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President & CEO’s review

VTT Review 2016

Antti VasaraVTT helps customers and society to grow and renew through applied research. This task is particularly important in Finland's slowly growing economy. Businesses need product and service concepts that contain the seeds of new growth. In addition, the private sector and decision-makers need our vision and support in making large-scale systemic changes in society.

VTT provides research as a service. We work via networks and create value in collaboration with the customer. We are increasingly becoming an ecosystem or network hub that comprises Finnish and international universities, start-ups, SMEs and large companies.

There were major changes in VTT's operating environment in 2016. The outlook for economic growth and the markets was challenging. VTT's government grant decreased by 10% and public funding from Tekes fell by 5% compared to the previous year. However, VTT Group's operating income – government grant and turnover combined – fell by only one percent, because the parent company's turnover for EU projects grew by 12% and turnover for commercial projects by 2%.

VTT had 460 international research projects and two major piloting and research facility ventures underway in 2016. Manufacturing techniques for renewable fuel were developed at the bio and circular economy piloting centre
Bioruukki, while the second phase of the biomass and fibre spinning facility progressed to the kick-off stage.
VTT's new nuclear safety laboratory facilities began operating in the Centre for Nuclear Safety and hot cells are being built. These new capabilities will provide opportunities for growth, new services and competence development.

In 2016, we renewed our strategy together with our employees. Challenge-driven way of working and excellence in science and technology are at the core of VTT's strategy. VTT aims at understanding customers' and society's needs and opportunities by working in a challenge-driven way. To match these needs, we co-develop impactful solutions together with the customers. In this way we help customers to succeed and promote sustainable growth and wellbeing in the society. VTT has created an impact, for example, when our customers' knowledge and skills grow, they gain access to new networks, their business renews through innovations or their turnover increases. Industrial renewal, enhanced well-being, and better political decision making based on research findings are examples of our societal impact.

The climate action, the sufficiency of resources, a good life, safety and security and the industrial renewal are the growth areas in which we will focus our research in order to meet global challenges and the needs of society and our customers. Our expertise, partnerships, unique research facilities and IPR will enable us to create innovations which enter the markets at the right time and are commercially successful.

In early 2017, positive signals emerged that the Finnish economy is expected to grow slightly in the wake of the global economy. In addition, new international research and production operations are moving to Finland and the Government has indicated the need to step up innovation funding. Faith in Finnish innovation is demonstrated by the fact, for example, that a record EUR 18 million was invested in spin-offs managed by VTT Ventures Ltd in 2016.

However, sustainable growth requires a long-term approach – there are no short cuts to such growth. We will achieve the best results through cooperation. We will continue to develop our own role towards providing a platform for companies' innovations, while supporting their business activities with our expertise, research facilities and partners.

I hope that this VTT Review successfully describes our achievements of 2016 and, above all, the many ways in which we can help companies and society going forward!

Antti Vasara
President & CEO