Economic performance indicators

EC1 Direct economic value generated and distributed

Lemminkäinen analyses the economic impact of its operations at the Group level. The company’s key stakeholders are customers, employees, shareholders and financiers, suppliers and partners, and the public sector.

More detailed information on Lemminkäinen’s financial impact can be found in the section discussing financial responsibility.

EC2 Financial implications and other risks and opportunities for the organisation’s activities due to climate change

Climate change risk analyses and financial impact assessments have been integrated into Lemminkäinen Group’s risk management processes. Lemminkäinen has not defined the financial implications of climate change in euros.

In 2010, Lemminkäinen started to calculate its energy efficiency and carbon footprint at the Group level. At the moment, these calculations cover the production facilities in Finland. Lemminkäinen’s goal is to extend these indicators to cover project production throughout Finland and then all operating countries as soon as the information systems allow. Lemminkäinen aims to calculate how efficiently it uses energy in its processes. With this information, Lemminkäinen will be able to make estimates of future trends in its energy consumption and emissions. Production facilities, traffic and transportation are the most notable sources of the company’s emissions.

Risks associated with the availability of exhaustible raw materials have an impact on Lemminkäinen’s costs. Rises and fluctuations in the price of raw materials also have an effect on the costs of the company’s contracts. Of these raw materials, bitumen is the most important. Bitumen is one of Lemminkäinen’s biggest purchases on the annual level. The price of bitumen is tied to the global price of oil. A rise in the price of bitumen affects the profitability of the company’s paving production. Lemminkäinen manages the bitumen price risk with oil derivatives and contractual terms. In order to protect the company from this risk, the use of alternative materials and fuels as part of the company’s processes must also be researched.

Lemminkäinen continuously develops the material and energy efficiency of its production. In mineral aggregate extraction, for example, the company takes an area's potential after-use into consideration already at the planning stage. By recycling asphalt, the company also saves virgin materials. Waste is one of the most significant environmental impacts caused by construction sites, and Lemminkäinen is striving to achieve a high level of waste sorting at its sites. This enables the company to reduce the amount of waste that ends up in landfill sites and ensures effective re-use and recycling of materials.

Climate change – and unusual weather conditions in particular – may have an effect on Lemminkäinen’s working conditions by, for example, interrupting or delaying the projects or the start of the operational season, which can reduce the profitability of projects. The cold, snowy winters of recent years have increased heating costs and have shortened the company’s standard operating season. On the other hand, in 2014 the company benefitted from the mild winter and a long paving season in its operating countries. Lemminkäinen has started to offer non-seasonal maintenance services in some of its operating countries.

Legislation and voluntary certification (such as LEED, BREEAM and PromisE) have an impact on the energy efficiency of buildings and infrastructure. Due to the risks and assumptions arising from climate change, uncertain outlooks and the changing socio-economic situation, increasingly stricter legislation is being employed to promote energy-efficient products, services and construction. Stricter legislation – and also customers’ and consumers’ growing demands – may have a significant cost impact by lowering both demand for products and services, and their cost efficiency. For example, an increase in fuel taxes or fuel prices may lower the cost efficiency of Lemminkäinen’s production facilities and increase transportation costs. Lemminkäinen strives to minimise this risk by enhancing its traffic and transportation logistics.

Lemminkäinen takes into account its customers’, investors’, consumers’ and partners’ increased interest in environmentally friendly products and material and energy efficiency. Lemminkäinen has, for example, developed a dense asphalt that protects the ground from chemicals and other hazardous substances. Lemminkäinen aims to constantly increase the percentage of low-temperature and recycled asphalts in its production. The company is stepping up to meet the challenges posed by climate change by enhancing the quality and energy efficiency of construction. Lemminkäinen believes that meeting the challenges of climate change with new energy-efficient solutions and services will also give the company a competitive advantage.

EC3 Coverage of defined benefit plan obligations

Lemminkäinen’s pension schemes are discussed in connection with the management’s remuneration and in the notes to the financial statements under Pension obligations.

EC4 Significant subsidies received from the government

In 2014, Lemminkäinen received EUR 448,659 (2013: EUR 113,677) in financial assistance for development projects from the Finnish government.

EC9 Significant indirect economic impacts

Lemminkäinen contributes to general well-being in society by, for example, providing employment and paying taxes, salaries and social security contributions.

More detailed information on Lemminkäinen’s financial impact can be found in the section discussing financial responsibility.