January 23, 2014

Insulation in high demand in Russia

Over the past couple of decades, Paroc has established a foothold in the Moscow and St. Petersburg insulation markets. The new local factory is now expected to accelerate the company’s growth.
Over the past couple of decades, Paroc has established a foothold in the Moscow and St. Petersburg insulation markets. The new local factory is now expected to accelerate the company’s growth.
Paroc Group

CEO Kari Lehtinen is of the opinion that Finland needs good news “these days”. The insulation factory recently opened by Paroc in Russia is definitely good news, and a response to the growing demand for energy-efficient construction.

The new factory that was opened last December in Izoplit, Russia, represents around 60 million euros in investments. However, it is only the first step in a larger investment programme estimated to amount to roughly 170 million euros in total. According to Lehtinen, the plan is to carry out further investments in stages over the next few years in Tver.

“The new factory is in line with our growth strategy,” Lehtinen says. “We have supplied products to Russia for more than 20 years, but the new factory will open up new opportunities for us. Local manufacturing close to our customers will improve our operations and increase our efficiency.”

Spurred on by the construction boom

Confident of the brisk growth in the Russian markets, Paroc has announced its intention to double the net sales of its operations in Russia by 2015. If Russian exports accounted for about 7 per cent in 2012 of the company’s total net sales of 430 million euros, their share will be close to 15 per cent next year.

These expectations are well founded. According to Lehtinen, demand for building insulation in Russia grows at an annual rate of about 8—10 per cent, which is more than in many other markets. This is attributable to, among other factors, the major boom in housing construction.

As new construction activity increases, renovation construction follows suit. Industrial buildings, such as power plants, are also being constructed at an ever-increasing pace. In the large markets of Russia, the volumes are big.

Powered by a strong drive

In Russia, growth in new construction means growth in energy efficiency, as the country is following the construction trends of Western countries. The law enacted in Russia in 2008 stipulates that energy efficiency should improve by 40 per cent over the coming years.

“Competition is fierce in the sector, prompting all actors to develop their operations,” Lehtinen says. “However, they are all playing in the same battlefield. We are now powered by a strong drive. We strongly believe in our expertise, our products and our operations.”

“The new factory also bears testament to the strengthening partnership between Finland and Russia,” Lehtinen points out.

Paroc, recognised at construction sites for its red-and-white-striped packaging, develops and tests building technology solutions that reduce both energy consumption and emissions. Alongside Russia, the company’s core markets are to be found in the Nordic countries and the Baltics.

Text by: Sari Okko

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