Review by the President and CEO

Dear investor,

As we enter 2017, we leave another eventful year behind us. We are all familiar with the mantra about the ever-increasing speed of change – we not only felt the speed of change in 2016, but also saw new kinds of change emerge. We are moving further into the digital age at both personal and business level and will experience changes in practices and in how various issues develop. At the same time, we are becoming ever more aware of the fact that our overpopulated world and weather patterns are changing and we are likely to face challenges of a totally new kind, perhaps much sooner than we thought possible.

Uponor – which will reach its hundredth year in 2018 – has seen many changes. However, our current line of business, in plastic pipes, began in the 1960s. Our focus has changed dramatically in the more than five decades since then. We still make plastic pipes, but our focus is on plumbing, indoor climate and infrastructure and on how they will meet the exacting and evolving needs of tomorrow’s societies.

We are continuously seeking ways to improve. We have defined our commitment in five words:

  • Comfort
  • Health
  • Efficiency
  • Sustainability
  • Safety

It is easy to see how these words will guide what we do, what we focus on and where we want to go as a company. They also describe what the brand Uponor represents to our customers and stakeholders.

Let me take a couple of examples.

In 2016, we channelled a historically high amount of funds into strengthening our technology and expertise. Part of this involved the establishment of a truly global technology function. Group Technology and Corporate Development comprises our key resources aimed at making progress in our most important strategic focus areas. Compared to our previous, more decentralised approach to this, we now want a stronger focus and faster results, getting more bang for our buck as the Americans would say.

Another important step was developing our know-how and offering in hygienic plumbing solutions. Plumbing is our largest business group, accounting for 49% of Uponor Group’s net sales last year, and is therefore of strategic importance to us. At the very end of 2015 we acquired a Finnish startup company, UWater, for online water quality monitoring. They had developed a unique, proprietary approach to measuring water quality, which can be applied to buildings and utility pipelines. They were seeking a partner to help commercialise the technology, which we began testing in 2016.

In early 2016, we made significant acquisitions in Germany when KaMo and Delta joined our company. These two brands had established themselves as specialists in hygienic water management in buildings. As an example, their decentralised fresh water stations combined with our own offering enable a highly efficient and cost-competitive way of performing large but healthy and energy-efficient residential, commercial or industrial installations.

Every now and then, the headlines refer to people struck down by an epidemic as a result of poor hygiene and drinking water quality. It is therefore easy to imagine the potential of a technology that could prevent or rapidly identify such problems in our urbanising world, with its increasing share of elderly people.

In July 2016, we took another step on our journey towards the future Uponor. Partnering with Belkin International, Inc., which is the majority partner and a global specialist in the Internet of Things (IoT), we established a new joint venture company, Phyn. Our joint goal is to create a totally new kind of system for monitoring water consumption in buildings. Mainly addressing the safety and sustainability aspects of our commitment, Phyn will help building owners and maintenance workers to prevent water damage and conserve water in a way never before possible. Our ‘intelligent water’ systems are already in test use in North America and we will bring them to Europe and elsewhere in due course.

In addition to the above, we continued to build Uponor into a stronger and more efficient company through various other actions in 2016. Most of our extensive transformation programmes in Europe were completed as the year ended. Unfortunately, the transformation had a considerable impact on our personnel in our historical home markets in Europe. However, in the longer term, building a stronger company can help create sustainable jobs. In 2016, we were able to hire more professionals in the USA and China, adding new production capacity in both countries. This paves the way for becoming more profitable and thereby more solid and dependable as an employer.

It is clear that Uponor’s future rests very much on the combined skills, knowhow and capabilities we have accumulated during our first hundred years. Our company’s values state this very clearly: we are curious and always looking for ways to improve. That’s what we plan to do in our next century, adding spice from the outside world every now and then in order to keep our offering competitive.

I would like to thank every one of you – our employees, customers, other building industry professionals, and shareholders – for your continued support for our company in 2016 and as we take steps into 2017 and beyond.

Jyri Luomakoski
President and CEO