An extremely unpredictable year for sustainability12-12-2022
Commentary on 2022
by Carsten Jespersen, CEO, KE Fibertec AS
Looking back on the year that passed
2022 has been characterised by a lot of geopolitical agendas never seen before. At the beginning of the year we experienced the hopefully last big COVID-19 outbreak, high freight rates, supply problems on key components, price increases, the climate crisis, and not least the Ukraine war and the resulting energy crisis and high inflation. We have had to deal not just with one crisis, but with a series of simultaneous crises, and unfortunately this will be something we have to deal with for many years to come.
For KE Fibertec, it has been an exceptionally busy year and one in which the concept of high season and low season no longer exists. We expect a turnover increase of a nice double-digit percentage, even after a 2021 where we also reached record turnover. Unfortunately, the bottom line has not kept up at quite the same pace due to the very high price increases of raw materials such as aluminium. We therefore expect a bottom line result in line with 2021, and we are really proud of that in such a volatile market.
New strategy and new business areas
In 2021, we initiated work on a new strategic plan towards 2025 called " Sustainability as a Business Model". The plan is based on three verticals or business areas. Sustainable growth of our core business, which is the sale of sustainable textile ducts for all types of ventilation installations. To drive this business model, we hired Niels Holm Norge as our new Sales Director in early 2022 and he is well on his way to rolling out our new core strategy.
In addition, we are building new service centres around our subsidiaries. This means, among other things, that we have expanded our in-house laundry in Vejen and that we are in the process of hiring a salesperson who will be responsible for selling service and maintenance on the Danish market. It is important to emphazise that KE Fibertec will not enter into our installation contracting customers' exclusive brands. KE Fibertec's service agreements are all about ensuring clean and optimally functioning textile ducts, and making it easier for our customers to achieve this.
Our third new business area is a newly developed product concept called KE GreenDuct, which we market and sell to the vertical farming market, e.g. medical cannabis installations in the global market. We have been working for some time to develop a brand new simulation and visualisation module for our product configurator, the TBV Designer, to predict the microclimate inside a given shelving system. Vertical farming is an area with great growth potential, both because of the compact production method, where food is produced indoors and independently of the outdoor climate, with much lower fertiliser and water consumption compared to conventional farming, and in fact with no use of pesticides at all. In 2022, we have supplied a number of large vertical farms, including more than 5.5 km of KE GreenDuct textile ducts to the world's largest vertical farm in Dubai called Bustanica, which supplies Emirates Flight Catering with over 1 million kg of greens per year for their fleet of aircraft. In addition, we have supplied a large KE GreenDuct system in Florida for lettuce production and we have just shipped almost 13 km of KE GreenDuct textile ducts to a vertical farm in Macedonia, which will produce medical cannabis.
Ready for the sustainable building of the future
As early as January 1, 2023, a fundamental change of the building code will be introduced. In all buildings over 1,000 m2, the developer will have to provide documentation of the building's climate impact in the form of a Life Cycle Assessment (LCA), which shows the climate impacts from construction, operation and demolition, seen over a period of 50 years. The new climate requirements in the Building Regulations also include an upper limit value for carbon emissions of 12 kg CO2 equivalent per m2 per year. This makes heavy demands on manufacturers of building components, and especially on manufacturers of technical installations such as ventilation, which are typically tailored to the individual building project. It has been difficult to get a definition of the requirements and methods to be used for our tailored solutions from the authorities in order to provide a generic EPD that helps the developer to document the climate requirements. From KE Fibertec's side, we are therefore proud to have succeeded in finding a partner who can help us get our EPD third-party evaluated which simultaneously supports our new documentation for the DNGB and BREEAM building certifications in addition to the mentioned requirements for an LCA in the Building Regulations.
One of the elements of our new strategic plan "Sustainability as a Business Model" is about becoming both waste and carbon neutral in our Danish factories by 2030. We have come very far with the goals for KE Fibertec Weaving Mill and with the conclusion of a new agreement to send 40 tons of surplus materials from our laser cutters to one of our co-operation partners who granulates the materials and makes acoustic ceiling panels, we are now also well in the process at KE Fibertec.
Expectations for 2023
Overall, we remain very positive about developments in the coming years, although construction activity is likely to slow down and we do not yet know the impact of high inflation and rising interest rates. With our own in-house weaving mill and strong supply chain, we have not been as affected by raw material shortages or extreme price increases as so many others in the ventilation industry. We must have the courage to transform this advantage into new opportunities not only in the Danish market, but also to a large extent in our many export markets in 2023. Our growth expectations are slightly lower than in 2021 and 2022, but we are very confident about our three business areas.