ANNUAL REVIEW Annual Report 2020 ANNUAL REPORT 2020
ANNUAL REVIEW Content ANNUAL REVIEW
PATRIA IN BRIEF Patria’s Annual Report consists ANNUAL REVIEW
OUR VALUES of the Business Units’ Review, ANNUAL REVIEW PATRIA 100 YEARS the Corporate Responsibility ANNUAL REVIEW 3 Patria in brief YEAR 2020 Progress Report and the Financial Annual Report 2020 4 Our values KEY FIGURES Statements Report. Patria’s 5 Patria 100 years REVIEW BY THE PRESIDENT AND CEO Annual Report is published 6 Year 2020 OPERATING ENVIRONMENT on the company’s website at 7 Key figures STRATEGY www.patriagroup.com. 8 Review by the President and CEO DIGITALISATION RESPONSIBILITY Annual Report 11 Operating environment 2020 13 Strategy BUSINESS UNITS 14 Digitalisation AVIATION
SYSTEMS 16 BUSINESS UNITS INTERNATIONAL SUPPORT PARTNERSHIPS
FINANCIAL AND GOVERNANCE 17 Aviation LAND Annual Report 20 Systems AEROSTRUCTURES 2020 23 International Support Partnerships MILLOG 26 Land NAMMO 29 Aerostructures
32 Millog
36 Nammo
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Business units and net sales as share of group net sales ANNUAL REVIEW Patria 17% Aviation 3% Aerostructures ANNUAL REVIEW in brief provides life cycle support services for aircraft and helicopters, Designs and manufactures demanding aerospace composite covering maintenance, repair and modification of fuselages, structures and is actively involved in the development PATRIA IN BRIEF engines and equipment as well as pilot training. programmes of the new composite technologies. The core OUR VALUES Patria is an international provider of defence, competences are the design of composite structures and efficient manufacturing processes. PATRIA 100 YEARS security and aviation life cycle support services, pilot training and technology solutions. Patria YEAR 2020 16% Systems provides its aerospace and military customers with delivers comprehensive systems and equipment to defence forces KEY FIGURES equipment availability, continuous performance and other security authorities. Its areas of special expertise are 43% Millog REVIEW BY THE PRESIDENT AND CEO development as well as selected intelligence, reconnaissance, surveillance and command systems, as well as Provides defence materiel life cycle support services to its their integration and life cycle support. strategic partner, the Finnish Defence Forces and to other surveillance and management system products OPERATING ENVIRONMENT security-critical actors. Patria owns 61.8% of Millog. and services. Patria’s mission is to give its STRATEGY customers confidence in all conditions, and the Nammo DIGITALISATION vision is to be the #1 partner for critical operations 15% International Focuses on developing and producing ammunition and missile products, as well as environmentally sound demilitarization on land, sea and air. Patria has several locations Support Partnerships services. Nammo is equally owned by Patria and the State of provides life cycle support services for aircraft and helicopters BUSINESS UNITS including Finland, Sweden, Norway, Belgium, Norway. internationally. The business unit’s core functions are Estonia and Spain. Patria employs approximately AVIATION maintenance and overhaul, modifications, spare parts and 3,000 professionals. Patria is owned by the State technical support. SYSTEMS of Finland (50.1%) and Norwegian Kongsberg INTERNATIONAL SUPPORT PARTNERSHIPS Defence & Aerospace AS (49.9%). Patria owns 50% of Norwegian Nammo, and together these LAND Land three companies form a leading Nordic defence 7% AEROSTRUCTURES The key products and services include cutting-edge armoured partnership. wheeled vehicles, mortar systems and related life cycle support MILLOG services. Patria AMV product family and Patria Nemo mortar system are the highest-profile products in this range. NAMMO www.patriagroup.com
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ANNUAL REVIEW Mission: PATRIA IN BRIEF We are proud of our WE GIVE OUR WE WANT OUR VALUES work, and we want to CUSTOMERS CONFIDENCE PATRIA 100 YEARS TO SUCCEED show it. IN ALL CONDITIONS. YEAR 2020
KEY FIGURES Customer promise: REVIEW BY THE PRESIDENT AND CEO WHEN IF IS NOT OPERATING ENVIRONMENT Cooperation guarantees AN OPTION. STRATEGY OUR OPERATIONS the success of all parties. DIGITALISATION ARE CUSTOMER ORIENTED Employer promise: BUSINESS UNITS YOU MAKE THE AVIATION DIFFERENCE.
SYSTEMS OUR VALUES OUR INTERNATIONAL SUPPORT PARTNERSHIPS We give constructing TOGETHER WE Vision: LAND feedback. We enjoy THE #1 PARTNER AEROSTRUCTURES CREATE SUCCESS succeeding together. FOR CRITICAL MILLOG OPERATIONS. NAMMO
PATRIA ANNUAL REPORT 2020 | 4 ANNUAL REPORT 2020 Patria 100
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PATRIA 100 YEARS The Finnish Air Force Aircraft YEAR 2020 Factory is established at 1924–1927 1959 The Finnish aviation industry Mortar production enters the jet engine era with KEY FIGURES Suomenlinna under the command The first results of Finnish Yhteissisu Oy is The 122 K/60, the begins at Tampella. the Fouga Magister. of Major Arne Somersalo. aircraft design, the test fighters established. first field gun fully REVIEW BY THE PRESIDENT AND CEO I.V.L.C24, I.V.L.C25, Haukka and developed in Finland, OPERATING ENVIRONMENT 1921 Kurki are completed. 1932 1943 is completed. 1960 STRATEGY
DIGITALISATION 1997 2016 2020 -luvulla 1965 1980 1996 Vammas Oy, Lapua Oy, 2004 The State of A contract was signed with BUSINESS UNITS The first Proto-Sisus The serial production of the The first single- Sisu Defence Oy, The serial production of the Finland sells Saab, selected as the combat are handed over to Pasi XA-180 and Nasu NA-140 seat Hornet F-18C Vihtavuori Oy and Patria AMV begins. Patria 49.9% of Patria system contractor for the AVIATION the Finnish Defence begins. is completed on the Finavitec Oy are merged AMV 8x8 vehicles are sold to to Kongsberg Squadron 2020 project, for the SYSTEMS Forces. Patria starts production line. and the current Patria is Poland and Sweden, among Defence & delivery of an anti-submarine the manufacturing of established. others. Aerospace AS. warfare sonar system for INTERNATIONAL SUPPORT PARTNERSHIPS military vehicles. Pohjanmaa class vessels. LAND
AEROSTRUCTURES
MILLOG
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ANNUAL REVIEW FEBRUARY MARCH MAY Patria and SIA Unitruck Patria prepared to operate in Patria and the U.S. Army entered into ANNUAL REVIEW established a joint venture in exceptional conditions due to agreement for a feasibility study of Patria Latvia. corona pandemic. Nemo mortar system. PATRIA IN BRIEF
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PATRIA 100 YEARS JANUARY APRIL YEAR 2020 Patria’s 6x6 platform was selected as part of a joint Milrem LCM is now Milworks, an Estonian Finnish-Latvian vehicle development programme. based company focused on the maintenance, KEY FIGURES Patria will supply the Squadron 2020 project with a repair and overhaul of defence materiel and is a trusted partner for the Estonian Defence REVIEW BY THE PRESIDENT AND CEO Sonac DTS sonar system for detecting submarines. JUNE Forces. Patria delivered AMV OPERATING ENVIRONMENT JULY 8x8 System Platform STRATEGY AUGUST Demonstration of the remote-controlled vehicle to Saab for test purposes. DIGITALISATION Patria joined AeroSpace and Defence Association Patria AMV 8x8 vehicle in cooperation with of Europe (ASD) as a Company Member. the University of Tampere.
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SYSTEMS SEPTEMBER INTERNATIONAL SUPPORT PARTNERSHIPS Millog was preparing the purchase of the LAND entire share capital AEROSTRUCTURES of Oy Western Shipyard Ltd, which MILLOG was announced on 1 OCTOBER NOVEMBER DECEMBER October 2020. Finland, Latvia and Patria signed a Patria and SIA EMJ Metāls signed The Finnish Defence Forces’ Logistics NAMMO R&D agreement on developing a joint a contract for vehicle parts Command was authorized to sign an armoured vehicle system. manufacturing in Latvia. updated Strategic Partnership Agreement with Millog.
PATRIA ANNUAL REPORT 2020 | 6 ANNUAL REPORT 2020 Key figures
ANNUAL REVIEW 1 / Avainluvut 2 / Avainluvut 3 / Avainluvut
ANNUAL REVIEW Net sales, EUR million Operating profit,EUR million Gross investments in fixed assets,EUR million PATRIA IN BRIEF 534.1 MEUR 534.1 74.6 15.1 OUR VALUES 507.5 NET SALES 489.9 467.2 476.1 12.6 PATRIA 100 YEARS 12.1 YEAR 2020 40.3 MEUR 40.3 7.3 KEY FIGURES OPERATING PROFIT 34.6 35.9 6.8
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OPERATING ENVIRONMENT 2,973 7.8 STRATEGY PERSONNEL 16 17 18 19 20 16 17 18 19 20 16 17 18 19 20 4 / Avainluvut 5 / Avainluvut 6 / Avainluvut 7 / Avainluvut DIGITALISATION
Personnel, end of period (FTE) Order stock, EUR million Equity ratio, % Net sales outside Finland, %
BUSINESS UNITS 3,055 2,973 1,508.2 58.3 AVIATION 2,765 2,792 2,815 53.7 54.4
SYSTEMS 39.1 38.8 INTERNATIONAL SUPPORT PARTNERSHIPS 857.7
691.4 687.1 649.2 LAND 41 33 AEROSTRUCTURES 27 26 25
MILLOG
NAMMO 16 17 18 19 20 16 17 18 19 20 16 17 18 19 20 16 17 18 19 20
As of 2018 figure personnel, end of period
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PATRIA IN BRIEF OUR VALUES Developing partnerships PATRIA 100 YEARS YEAR 2020 and paving the way for KEY FIGURES REVIEW BY THE PRESIDENT AND CEO future growth OPERATING ENVIRONMENT
STRATEGY For Patria, 2020 was a year of strong put to the test by the COVID-19 pandemic. However, Global interest in Patria’s products DIGITALISATION development in terms of partnerships we still managed to provide our customers with good and services and our own operations in both service in spite of the exceptional circumstances. We Year 2020 was excellent for International Support
BUSINESS UNITS Finland and international markets. were also doing our bit to ensure security of supply and Partnerships (ISP), which provides international life cycle Our new strategy, which emphasises the continuity of society’s core functions even during support services. ISP’s new organisation and operating AVIATION profitable growth, internationalisa- exceptional circumstances such as a pandemic. methods are now starting to bear result. A good example SYSTEMS tion and working together, will give us In Patria’s business units, 2020 was a year of strong is one of Patria’s acquisitions, Belgium Engine Center INTERNATIONAL SUPPORT PARTNERSHIPS a clear direction in the years to come. development in terms of both partnerships and opera- SPRL (BEC), which specialises in the global maintenance tions, and also a year paving the way for future growth. and repair of military aircraft engines. LAND Patria will be turning one hundred this year and our Additionally, it was an extremely good year financially Systems business unit also had a good year finan- AEROSTRUCTURES customer promise – When if is not an option – means that for the Group, and our objectives were achieved in this cially, and good openings were made for project deliver- MILLOG our operations must be one-hundred-per-cent reliable and respect. The pandemic’s main impacts on Patria were ies over the coming years. The biggest ongoing project in
NAMMO dependable under all circumstances. seen in the civilian market, as the collapse of commercial the business unit is the life cycle upgrade of Hamina class In 2020, Patria’s operating methods and the cooperation air traffic reduced demand for both pilot training and civil missile boats for the Finnish Defence Forces, with Patria models developed together with customers were really aircraft components. serving as overall responsible provider, designer and main
PATRIA ANNUAL REPORT 2020 | 8 ANNUAL REPORT 2020 integrator. Of the four ships to be upgraded, two missile The company is an internationally recognised supplier boats were delivered to the Finnish Navy during 2020. of ammunition, rocket engines and demilitarisation The highlights of Land’s year were several cooper- services. It also plays an important strategic role for ation agreements made with partners. Patria signed a Patria’s stakeholders in Finland. In November, the ANNUAL REVIEW research and development agreement with the States Finnish Defence Forces signed a partnership agreement of Finland and Latvia for the joint development of an with Nammo Lapua Oy and Nammo Vihtavuori Oy to armoured vehicle system. This system is based on the ensure security of supply for Finland’s ammunition and ANNUAL REVIEW Patria 6x6 vehicle platform, and series production could explosives sector over the coming years. PATRIA IN BRIEF potentially be launched during 2021. OUR VALUES Patria and the U.S. Army signed a research and New strategy will lead the way in the
PATRIA 100 YEARS development agreement to determine Patria Nemo’s coming years suitability and performance as a 120 mm turreted mortar In August, the Board of Directors approved Patria’s new YEAR 2020 system for U.S. Army vehicles. Horizon 2025 strategy. As its name says, the strategy KEY FIGURES will steer the Group’s activities over the next five REVIEW BY THE PRESIDENT AND CEO Deepening our strategic partnership with years. In the new strategy, the Group will be viewed as
OPERATING ENVIRONMENT the Finnish Defence Forces an even more cohesive entity: we are building a joint Millog, which provides fleet maintenance and life offering that brings together all of Patria’s products and STRATEGY cycle support services, signed a renewed strategic services. In the new strategy, the Group DIGITALISATION partnership agreement with the Finnish Defence Forces. Profitable growth lies at the heart of our new will be viewed as an even more This agreement is valid until further notice and covers strategy and will be sought from international markets cohesive entity: we are building BUSINESS UNITS services to the value of approximately EUR 1.4–1.6 billion in areas such as maintenance, repair and overhaul. In a joint offering that brings in 2021–2028. addition to acquiring new customers, Patria promises to AVIATION together all of Patria’s products Millog signed an agreement to acquire 100% of the continue nurturing and developing existing customer and services. SYSTEMS shares of Oy Western Shipyard Ltd with APX-Metalli Ltd. relationships, so that we can provide them with cost- INTERNATIONAL SUPPORT PARTNERSHIPS The Company continues to be owned by Millog as an effective and performance-enhancing solutions. independent subsidiary which business includes docking Patria’s basic mission is to ensure and develop LAND and repairs of ships and floating structures. security of supply. This requires financial resources, and Working together towards our goals AEROSTRUCTURES Senop Oy, which is part of Millog, signed a procure- income from international markets is also needed in This year, in addition to achieving the targets set for MILLOG ment agreement with the Finnish Defence Forces for addition to domestic revenue streams. 2021, we will be focusing on putting our Horizon 2025
NAMMO night vision combat equipment and target acquisition Having a competitive and cost-effective defence strategy into practice. Leadership development plays a devices. sector is also important for national economies, as the key role in this new strategy. 2020 was a year of strong growth for Nammo, which sector’s companies generate jobs, expertise and tax In addition to profitable growth, the new strategy is equally owned by Patria and the State of Norway. revenues for the country. requires improved operational efficiency. The latter will
PATRIA ANNUAL REPORT 2020 | 9 ANNUAL REPORT 2020 also be one of Patria Group’s focus areas from now on. In In addition to developing Looking ahead practice, boosting operational efficiency means better internal activities, In order to repair the damages done by the coronavirus resourcing, prioritisation and planning. We will continue the change programme is pandemic, countries have been forced to take on large this work also this year in order to assure the quality and seeking to improve our amounts of new debt and it will further burden their ANNUAL REVIEW reliability of customer deliveries and improved customer understanding of customer economies over the coming years. satisfaction. requirements and find new No growth is expected in defence budgets anywhere In order to develop Patria’s operations and sharpen in the world in the foreseeable future. Major fleet acquisi- ANNUAL REVIEW business opportunities. our strategic direction, the Group is currently running a tions, such as Finland’s HX project, will be made less fre- PATRIA IN BRIEF BOOST way of working. Two key elements in the new and security of supply provider in our various operating quently. However, many countries do need to modernise OUR VALUES working model are getting all personnel involved and countries. and renew defence equipment that is reaching the end of
PATRIA 100 YEARS working together across unit and country borders. Patria’s environmental responsibility is guided by its life cycle. This will open up new growth opportunities Group management, supervisors and a wide range the Group’s environmental policy, and the international for Patria’s international maintenance business. YEAR 2020 of employees from all areas of the Group have been principles for environmental responsibility to which the Patria’s products, services and technology – coupled KEY FIGURES involved in the new operating model. It’s important that company is committed. We will be promoting these things with our team of around 3,000 professionals – provide REVIEW BY THE PRESIDENT AND CEO every employee knows where Patria is heading and how with concrete measures, such as optimising energy, a firm foundation for partnerships both in Finland and
OPERATING ENVIRONMENT each of us can make a difference through our own work. water and materials use. globally. Our excellent reputation as a professional and In addition to developing internal activities, Over the coming years, the defence industry will also reliable partner also provides us with a competitive STRATEGY the change programme is seeking to improve our be placing a greater focus on the fight against climate advantage. Our goal is to continue providing our custom- DIGITALISATION understanding of customer requirements and find new change, reducing emissions and other environmental ers with high-quality and cost-effective solutions. business opportunities. issues. Patria can offer effective solutions to these chal- Patria’s hundred-year history provides an excellent
BUSINESS UNITS lenges by, for example, developing more energy-efficient foundation for this. We have chosen The foundation for Responsibility is part of everything we do technologies and providing life cycle services that extend a secure future as the theme for our centenary year, as AVIATION At Patria, responsibility, reliability and transparency are the lifespan of equipment. our long history creates a firm foundation for growth, SYSTEMS integral aspects of everything we do. A company that After the review period, Transparency International success, working together and a secure future. On behalf INTERNATIONAL SUPPORT PARTNERSHIPS is majority-owned by the Finnish state cannot operate Defence & Security released Defence Companies of myself and all Patria employees, I would like to thank without a good corporate citizenship. As a strategic Anti-Corruption Index (DCI) 2020 results, according to our customers, owners, partners and other stakeholders. LAND partner to the Finnish Defence Forces, Patria also carries which Patria was ranked in the second-highest category I would also like to thank all Patria personnel for their AEROSTRUCTURES out an important task in the Finnish society by ensuring B. We are a responsible operator in the defence sector efforts during 2020. This challenging year has shown that MILLOG security of supply. developing systematically the various areas of Corporate together we can succeed!
NAMMO Ethics, transparency and a strong focus on prevent- Social Responsibility. The main focus has been high- ing corruption lie at the heart of our business. In the lighting transparency, importance of ethical operating Esa Rautalinko future, we will communicate even more openly with methods and anti-bribery measures. Our operating President and CEO, Patria Group stakeholders about what Patria is doing and about the environment is constantly changing, which requires significance of our company as an employer, taxpayer active and continuous CSR development work.
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PATRIA IN BRIEF OUR VALUES International PATRIA 100 YEARS YEAR 2020 cooperation KEY FIGURES REVIEW BY THE PRESIDENT AND CEO intensifies in Europe OPERATING ENVIRONMENT
STRATEGY Multinational cooperation within Patria is closely monitoring technological develop- companies. A greater emphasis on national perspectives DIGITALISATION the EU is becoming more important ments in the defence sector, but it is equally important can also be seen in Europe. This has a number of potential in the defence sector. Patria is to keep a close eye on the civilian sector as well. For implications for Patria. For example, it might be more
BUSINESS UNITS increasingly involved in the joint example, advances in artificial intelligence, 5G networks difficult for the Group’s products and services to access development of the sector in and 3D printing must be taken into account in Patria’s local markets. AVIATION Europe. business and the development of future solutions. Another of the pandemic’s long-term impacts relates SYSTEMS The coronavirus pandemic has put the spotlight on to public-sector finances, as more funds will be required INTERNATIONAL SUPPORT PARTNERSHIPS Both world politics and the global security environment continuity management and, in particular, the function- in areas such as healthcare and debt servicing over the have changed dramatically in recent years. In particular, ality of value chains that operate across national borders. coming years. This may affect future budgets for defence LAND the operating environment is currently being affected by During the year, Patria’s operating methods and collab- procurement. AEROSTRUCTURES relations between major powers, which have escalated oration with customers have also been seriously put to MILLOG in many issues. Europe also needs to keep up with the the test. However, Patria has still been able to provide Debate on export licences for defence NAMMO USA and China in the ongoing technological competition. its customers with good service and meet their needs in materiel The coronavirus pandemic brought its own challenges spite of the exceptional circumstances. An export licence is required for all exports of defence in 2020. Various uncertainties have contributed to the The pandemic has underlined the importance of materiel. In Finland, these export licences are issued by emphasis on the role of international cooperation in the national solutions in many areas, as countries all across the Government, with the Minister of Defence deciding European Union and more broadly in the world. the world are supporting their own economies and on smaller deals. Export licences are currently a subject
PATRIA ANNUAL REPORT 2020 | 11 ANNUAL REPORT 2020 export licences are processed consistently, predictably Patria’s guiding principle in the and logically. This should also be the case for extensions export of defence materiel is to any previously issued licences for defence materiel to engage in sustainable and deliveries, so that any commitments for life cycle services responsible business. ANNUAL REVIEW may be fulfilled. Access to funding is based on open competition and the European Defence Fund promotes independent assessment of applications without any ANNUAL REVIEW cooperation quotas per Member State. PATRIA IN BRIEF Patria plays a significant role in the development of OUR VALUES projects in Finland’s national defence sector and as a Patria involved in European development
PATRIA 100 YEARS strategic partner to the Finnish Defence Forces. At the In August, Patria became a direct corporate member in same time, Patria also wants to be even more closely the AeroSpace and Defence Association of Europe (ASD), YEAR 2020 involved in developing the joint European defence sector. after previously being involved via the Association of KEY FIGURES The European Defence Fund (EDF) is an EU-funded Finnish Defence and Aerospace Industries (AFDA). As one REVIEW BY THE PRESIDENT AND CEO programme that was established to coordinate and of the largest companies in the Finnish aerospace and
OPERATING ENVIRONMENT finance investments and R&D in the European defence defence sector, Patria will also continue to be an active sector. member of the AFDA. STRATEGY In Patria’s opinion, the European Defence Fund offers ASD is the voice of European Aeronautics, Space, DIGITALISATION significant opportunities for networking within the Euro- Defence and Security industries, representing more than pean defence equipment industry. Through competitive 3,000 companies and actively supporting the competitive
BUSINESS UNITS of public debate in Finland. In 2020, this discussion tendering, the Fund supports R&D projects that address development of the sector both in Europe and worldwide. focused on extensions to previously issued licences for performance deficiencies defined by Member States. Its It includes direct members (including 18 major European AVIATION defence materiel agreements that, for example, involve guiding principle is cross-border cooperation, as a project companies) and 23 national associations operating in 18 SYSTEMS warranty or maintenance programmes. must involve actors from at least three Member States in countries. INTERNATIONAL SUPPORT PARTNERSHIPS Patria’s guiding principle in the export of defence order to receive funding. As Patria’s strategy emphasises internationalisation, materiel is to engage in sustainable and responsible busi- Actual implementation of the European Defence direct membership in the ASD constitutes an important LAND ness. Patria complies with all official export legislation, Fund is currently behind schedule, and the size of the strategic opening for business development, lobbying AEROSTRUCTURES regulations and practices, both in Finland and in other fund has also been decreased. However, it is still a and influencing. Patria is now even more actively involved MILLOG countries as necessary, including those that prohibit significant programme in European development, taking stands on issues and
NAMMO exports to countries currently at war. The export control The European Defence Fund consists of R&D making new openings with regard to the European Union, system is open and transparent, and every export licence packages that are currently ongoing or in the pipeline. the European Commission and European governments. is considered separately in accordance with the criteria of Patria is involved in several projects in the European The ASD also provides an excellent forum for promoting the EU Common Position. Patria considers important that Defence Industrial Development Programme (EDIDP). Patria’s products, services and expertise.
PATRIA ANNUAL REPORT 2020 | 12 ANNUAL REPORT 2020 STRATEGY New strategy highlights growth ANNUAL REVIEW and internationalisation ANNUAL REVIEW
PATRIA IN BRIEF
OUR VALUES The Board of Directors approved Basic mission requires profitable growth tial from its own perspective. This requires improved
PATRIA 100 YEARS Patria’s new Horizon 2025 strat- Patria’s basic mission is – both now and in the future – to international sales and marketing capabilities. egy in August. As its name sug- ensure and develop security of supply in Finland. This Patria’s key strengths include its in-depth under- YEAR 2020 gests, this strategy will steer the requires financial resources, and income from international standing of the needs of security-critical organisations. KEY FIGURES Group’s activities over the next markets is needed in addition to domestic revenue streams. However, the company’s own product and service REVIEW BY THE PRESIDENT AND CEO five years. It centres around prof- Profitable growth lies at the heart of this strategy, portfolio must be continually developed to ensure that
OPERATING ENVIRONMENT itable growth that will be sought and it will be sought above all from international markets. its offering meets customers’ changing needs to the from international markets. In line with its strategy, Patria is seeking growth that will greatest possible extent. It is therefore essential to STRATEGY enable the Group’s net sales to increase to about EUR 900 combine Patria’s own expertise with market potential. DIGITALISATION The new Horizon 2025 strategy is extremely signifi- million by 2025. In order to put the Group’s new strategy into practice, cant for Patria, as it is a genuine Group strategy rather Internationally, Patria operates openly in competitive Patria will be thoroughly investigating any potential
BUSINESS UNITS than the previous combination of business unit-specific markets in which success requires efficient operations needs to update its operational structure and operating strategies. Performance targets and performance- and innovative products and services. models. AVIATION based management have traditionally been set Continuous development in these areas will also The Group is currently utilising the BOOST operating SYSTEMS separately by business units, which has sometimes led benefit security-critical customers in Finland, and in method to develop its operations. BOOST focuses on INTERNATIONAL SUPPORT PARTNERSHIPS to group synergies being left unharnessed. Thanks to particular the Finnish Defence Forces. Maintaining involving all personnel and working together across its new strategy, Patria has a common growth target competitiveness internationally will also enable Patria to country and business unit borders. The new strategy and LAND that will, for the first time, be supported by all of the provide its Finnish customers with new solutions that will its premises will also be openly highlighted in communi- AEROSTRUCTURES Group’s products and services in a single joint offering. improve both cost-effectiveness and performance. cations, so that stakeholders will get as clear and unified MILLOG The company’s new strategy is founded on image of Patria as possible.
NAMMO thorough preparatory work that examined areas such Combining Patria’s expertise as operating processes, systems, corporate culture and with market potential competence. Patria’s important international markets Patria’s proactive approach means that the company were also carefully analysed. analyses appropriate target markets and market poten-
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ANNUAL REVIEW DIGITALISATION PATRIA IN BRIEF OUR VALUES Data-driven business PATRIA 100 YEARS YEAR 2020 generates added KEY FIGURES REVIEW BY THE PRESIDENT AND CEO value for customers OPERATING ENVIRONMENT
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DIGITALISATION Patria is developing data-driven Patria can benefit from a data-driven operating business in which data and model in two ways. Firstly, it can be used to develop new
BUSINESS UNITS analytics applications are used to business and services for customers in, for example, the optimise operations and create maintenance business. Secondly, data can be used to AVIATION new services. Everything revolves develop new offering for Patria’s products. SYSTEMS around generating added value for It thereby enables Patria to combine its expertise in INTERNATIONAL SUPPORT PARTNERSHIPS customers. business, application areas and technology in an optimal manner. Partners can also be used as part of solutions LAND A massive volume of fragmented data is generated and business models. The main objective is to generate AEROSTRUCTURES during Patria’s and its partners’ projects and other oper- added value for customers, as digital solutions can MILLOG ations, and this data could be more effectively utilised in provide them with cost-effective and performance-en-
NAMMO the development of products, services and new business. hancing solutions. This is the basic premise of JOAN (Joint Analytics Project), an ongoing project that is developing capabilities and performance in data-driven business.
PATRIA ANNUAL REPORT 2020 | 14 ANNUAL REPORT 2020 Developing data-driven business supports Patria’s new strategy.
ANNUAL REVIEW to be collected even more efficiently from a variety of devices and systems. At best, an organisation will be able ANNUAL REVIEW to use data and analytics in real-time both in its opera- PATRIA IN BRIEF tions and for decision-making. OUR VALUES Data-driven business deeply involves also the data
PATRIA 100 YEARS generated in customers’ and partners’ processes. For example, Patria’s maintenance business is integrated into YEAR 2020 its customers’ processes, which means that Patria has KEY FIGURES access to both its own data and its customers’ interlinked REVIEW BY THE PRESIDENT AND CEO data. This must be taken into consideration during
OPERATING ENVIRONMENT development work. Cybersecurity is essential in data- driven business and Patria has made considerable invests STRATEGY to guarantee it. DIGITALISATION Data-driven approach supports the new
BUSINESS UNITS Patria is investing in analytics expertise For example, servicing requirements and equipment strategy Patria has been involved in developing analytics to meet wear and tear can be better predicted in maintenance Developing data-driven business supports Patria’s new AVIATION the operational needs of Finnish authorities. These operations. Analytics can also help to identify the strategy, which aims to make the Group an even more SYSTEMS projects have created a foundation for technology and need for new services, thereby creating new business closely knit unit. Instead of individual businesses, all of INTERNATIONAL SUPPORT PARTNERSHIPS expertise that can be harnessed in the development of opportunities. Patria’s products and services are being brought together data-driven business. into a single offering. LAND New digital tools enable efficient data processing, Analytics make decision-making more The JOAN project is seeking synergies between AEROSTRUCTURES drawing conclusions and steering operations. Some good efficient Patria’s various products and services. Developing MILLOG examples of this include a variety of analytics tools, Processes generate a lot of data. This data needs to be data-driven business also supports BOOST, an ongoing
NAMMO algorithms, machine learning and artificial intelligence. processed into clear and comprehensible information internal operating model that is seeking not only to Advanced analytics enable us to better understand that can be used to steer operations. Data will become harness synergies in the Group, but also to improve everything that is happening in and around business or even more important in the future, as rapid advance- Patria’s understanding of customer needs and reveal new line operations. Analytics can also be used in forecasting. ments in industrial internet applications will enable data business opportunities.
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PATRIA ANNUAL REPORT 2020 | 16 ANNUAL REPORT 2020 AVIATION provides life cycle support services for aircraft and helicopters, covering maintenance, repairs and ANNUAL REVIEW modifications of fuselages, engines and equipment. The ANNUAL REVIEW business area’s customer base includes defence forces PATRIA IN BRIEF and other safety critical OUR VALUES organisations in various PATRIA 100 YEARS countries, as well as original
YEAR 2020 equipment manufacturers and civilian authorities all across the KEY FIGURES globe. Its pilot training services REVIEW BY THE PRESIDENT AND CEO cover both military and civil OPERATING ENVIRONMENT aviation training. Aviation is a
STRATEGY strategic partner to the Finnish Defence Forces. DIGITALISATION
BUSINESS UNITS PATRIA 100 CASE AVIATION 786 SYSTEMS It all begins from the Finnish Air Personnel INTERNATIONAL SUPPORT PARTNERSHIPS Force Aircraft Factory LAND Patria’s history begins in 1921 with the establishment of the Finnish Air Force Aircraft 17% AEROSTRUCTURES Factory at Suomenlinna. The operations began with licensed manufacturing of the Of Group net sales
MILLOG German Hansa-Brandenburg aircraft, with the total production volume between 1922 and 1926 amounting to 120 aircraft. This workload provided the factory with NAMMO 26% a strong foundation on which future developments could be based. After seven Of Group personnel years, the factory was renamed the State Aircraft Factory (Valtion lentokonetehdas).
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PATRIA IN BRIEF OUR VALUES Ongoing projects PATRIA 100 YEARS YEAR 2020 progress as KEY FIGURES REVIEW BY THE PRESIDENT AND CEO planned OPERATING ENVIRONMENT
STRATEGY The Aviation business unit was able The NH90 helicopter retrofit project in Sweden, used as training aircraft, and analogue systems were DIGITALISATION to provide life cycle support services which began in 2017, progressed according to plan during transformed into a digital environment. The project also as planned during the coronavirus the year. This project covers a total of seven helicopters. involved inspection of the structural integrity of aircraft,
BUSINESS UNITS pandemic. Preparations for the HX A project to make structural repairs to the Finnish Air conducting a damage repair analysis, structural condition project were one of the focal points Force’s Hornet fighters was also significant in terms of monitoring and preventive structural modifications. AVIATION of the year. workload. SYSTEMS A project to renew the Air Force’s elementary training Pandemic reduces civil INTERNATIONAL SUPPORT PARTNERSHIPS Aviation’s life cycle support services for aircraft and fleet also progressed during the year, as refits and cockpit aviation training volumes helicopters were successfully adapted to the coronavirus modifications for Grob 115E elementary training aircraft The coronavirus pandemic had a major impact on LAND situation. The maintenance, repair and modification continued as planned. In January 2020, a conscript in Aviation’s civil aviation training, as it made commercial AEROSTRUCTURES services of customers’ fleets were carried out almost military service made the first training flight in a modified aviation extremely difficult the world over. Pilot training MILLOG according to plan by making changes to operating aircraft in Tikkakoski. The modernised aircraft will replace continued throughout the year, although the number of
NAMMO methods and management practices. This was an excel- the current L-70 Vinka training fleet. trainees fell considerably. Training in Córdoba, Spain had lent achievement, as the nature of Aviation’s business The Finnish Air Force’s project to update its Hawk Nk51 to be halted in March, but recommenced in November. means that the majority of its work must be done on fleet was completed during 2020. Flight simulation Aviation has pilot training agreements with Qatar location, even in exceptional circumstances. technology was installed in the cockpits of fighters Airways and Turkish Airlines for customised training
PATRIA ANNUAL REPORT 2020 | 18 ANNUAL REPORT 2020 In spite of the pandemic preparatory work for the project with Patria’s Aerostruc- maintenance, repair and tures and Systems business units. overhaul services were During the year, Patria took part in negotiations provided to the customers between the Finnish Defence Administration and the ANNUAL REVIEW almost as planned. companies involved in the HX procurement process. These negotiations covered industrial participation and future maintenance of the Hornet replacements. ANNUAL REVIEW Patria is a neutral strategic partner to the Finnish PATRIA IN BRIEF Defence Forces in this project. The most important task OUR VALUES will involve cooperation to meet the requirements of
PATRIA 100 YEARS based on the Multi-Crew Pilot License (MPL) programme. industrial participation, and to ensure domestic security Pilots receive training in both the required aircraft type of supply and fleet maintenance in line with the tender. YEAR 2020 and the requirements of cockpit work for the airline in KEY FIGURES question. However, as a result of the pandemic training Pandemic impacts REVIEW BY THE PRESIDENT AND CEO couldn’t be started. The coronavirus pandemic significantly impacted civil
OPERATING ENVIRONMENT Patria carries out its elementary pilot training in aviation and thereby also Patria’s pilot training volumes, planning, clarifying work supervision roles and responsi- Córdoba using a fleet of single-engine DA40s. In Pirkkala, as major customers’ projects were delayed. As a result, bilities, and making more effective use of the ERP system. STRATEGY Patria provides theory and simulator training for commer- the Pilot Training unit conducted employee cooperation For customers, this means an organisation that can take DIGITALISATION cial pilots, and multi-engine and instrument flight training negotiations in April, which resulted in the temporary end-to-end responsibility for handling each customer’s in DA42 aircraft. In spite of the downswing caused by the lay-off of 20 flight instructors and 15 employees. The individual needs.
BUSINESS UNITS pandemic, Patria is seeking strong growth in commercial lay-offs were either full or part time for an average of two pilot training over the coming years. months. Environmental activities AVIATION Long-term collaboration on pilot training between However, redundancies were avoided and the payroll Aviation’s environmental system and policy meet the SYSTEMS Patria and the Finnish Defence Forces continued as remained roughly at the same level as in the previous ISO 14001 standard. An extensive environmental risk INTERNATIONAL SUPPORT PARTNERSHIPS planned in 2020. The agreement covers elementary year. assessment was carried out in Halli, Jämsä, and several and basic pilot training as a service. It also includes of the areas for development have now been addressed, LAND maintenance and servicing of the equipment required for Revised operating models facilitate work including groundwater protection, storm water treat- AEROSTRUCTURES training. Major investments were made in personnel induction and ment and building basins around fuel tanks. MILLOG training during the year.
NAMMO Closely involved in the HX project Progress was also made with revisions to operating Finland’s acquisition of fighters to replace its fleet of models that were begun in 2018. This had a major impact Hornets – aka the HX project – is highly significant for on daily work, particularly in production. The revised Aviation. In 2020, Aviation was actively involved in models facilitate work by standardising production
PATRIA ANNUAL REPORT 2020 | 19 ANNUAL REPORT 2020 SYSTEMS makes comprehensive system and equipment deliveries to defence forces and other ANNUAL REVIEW security authorities. Its areas of special expertise are ANNUAL REVIEW reconnaissance, surveillance and command systems, as well PATRIA IN BRIEF as their integration and life cycle OUR VALUES support. Systems is a strategic PATRIA 100 YEARS partner to the Finnish Defence
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DIGITALISATION PATRIA 100 CASE BUSINESS UNITS How Patria became an avionics expert AVIATION Patria launched its pioneering work in digital avionics back in the early ‘80s. By 1983, 387 SYSTEMS the company was modernising equipment with western avionics and had already Personnel INTERNATIONAL SUPPORT PARTNERSHIPS begun to produce its own processor-based devices. This created a foundation for LAND projects to build a data link system for the Draken fleet. When Finland was taking its 16% first steps to renew its fighter fleet, we were more prepared to take responsibility for AEROSTRUCTURES Of Group net sales developing aircraft equipment for the F/A-18 Hornet’s national data link system, and MILLOG later for building the Hornet’s system testing environment (the Software Test and NAMMO Integration Center – STIC). 13%
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PATRIA 100 YEARS YEAR 2020 A focus on KEY FIGURES REVIEW BY THE PRESIDENT AND CEO building the OPERATING ENVIRONMENT STRATEGY future DIGITALISATION
BUSINESS UNITS Systems has focused on investing In spite of the coronavirus pandemic, Systems contin- craft for the Finnish Defence Forces. Patria is the main in future growth in both domestic ued to invest in international sales and marketing during contractor, lead designer and lead system integrator for AVIATION and international sales, marketing the year, and these determined efforts are expected to the project. Two of the four vessels to be upgraded were SYSTEMS and tenders. Efforts to improve start bearing fruit in the form of new orders during 2021. handed over to the Navy during 2020 – the first in January INTERNATIONAL SUPPORT PARTNERSHIPS profitability have also continued. Systems will also continue to further develop and and the second in December. deepen its collaboration with the Finnish Defence Overhauling and upgrading these vessels will LAND Systems specialises in demanding system and equipment Forces. The goal is to maintain its involvement in enhance the Navy’s Anti-Submarine Warfare (ASW) and AEROSTRUCTURES deliveries. The business unit successfully progressed with future research projects and other projects to improve surface defence capabilities with new features. The goal MILLOG its ongoing projects in spite of the operational challenges operational capability. is to lengthen the vessels’ independent operation time
NAMMO posed by the coronavirus pandemic. However, acquiring and extend their service life into the 2030s. new international projects became more difficult, as trade Projects progress as planned Patria also signed a contract with Saab, which has fairs were cancelled and it was harder to set up meetings The largest ongoing project in the Systems business been selected to provide the weapons systems for the with customers. unit is a mid-life upgrade of Hamina Class fast attack Finnish Defence Forces’ Squadron 2020 project. Patria
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ANNUAL REVIEW will supply a Sonac DTS sonar system for detecting submarines. Collaboration will encompass both system In the field of surveillance and ANNUAL REVIEW integration and software development for the weapons control systems, the clients PATRIA IN BRIEF system. The Patria Sonac DTS system will also strengthen include not only the Finnish OUR VALUES Patria’s product range in international markets. Defence Forces, but also other
PATRIA 100 YEARS Systems carries out maintenance, repairs and security-critical authorities. performance-enhancing measures on the Finnish Air YEAR 2020 Force’s avionics systems. This work continued as planned KEY FIGURES during the year. REVIEW BY THE PRESIDENT AND CEO The business unit’s Software Test and Integration
OPERATING ENVIRONMENT Center (STIC) received the prestigious F-18 Hornet Handler award from the Finnish Air Force in recognition STRATEGY of the expertise and commitment shown by Patria’s STIC DIGITALISATION expert team in testing software for F/A-18 Hornets. Software and system testing for Hawk and Grob fleets
BUSINESS UNITS also continued as planned. Systems supplied the Finnish Air Force with two electronics and other digital solutions, and this will open will be studied in order to obtain information that can be AVIATION modern tactical flight simulators built into the cockpit up new opportunities for Systems in the future. used to develop new working methods. SYSTEMS chassis of a Hawk training fighter. These simulators will Systems recruited new employees during the year, INTERNATIONAL SUPPORT PARTNERSHIPS further enhance the Air Force’s modern training environ- Increased expertise in new technologies for tasks such as programming, testing, analytics, and ment. A survey of Patria personnel indicated that job satisfac- project management. The goal is to ensure broad-ranging LAND In the field of surveillance and control systems, the tion was at a good level. According to the survey, per- engineering expertise, and particularly in sensor and AEROSTRUCTURES clients Systems has gained include not only the Finnish sonnel were highly committed to their own teams, tasks surveillance systems. In recent years, Systems has also MILLOG Defence Forces, but also other security-critical author- and employer. The areas requiring the most development made considerable investments in expertise in the fields
NAMMO ities. A significant system delivery was made during the were communications and information flow, which is of artificial intelligence and data analytics. Systems’ year to the Finnish national security authority. Securi- partly due to increased remote working as a result of the expertise is also being increasingly harnessed within the ty-critical systems are now more dependent on software, coronavirus pandemic. The impacts of remote working Patria Group in addition to customer projects.
PATRIA ANNUAL REPORT 2020 | 22 ANNUAL REPORT 2020 INTERNATIONAL SUPPORT PARTNERSHIPS provides life cycle support ANNUAL REVIEW services internationally. The business unit’s core functions ANNUAL REVIEW are maintenance and overhaul, modifications, spare parts and PATRIA IN BRIEF technical support. Its services OUR VALUES include maintenance for fighter PATRIA 100 YEARS jet engines, helicopters and
YEAR 2020 military vehicles at service centres authorised by the KEY FIGURES manufacturers. REVIEW BY THE PRESIDENT AND CEO
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BUSINESS UNITS PATRIA 100 CASE AVIATION 246 SYSTEMS From mail deliveries to maintenance Personnel INTERNATIONAL SUPPORT PARTNERSHIPS services LAND In 1947 Ostermans Aero AB, nowadays Patria, starts commercial helicopter business. 15% AEROSTRUCTURES With Bell 47 the company delivered mail to Stockholm archipelago. Of Group net sales
MILLOG In 1957 the company celebrated its anniversary as a helicopter operator with own maintenance organisation. Main missions were post delivery, medical transport, NAMMO 8% forestry disinfection, agricultural fertilizing, taxi flights, personal transport to central Of Group personnel Stockholm from the islands and power line inspections.
Photo: Pratt & Whitney
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PATRIA IN BRIEF OUR VALUES Planned actions PATRIA 100 YEARS YEAR 2020 start to bear fruit KEY FIGURES
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STRATEGY The operating model that has been and servicing of military aircraft engines. This company Leonardo, Airbus and Bell. Patria also maintains Sweden DIGITALISATION systematically built for Interna- was named Patria Belgium Engine Center (PBEC). The and Norway’s NH90 helicopters, and acts as the Nordic tional Support Partnerships (ISP) second acquisition involved a company responsible for service centre for these helicopters.
BUSINESS UNITS is starting to bear fruit, and this maintaining and upgrading the Norwegian Air Force’s Milworks (formerly Milrem LCM) operating in Estonia international service provider is aircraft and helicopters. After the transaction, Kongsberg is another ISP unit. The company maintains and repairs AVIATION now paving the way for other Patria Defence & Aerospace AS owned 50.1% and Patria 49.9% armoured vehicles belonging to the Estonian Defence SYSTEMS products and services. of the company, which was renamed Kongsberg Aviation Forces, and has also expanded into weapons systems INTERNATIONAL SUPPORT PARTNERSHIPS Maintenance Services (KAMS). As a result of this acquisi- such as automatic firearms. In 2020, Milworks was also 2020 was an extremely strong year for ISP both tion, the company’s operations have experienced strong granted permission to handle the Estonian Defence LAND financially and operationally. ISP’s operating model and development and its service offering has expanded from Forces’ weapons outside official defence force areas, AEROSTRUCTURES organisation have been built up over the past two years the maintenance of F16 fighters and Sea King helicopters which has made maintenance easier and more efficient to MILLOG to create a service provider that can successfully supply to the maintenance and servicing of F135 engines and organise.
NAMMO the international defence market. This included two new types of helicopters. ISP strengthened its position in Latvia with the acquisitions that were made in 2019. In one of these Patria’s helicopter unit in Sweden has been a key acquisition of Milrem Latvia SIA’s entire share capital, and acquisitions, Patria acquired the entire share capital of player in helicopter maintenance since 1947. It services the company was renamed Patria Latvia. This acquisition a company specialising in the global maintenance, repair helicopters manufactured by companies such as will enable Patria to permanently expand its operations
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ANNUAL REVIEW There is growing market interest in ISP’s services, which offer comprehensive partnerships ANNUAL REVIEW to both defence and civilian PATRIA IN BRIEF authorities. OUR VALUES
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OPERATING ENVIRONMENT Patria Helicopters AB’s contract for the maintenance of the Swedish Defence Forces’ Black Hawk helicopters STRATEGY into the Latvian defence market and provide a wide There is growing market interest in ISP’s services, expired at the end of 2020, which led to the closure of DIGITALISATION range of services to the Latvian Defence Forces. In which offer comprehensive partnerships to both defence the Linköping site and redundancies for 28 employees. conjunction with the acquisition, Patria also established and civilian authorities. This means both the potential for However, all of them found new jobs before the end of
BUSINESS UNITS a joint venture with a Latvian partner (Defence Partner- business growth in existing core business and opportuni- the year. ship Latvia). ties to develop new services. Concrete results have already Responsibility and sustainable operating methods AVIATION been achieved in Latvia: Patria has signed a research and are an integral aspect of ISP’s daily work. In addition to SYSTEMS ISP is opening doors to international development agreement with the States of Finland and energy efficiency, ISP is also paying more attention to INTERNATIONAL SUPPORT PARTNERSHIPS markets Latvia for the joint development of an armoured vehicle material efficiency and other environmental issues. ISP Operating methods were standardised across country system. The system is based on the Patria 6x6 vehicle is promoting the circular economy by, for example, using LAND borders over the course of the year. Standardised operat- platform developed by Land business unit. repaired components rather than acquiring new ones AEROSTRUCTURES ing models also proved their worth during the pandemic: whenever possible. MILLOG all units could be kept open to ensure the uninterrupted Responsibility and cooperation with local In practice, ISP’s social responsibility involves NAMMO operation of important customer services. Although communities cooperation between its units and local communities. delays in spare part deliveries hindered ISP’s operations, In Belgium, almost 30 new employees were hired by In Belgium, for example, PBEC’s site canteen delivered more effective solutions to this challenge were found Patria Belgium Engine Center (PBEC) in 2020 to cover lunches to the local hospital and care home during the during the year. increased volume and compensate for retirements. coronavirus pandemic.
PATRIA ANNUAL REPORT 2020 | 25 ANNUAL REPORT 2020 LAND’S key product and service areas include cutting- edge armoured wheeled vehicles, mortar systems and their ANNUAL REVIEW associated life cycle support services. The Patria AMV, Patria ANNUAL REVIEW 6x6 vehicles and the Patria Nemo mortar system are the highest- PATRIA IN BRIEF profile products in this range. OUR VALUES Both the AMV and Nemo are PATRIA 100 YEARS market leaders in their product
YEAR 2020 segments.
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BUSINESS UNITS AVIATION 231 SYSTEMS PATRIA 100 CASE Personnel INTERNATIONAL SUPPORT PARTNERSHIPS LAND The reconstruction of Finland 7% AEROSTRUCTURES The large construction sites of the early 1950s required heavy transport equipment. Of Group net sales
MILLOG Vanaja’s automobile factory profiled itself even more clearly as a manufacturer of heavy trucks, sturdy special-purpose vehicles, and bus chassis. The serial production NAMMO 8% and quality control were learned during the war and those skills helped also succeed Of Group personnel in later times.
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PATRIA IN BRIEF OUR VALUES New agreements PATRIA 100 YEARS YEAR 2020 pave the way for KEY FIGURES REVIEW BY THE PRESIDENT AND CEO future growth OPERATING ENVIRONMENT
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DIGITALISATION The Land business unit signed an armoured vehicle system that is based on the Patria 6x6 company) signed an agreement on vehicle component agreement with Finland and Latvia vehicle platform and meets both countries’ require- manufacture in November.
BUSINESS UNITS for the joint development of an ar- ments. The agreement will also enable future R&D for moured vehicle system. A research other vehicle versions and system features. Turreted mortar interests the U.S. AVIATION and development agreement made This multinational collaboration is based on Patria and the U.S. Army signed a research and SYSTEMS with the U.S. Army will deepen identified common benefits that will be generated development agreement to determine Patria Nemo’s INTERNATIONAL SUPPORT PARTNERSHIPS cooperation on mortar systems. throughout the product’s life cycle. The participating suitability and performance as a 120 mm tower mortar countries will receive an extremely high-performance system for U.S. vehicles. This agreement is a logical LAND Land is focused on paving the way for future growth, and cost-effective solution that will most likely interest continuation of Patria’s collaboration with the U.S. AEROSTRUCTURES and this was furthered by several agreements signed other countries that are seeking to improve the mobility Government, which began with export deals for Patria MILLOG with partners during the course of the year. of their defence forces. Nemo.
NAMMO Patria signed a research and development Patria expects the joint project to lead to serial The agreement reflects the increased performance agreement with the Ministries of Defence of Finland production of the new vehicle platform, and this could that a modern turreted mortar system is capable to and Latvia for the joint development of an armoured potentially start as early as 2021. In connection with provide to the army, and also demonstrates Patria’s vehicle system. This agreement aims to develop a joint this, Patria and SIA EMJ Metāls (a Latvian metalworking leading global role in this field of technology.
PATRIA ANNUAL REPORT 2020 | 27 ANNUAL REPORT 2020 AMVXP 8x8 – Patria’s armoured personnel carrier and systems of Saab’s latest generation of vehicles. The Patria expects the joint project support vehicle – is also generating global interest. In agreement includes both the vehicle and training and between Finland and Latvia to October, the AMVXP was selected for the next phase of maintenance services related to its use. lead to serial production of the Bulgaria’s vehicle project on the basis of a competitive During the year, Land continued to develop its prod- new vehicle platform as early as ANNUAL REVIEW tender. The final decision on the acquisition will be made ucts and services. One of the priorities in Patria’s vehicle 2021. after negotiations and field tests. R&D has been a steering system that enables remote Patria AMVXP is also taking part in field tests in Japan, control and autonomous functions. Patria organised a ANNUAL REVIEW where vehicles from three companies are being tested demonstration in which a Patria AMV 8x8 vehicle was Significant improvement in job PATRIA IN BRIEF on the basis of a competitive tender. Japan’s Ministry of remotely controlled from outside visual range using 5G satisfaction OUR VALUES Defence purchased two test vehicles from Patria. The final and 4G networks. This demonstration was organised in When the coronavirus pandemic began, Land was able to
PATRIA 100 YEARS decision on the acquisition will be made after the tests, collaboration with the University of Tampere, which is one organise its own operations effectively, even in excep- which last approximately a year. Patria’s partners. tional circumstances. Although there were minor delays YEAR 2020 Patria AMV 8x8 System Platform vehicle was delivered In Croatia, Patria fulfilled its counter-trade commit- in component deliveries from subcontractors, they did KEY FIGURES to Saab in Sweden, where it will be used as a testing ments related to the agreement on the manufacture and not have a major impact on operations. REVIEW BY THE PRESIDENT AND CEO and development platform in the electronics and video supply of 126 Patria AMV 8x8 vehicles. The fulfilment of According to a personnel survey, job satisfaction
OPERATING ENVIRONMENT Patria’s commitment was verified in December by Croatia’s had clearly improved on the previous year. The survey Ministry of Economy and Sustainable Development. The also highlighted some areas for development that were STRATEGY counter-trade project, which ran until the end of the discussed at both team and business unit level. DIGITALISATION year, involved Croatian companies from several industrial The number of accidents at work and the rate of sectors. It also included the transfer of skills for the long- sickness absences remained at the same good level as
BUSINESS UNITS term benefit of the Croatian economy. in the previous year. During the year, Land achieved 385 In Finland, Patria continued mid-life upgrades to the days without any accidents at work. AVIATION Finnish Defence Forces’ XA-180 personnel carriers in order SYSTEMS to guarantee the performance, condition and technical Environmental impact of products INTERNATIONAL SUPPORT PARTNERSHIPS life cycles of these vehicles into the 2040s. Among other assessed things, the project will update the vehicles’ electrical Land’s direct impact on the environment is fairly minor. LAND systems, recondition their transmission components, and The business unit’s environmental policy has identified AEROSTRUCTURES renew their suspension and exterior coating. and assessed the environmental impacts and associated MILLOG Patria also continued deliveries for the armoured risks caused by its own products and services throughout
NAMMO bridge layers ordered by the Finnish Defence Forces. This their entire life cycles, and likewise for the operations of project, which runs from 2019–2021, will increase the its subcontractors. number of armoured bridge layers and update existing equipment.
PATRIA ANNUAL REPORT 2020 | 28 ANNUAL REPORT 2020 AEROSTRUCTURES designs and manufactures demanding composite and metal structures for aircraft and the ANNUAL REVIEW defence sector. The business unit is actively involved in ANNUAL REVIEW programmes to develop new manufacturing technologies. PATRIA IN BRIEF Its core competence comprises OUR VALUES strong structural design PATRIA 100 YEARS expertise and efficient
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BUSINESS UNITS AVIATION 101 SYSTEMS Personnel PATRIA 100 CASE INTERNATIONAL SUPPORT PARTNERSHIPS LAND Beyond the stars 3% AEROSTRUCTURES Patria’s space expertise: In 1997 the XMM scientific satellite was delivered to the of Group net sales MILLOG customer, the European Space Agency ESA. The Rosetta spacecraft was launched into space in 2004 in search of new information about the early development of our NAMMO 3% solar system. Patria designed and built the spacecraft’s platform structure and some of Group personnel of its power distribution units. Rosetta landed on the surface of a comet in 2014.
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PATRIA IN BRIEF OUR VALUES COVID-19 pandemic PATRIA 100 YEARS YEAR 2020 impacts civil aviation KEY FIGURES REVIEW BY THE PRESIDENT AND CEO deliveries OPERATING ENVIRONMENT
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DIGITALISATION The Aerostructures business unit In 2020, the aircraft manufacturer Airbus made Patria highly involved in the HX program continued to manufacture demand- 45 per cent fewer orders for composite civil aircraft One of the Patria Group’s most significant projects for the
BUSINESS UNITS ing aircraft structures for both civil components manufactured by Aerostructures. Deliver- coming years is Finland’s HX fighter program, in which the aviation and defence applications. ies of metal components to Airbus and Embraer, another Finnish Air force will be replacing its existing Hornet fleet AVIATION However, the difficulties caused by aircraft manufacturer, halved. with a solution based on a new multipurpose fighter. SYSTEMS the coronavirus in commercial avia- The majority of the composite unit’s net sales still Aerostructures together with the Aviation and INTERNATIONAL SUPPORT PARTNERSHIPS tion led to a fall in deliveries. consist of carbon fibre structures for the tail fins of Airbus Systems business units has been engaged in the A320 passenger aircraft. These structures are manufac- industrial participation part of the project. During the LAND The Aerostructures business unit was significantly tured in Halli, Jämsä. During 2020, last spoilers for Airbus year, Patria took part in the industrial participation nego- AEROSTRUCTURES affected by the coronavirus pandemic in 2020, as it man- A380 aircraft were delivered to Airbus, following the tiations between the Finnish defence administration and MILLOG ufactures composite and metal structures for aircraft company’s decision to end this aircraft programme. the companies involved in the HX procurement process.
NAMMO and defence applications. Commercial air traffic volumes Patria will continue to manufacture radar structures The aim is to secure a significant Finnish industrial foot- plummeted suddenly, and this has forced many airlines to and other demanding structures for the Airborne Early print in the program and to secure the national security cancel or postpone orders for new aircraft. Warning system used in SAAB surveillance aircraft. of supply as well as to strengthen the technological
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ANNUAL REVIEW During the HX program Patria has also charted the future competencies that the industrial ANNUAL REVIEW cooperation requires. PATRIA IN BRIEF
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YEAR 2020 and industrial basis of the Finnish defence. During the Supporting health KEY FIGURES program Patria has also charted the future competencies In occupational healthcare, the focus has been on joint REVIEW BY THE PRESIDENT AND CEO that the industrial cooperation requires. measures to prevent and reduce musculoskeletal disor-
OPERATING ENVIRONMENT ders. A particular focus has been placed on promoting the Difficulties in civil aviation impact working capacity of older employees. STRATEGY business DIGITALISATION Aerostructures conducted three employee cooperation Material efficiency and environmental negotiations during the year. The negotiations were activities
BUSINESS UNITS a result of work reorganisation and reduced delivery Implementation, monitoring and reporting continued volumes in civil aviation projects. to comply with the ISO 14001 environmental standard. AVIATION Various measures were agreed on as a result of these In production, continued efforts were made to improve SYSTEMS negotiations, including shorter working hours, lay-offs, material efficiency, minimise waste and increase INTERNATIONAL SUPPORT PARTNERSHIPS a six-week closure of the unit over the summer, and recycling. redundancies for 12 personnel, as the amount of work LAND done in the unit has significantly declined or, in some AEROSTRUCTURES cases, ceased altogether. MILLOG
NAMMO
PATRIA ANNUAL REPORT 2020 | 31 ANNUAL REPORT 2020 MILLOG provides material life cycle support services to strategic partners such as the Finnish Defence Forces and ANNUAL REVIEW other security-critical actors. The company’s responsibilities ANNUAL REVIEW include the maintenance of vehicles and armoured PATRIA IN BRIEF equipment, weapon and OUR VALUES electronic systems, vessels PATRIA 100 YEARS and various other systems; the
YEAR 2020 provision of the material and life cycle services required by them; KEY FIGURES as well as equipment and system REVIEW BY THE PRESIDENT AND CEO installations and modifications. OPERATING ENVIRONMENT Patria owns 61.8% of Millog.
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PATRIA 100 CASE BUSINESS UNITS AVIATION Millog guarantees life cycle support 1,137 SYSTEMS for military equipment Personnel INTERNATIONAL SUPPORT PARTNERSHIPS Millog was established in 2006 and is today a consortium of various companies, LAND with Patria holding most shares. For the Finnish Defence Forces, Millog is the life 43% AEROSTRUCTURES cycle maintenance provider for the defence materiel of the Finnish Army and Navy, Of Group net sales MILLOG as well as for the surveillance systems of the Finnish Air Force in all conditions. NAMMO Millog also serves civil industries for whom national security, security of supply, and 38% partnership are critical success factors. Of Group personnel
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ANNUAL REVIEW Adding depth to the PATRIA IN BRIEF OUR VALUES continuing strategic PATRIA 100 YEARS YEAR 2020 partnership with the KEY FIGURES REVIEW BY THE PRESIDENT AND CEO Finnish Defence Forces OPERATING ENVIRONMENT
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DIGITALISATION Millog and the Finnish Defence to quickly adapt its operations even in the face of a impact of about 10,000–11,000 person-work-years Forces signed an updated strategic disruption such as the pandemic. In terms of protection during the aforementioned period.
BUSINESS UNITS partnership agreement. The long and operating methods, Millog proactively implemented Millog companies have a network of 28 locations in contractual period will enable more stringent measures than required by official rec- Finland and approximately 1,200 employees. Millog com- AVIATION long-term collaboration, cost-ef- ommendations in line with its main customer, the Finnish panies also make use of their extensive subcontractor SYSTEMS fectiveness and active business Defence Forces. These measures kept the number of network, and together they are important for domestic INTERNATIONAL SUPPORT PARTNERSHIPS development. infections at a very low level in 2020, and infections did security of supply. not have an impact on Millog’s service provision. LAND Millog provides fleet maintenance, life cycle management After a year of preparatory work, the highlight of the Actively developing collaboration AEROSTRUCTURES and material services. The company achieved its financial year was the updated strategic partnership agreement A long pricing period enables long-term collaboration and MILLOG targets for the year and fulfilled its agreed service signed between Millog and the Finnish Defence Forces cost-effectiveness. Proactive operational development
NAMMO deliveries as planned in spite of the challenges posed by in December. This agreement is valid until further notice will play an even more significant role in cooperation. Key the coronavirus pandemic. and covers services to the value of about EUR 1.4–1.6 areas for development include changes in the operating Millog has been employing its contingency plan billion in the pricing period 2021–2028. Procurement and security environment, reliability-based maintenance, during the pandemic, and this has enabled the company related to this agreement will have an employment digitalisation and cost-effectiveness management. Their
PATRIA ANNUAL REPORT 2020 | 33 ANNUAL REPORT 2020 Millog executes its growth strategy by expanding into new sectors and acquiring new customers. ANNUAL REVIEW
ANNUAL REVIEW sidiary. Its business includes the sale and maintenance of PATRIA IN BRIEF terminal equipment for terrestrial trunked radio (TETRA) OUR VALUES networks. The company’s customers include securi-
PATRIA 100 YEARS ty-critical organisations such as the Finnish Defence Forces, the Police, the Rescue Services, and the social YEAR 2020 welfare and healthcare sector. When it comes to business KEY FIGURES development and partnerships, Millog is currently REVIEW BY THE PRESIDENT AND CEO focusing on new technology: existing solutions based on
OPERATING ENVIRONMENT a 2G network are being replaced with 5G technology. In October 2020, Millog signed an agreement with STRATEGY APX-Metalli Oy to acquire the entire share capital of DIGITALISATION Oy Western Shipyard Ltd, which will continue as an independent subsidiary under Millog’s ownership. The
BUSINESS UNITS development will be actively supported with the aid of, transmissions and equipment. Coronavirus restrictions company provides docking and repairs for ships and for example, mutual incentives. have extended sales cycles in the acquisition of new floating structures, and its customers include the Finnish AVIATION Millog’s largest ongoing project is the upgrade of customers. Defence Forces, the Finnish Border Guard, Finferries SYSTEMS the Finnish Defence Forces’ Jurmo Class landing craft. and Patria. The acquisition will enable Millog companies INTERNATIONAL SUPPORT PARTNERSHIPS The vessels’ hulls, engines, gears and cockpits will be Millog expands into new fields to provide a larger overall maintenance service package renewed or repaired to the required extent. The project During 2020, two strategic acquisitions were made to than any other shipyard in Finland. LAND progressed on schedule and according to plan during strengthen the range of products and services provided AEROSTRUCTURES 2020, and will run until the end of 2021. by Millog companies. These acquisitions were a concrete New recruits and developing leadership MILLOG Millog’s acquisition of new customers will focus on step forward in Millog’s growth strategy to expand into Millog’s company-specific collective agreement was
NAMMO areas that are important for Finland’s security-critical new sectors and acquire new customers. signed in November 2020 and will remain in force until infrastructure and whose operation must be assured Ownership of Virve Tuotteet ja Palvelut Oy was the end of 2021. in exceptional circumstances. The VR Group is one transferred to Millog at the beginning of 2020, and the Millog recruited 90 new employees during the year. of Millog’s partners, and Millog will be repairing train company will continue to operate as an independent sub- As several dozen employees retire every year, Millog has
PATRIA ANNUAL REPORT 2020 | 34 ANNUAL REPORT 2020
invested in finding young experts by, for example, engag- ANNUAL REVIEW ing in closer cooperation with educational institutions all across Finland. Millog made further investments in developing lead- ANNUAL REVIEW ership during the year. The “Fair Leadership” coaching PATRIA IN BRIEF programme for supervisors has significantly improved OUR VALUES leadership quality. This improvement has also been
PATRIA 100 YEARS concretely measured using a supervisor index that will now be used annually to follow up and steer leadership YEAR 2020 development. KEY FIGURES The number of sickness absences was at a record REVIEW BY THE PRESIDENT AND CEO low in 2020. Proactive efforts have led to a significant
OPERATING ENVIRONMENT improvement in occupational safety over the past few years. For example, personnel have been encouraged STRATEGY to make safety observations that will help develop DIGITALISATION operations, prevent accidents, and improve occupational safety culture. An increasingly positive attitude to
BUSINESS UNITS safety at work is reflected in the more than 3,000 safety observations that were made during 2020, compared to ued its strategic efforts by focusing on the development Command for night combat equipment and target acqui- AVIATION about 2,000 observations in 2019. Proactivity also had a of existing partnerships with Finnish customers. Inter- sition devices. The contract, which includes new image SYSTEMS positive impact on accident rates. national sales and marketing has also been intensified in intensifiers, laser sights and target acquisition devices, is INTERNATIONAL SUPPORT PARTNERSHIPS Sweden and the Baltic countries in particular. worth more than EUR 13 million. Senop’s international customers include the Norwe- It also includes an additional procurement option for LAND Significant order for Senop from the Finnish Defence Forces gian company Kongsberg Defence & Aerospace AS, which weapon-mounted laser sights, image intensifiers and AEROSTRUCTURES Millog’s wholly owned subsidiary Senop Oy develops has been provided with lightweight container solutions target acquisition devices. The five-year additional pro- MILLOG and manufactures high-tech night vision systems, for command centres. These deliveries are a continuation curement option is worth about EUR 209 million including
NAMMO MIL-compliant system platforms and demanding system of Kongsberg and Senop’s earlier collaboration, and will VAT. Without the additional procurement option, the integration solutions. continue over the coming years. contract will have a domestic employment impact of 40 In 2020, Senop’s net sales experienced a clear In Finland, Senop Oy signed a procurement person-work-years. increase on the previous year. The company has contin- agreement with the Finnish Defence Forces’ Logistics
PATRIA ANNUAL REPORT 2020 | 35 ANNUAL REPORT 2020 NAMMO is an international aerospace and defense company headquartered in Norway. With more than 2,700 staff spread across ANNUAL REVIEW more than 30 sites and offices in 12 countries, Nammo is one of ANNUAL REVIEW the world’s leading providers of ammunition, rocket motors and PATRIA IN BRIEF demilitarization services for both OUR VALUES military and civilian customers. Patria PATRIA 100 YEARS and the State of Norway own equal
YEAR 2020 shares of Nammo (50%).
KEY FIGURES Nammo AS publishes its own annual
REVIEW BY THE PRESIDENT AND CEO report and corporate responsibility report, available on the company’s OPERATING ENVIRONMENT website at www.nammo.com. STRATEGY
DIGITALISATION PATRIA 100 CASE BUSINESS UNITS Nammo’s heritage dates back to AVIATION 1920s Finland 2,752 SYSTEMS Nammo and the Finnish Defence Forces signed a new long-term strategic partnership Personnel INTERNATIONAL SUPPORT PARTNERSHIPS agreement on December 2020. The agreement is a continuation of a previous LAND security of supply agreement between the two parties signed in 2014. 562.8% AEROSTRUCTURES “This agreement confirms the close relationship between Nammo and the Finnish Net sales government, which has existed since the formation of Nammo in 1998, and before MILLOG that since our current Finnish factories were founded in the 1920s” , said Morten NAMMO Brandtzæg, President and CEO of the Nammo Group.
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PATRIA ANNUAL REPORT 2020 | 36 ANNUAL REPORT 2020
ANNUAL REVIEW
ANNUAL REVIEW NAMMO
PATRIA IN BRIEF OUR VALUES Nammo delivers PATRIA 100 YEARS YEAR 2020 unprecedented results in KEY FIGURES REVIEW BY THE PRESIDENT AND CEO unprecedented conditions OPERATING ENVIRONMENT
STRATEGY
DIGITALISATION Owned 50% by Patria, the Norwe- teamwork and of everyone pulling together to get the job Finnish Defence Forces partnership gian aerospace and defense inno- done. continues
BUSINESS UNITS vator delivers solid performance in Nammo currently operates through four business The most recent highlight for Nammo was the challenging times units: Commercial Ammunition, Small and Medium Caliber December 2020 signing of the strategic partnership AVIATION Ammunition, Large Caliber Systems, and Aerospace agreement with the Finnish Defence Forces. The SYSTEMS In 2020, the global coronavirus pandemic has shadowed Propulsion. The company remains one of the world’s agreement is a continuation of a previous security of INTERNATIONAL SUPPORT PARTNERSHIPS also Nammo’s operations – but the company has demon- leading manufacturers of specialty ammunition and rocket supply agreement between the two parties signed in strated remarkable resilience in tough times. Nammo’s motors and has grown significantly in the years following 2014. LAND delivery rate for the year was 95% or better. its founding in 1998. Nammo sees itself as committed to Finnish safety AEROSTRUCTURES Nammo attributes this result to its employees who Lately, the company has been steadily strengthening and security as it has ever been, believing that a new MILLOG have shown great initiative and resilience in a tough its presence in its European and North American core agreement will allow it to take on an even greater role
NAMMO situation. Though the challenges of coronavirus are in no markets. All key markets had a positive underlying trend in and build an even closer partnership with the Finnish way over, the company has seen remarkable examples of 2020 despite COVID-19. Defence Forces.
PATRIA ANNUAL REPORT 2020 | 37 ANNUAL REPORT 2020 In 2020, the company reported its third consecutive year of record-high revenue and ANNUAL REVIEW order books.
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PATRIA IN BRIEF
OUR VALUES Welcoming Nammo Perry
PATRIA 100 YEARS The year was also significant with Nammo completing its acquisition of Chemring Ordnance Inc. in Perry, Florida, in YEAR 2020 May 2020. The company is now known as Nammo Perry KEY FIGURES Inc. The Florida operation joins the group during a time REVIEW BY THE PRESIDENT AND CEO of major change and development for the company, as it
OPERATING ENVIRONMENT is delivering more than ever, and taking an even greater role in supporting the security of supply for its core STRATEGY markets. DIGITALISATION Also, with the arrival of Perry, Nammo now has more employees in the U.S. than in any other country, which in
BUSINESS UNITS itself represents a major milestone for the company.
AVIATION Growth despite pandemic SYSTEMS In 2020, the company reported its third consecutive year INTERNATIONAL SUPPORT PARTNERSHIPS of record-high revenue and order books. Nammo has also succeeded in improving its overall profitability. LAND Nammo believes its operations are going strong, and AEROSTRUCTURES it continues to work on new technology developments, MILLOG particularly within areas where it can combine its twin
NAMMO competencies of ammunition and rocket motors. To that end, it will continue its focus on improving its operations to ensure it remains able to invest in its future.
PATRIA ANNUAL REPORT 2020 | 38 Patria Oyj Arkadiankatu 2, 00100 Helsinki, Finland www.patriagroup.com [email protected]