Gas prices encourage Lodi to produce new products :: Dienas Bizness

Discovery and innovation happen best when conditions are pressing. This is also the case for building materials manufacturer SIA Lode Instead of the Russian export market, it has opened its doors to Finland by establishing a joint venture Lode Finlandbut as gas prices continue to rise, it has been decided to try to sell unfired production.

More about business milestones and plans in the direction of CO2 neutral construction Daily Business conversation with SIA Lode board member Valdi Zariņu.

Excerpt from the interview

Gas is used for firing bricks. How have you been since last fall?

The bullet has existed for 60 years, but it has never been so dramatically harsh. We have always reacted creatively to market challenges, and it seems that this time too we will have managed to literally slip through the eye of a needle. The first big blow directly to Lode was energy resource prices, which started to rise already at the end of 2021. Namely, if at the beginning of the year we paid 12 euros for a cubic meter of gas, then at the end of the year it was already 100 euros. It is clear that the Russian invasion of Ukraine was like fuel to the fire, if we look directly at the sales of our products and changes in the cost price.

At what gas price is a brick unprofitable? What was the size of the Russian export market?

We actually lost a lot of market share. In 2021, we worked with a turnover of 14 million euros and the price of gas was 12 euros per cubic meter, excluding the end of the year. At the beginning of 2022, we bought gas for 130 euros per cubic meter. At the moment, for example, in June we bought for 106 euros. I just looked at the exchange price, it was 140 euros again. Lode can work without profit and without loss if the price of gas is 90 euros per cubic meter. After that, there are only losses. We simply choose to work with small losses in the hope that one day it will work out. Unfortunately, the information in the European newsroom does not bode well. We did not hang our noses until February 24, 2022, when the beginning of the Russian war took away 20% of the market. We stopped the export of products to the aggressor country, of course we cut all ties, the Russian representative office in LodeRU has been closed since July 10. At the same time, the question of where to put this production remained on our agenda, because people have to pay salaries. Namely, the need is to go where we have never been before.

How long does it take for companies to enter the Finnish market?

The average statistical time spent by companies entering the Finnish market is four to five years. We ourselves cannot believe that it has been done in two months. We are already talking about specific projects, brick sizes and colors, delivery schedules and the way the bricks are delivered to Finland. This is really a pleasant surprise in all the valley of sorrows we saw this March. By the way, we have another story where, of course, it is about saving one’s own skin, but it looks like we are going to save the world.

What are you talking about?

Realizing that our classic product market would be limited, we began to wonder if there were other options. Namely, we are talking about classic fired ceramics. The question is whether it is possible to create bricks or blocks where the clay is not fired, thus avoiding the unnecessary energy costs. At first it sounded like a joke, complete humor. One of the sellers asked: why should we sell fired bricks, we sell unfired ones! At first there was a lot of laughter, but then, as a joke, I decided to find out if anyone in the world was already doing something like that. Is there an unfired clay block or brick house?

Read the whole interview July 12 in Dienas Bizness magazine!

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