandum of Understanding is an important step on this path. For this we are glad. Finnvera’s mission is to promote the exports of both small and large Finnish enterprises and to secure a competitive export financing system.”Haarasilta sees export opportunities for Finnish companies in several industries.“Cleantech, the bioeconomy and mining technology are good examples of industries important to Iranians where Finns have solid expertise. Infrastructure projects also have potential for Finland,” he assesses.Haarasilta points out, however, that monetary transactions with Iran still involve challenges.“An export company planning to do business in Iran should contact the bank and Finnvera as early as possible,” he stresses.Additional information: Jussi Haarasilta, tel. +358 29 460 2601Photo: The Memorandum of Understanding was signed in Tehran by Jussi Haarasilta (Finnvera) and Mohammad Khazaee (Organization for Investment, Economic and Technical Assistance of Iran). Photo credit: Juhani Kandell/Office of the President of the Republic
Credit insurance and letters of credit help avert unnecessary credit losses, especially on exotic export markets.Most SMEs engaged in exports have rather weak protection against potential credit losses.According to the latest SME Barometer Survey, 15 per cent of export companies use credit insurance to secure their sales receivables. Nine per cent of respondents relied on letters of credit with payment time, while the same percentage used letters of credit at sight.Respondents were allowed to tick more than one answer to questions about financial instruments in export trade. Nearly 6,000 SMEs responded to the barometer published in mid-September. One in five engaged in exports or business abroad. Eeva-Maija Pietikäinen, Head of Trade Finance at Finnvera, recommends that SMEs secure their sales receivables, especially in what are known as exotic countries.“Credit insurance is the simplest means of protection and particularly well suited to continuous, short-term trading. We are also able to provide one-off policies, that is, insurance for a single transaction – something very important for small actors,” Pietikäinen says.Finnvera can grant credit insurance only for countries that are not encompassed by the EU rules on State subsidies.The insurance also includes a self-risk portion of ten per cent and the receivables must be uncontested.“The company can apply for compensation from Finnvera when the payment is 90 days overdue,” Pietikäinen explains.Dozens of destinationsA letter of credit is also suitable for protecting companies in short-term transactions. In a letter of credit, the buyer-customer’s bank undertakes in writing to pay the purchase price to the seller.Pietikäinen sees it as a challenge that some countries do not necessarily have a bank that could assume the responsibility for a letter of credit.“One answer is to use pre-payment, which means that at least some of the purchase price is paid upfront. This procedure can be applied, in particular, in the most exotic countries,” Pietikäinen says.Finnvera has commitments in 90 countries, half of which are classified as exotic.Raija Rissanen, Vice President, Country and Bank Risks, at Finnvera, bases her definition of an exotic country on distance, culture and differences in operating environment. The most exotic destinations where Finnish companies export their products backed by Finnvera’s guarantees include Burkina Faso, Trinidad & Tobago, and Malawi.Besides countries in Africa and South and Central America, the list contains countries in Asia and the Middle East.“Most of our commitments concern buyer credits. This means that the credit is granted directly to the Finnish exporter’s buyer-customer abroad. The bank provides the financing and Finnvera shares the risk with the bank. Such credits are often worth over a hundred million euros. Credit insurance and letters of credit are typically used for smaller transactions,” Rissanen explains.FACT: Protection mechanisms for SMEs It pays for SMEs to use secured payment terms when doing business, or to protect their sales receivables, in order to avoid credit losses. The most common protection mechanisms are credit insurance, letters of credit and the Bill of Exchange Guarantee. Credit insurance: Finnvera grants credit insurance directly to the export company. The exporter signs an agreement with Finnvera. The insurance is suited to continuous, short-term trading.EU legislation prohibits Finnvera from granting credit insurance for exports to European countries and a few countries outside Europe. See the list here.If the risks are realised, the insurance includes a self-risk portion of ten per cent. The company can seek compensation after a payment delay of 90 days provided that the claim is uncontested.Credit insurance also suits small transactions: For example, Finnvera has credit limits of EUR 10,000.Letter of credit: A letter of credit means that the buyer-customer’s bank undertakes in writing to pay the purchase price to the seller, i.e. the bank issues the letter of credit. Similarly, the seller has an agreement with its own bank, which confirms the letter of credit. The bank, in turn, can share the risk associated with a foreign bank with Finnvera by applying for Finnvera’s Letter of Credit Guarantee. In all cases, the exporter does not necessarily know that a Letter of Credit Guarantee has been used.Bill of Exchange Guarantee: A Bill of Exchange Guarantee is ideal for fairly small capital goods transactions and continuous exports.The bill of exchange serves both the exporter and the buyer because the exporter is paid in cash while the buyer is given payment time. Finnvera’s Bill of Exchange Guarantee, in turn, protects the bank from any credit losses that might arise.The exporter applies for the guarantee from Finnvera and submits credit data and financial statements on both the buyer and the guarantor, if any, over the past three to four years.It is essential that the financing is planned well in advance before the export transaction. In this way it is possible to select the payment method that suits each deal.Read more about the Credit Risk Guarantee and the Export Receivables GuaranteeAlso, read more about the Bill of Exchange GuaranteeText: Kimmo Koivikko
A review of environmental risks also benefits Finnish export enterprises.Finnvera conducts an environmental review of all export projects undertaken by Finnish enterprises where the financial institution’s liabilities exceed EUR 10 million and the repayment period of the loan is at least two years.The recommendations have come from the OECD, and all OECD export credit agencies comply with them.When conducting an environmental review, Finnvera’s experts strive to ensure that the foreign investor adheres to the host country’s local legislation and meets international standards. The investor bears the principal responsibility for the background study. According to Lauri Etelämäki, Environmental Adviser at Finnvera, a review of environmental risks is standard practice and, at the same time, an advantage to Finnish export enterprises as it helps to avoid unnecessary damage to reputation.“Exporters are helpful and give us information about the investment. Sensitive areas involving, for instance, poor population groups or endangered plant or animal species, may exist anywhere in the world,” Etelämäki says.An environmental review encompasses the whole project even when export financing applies only to an individual delivery of equipment.Virve Tulenheimo, Finnvera’s second Environmental Adviser, emphasises that on the whole, an investment is not turned down because of environmental assessment.“The financier has the right to set terms for the credit agreement. Projects are so large that the investor usually wants to get things right,” Tulenheimo points out.Four different categoriesThere are four categories for environmental assessment: Categories A, B, C and non-project.Finnvera receives a few Category A projects per year. Category A means that the investment may involve significant environmental and social risks in the host country.“Examples are pulp mill projects, power plants and mines established abroad. In general, Finnish companies deliver larger sets of equipment for mills and plants,” Tulenheimo explains.She says that it takes months to assess a Category A project.- “We also make an effort to visit the project site. The final guarantee decision won’t be made until afterwards,” says Tulenheimo.The small number of Category A environmental reviews indicates that Finnish companies have not gained access to large international industry investments. As a rule, companies use export credit guarantees as protection against potential credit losses.“It has been quieter in recent years. On the other hand, projects are increasingly massive. Ships and oil rigs have been excluded from the review, but we plan to include them in the future,” Etelämäki explains.The second highest environmental category, or Category B, includes, among others, power plants of less than 140 megawatts. Hospitals and mobile phone manufacturing plants are examples of Category C. Finnvera conducts 5 to 10 reviews for Category B per year and dozens of reviews for Category C.“Category B is the most difficult to assess, because the background materials are diverse. Projects in Category C have minor environmental impacts and don’t require background studies,” says Tulenheimo.The fourth environmental category, non-project, has a misleading name. It generally consists of replacement investments.Text: Kimmo KoivikkoFACT: What classification? By using export credit guarantees, exporters and providers of financing for exports usually want to protect themselves against credit losses that may arise when a foreign customer is granted payment time. If needed, it is also easier to arrange financing for a foreign customer to purchase the product if Finnvera covers some of the credit risks Finnvera grants guarantees for countries with adequate credit standing and assesses the creditworthiness of buyers and guarantors If Finnvera’s liabilities for guarantees exceed EUR 10 million or the loan repayment period is at least two years, the project always undergoes an environmental and social impact review In general, Finnvera’s project review encompasses the whole project even when export financing is granted, for instance, for an individual delivery of equipment The owner of the project company or the main supplier for the project is responsible for ensuring that the background studies are made or commissioned. The applicant for export financing is responsible for supplying the information to Finnvera Projects are divided into four categories: A, B, C and non-project Categories A and B: The applicant must provide Finnvera with a report of the assessment of environmental and social impacts. In Category A, impacts are assessed more broadly C and non-project: No background studies are needed A prerequisite for granting financing for Category A projects is that the information on environmental and social impacts is published 30 days before Finnvera signs the agreement on export financing. The relevant parties are asked to give their consent for publication. Read more about export credit guarantees.
The number of growth-oriented SMEs has increased since last spring, and the number of enterprises with a strong desire to grow has already reached the level that prevailed before the-financial crisis. Yet problems exist in the application for financing.The positive trend observed already last spring has continued and among SMEs, economic expectations for the near future are considerably more optimistic than before. The same trend is also visible in growth orientation: 11 per cent of enterprises already say that they have a strong desire to grow while 39 per cent seek growth according to their possibilities.Internationalisation is seen as the key avenue for growth. The number of SMEs with a strong desire to grow has already reached the level that prevailed before the financial crisis.The availability of external financing has not changed. Slightly more SMEs than before plan to apply for financing within the next year. On the other hand, one in ten respondents reported that they would have needed financing during the past 12 months but had not applied for it. Nor has the will to apply for internationalisation financing risen at the same rate as growth orientation.“About 80 per cent of enterprises that had applied for financing said that the terms or availability of financing had no negative impact on the implementation of projects. Since as many as one in ten do not apply for financing because they assume that availability, in particular, is poor, we must communicate to SMEs ever more clearly that financing is indeed available for profitable projects,” says Katja Keitaanniemi, Executive Vice President, SMEs at Finnvera.However, a positive signal of the functioning of the financial market is that 46 per cent of the enterprises that had not applied for financing – despite their needs – reported that they had in any case implemented their project according to plans.Expectations for exports and investments on the riseThe respondents to the SME Barometer Survey also have positive expectations for exports, and exports are assumed to increase steeply in all sectors. Financing is now sought for investments slightly more often than before, while the number of applications for working capital has decreased.The Federation of Finnish Enterprises, Finnvera and the Ministry of Employment and the Economy jointly conduct an SME Barometer Survey twice a year. The goal is to study the operations and economic environment of small and medium-sized enterprises. The barometer for autumn 2016 is based on responses from over 6,000 SMEs.SME Survey on The Federation of Finnish Enterprises websiteAdditional information:Katja Keitaanniemi, Executive Vice President, SMEs, tel. +358 29 460 2888Jonna Myllykangas, Communications Officer, tel. +358 29 460 2740
The world’s largest power plant fuelled solely by biomass will be built near the town of Middlesborough, England. The circulating fluidised bed boiler and the flue gas cleaning system are delivered by Amec Foster Wheeler Energia Oy. Finnvera’s contribution to the financing of the project is GBP 100 million, or roughly EUR 120 million.The construction of the power plant is estimated to cost approximately GBP 650 million, or about EUR 780 million.Preliminary construction work for the MGT Teesside plant will begin within the next few months. Commercial operations are due to start during the first quarter of 2020. The 299 MW power plant will be fuelled solely by clean wood pellets and chips.“We’re glad of this opportunity to contribute to the export of Finnish renewable energy technology. Finland has solid expertise in this type of renewable energy technology. Elsewhere in the world – surprisingly– it is still often perceived as something new,” says Tuukka Andersén, Vice President and Head of Underwriting at Finnvera.“Finnvera’s participation in the project enabled long-term financing of 15 years. This is a key factor if a project of this type is to succeed,” he adds.Jaakko Riiali, VP, Commercial Operations at Amec Foster Wheeler Energia Oy, the company delivering the power plant boiler, sees the project as a good bridgehead for large biomass boilers of the power company class in Central Europe. In addition, the project serves as an example for more northern countries as well, showing that biomass as well as fossil fuels can be used to fuel large baseload plants. “Finnvera’s inclusion in the financial arrangements gave stability to the negotiations and made it considerably easier to reach an agreement on project financing,” Riiali says.Fuel from responsibly managed forestsIn order to ensure the sustainability of fuel supply, the biomass-fuelled power plant uses fuel acquired from FSC Forest Management certified forest areas. FSC certification guarantees that the fuel is derived from responsibly managed forests.The price paid by the British government for electricity produced using clean biomass is considerably higher than the normal price of electricity. The purpose is to support the attainment of the targets set by the UK Government and the European Union for CO2 emissions and to promote the objective of reducing coal combustion at both small and large power generation units.Additional information:Tuukka Andersén, Vice President, Head of Underwriting, Finnvera, tel. +358 29 460 2688Jaakko Riiali, VP, Commercial Operations, Amec Foster Wheeler Energia Oy, tel. +358 40 585 1590
After a long decline, investments by enterprises seeking growth on international markets seem to have picked up in the first half of the year. The information is based on applications for financing that Finnvera has processed during the first six months of the year.“I think this is a good signal showing that enterprises feel more confident about investing. The change is particularly significant because the growth is based on intangible investments, such as research and development, and on various corporate reorganisations,” says Katja Keitaanniemi, Executive Vice President, SMEs.Intangible investments have in recent years accounted for 2 to 3 per cent of internationalising enterprises’ projects financed by Finnvera. However, during the first half of the current year, their share almost doubled. The amount of financing needed for corporate reorganisations also nearly doubled when compared against previous years.Keitaanniemi stresses the importance of intangible investments for developing long-term competitiveness.“When operating on international markets, Finland’s problem has been the relatively small company size, which means that the resources available are also small. When the company size increases, there are more opportunities to invest in international growth.“No single region or sector explains the growth in investments. The probable reason is therefore an increase in general investment activity,” Keitaanniemi presumes.The surveys conducted by the Federation of Finnish Financial Services and the Confederation of Finnish Industries also corroborate the positive trend. Despite the increase in investments, the working capital required by growth is still the greatest single need for Finnvera’s financing.Links:Growth > InvestmentsGrowth > Business operations abroadFill in the contact request form
Contacts helped a health technology company to find a retailer. Outotec, in turn, has been doing business in Iran for over 40 years.Networks and contacts may be important in Finland, but in Iran they can be the lifeline of success.NewIcon, a Kuopio-based company specialising in automation solutions for medicine supply, was able to sign their first contract in Iran thanks to a good retailer. The following contracts also largely depend on the local retailer.According to Marketing Director Jori-Matti Savolainen of Kuopio-based NewIcon, good contacts helped the company to find the right retailer in Iran.“We were warned that everything proceeds slowly in Iran – especially as our customers are hospitals, that is, the public sector – and so we were surprised at how straightforward everything has been in comparison to other Middle Eastern countries,” says Jori-Matti Savolainen, Marketing Director of NewIcon.The company from Kuopio has customers the world over, for instance in Russia, Poland, Israel, the United Kingdom, the United Arab Emirates, Denmark and Sweden. However, most of the roughly EUR 5.5 million in turnover still comes from Finland.NewIcon can thank the Chairman of the company’s Advisory Board for finding the retailer.“Through the retailer’s contacts, our CEO was invited to Iran, to get to know our end customers. They were impressed that he actually came. At the turn of the year, we invited a delegation to Finland and showed them around at other health technology companies, too,” Savolainen reminisces.He is amazed at how much the Iranians know about Finland.“Thanks to Nokia, Finnish technology is appreciated. Our contacts also know of top-class Finnish surgeons we have never even heard of,” Savolainen says.In Iran for decadesThe history of Outotec, a listed company, differs somewhat from NewIcon. The company has been in Iran since 1973 – 43 years now.Adel Hattab, Executive Vice President, Markets Unit at Outotec, says that conducting business in Iran requires much time and presence.Adel Hattab, Executive Vice President, Markets Unit, says that their customers appreciate the fact that Outotec did not leave Iran even in hard times.“We have been open with respect to Iran and everything is done with security first. The trade embargo was a difficult period. We have big teams ensuring that we don’t sell anything inappropriate,” Hattab explains.Outotec’s projects are associated with the concentration processes of raw materials and the refining of metals. The company designs, builds and maintains equipment.Having visited Iran dozens of times, Hattab says that Iranians value interaction and bilateral relations.“They are demanding negotiation partners and shrewd in seeking good deals for themselves. People need to be known at all levels, including political decision-makers. As customers, Iranians are loyal,” Hattab lists.Savolainen of NewIcon agrees with Hattab’s characterisations. The Marketing Director says that their company has also had tough contract negotiations with their retailer.There are other differences in the business environment as well.“Patience is required in Iran and aggressive selling does not work. You need to talk about this and that with people. The first day you talk about sports and the family. It’s not until there’s a suitable moment on the second day when you start talking business,” Savolainen explains.Hitches in money transactionsAt NewIcon, assessment of the risks in the Iran deals was more about sufficient resources and economic risks.However, both Savolainen and Hattab name a risk that is shared by all companies: financing.“Investments don’t live up to their potential when the financial market is not functional. I hope that the bank system would recover and reach the same stage on average as elsewhere. Customers have big problems with letters of credit,” Hattab points out.He continues that the willingness of Western banks to take risks also depends on the United States’ attitudes towards Iran.Jori-Matti Savolainen of NewIcon advises Finnish companies to conduct their business in euros. Nor is it good to rely on any particular bank.“In Iran you should monitor which bank handles foreign transactions at any single time,” Savolainen advises.Text: Kimmo KoivikkoMore information:Credit risks in export tradeCountry classification
Different factors explain the success of small and large enterprises. According to studies, the company’s management is the most important factor for an SME. A large enterprise, in turn, has access to wider markets for management recruitment and, for instance, the option of transferring operations from one country to another to gain cost benefits. In consequence, for a large enterprise, the single factor having the highest correlation with the company’s success is simply its line of business. Since we at Finnvera have the opportunity to follow the stories of thousands of different enterprises and to observe the cause and effect relationships contributing to a company’s success – or sometimes, sad to say, its failure – I would claim that the owner is even more important for an SME than the management. Of course, these two are often the same person. But even when they aren’t, the owner has more direct influence over management selection and may intervene in the company’s day-to-day operations more than the owners of large corporations do. A good or a bad owner can be critical even for a large corporation – an example might be the revival of the Turku shipyard after its Korean owner was replaced by a German owner – but for an SME, the owner almost always has an absolutely pivotal role in the development and success of the Enterprise. Finnvera provides financing for over a thousand transfers of ownership each year. Statistics on the age structure of entrepreneurs reveal that the need for transfers of business to the next generation, and for business acquisitions, will continue at an exceptionally high level even for the next ten years. Surveys indicate that the principal bottlenecks are the matching of suitable buyers and sellers, accurate value determination and issues pertaining to taxation and law. Financing follows next. Together with enterprise organisations, Finnvera works actively to help eliminate all these bottlenecks. Throughout the country, we organise numerous events where buyers, sellers, experts in various fields and financiers can meet each other. Our goal is to ensure that as many enterprises as possible, after having been brought by their current owners along their own unique paths to this point in time, will find a good new owner who has the resources and the desire to continue in the future to the next success story! Pauli HeikkiläCEORead more about Finnvera's financing for transfers of ownership.
Next year Kazakhstan will also host the Specialised Expo 2017. Protection of sales receivables is important.Finland may have a long land border with Russia, but it cannot rival with Kazakhstan in Central Asia.The border shared by Kazakhstan and Russia is no less than 6,500 kilometres long, and the border with China is measures 1,500 kilometres. The former Soviet republic is the world’s largest landlocked country, whose most famous ‘resident’ is probably the bumbling TV reporter Borat created by comedian Sacha Baron Cohen.Yet laughs end abruptly when the Silk Road is mentioned. Under China’s leadership, the ancient trade route is seeing a new prosperity, and Kazakhstan has a central location as a transit country.China has invested much prestige and tens of billions of euros to give new life to the Silk Road. An indication of the massive scale of the project, known as ‘One Belt, One Road’, is the fact that the Silk Road connects 64 countries covering an area that is home to 4.4 billion people.The aim is to create frequent train and airline connections as well as a road network between Europe and Asia.“China acts as the engine. Since the projects are really big, it may prove difficult for Finnish companies to get a foot in the door. Working as a subcontractor might be a more suitable role,” says Outi Homanen, Senior Adviser at Finnvera.Foreign companies are needed at least when planning and implementing infrastructure, transport, logistics, and information and communications technology.Homanen continues the list for Kazakhstan.“Kazakhstan has identified sustainable development as its goal, and the government supports renewable energy projects, for example. In addition, know-how in cleantech, education and mining attracts interest,” she explains.Next year in the spotlightIn other respects, too, Finnish companies should take a closer look at Kazakhstan. The reason is the Specialised Expo 2017 to be held next year in Astana.Finland will have its own pavilion at the event. More information on this topic is available here.“Participation in the Expo will entail much positive visibility and new opportunities for Finland, especially in the cleantech sector,” Homanen believes.Despite the Expo and the opportunities brought by the Silk Road, Finnvera classifies Kazakhstan as a high-risk country.The decline in oil prices has almost halved export revenue and inflation is soaring at over ten per cent. The value of the currency collapsed last year but is now more stable. The difficult financial situation has also accentuated the role of State-owned companies.Partly for these reasons, Finnish companies are not a familiar sight in Kazakhstan.“The business environment is challenging. It may therefore be difficult to predict how companies will behave. In general, timetables stretch. On the other hand, cash may be found if there is an urgency. It is highly important to protect receivables, and we recommend that letters of credit be used,” says Homanen describing the situation.A letter of credit is a written undertaking given by the buyer’s bank for the payment of the purchase price to the seller.Homanen also mentions the political situation as an additional question mark. Kazakhstan has only had one president, Nursultan Nazarbayev.“It’s very uncertain what will happen after him. One must be prepared for major changes,” Homanen muses.FACT: Kazakhstan in figuresFinnvera’s country risk category for Kazakhstan is 6/7. Kazakhstan is an important exporter of oil and gas. The country is also rich in other natural resources. The country’s indebtedness has increased in step with the collapse of oil prices, which weakens the income flow.Kazakhstan’s political situation is currently relatively stable. Finnvera’s country exposure is about EUR 10 million. When assessing country risk categories, Finnvera cooperates with the OECD group of country risk experts.Kazakhstan is currently a member of the World Trade Organization (WTO).Gross domestic product: EUR 110 billion (2015). In 2014, the GDP was EUR 185 billion. Finland’s gross domestic product is EUR 207 billion (2015).Gross domestic product per capita: EUR 6,230 (2015). In 2014, the gross domestic product per capita was EUR 10,600. Finland’s gross domestic product per capita is EUR 37,827 (2015).Economic growth: Forecast 0.1–0.7% (2016). The growth rate was 1% in 2015 and 4.3% in 2014.Inflation: 13.6% (2015).Exports: About USD 46 billion (2015).Imports: About USD 30 billion (2015).Principal sectors: Oil and gas industry, ore and metal industry. Kazakhstan is a Top 20 oil producer country. Oil production averages around 1.5–1.6 million barrels per day, or roughly the same as Norway. The world’s average oil production is 80 million barrels per day.Currency, the Tenge: The exchange rate is 1 euro to 376 tenges.Finnish citizens can travel to Kazakhstan without a visa when they stay for a maximum of 15 days. The visa waiver is limited in time and expires at the end of next year.More information about Finnvera’s export credit guarantees is available here.Sources: Statistics Finland, World Bank, IMF, Asian Dev Bank, Focus Economics.Text: Kimmo Koivikko
A marked rise in Finnvera’s authorisations – performance slightly negativeDuring the period under review, the maximum amounts of export credits and export credit guarantees that Finnvera is authorised to grant were raised through legislative amendments. The main reasons behind the need to raise the authorisations were the steep rise in ship financing within the past few years and the increase in the volume of export projects undertaken for telecommunications and the forest industry. The Group’s performance for the first six months of the year was EUR 7 million in the red, owing to losses and provisions for losses in export credit guarantees. The negative result for the first six months of the year does not affect the realisation of the cumulative self-sustainability of Finnvera’s export credit guarantee activities.The need for funding increased alongside the greater demand for export financing sevices. The fixed-rate bond of EUR one billion issued by Finnvera in April was the company’s first euro-denominated bond with a maturity of ten years.In April, Finnvera and enterprise organisations launched a joint campaign to speed up transfers of ownership in SMEs. Various activation measures are applied to increase enterprises’ awareness of issues such as valuation and taxation. During the first half of the year, transfers of ownership financed by Finnvera showed a rise of 17 per cent when measured in euros.In line with the Government Programme, Finnvera introduced a new debt-based mezzanine financing product onto the market: the Growth Loan. The new product is intended for financing SMEs and midcap companies in major growth and internationalisation projects.Business operations and the financial trendDuring the period under review, demand for Finnvera’s export and special guarantees and export credits rose steeply on the previous year: 50 per cent and 90 per cent, respectively. In contrast, demand for SME and midcap financing fell by 17 per cent on the previous year.Although the demand for export and special guarantees rose, the offers given by Finnvera for export credit and special guarantees and for export credits fell by 76 per cent and 87 per cent, respectively. The reason for this was that some of the projects or their credit agreements were still being negotiated at the end of June. The amount of loans and guarantees granted to SMEs and midcap companies fell by 11 per cent when compared against the first half of 2015. Finnvera Group 1 Jan-30 June 2016 1 Jan-30 June 2015 Change % Offered financing, MEUR Loans and guarantees 483 541 -11 % Export credit guarantees and special guarantees 1 226 5 124 -76 % Export credits 477 3 601 -87 % 30 June 2016 30 June 2015 Change % Outstanding commitments, MEUR Loans and guarantees 2 322 2 285 2 % Export credit guarantees and special guarantees 16 896 17 436 -3 % Export credits 4 718 4 240 11 % 1 Jan-30 June 2016 1 Jan-30 June 2015 Change % Net Interest income both fee and commission income and expenses, MEUR 93 102 -8 % Operating profit, MEUR -7 56 -113 % Profit for the period, MEUR -7 55 -113 % 30 June 2016 30 June 2015 Change % Balance sheet total, MEUR 9 166 8 418 9 % Equity; MEUR 1 116 1 121 0 % - of which non-restricted reserves, MEUR 865 871 -1 % 30 June 2016 30 June 2015 Change % points Equity ratio, % 12,2 % 13,3 % -1,1 % Capital adequacy, Tier 2, % 18,9 % 19,6 % -0,7 % Cost-income ratio, % 30,6 % 28,3 % 2,3 % The Finnvera Group’s financial performance for January–June showed a loss of EUR 7 million, as against a profit of EUR 55 million the year before. The result was EUR 62 million less than for the first six months of 2015.The principal factors affecting the negative result during the first half of the year were the increased losses and provisions for losses recognised by the parent company, Finnvera plc, for export credit guarantees. Losses on export credit guarantees and provisions for losses together amounted to EUR 66 million (2 million). During the period under review it emerged that the Brazilian Oi S.A. Group poses a risk that, if realised, might cause a loss that is currently estimated at about EUR 55 million. In consequence, the provisions for losses were increased during the period. Provisions for losses are current estimates. Their amount may still change considerably as more detailed information is obtained.The result of EUR -7 million recorded for the parent company, Finnvera plc, during the first half of the year (56 million), was broken down as follows: Large Corporates, EUR -17 million (48 million); SMEs, EUR 10 million (8 million).During the 17 years that the company has been in operation, the Group’s performance has been positive for all financial periods and, since the early 2009, for all six-month periods, until the recently ended period of January–June 2016. The parent company’s export credit guarantee activities have also been cumulatively self-sustainable throughout the company’s operations, even considering the negative result for January–June. Finnvera Group H1/2016 H1/2015 Change Change *2015 MEUR MEUR MEUR % MEUR Net Interest income 27 28 -2 -6 56 Fee and commission income and expenses (net) 67 73 -7 -9 141 Gains/losses from items carried at fair value -10 -6 4 63 -21 Administrative expenses -22 -22 0 1 -44 Other operating expenses -3 -3 0 -5 -6 Impairment losses, guarantee losses -65 -14 51 352 -15 Loans and domestic guarantees -15 -72 -57 -79 -87 Credit loss compensation from the State 15 60 -45 -74 83 Export credit guarantees and special guarantees -66 -2 64 - -10 Operating profit -7 56 -63 -113 114 Profit for the period -7 55 -62 -113 111 Outlook for financingIt is expected that demand for export credit guarantees and financing provided by Finnvera will continue to increase. Measured in euros, demand will probably continue to focus on cruise vessels, telecommunications and forestry. An internationally competitive export financing system plays an important role in these sectors, owing to the large scale of individual investments.New export markets have opened up, for instance, in Iran and Argentina. With opening markets, public financing sources, such as Finnvera’s export credit guarantees, are important for the realisation of export transactions. Among countries where Finnvera is exposed to risk, the situation in Brazil, Turkey and Russia is expected to remain uncertain. This will pose challenges to enterprises operating in these countries. On the other hand, Brazil’s and Russia’s weakened local currencies reinforce the operating conditions of export companies active in these countries. This may boost interest in investments and may provide export opportunities for Finnish businesses. The result of the British referendum on exiting the EU is likely to cause uncertainty in Europe for several years.During the first half of 2016, demand for Finnera’s SME financing was slower than a year ago. The financing granted was also at a lower level than the year before. During the first half of the year, Finnvera prepared the adoption of the Growth Loan, a new mezzanine financing product, and was getting ready to serve as an intermediary organisation for the European Fund for Strategic Investments. Together with the recently adopted programme on transfers of ownership, these developments are likely to increase the demand for and granting of financing in the latter half of the year.According to the estimate made in early 2016, the financial performance for the current year is likely to fall below that for 2015. The negative result for the first six months of the year does not affect the realisation of the cumulative self-sustainability of Finnvera’s export credit guarantee activities.CEO Pauli Heikkilä:“Finnvera’s exposure figures have risen higher than ever before, and it is expected that demand for export credit guarantees and financing provided by Finnvera will continue to increase. It is important to ensure the functioning of our export financing system so that Finnish companies can compete over export deals on equally good financing terms as their competitors.With respect to SME financing, the growth in the volume of enterprise acquisitions has been gratifying. We shall continue our efforts to encourage transfers of ownership; the greater the number of companies that continue their operations, the better it is for the overall economy of Finland. New owners often bring development ideas and the wish to grow.The Team Finland network is under intense development. Improvement of the joint domestic service model will continue for the rest of the year. So far the feedback from customers within the scope of the service has been positive. Team Finland cooperation will get a boost in practice with the impending move of Finnvera, Finpro, Tekes and Finnish Industry Investment to joint premises in Team Finland House, in the Ruoholahti district of Helsinki.Finnvera’s statutory mission is to bear some of the credit risks that are inevitable in all export transactions. Some of these risks were realised during the first six months of the current year.”Half Year Report 1 Jan - 30 June 2016 (PDF)Additional information:Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400 Ulla Hagman, Senior Vice President, CFO, tel. +358 29 460 2458
During its first year, Finnvera’s Start Guarantee attracted applications for 1,600 financing projects. An entrepreneur considers the guarantee convenient for start-ups.Both banks and entrepreneurs have found Finnvera’s Start Guarantee, which has been in use for a little over a year.According to Team Leader Leena Waarna, banks have submitted applications for Start Guarantees to Finnvera for 1,600 financing projects.The bank applies for the Start Guarantee on behalf of the entrepreneur. In other words, the entrepreneur only deals directly with his own bank. Finnvera’s guarantee coverage can be at most 80 %. However, the total sum of Start Guarantees granted to one enterprise may not exceed EUR 80,000.“The Start Guarantee is also well suited for smaller projects, for instance from 30,000 to 50,000 euros in size. Therefore, entrepreneurs should not be discouraged even if they don’t have proper collateral for the bank,” Waarna says.She encourages starting entrepreneurs to contact local advisory services first. They have information, for instance, on competition in both the region and the sector involved.Companies’ initial costs and financing needs vary widely.A few tens of thousand euros is enough for the initial working capital for example in the service sector, whereas considerably more money is needed for investments in projects involving production.“Entrepreneurs are generally pretty good at calculating their expenses in advance. In contrast, turnover forecasts are easily over-optimistic. It is expected that turnover will start to accumulate quickly, and payment schedules are drawn up accordingly,” Waarna says.“Realistic overall calculations and correctly dimensioned credit with its repayment periods help the fledgling entrepreneur to avoid the worst pitfalls,” she continues.A faster startTuure Parkkinen, an entrepreneur from Helsinki, praises the Start Guarantee lavishly.“The Start Guarantee was unusually easy because the bank filed the application for us. From the entrepreneur’s perspective, there was little red tape. In the end, we decided to withdraw 25,000 euros,” Parkkinen reminisces.Together with his partners, he founded ResQ Club late last November. Using the digital service developed by the enterprise, consumers receive information on food that is about to go to waste in restaurants, bakeries, cafés and hotels.The service gives consumers the opportunity to buy food at discounts exceeding even 50 per cent. Restaurants, in turn, can reduce their waste.Parkkinen says that the founders had little savings when establishing their enterprise.“Even if we ourselves worked without pay, some expenses are inevitable at the start. Now we were able to kick off more quickly.”From the very start, ResQ Club’s services have attracted interest among both investors and consumers.With private individuals and venture capitalists as new investors, the company issued a financing call of over 300,000 euros. At the same time, ResQ Club announced that the service is also being launched in Sweden.The service has about 20,000 registered users and 150 partner suppliers.FACT: What’s a Start Guarantee? The Start Guarantee is intended for start-ups and enterprises that are no more than three years old. The enterprise must be owned by private individuals. The Start Guarantee is particularly well suited for small-scale financing, especially if the entrepreneur has insufficient collateral for the bank. Finnvera’s guarantee coverage is at most 80 per cent. The total amount of Start Guarantees granted to an enterprise cannot exceed 80,000 euros, in which case the maximum loan sought from a bank under the Start Guarantee is 100,000 euros. For collateral, the principal shareholders lodge special guarantee undertakings that must cover at least 25% of Finnvera’s guarantee sum. The enterprise presents the financing application to its own bank. Thereafter, the bank assesses the credibility of the business and checks the calculations and the applicants’ creditworthiness before granting financing. The bank submits the application for the Start Guarantee to Finnvera on behalf of the enterprise. The Start Guarantee is intended especially for the working capital and investment needs of start-up enterprises. It cannot be used for financing company acquisitions or purchases of business premises. The Start Guarantee may also be one part of the enterprise’s aggregate of loans. The maximum repayment period for loans under the Start Guarantee is ten years. More information about the Start Guarantee is available here.More financing solutions for setting up a company are found here.Text: Kimmo Koivikko
In South America, the Argentinian economy is gradually opening up for foreign business again. Finnvera’s experts see opportunities for Finnish companies in Argentina.Argentina’s economy collapsed at the turn of the millennium and, owing to unpaid debts, the country remained outside international financial markets for many years. However, the new conservative administration has taken quick action to resolve any unsettled disputes with Argentina’s creditors. In consequence, the country is gradually able to renew its relations with international providers of financing. The new Government has also lifted the restrictions on foreign trade.According to Jussi Haarasilta, Executive Vice President at Finnvera, Argentina is gradually becoming a potential export country for Finnish companies.“Necessary reforms were neglected during Argentina’s long period of isolation. For instance, the infrastructure is in urgent need of development, and that’s where Finns might well have a lot to offer in the coming years. This could mean, for example, telecommunication and electricity networks, mining, wood processing and the construction of harbours,” Haarasilta lists.“In short, the traditional Finnish export portfolio is well suited to Argentina’s future needs.”Haarasilta stresses that with its population of 43 million, Argentina is now becoming an attractive market for many companies.“Competition will be stiff for certain,” he predicts.“Realisation of large projects calls for financing, which in turn requires that the counterparty is creditworthy. Argentina was outside export credit guarantees for years. At present, Finnvera can support the financing of trade and is investigating how to guarantee long-term credits,” Haarasilta says.“It pays to look into partners’ backgrounds”Many companies have already contacted Finnvera to inquire about the situation in Argentina. Senior Adviser Mika Relander visited Argentina recently and underlines that even if Argentina offers promising opportunities, companies considering business there should still exercise caution.“The operating environment continues to involve risks, especially in the public sector, as the country’s economy is still rather weak and will require many long-term reforms. Good examples are the large subsidies for electricity and petrol prices that need to be dismantled before the public economy can be balanced.”“Otherwise, too, it pays to investigate customers’ solvency and the partners’ backgrounds in advance together with Finnvera,” Relander says.However, according to Relander, Finnvera always strives to seek and tailor financing solutions that would make the export transaction possible.“Still, in the case of Argentina, we also need to be rather cautious,” he adds.Additional information:Jussi Haarasilta, tel. +358 29 460 2601, jussi.haarasilta (at) finnvera.fiMika Relander, tel. +358 29 460 2725, mika.relander (at) finnvera.fi
Recruiting the right people and the owners’ capacity to take risks are crucial for a company’s growth.Everyone makes mistakes, but you should learn from them, growth entrepreneur Lennu Keinänen urges.Keinänen says that he himself has stepped on all possible mines, from market analyses to financing. Despite that, he has taken part in founding nine enterprises. Of these, the best known is Paytrail, a provider of online payment services. The Danish company Nets acquired 80 per cent of the enterprise two years ago.However, Keinänen identifies the team and its importance as the biggest mine.“Team members must have sufficiently diverse backgrounds. It’s not necessarily a good idea to hire your course mate,” Keinänen points out.In his view, building the right team can start once the entrepreneur understands what he or she is actually doing.“Corporate culture must be created first. In the end, culture is shaped only through people, but its desired state must be known so that the entrepreneur can make the right recruitment choices.”Despite his young age, Keinänen has already been an entrepreneur for 20 years. He set up his first enterprise, in Kuopio, at the age of 15. Growth, internationalisation and financing are all interlinked. Growth has always been at the core of Keinänen’s enterprises as well.“Growth calls for bigger thinking, that is, leaving one’s own sandbox. One of the worst things is underfunding. Growth is always more expensive than you had originally thought,” says Keinänen.He agrees with Kim Väisänen, a successful entrepreneur who says that a company has only one crisis and that is the cash crisis.From bikinis to a growth trackStudies indicate that young people are eager to start their own enterprises. Young entrepreneurs have recently gained visibility otherwise, too, with the selection of the Young Entrepreneur of the Year in Jyväskylä last Friday.Last year this recognition went to Varusteleka, which has also sought growth outside Finland.One of the finalists this year was Biancaneve of Tampere, a maker of individual sports garments. Biancaneva was ranked third in the national competition. Entrepreneur Elina Loueranta acknowledges that she has also stepped on various mines.“My dream was only to make clothes. At first I didn’t even calculate any profit margins,” Loueranta says.The awakening came three years ago at a growth camp where other companies were making plans for internationalisation. “We were so small next to the others. One company was selling a million screws to Russia and we were talking about bikinis. We were asked if we really believed that we could grow and become international. It didn’t occur to me to answer that each bikini cost 600 euros,” Loueranta recalls.Not even all of the team members believed in growth. The entrepreneur says that one team member aroused doubt in the others, too.Intervening in the situation required a lot, but it was necessary.“I stood up from behind the sewing machine and started to look at the big picture,” Loueranta says.With its turnover of about half a million euros, Biancaneve is living a strong growth phase. This summer, the company is launching a webcam service that will allow customers to order Biancaneve’s tailored bikinis from anywhere in the world.At present, growth is brought by a luxury-focused sportswear collection designed for women. The marketing of this product line also takes the entrepreneur outside Finland.“We wanted to go abroad and we were asked whether we were ready to travel. Now this has come to pass. Relations can only be created face to face,” Loueranta concludes.FACT: Ways to break the glass ceiling on growthAccording to research, one out of five enterprises has hit the glass ceiling on growth.The main factors keeping a glass ceiling on growth are sales and marketing skills, the availability of competent staff, the acquisition of financing and the capacity of owners to take risks.Growth entrepreneurs believe that the glass ceiling can be broken if the management or the owners have sufficient capacity to take risks. That is the most important single way. Other important ways are product and service innovations, sales and marketing expertise, the availability of competent personnel and customer demand.Obtaining adequate financial resources is another tool for breaking the glass ceiling.This information is based on the Growth Enterprise Survey, conducted by the Kauppalehti business periodical and sent to 715 entrepreneurs, of whom 92 responded.There are several financing solutions for working capital needs and for starting business abroad.Text: Kimmo Koivikko
For its own part, Finnvera wants to ease the financing of smaller export transactions carried out by enterprises. The first step is the new Bill of Exchange Guarantee, which is best suited to transactions of less than two million euros.Finnish exports are concentrated in a few sectors and are dominated by large corporations. SMEs account for only about 15 per cent of the total value of exports.“It is evident that Finland needs more SME exporters. In general, simpler financing options should be available for small export deals. Complex credit documents and their high costs are often obstacles to financing the smallest transactions. The first product we are launching is the Bill of Exchange Guarantee, where we have considerably relaxed our requirements for both the exporter and the bank. We’ll continue making our services increasingly responsive in order to help Finnish exporters in their sales efforts,” says Executive Vice President Jussi Haarasilta.A bill of exchange is a traditional means of paymentThe use of bills of exchange has gradually increased in foreign trade in recent years. The bill of exchange serves both the exporter and the buyer because the exporter is paid in cash while the buyer is given payment time. Finnvera’s Bill of Exchange Guarantee, in turn, protects the bank from any credit losses that might arise. Compared to a loan agreement, for example, a bill of exchange is a quick and cheap payment instrument.“Our new Bill of Exchange Guarantee requires no security for small transactions of under two million euros. We trimmed the contents of the guarantee agreement and simplified pricing. We also cover risks stemming from the application of laws and regulations on bills of exchange that have been passed in various countries. We want to boost transactions of this size class in particular by increasing flexibility in our guarantee terms associated with export bills of exchange,” Team Leader Eeva-Maija Pietikäinen explains.The exporter applies for the guarantee from Finnvera and submits credit data and financial statements on both the buyer and the guarantor, if any, over the past two to three years. Additional information is requested, if necessary. Finnvera always makes guarantee decisions individually for each project.Finding the right kind of payment method requires cooperation with the exporter, the exporter’s bank and Finnvera. It is essential that the financing is planned well in advance before the conclusion of the export transaction. In this way it is possible to select the payment method that suits each export deal. This is important particularly for bills of exchange because not all countries use them as a means of payment.Additional information:Jussi Haarasilta, Executive Vice President, tel. +358 29 460 2601Eeva-Maija Pietikäinen, Team Leader, tel. +358 29 460 2674Products > Export Credit Guarantees > Bill of Exchange Guarantee
Marju Silander, Managing Director of the Women Entrepreneurs of Finland, sees many solutions for improving the state of the economy. One key factor is to seek growth through internationalisation and transfers of ownership.Finnish working life and enterprise structure have been in turmoil in recent years. Marju Silander, herself an entrepreneur by background, has been on the front line of this restructuring. Prior to her appointment as Managing Director of the Women Entrepreneurs of Finland, Silander had earned her stripes, among others, at the Regional Organisation of Enterprises in Helsinki.“We have changed from a Finland of large corporations to a Finland of micro-enterprises.”According to Silander, Finnish legislation is still living in the time of large corporations even though the current Government strives to revise the structures of working life and to dismantle unnecessary regulation.“Most jobs are created in small and micro-enterprises. By following the Think Small First principle of the EU, Finland Ltd could be brought to the present day,” Silander ponders.Small enterprises face a new situationSilander is concerned about the lack of international growth. Economic growth centring on Europe does not seem to trickle to Finland.“Small enterprises face the challenge of how to reach the international growth market. A strong domestic market is not enough to stop the spiral of increasing government debt: in practice we are sitting at the same table circulating money from one purse to another,” Silander summarises the situation.She believes that technology-driven industries, in particular, have growth potential. Sustainable development and the circular economy, ageing of the population and the health and wellness boom offer diverse opportunities for creating new products and services for the international market. Younger entrepreneur generations also have the enthusiasm to venture out into the world.“It’s no longer necessary to think that first we’ll establish a company and then we’ll go international. Instead, there can be a bigger picture from the very start,” Silander says.Being an entrepreneur has become attractive: young entrepreneurs are increasingly eager to seize the opportunity to build exactly the kind of life they have dreamed for themselves.“In addition to the cultural shift, the many years of entrepreneur training given by educational institutions and entrepreneur organisations are finally starting to bear fruit,” Silander rejoices.Transfers of ownership add momentum to Finnish work life Internationalisation is not an option for all entrepreneurs. Certain local services cannot be globalised or digitised, and boosts for business must be sought through other means. Silander says that transfers of ownership are a pivotal tool for growth in the Finnish economy.“At present we have more than 80,000 entrepreneurs over 55 years of age. Nearly one third of them have announced that they will wind up their business when they retire. It is also known that, in general, one transfer of ownership affects on average four people. This means that many jobs are in the danger zone,” Silander ponders.Lack of information is one reason why there are so few transfers of ownership.“Especially sole entrepreneurs are often too modest when putting a value on their enterprise. As a trade association within the Federation of Finnish Enterprises, we also conduct serious dialogue with Finnvera about how we could make entrepreneurs understand the realisable value of their enterprises so that they can continue to offer jobs in the future as well,” Silander explains.She mentions a case where a woman entrepreneur was about to wind up her enterprise for good, but decided in the end to ask for advice about selling the enterprise. The outcome was that the entrepreneur was able to supplement her pension income with a profit of nearly 10,000 euros by splitting up the company’s inventories and operations into packages ready to buy.“In a way, we squander our assets if no deals are made. Entrepreneurs should feel proud and pleased for having created something that is useful for others, too,” says Silander.Finding the right partner is rewardingFor a starting entrepreneur, buying an existing enterprise is an excellent way to pick up speed quickly. The entrepreneur does not need to start from scratch, since networks, premises and processes are already available. In fact, persons who have become entrepreneurs by buying an enterprise are on average more satisfied with being an entrepreneur and feel that they have made a go of it.According to Silander, buyers’ knowledge of company acquisitions is also scanty.“Many people come to Enterprise Agencies with their own ideas. If the idea isn’t viable, it could be proposed that a development partner be sought in an existing enterprise,” Silander suggests.When a novel idea is combined with an operating enterprise, the result may be something brand new. Earning money on the basis of one’s own idea will then take less time and, on the other hand, the idea may also be refined in the process.What’s more, transfers of ownership are an excellent way to expand existing business operations.“When two enterprises are put together, the result may sometimes be greater than two. It would be really valuable to get people together at an earlier stage instead of waiting until the enterprise has suffered from years of underdevelopment,” Silander sums up.Silander compares selling an enterprise to selling a home: usually everyone selling their home makes sure that they get as good a price as possible when closing the sale. She urges entrepreneurs to keep this philosophy in mind at every stage of developing their companies. Quotes “Finland is such a small country that cooperation is extremely important. We cannot waste time by arguing among ourselves; instead, we must stand as a united Finland against China, Germany or Sweden.” “If the only plumber in the village closes up shop, it should be in the interest of towns and municipalities to look for a new entrepreneur in the locality rather than letting operations cease and allowing residents’ basic services to decline.” “Business Infrastructure Analysis, which is a public service provided free of charge, is an excellent way of keeping abreast of a company’s development potential and value. It would be good if every company were given a kind of ‘annual inspection’ at certain stages of the life cycle.”Text: Noora Puro Photo: Heidi Strengell
It often comes as a surprise when sales lag behind expectations. An entrepreneur’s advice is to seek local partners.Growth companies entering international markets badly underestimate their need for financing.There are many reasons for this.The most common reason is that the business launches organised by enterprises abroad are in fact much more expensive and more time-consuming than had originally been planned.The discrepancy between plans and reality is explained, among others, by unexpected turns of event and more sluggish sales of products or services on targeted markets.“The costs are always at least twice as much, and the need for external financing three times greater than what had been planned. When drawing up their budgets, companies are slightly overoptimistic. The fact is that an enterprise must get loads of visibility on the consumer market. Achieving credibility in business between companies takes time,” says Titta Mantila, Vice President, SME Financing at Finnvera.She heads the Growth and Internationalisation Team at Finnvera.According to Mantila, Finnish companies are told repeatedly about the importance of sales skills. However, skills in financing and economics should not be underestimated.Shareholders’ equity should account for almost one third of the total need for financing. Additionally, it would be good to think about what happens to the company if everything goes wrong abroad. In other words, risk tolerance.“Nor does it hurt to learn about the target countries and their business culture,” Mantila continues.There are no major differences in the financing needs of growth companies and companies with a slower growth pace. Working capital is the most common reason for seeking external sources of financing.With growth companies, everything is just a lot bigger. The financing granted to a growth company by Finnvera is on average about EUR 400,000.“No one can set up an international business with 100,000. Companies turn to us to obtain financing for expanding their own organisation, recruitment, sales and marketing, and for launching on international markets,” Mantila lists.She says that, for instance, Finnvera can offer several financing solutions for working capital needs and starting business abroad.Seek partners Katja Lindy-Wilkinson, Marketing Director of Picote Oy Ltd and CEO of Picote Solutions Inc., admits that a perpetual shortage of resources has also slowed down the growth of the company based in Porvoo, Finland.The company renovates drainage pipes and develops and manufactures pipe lining tools, and has been able to forge ahead abroad in step with financial resources.“Equipment sales abroad began in 2012. Our German partner wanted to become a reseller, and that gave us a good start,” Lindy-Wilkinson reminisces.Today, foreign buyers account for 88 per cent of Picote’s equipment sales. The company, with a turnover exceeding six million euros, has 19 resellers around the world.Lindy-Wilkinson, who has lived in the United States for years, says that resellers are supported in many ways in their efforts to succeed. In return, resellers bring added value with their knowledge of the local markets.“The chances of success are much better if you find local partners. It’s also worth remembering that there are many Finnish expatriates living all over the world. We, too, hired a Finnish consultant in the USA. That person was an excellent support for us,” Lindy-Wilkinson says.FACT: Does the lack of money slow down growth? According to companies, the main factors keeping a glass ceiling on growth are sales and marketing skills, the availability of competent staff, the acquisition of financing and the capacity of owners to take risks. During the first months of the current year, Finnvera’s financing for enterprises exceeded 300 million euros. Growth companies accounted for 49 per cent of this. Despite their potential, not all companies seeking solid growth have a long, economically profitable history behind them. In consequence, their rating may not be high enough. Rating affects the price and availability of money. The rule of thumb is that loan financing must be accompanied by a sufficient amount of equity. It can be considered that 30 per cent is a sufficient amount. Text: Kimmo Koivikko
At the beginning of April, Finnvera’s selection of financing services was supplemented with a new loan product, the Growth Loan.Kalle Åström, Program Manager at Finnvera’s SME Unit, for what types of projects is the Growth Loan designed?– The Growth Loan is intended for financing SMEs and midcap companies in major growth and internationalisation projects or corporate reorganisation. The idea is that the loan would attract financiers operating on market terms to invest in projects where risks are high but profitability and effectiveness are deemed to be good.Who can apply for a Growth Loan?– Finnvera’s Growth Loan may be granted to SMEs and midcap companies that have been in operation for over three years. The loan is not suited for the very start of business or for small projects. In these situations, some other financing product we provide may be the solution; for instance, Finnvera’s Start Guarantee, where the bank submits the guarantee application to Finnvera on behalf of its customer.The Growth Loan is a debt-based mezzanine financing product that combines the features of both equity and debt financing. The company’s self-financing portion must always be at least 20% and the share contributed to the total financing by financiers other than Finnvera must be at least 50%.The Growth Loan is granted for each project on a case-by-case basis. Project profitability and eligibility for financing are assessed together with other financiers.Read more: Growth Loan
Interview of Joonas Mikkilä, Organization Manager at the Federation of Finnish EnterprisesFederation of Finnish Enterprises’ survey reveals: University students, in particular, have embraced entrepreneurship. One out of five students sees being an entrepreneur as a probable career direction.How has interest in entrepreneurship developed among young people?JOONAS MIKKILÄ: Attitudes are undergoing a major generational shift. In consequence, the young people entering the labour market now are increasingly entrepreneurial. According to the Global Entrepreneurship Monitor survey, in 2015 as many as 20 per cent of young people between 18 and 24 years of age deemed that they would set up an enterprise within the next three years. At the turn of the millennium, only a few per cent of the same age bracket thought in this way.How actively do Finnish young people start enterprises when compared against young people in other countries?JM: Fairly actively. About five per cent of working Finns under 30 years of age work as entrepreneurs. In the rest of the Nordic countries, the ratio of young people working as entrepreneurs is 2–4 per cent. The EU average is about seven per cent.How are young people encouraged to become entrepreneurs in Finland and what kind of mentoring is available?JM: The development of entrepreneur training in basic and upper secondary education has been one of the focal points of Finnish education policy since the 1990s. The results are now becoming clearly visible. Universities have also gradually realised the importance of entrepreneur education for strengthening young people’s skills on the labour market. University students themselves have also established communities that promote growth enterprise culture on campuses.The association Suomen Yrityskummit provides mentoring for young entrepreneurs. Enterprise Agencies, in turn, give high-quality enterprise consulting to people planning to start a business. Business accelerators, operating in connection with universities and regional development companies, provide services for those seeking faster growth. Our Young Entrepreneurs programme aims to offer peer support and ready-made networks for starting entrepreneurs.What are the biggest challenges facing a young entrepreneur?JM: Apart from financing, many young entrepreneurs seeking to expand their operations are concerned about the risks involved in employing people. The significant increase in the number of one-person firms in the 2000s is an indication of the high threshold for hiring others and the rigidity of our labour markets. In certain sectors, the amount of regulation and administrative oddities also causes concern. How is financing arranged?JM: Getting financing from a bank is currently challenging for a starting entrepreneur who has little capital. However, supplementary financing from Finnvera and Tekes has helped to ease the situation. New crowdfunding forms are also becoming clearly more popular. How could young people be inspired to buy already existing companies?JM: Persons who engage in entrepreneur training and consulting must communicate to young people that continuing the operation of existing companies is an excellent channel to entrepreneurship. As entrepreneurs age, these opportunities will be available increasingly often in the coming years. Additional information:www.yrityssuomi.fiwww.uusyrityskeskukset.fiwww.yrittajat.fiwww.nuoretyrittajat.fiwww.yrityskummit.fiwww.nuoriyrittajyys.fiwww.yes-keskus.fiPhoto: Jaakko Översti
Finnish exports to Russia fell by one-third, but inquiries about Finnvera’s guarantees come in steadily.Lower oil prices, the weak rouble and the sanctions imposed in consequence of the Ukrainian crisis have cramped Finnish companies’ exports to Russia.According to customs statistics for last year, exports to Russia plummeted by 32 per cent, to EUR 3.2 billion. The first months of the current year have not changed this trend.The last time when exports fell below four billion euros was in 2003. At the same time, Russia has dropped to rank fifth among the most important export markets.As a counterbalance to the gloomy news, enterprises have fortunately woken up to the situation.According to Jussi Haarasilta, Executive Vice President at Finnvera, companies’ crisis awareness has increased and they more actively seek to protect their claims.“We want to advance Finnish companies’ opportunities to engage in export trade. We will therefore continue to grant guarantees for exports to Russia, but we will observe how larger transactions, in particular, affect the level of total exposure,” says Haarasilta.Outstanding commitments have remained steadily around 1.5 billion. This accounts for a little less than ten per cent of total outstanding commitments.“Even now we have dozens of clients that export to Russia. There is a constant flow of inquiries about guarantees. Immediately after the sanctions were imposed, many companies hurried for guarantees, but not all projects have proceeded,” says Haarasilta.Know your partner’s backgroundMost of Finnvera’s guarantee commitments involve the exports of large corporations. According to the Finnish-Russian Chamber of Commerce, hundreds of companies carry out regular exports to Russia.“We grant short-term credit insurance for good buyers, but since the outbreak of the crisis, payment defaults have increased. We are particular about the buyer’s creditworthiness. In large projects that require credits, export credit financing is often channelled through a bank that is backing the Russian buyer,” Haarasilta explains.He advises companies to investigate their trading partners’ background.“Who is the buyer and the actual owner of the company making the purchase. The seller may start to pursue the issue too easily, without verifying the background.”Russia’s economy will continue to slip this year. The IMF’s forecast for the change in the GDP is -1.8 per cent. The situation caused by the sanctions adds to economic uncertainty.“The weak economic situation has caused a cut in imports. This means that many important investments or supplies for maintenance are sorely needed. This may gradually be seen in demand for imports in some sectors,” Haarasilta believes.Finnvera has many tools for financing and guarantees that companies can use in their exports. More information about the various alternatives is available at: www.finnvera.fi/eng > Export.Text: Kimmo Koivikko
The Growth Loan introduced by Finnvera at the start of April provides an instrument for financing major growth and internationalisation investments in SMEs and midcap companies.The Growth Loan is intended for SMEs and midcap companies that have been operational for more than three years and seek funding for major growth and internationalisation projects and corporate restructuring. Midcap companies are enterprises that are larger than SMEs and have a turnover of less than EUR 300 million.- The purpose of the Growth Loan is to attract market-based financing to projects where risks are high but that are expected to be profitable and effective, explains Katja Keitaanniemi, Executive Vice President, SMEs at Finnvera.The Growth Loan is a debt-based mezzanine financing product combining features of equity and debt financing. The company must provide at least 20 per cent of the financing and the contribution of Finnvera and other financiers must be at least 50 per cent.The Growth Loan is granted on a project-specific basis and Finnvera and other financiers jointly evaluate the profitability and financing eligibility of each project.Further information: Kalle Åström, Program Manager, SMEs, tel. 029 460 2747
Half of all decision-makers in Finnish SMEs follow changes in the value of their enterprises. Less than half of all Finnish SMEs have made preparations for ownership changes. These are some of the findings of a survey conducted among Finnish SMEs.Each year thousands of companies find themselves in a situation where they have to find a new owner for their business. Despite this, more than half (56%) of them have not made any plans for the situation. Retention of value is a particularly low priority in companies with the smallest number of employees and the lowest turnover.- It should definitely be a greater concern. Making sure that the company retains its value should be a top priority and the owner should also develop the business operations throughout the company’s life cycle. This helps to ensure that the company is in good shape when a new owner has to be found, says Katja Keitaanniemi, Executive Vice President, SMEs at Finnvera.Finnvera, the Federation of Finnish Enterprises and the Ministry of Employment and the Economy jointly conduct the SME Barometer Survey twice a year. In this year’s survey the respondents were specifically asked about changes in ownership. About 6,000 SMEs took part in the spring 2016 barometer and the findings on ownership changes are based on the responses provided by them.Boosting growth through company acquisitionsEven though company acquisitions may be a good way of expanding business, some 80 per cent of all SMEs taking part in the survey said that they are not interested in acquiring other companies or business operations. However, strongly growth-oriented companies see more opportunities in this area and about 40 per cent of them said that they would be interested in such acquisitions.- From the perspective of growth, acquiring an existing company would open up new opportunities and it might also be smarter economically than organic growth. A company acquisition is also a good idea for new entrepreneurs because that would give them a well-tested business concept for further development, explains Anssi Kujala, Deputy Managing Director of the Federation of Finnish Enterprises.The Yrityspörssi website of the Federation of Finnish Enterprises is a place where companies are sold and acquired. It is Finland’s largest market place for SMEs and nearly 25,000 people interested in company acquisitions check the ads on the site each month. Yrityspörssi now also provides basic information about valuation, business practices, financing and taxation. In addition to the nationwide Yrityspörssi, there are also ten regional Yrityspörssi websites.Further information: Katja Keitaanniemi, Executive Vice President, SMEs, Finnvera plc, tel. 029 460 2888 Anssi Kujala, Deputy Managing Director, Federation of Finnish Enterprises, tel. 0400 567 925Finnvera provides financing for the start, growth and internationalisation of enterprises and guarantees against risks arising from exports. Finnvera strengthens the operating potential and competitiveness of Finnish enterprises by offering loans, guarantees and other services associated with the financing of exports. The risks included in financing are shared between Finnvera and other providers of financing. Finnvera is a specialised financing company owned by the State of Finland and it is the official Export Credit Agency (ECA) of Finland. https://www.finnvera.fi/eng/ https://www.finnvera.fi/eng/Finnvera/Media/Media The Federation of Finnish Enterprises promotes the interests of small and medium sized enterprises in Finland. With a membership of more than 115,000, 400 local associations, 20 regional organisations and 63 branch organisations we are Finland’s largest business federation. Self-employed individuals account for half of our members, while the other half consists of employer enterprises. Our members provide employment for about 650,000 people. Further information: http://www.yrittajat.fi/en-GB/. http://www.yritysporssi.fi/en
Brazil is expected to play a major role for Finnish exports in the coming years as well. Despite the current economic difficulties, it is believed that Brazil will continue to offer business opportunities in many of the strong sectors of the Finnish export industry.According to Jussi Haarasilta, Executive Vice President at Finnvera, Brazil is an important and, above all, growing market from the viewpoint of Finnish enterprises.“Brazil’s devalued currency, the real, stimulates demand in the export-oriented sector of wood processing and pulp manufacture. Moreover, the great potential in the country’s bioenergy and cleantech sectors is finally being realised and, as we know, Finland has volumes of first-rate expertise in these fields,” says Haarasilta.“In addition, Brazil has made extensive investments in telecommunications, which has also benefited Finnish enterprises.”Haarasilta says that Brazil’s economy of 200 million people would also have great demand for consumer goods.“The consumer market will certainly experience vigorous growth in the future. So far Finland’s exports to Brazil have focused on capital goods and, at least yet, Finland has not been able to profit from the consumption potential of the growing middle class.”Economic recession is hoped to remain shortJussi Haarasilta judges that Brazil’s economic problems and domestic policy crisis inevitably make an impact on the business environment of foreign enterprises in Brazil, at least to some extent.“It is clear that more caution and deliberation than normally is advisable when planning business deals in Brazil. However, I’d like to stress that despite the current problems, Brazil has many good enterprises and sectors that can serve as trading partners,” he says.“In the longer term, Brazil still has much potential as an export country for Finland, and sales to Brazil could be much higher than at present. We naturally hope that the recession of the Brazilian economy will be as short-lived as possible.”According to Haarasilta, Finnvera for its part is willing to support Finnish companies’ export efforts in Brazil as well, but keeps a close eye on the development of the country’s economy.“The more contracts Finnish export companies can win, the better it is for the whole of Finland.”Finvera’s guarantees for exports to Brazil account for the third highest country exposure among all countries. Apart from Finnish companies’ active efforts in Brazil, the exposure is explained by the fact that individual transactions in Brazil often have a very high monetary value.Additional information:Jussi Haarasilta, Executive Vice President, tel. +358 50 346 95 37
The ceilings for the Finnvera Group's export credits and export credit guarantees have been raised. The Finnvera Group can continue to provide Finnish export companies with internationally competitive financial arrangements for their export transactions. The legislative amendments will enter into force on 15 April 2016.The authorisation to grant export credits will rise from EUR 7 billion to EUR 13 billion, while the authorisation to grant export credit guarantees will rise from EUR 17 billion to EUR 19 billion. The authorisation to provide interest equalisation will also increase, from EUR 7 billion to EUR 13 billion. The purpose of the increases is to improve the competitiveness of Finnish companies engaged in the exports of capital goods and to enhance their opportunities to secure export contracts.– “Long-term financing plays an important role in negotiations for export-related purchase agreements. Bank regulation has affected banks’ possibilities to finance long loan periods. For this reason, Finnish Export Credit Ltd is needed in large financial arrangements. Some individual large export deals have increased our exposures close to their maximum limits. The increases in the authorisations enable Finnvera to participate in financial arrangements for Finnish companies’ export transactions and for their foreign buyers in the coming years as well,” says CEO Pauli Heikkilä.The parent company Finnvera’s total commitments for export credit guarantees and special guarantees amounted to EUR 17.4 billion at the end of December 2015. The outstanding commitments for export credit guarantees in accordance with the ceiling laid down by law totalled EUR 14.2 billion. The outstanding export credits and ship credits granted by the subsidiary Finnish Export Credit totalled EUR 4.2 billion. The granting of export and ship credits always requires an export credit guarantee. In other words, the risks associated with the project are covered with an export credit guarantee. According to the goal of economic self-sustainability set for Finnvera’s operations, the income received from the company’s operations must, in the long run, cover the company’s operating expenses. The self-sustainability of export financing has been realised over Finnvera’s history of 17 years, and Finnvera’s operations have not caused any costs to the State.Finnvera acquires the funds needed for credits from the market, by issuing State-guaranteed notes. The maximum amount of loans guaranteed by the State was raised from EUR 9 billion to EUR 15 billion. Additional information:Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400Jussi Haarasilta, Executive Vice President, tel. +358 29 460 2601
On 6 April 2016, Finnvera issued a ten-year, fixed-rate bond of EUR one billion. Among the euro-dominated bonds issued by Finnvera so far, this one has the longest maturity.The bond attracted much interest, and subscriptions rose to about EUR 1.9 billion.Over 60 investors from 15 countries participated in the arrangement. The greatest demand came from investors in Central Europe, especially Germany, Austria and Switzerland (36%), the Benelux countries and France (30%), Finland (17%) and other Nordic countries (7%).Finnvera’s EMTN Programme and the bonds issued under it are guaranteed by the State of Finland. Finnvera uses the funds both for SME financing and for financing export credits.The bookrunners for the issue are Citigroup, Credit Agricole, Danske Bank and HSBC.Finnvera acquires funds from international capital markets within the Medium Term Note Programme. The programme is guaranteed by the State of Finland.The rating of Finnvera’s EMTN Programme corresponds to the rating assigned to the State of Finland for its long-term liabilities. The rating given by Moody’s to Finnvera is Aaa and that given by Standard & Poor’s is AA+.Additional information:Ulla Hagman, CFO, tel. +358 29 460 2458Mikael Nordgren, Head of Treasury, tel. +358 29 460 2467
On 6 April 2016, Finnvera plc issued a ten-year, fixed-rate bond of EUR 1.0 billion.This is Finnvera’s first euro-denominated bond with a maturity of ten years.The bond was issued under Finnvera’s EMTN (Euro Medium Term Note) Programme.Finnvera’s EMTN Programme and the bonds issued under it are guaranteed by the State of Finland. Finnvera uses the funds both for SME financing and for financing export credits.Additional information: Ulla Hagman, CFO, tel. +358 29 460 2458Mikael Nordgren, Head of Treasury, tel. +358 29 460 2467
On 23 March 2016, Finnvera's Annual General Meeting elected new members to the company's Supervisory Board. No changes were made to the composition of the Board of Directors.The new members of the Supervisory Board are Laura Huhtasaari, Timo Kalli, Krista Kiuru, Kari Kulmala, Ville Niinistö and Eero Suutari, Members of Parliament; and Kari Luoto, Managing Director; Carita Orlando, Managing Director; and Christel Tjeder, Second Vice Chairman.Antti Rantakangas, Member of Parliament was elected Chairman and Krista Kiuru, Member of Parliament Vice Chairman of the Supervisory Board. Eeva-Johanna Eloranta, Member of Parliament; Mika Harjunen, Information Security Manager; Lasse Hautala, Member of Parliament; Olli Koski, Chief Economist; Leila Kurki, Senior Adviser; Veli-Matti Mattila, Chief Economist; Tommi Toivola, Senior Adviser; and Sofia Vikman, Member of Parliament will continue as members of the Supervisory Board.Markku Pohjola, B.Sc (Econ.), will continue as Chairman, Pekka Timonen, Director General, as First Vice Chairman and Marianna Uotinen, Specialist Counsel, as Second Vice Chairman of Finnvera's Board of Directors. The following persons will continue as Board members: Kirsi Komi, LL.M.; Pirkko Rantanen-Kervinen, B.Sc (Econ.); Harri Sailas, B.Sc (Econ.); and Antti Zitting, Chairman of the Board.The Annual General Meeting adopted the Consolidated Financial Statements and the Parent Company’s Financial Statements for the period 1 January–31 December 2015, discharged the Supervisory Board, the Board of Directors and the Chief Executive Officer from liability, and approved the proposal made by the Board of Directors for the use of the parent company’s profits.KPMG Oy Ab was re-elected Finnvera’s regular auditor with Juha-Pekka Mylén, Authorised Public Accountant, as the principal auditor.Further information:Pauli Heikkilä, CEO, tel. +358 29 460 2400Risto Huopaniemi, Senior Vice President, Administration, Legal Affairs and Administration tel. +358 29 460 2520
A bilateral agreement pertaining to the State Guarantee Fund’s arrears of EUR 37.8 million from Cuba was signed in Havana on 17 March 2016. The arrears stem from export credit guarantees granted 30 years ago.The agreement was signed by Under-Secretary of State Pirkko Hämäläinen and Vice President of the Council of Ministers of Cuba Ricardo Cabrisas Ruiz. The bilateral agreement complements the arrears clearance negotiated in Paris on 10–12 December 2015. According to the agreement, Cuba repays the principal and contractual interest, in total EUR 7.7 million, within 18 years. The late interest that has accumulated is cancelled. However, cancellation of the late interest requires that Cuba repays the principal and interest as agreed. In summer 2015, Cuba paid its old, short-term arrears associated with trade finance contracts. The agreement now concluded continues this favourable trend.An important step for trade between Finland and CubaThe agreement that has now been signed is an important step for promoting trade between Finland and Cuba. “Finnvera has already made guarantees available for small export transactions with Cuba and keeps a close eye on the country’s development as a potential trading partner,” says Senior Adviser Mika Relander.The State Guarantee Fund is organised under the Ministry of Employment and the Economy. Its receivables stem from export credit guarantees granted by Finnvera’s predecessors. Finnvera manages the receivables on behalf of the fund.Additional information:Mika Relander, Senior Adviser, tel. +358 29 460 2725
According to Pauli Heikkilä, CEO of Finnvera, Finland has a well-functioning financial market. Writing in Finnvera’s Annual Report of 2015, he states that Finnvera’s role is emphasised especially at the start of enterprise activities and in various situations of change, when the company is needed as a co-financier for projects.Heikkilä also stresses that Finnvera’s role is to encourage enterprises to enter international markets:“We have constantly developed our operations to be able to meet the needs of our clients in the optimal way. Our goal is to identify growth companies and encourage them to become international,” he underlines.For export financing, the year was busy and the total value of offers pertaining to exports was record high.“The orders for ships that followed the ownership arrangements of the Turku shipyard, an event important from the point of view of industrial history, were the absolute highlight of the year and were also visible in our export financing.”“We want to ensure that Finnish companies get the financing they need for their profitable projects,” Heikkilä writes.Read the CEO’s full review of 2015 here.
As in previous years, we have published our annual report online.Each year we also report on corporate responsibility. Our corporate responsibility report is included in the annual report. Combining the reports is a natural step since Finnvera’s operations as a whole have a broad impact on enterprise and employment in Finland, and thereby on all aspects of society. This year, for the first time, Finnvera has compiled the reports in accordance with the G4 Guidelines of Global Reporting Initiative (GRI). In our reporting, we concentrate on key issues in terms of the company’s operations and its stakeholders and we adhere to the reporting guidelines of State-owned companies whenever applicable.The annual report is published in Finnish and in English.
A variable and record-breaking yearCompared against the previous year, the world economy gained a little momentum in 2015. However, the economy did not develop steadily; instead, situations and divergent estimates varied throughout the year. The subdued outlook for exports and low spirits on the domestic market kept the demand for SME financing for investments modest. In contrast, financing for working capital and credits for changes of ownership were in great demand. In exports, shipbuilding orders were the biggest single factor increasing the demand for financing. Finnvera’s contribution was also needed in some other large export projects.Business operations and the financial trend In 2015, Finnvera’s offers for export credit guarantees increased by 28 per cent, while offers to finance export credits rose by 46 per cent on the previous year. The volume of loans and guarantees granted to SMEs and enterprises larger than the SME definition applied by the EU was 19 per cent greater than the year before. Finnvera Group 1 Jan–31 Dec 2015 1 Jan–31 Dec 2014 Change % Offered financing Loans and guarantees 906 MEUR 763 MEUR 19% Export credit guarantees and special guarantees 6 760 MEUR 5 274 MEUR 28% Export credits 4 131 MEUR 2 829 MEUR 46% 31 Dec 2015 31 Dec 2014 Change Outstanding commitments Loans and guarantees 2 285 MEUR 2 378 MEUR -4% Export credit guarantees and special guarantees 17 436 MEUR 12 600 MEUR 38% Export credits 4 240 MEUR 3 330 MEUR 27% 1 Jan–31 Dec 2015 1 Jan–31 Dec 2014 Change % Net interest income and fee and commission income and expenses (net) 197 MEUR 189 MEUR 4% Operating profit 114 MEUR 101 MEUR 13% Profit for the period 111 MEUR 100 MEUR 11% 31 Dec 2015 31 Dec 2014 Change %-point Equity ratio 13.3% 15.2% -1.9% Capital adequacy, Tier 2 19.6% 18.6% 1% Cost-income ratio 28.3% 25.9% 2.4% The profit for the last quarter of 2015 was EUR 5 million. The figure was two thirds, or EUR 46 million, less than the profit for the previous quarter (51 million). The main factors affecting the smaller profit were the impairment losses on receivables and guarantee losses, which doubled and were EUR 33 million more than in the previous quarter. The increase in the impairment losses on receivables and guarantee losses between the two quarters was partly due to the reversal and reduction of impairment losses and provisions for losses, which took place in the previous quarter.The profit for the Group in 2015 was EUR 111 million (100 million). This was 11 per cent better than the year before. The main factor improving the financial performance was the decrease of 57 per cent, or EUR 19 million, in impairment losses on receivables and guarantee losses. In addition, the increase of 8 per cent in the net interest income and the rise of 3 per cent in the net value of fee and commission income and expenses improved the financial performance.The profit of the parent company, Finnvera plc, in 2015 stood at EUR 95 million (92 million). This was 3 per cent more than the year before. When divided between the business areas, the parent company’s financial performance was as follows: the profit for export financing was EUR 82 million (96 million) and that for SME financing EUR 38 million (6 million). In addition, the impairment losses recognised on investments, EUR 25 million (9 million), had an impact on the parent company’s profit. Finnvera Group Q4/2015 Q3/2015 Change Q4/2014 Change *2015 *2014 Change Profit for the period MEUR MEUR % MEUR % MEUR MEUR % Net interest income 13 15 -12 10 35 56 52 8 Fee and commission income and expenses (net) 34 34 -1 35 -4 141 137 3 Gains/losses from items carried at fair velue -13 -2 - 4 - -21 -10 108 Other operating income 2 0 - 0 - 2 2 43 Administrative expenses -12 -9 32 -11 9 -44 -41 8 Impairment losses, guarantee losses -17 16 201 -9 84 -15 -34 -57 Loans and guarantees -21 6 444 -26 -22 -87 -105 -18 Credit loss compensation from the State 13 9 42 18 -28 83 64 30 Export credit guarantees and special guarantees -9 1 927 -1 - -10 8 232 Operating profit 5 53 -90 27 -81 114 101 13 Profit for the period 5 51 -90 25 -80 111 100 11 Outlook for financingEconomic growth and investments are likely to remain at a low level in 2016, and SME financing continues to focus on working capital needs. However, it is expected that the increase in changes of ownership and the investments disclosed by large corporations will have a positive effect on the demand for SME financing. In addition, Finnvera’s new mandates and financing products support the rise in the volume of SME financing.Financing solutions offered to buyers will continue to play a pivotal role in exports of capital goods sold by large corporations. It is expected that the demand for export credit guarantees and export credits will decline slightly from the previous year if no individual major orders are placed in 2016. Ships, telecommunications and the forest industry are still anticipated to account for the bulk of demand associated with large corporations’ exports.According to the current estimate, the Finnvera Group’s financial performance for 2016 is likely to fall below that for 2015. The uncertainty factors associated with economic trends make it difficult to predict financial performance. If more risks materialise than has been anticipated, the situation may weaken considerably from what is projected.CEO Pauli Heikkilä:“The new tasks assigned to us added momentum to the year and increased the demand for our financing. We granted markedly more financing to SMEs than the year before. This rise was mainly attributable to our new mandates and to a positive trend in changes of ownership. However, investments did not pick up yet; instead, SME financing continued to be needed mainly for working capital.The total value of offers pertaining to exports was record high. The orders for ships that followed the ownership arrangements of the Turku shipyard, an event important from the point of view of industrial history, were the absolute highlight of the year and were also visible in our export financing. To provide financing for the buyer, export credit guarantees or, possibly, pre-delivery financing are needed in practice almost always for major shipbuilding projects. In consequence, ship financing will account for an exceptionally large share, or about one third, of our current commitments. The shipyard is an important employer in the Turku region and also has several hundreds of sub-contractors giving work to tens of thousands of people.”Financial Statements 2015 (PDF)Statement on the Corporate Governance and Steering System 2015 (PDF)Additional information: Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400 Ulla Hagman, Senior Vice President, CFO, tel. +358 29 460 2458Distribution NASDAQ OMX Helsinki Oy London Stock Exchange The principal media www.finnvera.fiFinnvera publishes its Annual Report for 2015 as an electronic document on the company’s website in Finnish and English during week 10. The Annual Report also includes the Corporate Responsibility Report. The half year report 1 Jan–31 June of the company will be published on 11 August 2016.
Finnvera has revised its country policy for Iran after the EU’s economic sanctions were lifted in January. This means that Finnvera can begin to grant export credit guarantees for exports from Finland to Iran. Because of the sanctions, it is almost ten years since export credit guarantees were last granted for Iran.Since the economic sanctions were lifted, Finnish companies have shown interest in the Iranian markets.“We are ready to receive guarantee applications for exports. Our task is to support Finnish export companies in their efforts to secure contracts in Iran,” says Executive Vice President Jussi Haarasilta.According to Haarasilta, financing on new markets typically opens first between governments or banks. When more experience is gained, it becomes more common to provide financing for companies.Iran is a wealthy country and thereby a large market. This creates great potential for exports. Haarasilta assesses that, for instance, the modernisation of Iran’s basic infrastructure could bring opportunities for Finnish exporters.“Of course, it must be remembered that competition over contracts will be fierce. Many other countries have their eye on the Iranian markets, and the export credit agencies of several states have also relaxed their policies on Iran after the sanctions were cancelled.”“A challenging business environment”Jussi Haarasilta underlines that although trade with Iran will be easier once the sanctions have been suspended, projects should be prepared carefully in advance.“On the whole, the business environment is challenging but I encourage companies to explore business opportunities.”Haarasilta points out that some of the sanctions caused by the nuclear programme are still in force. Human rights sanctions remain in force, too, Haarasilta stresses.He also underlines that each export project is always assessed on a case-by-case basis at Finnvera.Iran is the world’s 18th largest economy. The International Monetary Fund (IMF) has predicted a growth rate of about four per cent for the Iranian economy in the coming years. Read more about Finnvera’s export credit guarantees and country policy.Additional information:Jussi Haarasilta, Executive Vice President, tel. +358 29 460 2601, jussi.haarasilta (at) finnvera.fi
Economic outlook for SMEs shows improvement. The desire for growth remains strong and export volume is expected to increase sharply. In the near future, SMEs will see a bit of light at the end of the tunnel for the first time in a long while. This positive outlook is reflected in the desire for growth, with more enterprises than before being growth-oriented: 9 per cent of enterprises report being strongly growth-oriented, while 36 per cent plan for growth wherever possible.SMEs are looking for growth on the international market and, according to the survey, export volume is expected to rise above current levels within the next year. A positive sign in all sectors is the increase in plans for internationalisation financing.However, outside financing is still being sought primarily for working capital, even though the investment percentage in strongly growth-oriented enterprises is already showing a slight increase. There have been no changes in the availability of financing compared to the results from last autumn. In any case, there are signs that the terms of financing are becoming more favourable, as over 80 per cent of the SMEs seeking financing stated that the availability of financing was not an obstacle to realising projects."Improvement of the economic situation in the euro zone can be clearly seen in higher expectations concerning the demand for export goods. The export share of Finnish SMEs is currently below the EU average, so it's of the utmost importance to find the internationalisation potential behind the Barometer results," says Finnvera's CEO Pauli Heikkilä.The Federation of Finnish Enterprises, Finnvera and the Ministry of Employment and the Economy jointly conduct the SME Barometer Survey twice a year. The aim is to examine the operations and economic operating environment of small and medium-sized enterprises. The spring 2016 Barometer Survey is based on the responses submitted by 6,000 SMEs.SME Survey on The Federation of Finnish Enterprises websiteFurther information:Pauli Heikkilä, CEO, tel. +358 29 460 2400Jonna Myllykangas, Communications Officer, tel. +358 29 460 2740
The economic situation posed challenges both to enterprises operating on the domestic market and to export companies. As in the previous year, continued uncertainty in the global economy dampened companies’ willingness to invest, make growth plans and take risks.However, a positive feature was the upswing in companies’ ownership arrangements, the first since 2012. It is estimated that Finnvera is involved in every third company acquisition. Otherwise, despite the improved investment expectations of SMEs, there was no change of course in the allocation of financing. It is four years since investments accounted for a larger share of financing offered to SMEs than working capital.Long-term financing played an important role in negotiations for export-related purchase agreements. Banks were still cautious when financing transactions requiring long repayment periods; in consequence, the role of Finnish Export Credit, in particular, was emphasised. Institutional investors participated in loan arrangements on credit markets slightly more than before but, owing to investors’ expectations for returns, demand and supply did not meet in export credits, with a few exceptions.In international comparison, Finland has well-functioning financial markets, and good projects receive financing from banks. However, the definition of a good project is more demanding than before. “Companies must have credible plans, a good balance sheet structure and adequate collateral. Finnvera is needed as a co-financier in projects especially at the start of enterprise activities and in various situations of change. Internationally, the impact of bank regulation is seen the most in demand for Finnvera’s export financing,” says CEO Pauli Heikkilä.A positive trend in ownership arrangementsIn 2015, Finnvera granted a total of EUR 1,116 million in financing to SMEs and to companies larger than the SME definition used by the EU. Of the financing granted, over 50 per cent was used to finance working capital. Loans and domestic guarantees accounted for EUR 906 million of the financing; this was 19 per cent more than the year before. The factors contributing to this increase included the mandate granted to Finnvera at the start of 2015 to provide financing for companies larger than SMEs, the increase in changes of ownership, and the restructuring of financing granted earlier. The value of guarantees granted to SMEs for exports totalled EUR 210 million, or 13 per cent less than the year before. In 2015, about 950 enterprises received financing for ownership changes. The total sum was EUR 116 million.At the end of 2015, outstanding commitments for SME financing totalled EUR 2.7 billion.The volume of offers for export credit guarantees increasedThe value of export credit guarantees and special guarantees offered rose by 30 per cent, to a total of EUR 6,550 million. Western banks think carefully before granting credits with long repayment periods, especially when they exceed five years. This underlines the importance of the Finnvera Group’s financing. Offers pertaining to the financing of export credits totalled EUR 4,131 million. This is nearly 50 per cent more than the year before. At annual level, the value of export credits offered was the greatest in Finnvera’s history.In total, 88 per cent of the export credit guarantees offered concerned the traditional sectors of Finnish capital goods exports, such as shipbuilding, telecommunications and the forest industry.At the end of 2015, outstanding commitments for export financing totalled EUR 17.0 billion.Additional information:Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400Finnvera publishes the financial statements for the period 1 January to 31 December 2015 on 26 February 2016 and the Annual Report during week 10.
Established in 1991, Helsinki-based marketing communications agency hasan & partners has expanded rapidly into new areas. To meet its financing needs, the company has turned to the Team Finland LetsGrow financing programme.
OECD Participants to the Arrangement on Officially Supported Export Credits have agreed new rules on coal-fired power plants, including restrictions on export credits for the least efficient coal-fired power plants.The new agreement will remove support for large super and sub-critical coal-fired power plants, while allowing support for smaller sub-critical plants in poorer, developing countries. “After two years of intense negotiations, the agreement represents a first important step towards aligning export credit policies with climate change objectives to achieve lower emissions”, says Pekka Karkovirta, vice president for international relations in Finland’s export credit agency Finnvera and Chairman of the Participants to the Arrangement.The private sector is expected to follow suit in with the now agreed public sector agreement, which could mean increasing the emission cuts in the future. The new agreement will also improve the competitive position of the Finnish high technology.The 2015 United Nations Climate Change Conference in Paris negotiated a global agreement on reduction of climate change. The agreement was accepted by 196 countries and parties. The agreement sets a goal of limiting global warming to less than 2 degrees Celsius with an additional commitment to pursue efforts to limit the warming to 1.5 degrees. Finnish scholars and specialists have stated that Finland will benefit from the reduction of global warming economically. Finnish cleantech companies have developed technological solutions to curb emissions. We believe that global demand for Finnish cleantech companies will increase in the future.Finnvera supports exports of new clean tech technologiesThe OECD agreement on restricting financial support for certain coal fired power plants together with the UN agreement on restrictions of global warming is expected to enhance the competitiveness of technologically advanced Finnish companies in global trade. Finnvera will take an active role in financing Finnish technology exports to secure that the ambitious goal to limit global warming will be secured. Cleantech projects can benefit from export credits and guarantees with repayment periods up to 18 years.
Finnvera monitors 140 political risk countries and classifies them into country risk categories 0–7, with category 0 as the lowest country risk rating. Country risk categories are reviewed by region once a year in cooperation with the other OECD members. At the latest meeting, it was time to update the classifications of countries in Latin America, the Caribbean, and Western and Central Africa. It was consequently decided that two countries would be upgraded in a better category and three countries downgraded in a weaker category.Despite the slowdown in global economic growth, the economies of many countries in the regions now considered have continued to grow, though some opposite trends have also occurred. Especially in countries that are dependent on the exports of oil and other raw materials, the economy has taken a negative turn as income from exports has shrunk. Despite the gloomier economic outlook, political and social stability has largely continued to evolve in a positive way.Brazil’s country risk category downgraded from 3 to 4Brazil’s economic growth has been slowing down for the fourth consecutive year and corruption scandals have fuelled a political crisis. In consequence, the outlook of South America’s largest economy is now clearly weaker than before. The prolonged political stalemate, faltering domestic demand, the falling prices of raw materials important for the country’s exports, and the inability to carry out the necessary structural reforms for achieving economic growth mean that Brazil’s prospects will remain negative in the coming years as well. In the longer term, however, Brazil is a large, strong and diverse economy that still has all the prerequisites for emerging from the recession and thriving. With its exposure of over EUR 1.8 billion, Brazil accounts for the third highest country exposure for Finnvera.Ghana’s country risk category downgraded from 5 to 6Concern over Ghana’s economic situation has continued for a long time. The country’s public debt has increased, economic growth is sluggish and the value of the currency see-saws. The economy is also burdened by low raw material prices. Ghana’s financing costs are high and currency reserves low. However, the political situation is stable, and the IMF and the World Bank have a strong presence in Ghana. Support by international financial institutions creates prerequisites for improving the situation in the future.The country risk categories of Benin and Ivory Coast upgraded from 7 to 6Benin is a politically stable country whose economy is expected to grow in the coming years. The central government debt is relatively low, and the focus in the coming years will be on making important structural changes and improving the business environment. Benin’s main trading partner is Nigeria, whose problems are reflected in Benin as well.Ivory Coast’s economic growth is very strong, as much as 7 per cent annually. The outlook for the near future is bright, the infrastructure is constantly being improved and effort is made to develop the business environment. The political situation is calm and creates a basis for long-range development.El Salvador’s country risk category downgraded from 4 to 5The country’s economic trend has steadily deteriorated at the same time as disagreements in internal politics make it more difficult to carry out the necessary structural reforms. However, El Salvador’s business environment is still at a reasonable level, and the revival of the U.S. economy promises better times for El Salvador’s economic prospects, too.Gradual opening of export credit guarantees for CubaFor many years, Finnvera has not granted export credit guarantees for Cuba. In September, Finnvera made Cuba eligible for short-term letters of credit guarantees after the country had repaid its short-term debts to Finnvera. The improvement of relations between Cuba and the United States has contributed to positive developments in Cuba. The launching of medium-term guarantees requires that Cuba and its creditors agree on the multilateral rescheduling of debts. Finland also has claims in Cuba.The situation in Iran is monitored closelyAn agreement in Iran’s nuclear programme negotiations was reached in summer. This started a process that, if successful, would bring Iran into the global economy. Economic sanctions are still in force and Iran is required to comply with the agreement closely under the supervision of the International Atomic Energy Agency (IAEA). For as long as the sanctions are in force, Finnvera cannot grant export credit guarantees for Iran. If the situation changes, the possibilities for making export credit guarantees available for Iran will be reconsidered. The lifting of sanctions will begin when the IAEA verifies that Iran complies with the agreement.
OECD Participants to the Arrangement on Officially Supported Export Credits have agreed new rules on official support for coal-fired power plants, including restrictions on official export credits for the least efficient coal-fired power plants.“After two years of intense negotiations, the agreement represents a first important step towards aligning export credit policies with climate change objectives to achieve lower emissions”, says Pekka Karkovirta, vice president for international relations in Finland’s export credit agency Finnvera and Chairman of the Participants to the Arrangement.The new agreement, or rather, the new climate sector understanding under the Arrangement on Officially Supported Export Credits, will remove support for large super and sub-critical coal-fired power plants, while allowing support for smaller sub-critical plants in poorer, developing countries.The private sector is expected to follow suit with the now agreed public sector agreement, which will mean leveraging the emission cuts in the future.“The new agreement is not seen to hinder the Finnish export industries, on the contrary it is more likely to improve the competitive position of the Finnish high technology coal power plant solutions”, says Pekka Karkovirta.The new Climate Sector understanding will be set in force on and as from 1st January 2017.The Participants to the Arrangement on Officially Supported Export Credits are: Australia, Canada, the European Union, Korea, Japan, New Zealand, Norway, the United States and Switzerland.For further information, please contact:Pekka Karkovirta, Vice President, International Relations, tel. +358 (0)29 460 2768In OECD website: http://www.oecd.org/newsroom/statement-from-participants-to-the-arrangement-on-officially-supported-export-credits.htm
KPA Unicon, a company based in Pieksämäki, Finland, opened an export window to South Africa and will deliver a boiler plant worth about ten million euros. Financial arrangements were very important for the success of the export Project.KPA Unicon specialises in the delivery of tailored and modular boiler plants on a turnkey basis. In accordance with a recently signed contract, KPA Unicon will deliver a boiler plant to the South African subsidiary of ArcelorMittal, the world’s leading steel and mining company. KPA Unicon has about twenty years of experience of export projects. When trade with Russia began to wane, new markets had to be found. “We succeeded because we have a good product and can give a similar plant, delivered to the same global corporation, as a reference,” says Mikko Marttala, CFO of KPA Unicon.According to Marttala, this deal will bring vast amounts of credibility for the future. He stresses that, when entering a developing market, it is worth hiring an agent who knows the local actors. The biggest fear of the locals is that the foreign operator comes in and does everything in the Western style. “To be able to enter a new market, a company must have a systematic approach and be tenacious in its development work. The very first thing to do is to go to a trade fair where new contacts can be made. Patience is needed: for each successful deal there are certainly twenty failures. Much time must also be spent on site, because no deal can be concluded from Finland.”Customer financing opens doorsSelling equipment means engineers talking about screws and mechanical properties. Marttala has discovered that when financing is also discussed in the sales setting with the buyer, one gets a seat at the same table with the persons who actually decide on the deals. “A financing offer combined with sales opens doors and is really an important factor. At the same time the seller learns to understand the customer’s business better.”For new potential customers, financiers should be contacted at once in order to determine what financial arrangements would be possible. “This is what we do, and at the same time we also take a closer look at customer risks. Anyone can learn export financing; the more pertinent question is perhaps whether one has the time to concentrate on it.”Alongside selling, for some years KPA Unicon has offered its customers financing solutions worked out together with banks and Finnvera. “Today, financing begins to be a prerequisite for entering any competitive bidding at all. We often hear grumblings that Finnish companies cannot match, say, German companies. We can, but we just have to make a slight effort and learn to master this aspect of export trade as well.”In recent years, Finnvera has paid special attention to financing expertise needed for the exports and internationalisation of SMEs. “For the third year in a row, we have arranged the SME Export Finance Programme where we cooperate with banks to provide information about financing options available for enterprises that engage in exports. The aim is to give companies tangible solutions that they can use when making tenders to customers abroad. It pays for the exporter to find out about financing in good time and to discuss the matter with banks and Finnvera. Before making our decision, we conduct background studies pertaining to the project, for instance, on country risks and the buyer’s creditworthiness,” Finance Manager Otto Lindstedt of Finnvera explains.Exports as a precondition for existenceA couple of years ago, exports accounted for 99 per cent of KPA Unicon’s turnover, but now the figure is smaller. The company believes that imports to Russia and the rest of the CIS countries will revive.“In terms of risks, our situation is now healthier because we had to start looking for new markets. Once the decision is made, results start to appear. Our future target is that one third of our turnover comes from Finland, one third from the CIS countries and one third from other export markets. A precondition for our existence is that we have exports,” Marttala sums up.Marttala encourages exporters to discard the “I sell, you buy” thinking and contemplate what they could do together with the customer. “The more we see ourselves as partners, the better.”Read about Finnvera’s SME Export Finance Programme
Finnvera plc issued on 15th September 2015 a EUR 1.0 billion seven year fixed rate bond. The bond is Finnvera’s largest transaction so far and it was issued under Finnvera’s EMTN (Euro Medium Term Note) programme.Finnvera’s EMTN programme and notes issued under it are guaranteed by the Republic of Finland. Finnvera uses the funds for financing the domestic SME sector as well as export credits.Additional information:Ms Ulla Hagman, CFO, Tel +358 29 460 2458Mr Mikael Nordgren, Head of Treasury, Tel +358 29 460 2467
SMEs see the future as being perhaps a bit brighter, and the protracted economic uncertainty has not reduced their desire for growth. Outside financing is being sought for not only working capital, but now also enterprise development.Compared to the results of last spring’s SME Barometer Survey, the economic expectations of enterprises have taken a turn for the better. Nearly one out of every three SMEs expects the economic situation to improve in the next 12 months. Also where investments are concerned, the expectations are slightly better than before, even though the trend remained on the minus side.Despite the unstable economic situation, SMEs’ desire for growth and internationalisation is still moderate: 8 per cent of enterprises report being strongly growth-oriented, while 34 per cent plan for growth wherever possible.There has been no change in the availability of outside financing and SMEs intend on applying for it slightly more than before. Interest in outside financing has grown, particularly among strongly growth-oriented companies. Even though the desire to invest is currently weak, there are signs of an upturn. Financing is primarily being sought for working capital, and one key reason that enterprises seek outside financing is to develop their operations.- According to the autumn SME Barometer Survey, interest in obtaining internationalisation financing has dropped in all sectors, while, on the other hand, strongly growth-oriented enterprises show a clear desire to expand by internationalising. Right now, the most important thing is to line up needs and offerings and make sure that not a single profitable project falls outside our network of Team Finland organisations, says Finnvera CEO Pauli Heikkilä.The Federation of Finnish Enterprises, Finnvera and the Ministry of Employment and the Economy jointly conduct the SME Barometer Survey twice a year. The aim is to examine the operations and economic operating environment of small and medium-sized enterprises. The autumn 2015 Barometer Survey is based on the responses submitted by more than 6,500 SMEs.
The Team Finland network is developing its domestic services. The aim is to simplify companies' access to the network's services and to improve the smoothness of service. Prime Minister Juha Sipilä has today appointed a new Steering Group for the network, with Mr. Risto Siilasmaa as Vice Chairman.Team Finland network is developing its domestic services. Thanks to the new service model, the network organizations can now serve companies in an unbroken chain, without referring them from one organization to another. The first changes visible to Finnish companies are one common telephone service number and an online contact form. The new services were introduced on Thursday, August 27, 2015."The idea underlying Team Finland's new domestic service model is simple: a company gets all the services it needs from a single service point. In other words, the company does not need to learn the division of tasks between public organizations in order to obtain the services they provide. Instead of dallying over complex administrative structures, we must direct our attention towards conquering new markets and building new growth. This calls for a Finnish team spirit – which is exactly what Team Finland is all about," says Mr. Olli Rehn, Minister of Economic Affairs.Service is improved by more focused customer service and tighter cooperation between the organisations in managing customer relationship. Each customer company will get a service team which, according to the customer's needs, combines the expertise of different organizations. The team makes a service proposal for the customer and takes care of the customer's changing needs. Regional activities are carried out in cooperation with local actors, including regional development agencies, chambers of commerce and the Federation of Finnish Enterprises. Due to the new service model, the entrepreneur need not know the details about the services provided by different organisations."There is a demand for Finnish expertise worldwide. The duty of the State is to ensure that the operating environment for companies is good. Well-functioning internationalization services are an integral element in this," Ms. Lenita Toivakka, Minister for Foreign Trade and Development, points out.Prime Minister Juha Sipilä has appointed Risto Siilasmaa, Chairman of the Board of Nokia Corporation and F-Secure Corporation, to act as Vice Chairman of the Team Finland Steering Group. Prime Minister Sipilä himself serves as Chairman of the Steering Group. The following persons were appointed as members of the Steering Group: Ilkka Kivimäki, Partner, Inventure Oy; Nina Kopola, President and CEO, Suominen Corporation; Päivi Leiwo, Chairman of the Board, Oilon Oy; Paula Salastie, CEO, Teknos Group Oy; Paula Lehtomäki, State Secretary, Prime Minister's Office; Peter Stenlund, Secretary of State, Ministry for Foreign Affairs; Jari Gustafsson, Permanent Secretary, Ministry of Employment and the Economy (as of October 1, 2015); and Anita Lehikoinen, Permanent Secretary, Ministry of Education and Culture."We will continue developing the Team Finland network in line with the Government Programme. We want to help even more new, internationally competitive companies to reach the global markets. At the same time, we will steer the internationalization service providers to ever closer cooperation," states Prime Minister Juha Sipilä.The Steering Group is appointed for the duration of Government's term, it is responsible for target setting and the strategic steering of the network. Its composition ensures good interaction between the business world and government.Team Finland network brings together all government-funded players providing internationalisation services for companies, working to attract foreign direct investments to Finland, and promoting Finland's country brand. The core of the network comprises of the Ministry of Employment and the Economy, the Ministry for Foreign Affairs, the Ministry of Education and Culture, and the publicly funded organisations under their supervision that offer internationalisation services.Team Finland's common telephone service number is +358 295 020 510. The contact form for the companies is available at https://www.tekes.fi/team-finland-yhteydenotto/More information Anna-Kaisa Heikkinen, Special Adviser to the Prime Minister (International Affairs), tel. +358 40 7483 867, Prime Minister's Office; Jannika Ranta, Special Adviser to the Minister of Economic Affairs, tel. +358 29 504 7165, Ministry of Employment and the Economy; Marja Koskela, Diplomatic Adviser to the Minister for Foreign Trade and Development, tel. +358 295 350 633, Ministry for Foreign Affairs. Requests for interviews of Risto Siilasmaa, Vice Chairman of the Team Finland Steering Group, please contact Mari-Kaisa Brander, Communications Manager, tel. +358 40 131 3388, Prime Minister's Office.