Political gloomy pictures have been painted of the destructive effect of strikes on Finnish companies and the Finnish economy.
EK has hit the table with price tags of hundreds of millions of euros one after the other, and the forest industry has also talked about the massive effects.
It's been four weeks now the strikes are ending in the beginning of next week. How bad a mark have they really made on companies?
So far, at least, we haven't seen a flood of profit warnings from listed companies, and investors aren't panicking either.
That doesn't mean there aren't effects. However, they may be smaller than feared.
So far, only the steel companies Outokumpu and SSAB and Kempower, which manufactures fast charging equipment for electric cars, have issued profit warnings due to strikes.
Outokumpu has warned that the strikes will have an effect of about 80 million euros so far, and SSAB about 40 million euros. The effects are spread over two different quarters.
Big sums, but in companies with a turnover of billions of euros, these are still not shocking losses.
What about other export cannons?
From the engineering industry so far no result warning has been received due to strikes. It's still possible, because they have a few weeks to give a warning before they start announcing their January-March results at the end of April. Then you will hear the real numbers.
Some of the effects spill over into the second quarter as well.
Something can be deduced already. Inderes analyst Erkki Vesola collected data at the end of March on the engineering industry companies it monitored, whose operations have been affected by strikes. The companies were careful not to say anything, and the differences between the companies were big.
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A flood of profit warnings is not expected.
The data collected by Vesola shows that the companies' production has gone well despite the strikes. It has been made easier by the fact that it has been a reasonably calm season. There hasn't been a shortage of components, and the companies have succeeded in developing alternative transport methods for smaller products.
The most affected by strikes are those companies in the export industry, where the majority of production is in Finland and whose operations are fast-cyclical. Among the companies followed by Vesola, such are the forest machine manufacturers Ponsse and Kesla. Wärtsilä, Glaston and Robit also have significant production in Finland.
On the other hand, according to Vesola, Metso's risks were small. In Vesola's opinion, if necessary, it could have moved production to, for example, its own facility in India.
Based on all this, Vesola believes that no flood of earnings warnings can be expected in the coming weeks either. In other words, the results are unlikely to be very bad. The impact of strikes on the entire year's turnover of engineering companies will be a few percent rather than tens of percent.
If the strikes had continued for several more weeks, the situation would have been different.
How about forest companies? The company-specific profit losses are tens of millions of euros, estimates Inderes' chief analyst Antti Viljakainen.
In percentages, this means that adjusted operating results can theoretically remain 5–10 percent lower than forecasts if no other factors change during the year.
Viljakainen does not believe that the strikes seen now will have visible effects on forest companies in the long term or permanently. Even previous strikes do not seem to have resulted in permanent customer losses or long-term reputational risks.
For example, two years ago, UPM's factories experienced a strike that lasted more than a hundred days.
What about investors?
The stock market is hardly affected by strikes. Politics doesn't really move the market – except for the US presidential election.
Since, based on financial theory, the company's value is the discounted present value of its free cash flows from today to eternity, a strike is only a short disruption in terms of the company's entire life cycle.
Once the agreement is reached, the strike is no longer a historical cost. Investors are interested in the future.
Read more: A billion bill or something completely different? This is how economists evaluate the economic effects of a strike
Read more: The impact of the strike on industry is “massive” – ”The strike will stop the factories”
Read more: Almost half of the companies reduce their investments in Finland due to the strikes – “now the foundations of the economy are being shaken”
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