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Activity report 2022

Introduction The world economy in 2022 is characterized by the positive impact of post-pandemic reopening in the first half of the year, which, however, cooled down in the second half. Rapid price growth combined with rising interest rates led to a decline in global economic activity in the last months of the year. At the same time, economic activity weakened simultaneously in both the manufacturing and service sectors. Rapid inflation and high energy prices, along with tightened financing conditions and the Russian-Ukrainian war and geopolitical conflicts, are increasingly damaging the world economy.

The outlook for the European Union's economy is also deteriorating. The energy crisis caused by the Russian-Ukrainian war last year particularly affected the euro area economy. In the long run, there is a risk that there will be a shortage of energy and the resulting direct production restrictions and price cuts may

further damage the European economy. The setbacks to the economy caused by rapid inflation and declining purchasing power are stubbornly receding.

Although the labor market situation remains strong in European countries, the effects of economic cooling will eventually reach the labor market.

According to the latest estimates, the European Union's economic growth in 2022 was 3.4% (in 2021, economic growth was 5.3%), including in Estonia, the economic downturn was -1.3% (in 2021, economic growth was 8.3%). More moderate economic growth is also forecast for this and next year - 0.5% in 2023 and 1.9% in 2024. The main threat to the European Union's economic outlook is still related to a possible more extensive disruption of European energy supply, which will lead to a further increase in energy prices and a decrease in production.

Estonia's GDP declined last year by an estimated 1.3% compared to 2021 (in 2021 it grew by 8.3%). The main obstacle to economic growth last year was the declining demand due to energy savings and high prices, and production restrictions. Supply chain disruptions in manufacturing companies eased, but the economy's adjustment to abandoning Russian energy carriers takes longer and keeps energy prices still high.

The continued growth of consumer prices and the rapid rise in interest rates significantly reduced consumers' purchasing power and slowed down private consumption. While strong private consumption supported economic growth in the first half of the year, consumption in the second half of the year remained at the same level as a year ago. Consumer confidence is still very low, most of the savings accumulated due to corona restrictions have been used up, and rapid price increases eat away at purchasing power. Although inflation in Estonia's main trading partners has already slowed down, price pressure on both goods and services remained widespread. The decline in confidence and the associated decline in economic activity among the main trading partners led to weaker demand for Estonian companies' exports. High energy prices have benefited the oil shale sector. Volumes increased in both mining and energy. The energy crisis has also favored forestry, as wood is a substitute for gas and electricity.

ETRA BALTI AS was established in 1993 and deals with the import, processing and sale of technical materials to industrial companies. The company belongs to the Finnish ETOLA GROUP. The ETOLA Group's headquarters are located in Helsinki. In 2021, Etra Oy acquired a 100% stake in ETRA

BALTI AS. The headquarters and central warehouse of ETRA BALTI AS are located in Rae parish, Peetri village, and representations in Rakvere, Tartu and Pärnu.

Revenues, expenses and profit In 2022, ETRA BALTI AS's sales revenue amounted to 5,247 thousand euros (in 2021, 4,576 thousand euros), which grew by 15% compared to the previous year. The growth in sales revenue was achieved mainly from the increase in sales volumes of fasteners and personal protective equipment. In addition, various logistical full-service offerings to customers have been vigorously launched. 95% of ETRA BALTI AS's sales revenue was sales to Estonia (in 2021, 96%) and 5% was exports (in 2021, 4%). The main export target countries were Lithuania, Latvia and Germany. The profit for the financial year of ETRA BALTI AS was 68 thousand euros (in 2021, 538 thousand euros), which is 87% less than last year. The profit for 2021 was affected by other business income from the sale of real estate.

In 2022, operating expenses continued to grow, which was due to the growth in rental costs of new buildings and the increase in energy prices and services.

Salary costs decreased compared to the previous year due to a decrease in the number of employees.

Main financial ratios 2022 2021

Sales revenue (thousand euros) 5,247 4,576

Revenue growth 15% 15%

Net profit (thousand euros) 68 538

Profit -87% 894% growth/decline

Net profitability 1% 12%