Baltic bioenergy is booming Vapo Group

BALTIC BIOENERGY

IS BOOMING Vapo Group is the Baltic Sea region’s foremost bioenergy expert. Emma-Jane Batey spoke to Reijo Vatanen, communications director of this future-focused company to find out more.

Pellet factory in Forssa

The Finnish-based Vapo Group is a powerful force in the ever-increasing biofuels market worldwide, with the market leading place across its native Baltic region and a growing presence throughout Europe. The Group comprises Vapo Biofuels, Vapo Bioheat, Vapo Timber Oy, Vapo Environment and Kekkilä Oy, all of which come together to offer a range of responsible energy services.

The biofuels, heat services, electricity, peat products, waste treatment, compost products, sawn goods and peat machines delivered by the Vapo Group are all environmentally focused, enabling the company to become the Baltic Sea region’s leading bioenergy expert.

The Group’s main focus is producing and delivering biofuels in a responsible manner across the Baltic region, with considerable investment allowing it to become the largest producer of peat pellets in Europe. Communications director Reijo Vatanen told Industry Europe, “Pellets are a great source of environmentally friendly heat, and so it makes perfect sense that they are increasingly popular across Europe, especially in the Baltic where we are well-known for taking ecologically sustainable solutions very seriously.”

Strong financial performance

Partly owned by the Finnish government, the Vapo Group posted a 2010 turnover of €719.5 million, with an operating profit of €39.1 million, which was an increase on 2009 largely thanks to a favourable market for

sales of local fuels and heat. The unseasonably cold weather across the Baltic also helped the demand for fuels such as peat and wood stay at a strong level throughout 2010, with peat production of 24.4 million m3, mostly from the Group’s Finnish operation.

With 2010 proving to be a successful year for Vapo Group – a welcome development following the challenges of overproduction of pellets in the European market in 2009, when stocks grew and sale prices remained low – the continued strong performance of the Swedish market is consistently positive. Mr Vatanen explained, “Taxation favours bioheat in the Swedish market, so we have been able to maintain our market-leading position in the domestic segment despite tightening competition. In Finland, we have seen that the growth of demand in the consumer segment has been restricted by the comparatively low taxation of competing fuels such as light fuel oil and electricity, which is frustrating as it does not favour choosing the environmentally friendly option, which is good for us all in the long term. We have also found that our position in the Polish market has strengthened.”

Excellent market understanding

In order to maintain its market leading position and ensure it is well positioned to profit from the opportunities in each of its segments, Vapo takes continuous investment very seriously. In 2010 the Group’s gross investments totalled

€80.9 million, with its most significant investments seen in new peat production, construction of a new horticultural peat plant and specialised heating plants for pellets.

Investment plays an important role in Vapo’s short term prospects too, with the Group dedicated to staying at the forefront of the changing market situation, particularly as demands fluctuate in relation to changing weather conditions and financial incentives.

Mr Vatanen continued, “Each of our business areas in each of our geographical markets is subject to changes, so it is imperative that we stay one step ahead of the trends and have the right amount of pellets and biofuels available at the right time. We have a team of industry experts who are constantly monitoring the relevant situations and it is this that perfectly matches our environmentallyfriendly products to create a perfect storm of commercial success in the long term.”

The energy of a positive attitude

With more than 1300 employees, of whom over 800 are based in Finland, Vapo Group understands that the positive attitude and technical excellence of its staff make the difference. The company operates a carefully established training programme whereby the workforce is supported in learning about the ever-developing biofuel industry, and the Group’s investment policy extends to ensure the state-of-the-art equipment is utilised in the best way possible.

Vapo predicts that the demand for its biofuel products will continue to increase in the coming years, with the proposed taxes on peat in some markets pre-emptively included. The Group will continue to export its pellets to Europe, which can be made from both cutter shavings and sawdust or peat, with a new drying facility currently being built to increase its capacity to produce wood pellets from wet sawdust.

Mr Vatanen concluded, “We certainly see the future of the Group as bright; the sawmill industry is seeing a strong pickup after the global construction downturn and the various activities of the biofuels industry is one of the most exciting future-proof markets around. We are well-positioned to bring our unique brand of environmentally friendly fuels to a wider European market, as well as maintaining our strong position in the Baltic region.” n