Aiming for growth despite difficulties: “Growth is certain to come – We are shooting for revenues in the billions”
Peikko Group, which began as a one-man welding shop in 1965, has its sights set on the billion-euro club. The construction industry has had difficulties for a long time now. Despite this, the company is investing, expanding its production capacity, and seeking robust growth. “A company that does not seek growth will wither away. The growth target keeps the company moving forward,” says CEO Topi Paananen.
In just under 60 years, Peikko Group has become a successful and innovative company in the construction industry. It operates in more than 30 countries and employs over 2,000 people worldwide. The company designs and manufactures products such as composite beams for precast and cast-in-situ construction. The company’s solutions aim to enhance the ease, efficiency, safety, and environmental responsibility of construction.
Although the construction sector has experienced difficulties for some time now, Peikko Group invested a total of EUR 40 million in 2022–2023. The company has expanded its production capacity by opening new factories in strategically important markets, such as Europe, the Middle East and Asia.
Despite the hard times, Topi Paananen, Peikko Group’s CEO, has an unwavering belief in the company’s growth. He bases his confidence on the cyclical nature of the construction industry.
“Individual years may vary according to the behaviour of the market and different segments. Our net sales have temporarily decreased, but growth is certain to resume in the winter. We have some big things in the research and development pipeline and major projects for next year. The trend is clear.”
Aiming for EUR 1 billion in net sales
Topi Paananen recalls the wisdom of old and encourages Finnish companies to grow.
“A company that does not seek growth will wither away. The growth target keeps the company moving forward. It forces the company to think differently, be creative, and develop products, production, and services.
Paananen is not shy about Peikko’s targets. The company aims to join the billion-euro club.
“Our current product range has the ingredients to take us to EUR 1 billion in net sales within ten years. It is entirely up to us. It is about how the firm is managed and how good our employees are,” Paananen says.
“We have succeeded in increasing our net sales tenfold in about 20 years, so I am sure we can increase them fourfold over the next ten years. That is an entirely realistic goal.”
Peikko Group has also invested in Finland, but Paananen says these investments are mainly in replacing and testing machines. In Finland, the company has a product development workshop and the Group’s management functions.
“You only need to look at a map to see why it is not worth investing in a large factory in Finland. We are effectively an island with competitors in the middle of a large market in Germany. If a customer can receive an item in Central Europe with lower logistics costs, and it only takes a few days, why would they buy it from us and wait a whole week? On top of logistics, the costs and availability of labour are further factors.”
“We have over-invested in walls and equipment.”
Peikko’s net sales increased constantly between 2009 and last year. In 2022, the company’s net sales of EUR 314.2 million represented a growth of 23 per cent.
“We have had steady growth for a long time. The figures for 2022 still included our Russian operations, a good wind power business, and the positive effect of higher raw material prices. All of these vanished, and our volumes also began falling,” Paananen says.
“We are not immune to a market that has dried up or is on that road. We have an excellent team, and it is very upsetting that we had to let some people go. We cannot afford it if we think about the future.”
Topi Paananen admits that Peikko Group’s pace of investment has been too fast in the current economic climate.
“Our investments were based on forecasts made three or four years ago and the assumption of uninterrupted growth. This led to over-investment in walls and equipment. We currently have the capacity to produce goods worth EUR 400 million, but we are operating at the EUR 250 million level. Our product development expenses have remained almost the same at EUR 5–6 million annually.”
Premises and machinery ready for growth
Paananen believes that the investments made in recent years will be a significant advantage for Peikko when the market recovers.
“If we look only at our balance sheet structure and utilisation rate, our current situation appears catastrophic, but it is also a huge opportunity. When this market gets back on its feet in the winter, we will not need to invest and waste our energy thinking about it. We will be able to scale the business forward. The premises and machinery are ready, and we have no bottlenecks to resolve. We will recruit more people, which will enable us to adjust our production.”
Peikon Group’s growth was previously based on its ability to respond to changes in demand. The company has invested in product development and expanded its product portfolio, which has solidified its position internationally. Now, Peikko is investing in low-carbon structures, the development of demountable structures and products, and products that enable wood construction.
Topi Paananen’s tips for growth
- If you cannot find the right person for a job in Finland, do not hesitate to hire a foreigner.
- You only learn by doing. Take risks—the kind of risks that will not be fatal.
- Ensure your company’s products or services offer genuine added value, including for customers abroad.
- Be proud of who you are and where you are from. Finland and the Finnish identity are at least as good a starting point as any other for international trade.
- Do not be afraid.
Peikko acts as a technology partner for its customers
Peikko Group’s solutions are used by manufacturers of concrete elements, construction companies, builders, developers, structural designers, and architects.
It is important for Peikko to work with its customers in the early phases and influence the entire life cycle of the building. The company increasingly sells its products directly to designers and not just to builders.
“Although this is a construction business, we have a Peikko Inside philosophy in many regards. We are a technology partner for our customers.”
Peikko endeavours to help the designers who use its solutions to save on working time and feel confident in the end results.
“Designers can count on our ETA-approved products and add our symbol directly to a 3D model. We can also join the designer’s cloud, add our products to the model, and begin production as soon as we receive manufacturing authorisation. Our dimensioning software makes our customers’ lives easier and saves time, as the designer does not need to calculate everything manually.”
Text: Mikko Viljanen
Photos: Liisa Takala