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Neova Group 1 January to 31 December 2023 – Interim report and full-year financial statements

October–December 2023

  • Group net sales from September to December 2023 were EUR 122.4 million (123.6 in September–December 2022) 
  • Operating margin (EBITDA) was EUR 1.5 million (8.5), or 1.3% (6.9) of net sales 
  • Comparable EBITDA was EUR 12.6 million (10.0). The EBITDA included a total of -11.1 million (-1.4) of non-recurring items relating to efficiency improvement measures 
  • The operating result (EBIT) was EUR -5.8 million (10.6) 
  • Comparable EBIT excluding non-recurring items was EUR 6.2 million (-0.1). The EBITDA included a total of -11.8 million (10.7) of non-recurring items relating to efficiency improvement measures. 
  • Free cash flow before taxes was EUR -12.2 million (-0.2) 
  • Investments amounted to EUR 15.1 million (31.1) 

January-December 2023

  • Group net sales from January to December 2023 were EUR 495.9 million (544.9 in January–December 2022) 
  • The operating margin (EBITDA) was EUR 29.2 million (46.8), or 5.9% (8.6) of net sales 
  • Comparable EBITDA excluding non-recurring items was EUR 46.7 million (52.1). The EBITDA included a total of -17.6 million (-5.3) of non-recurring items relating to efficiency improvement measures 
  • The operating result (EBIT) was EUR -5.3 million (29.2). The EBITDA included a total of -21.8 million (8.8) of non-recurring items relating to efficiency improvement measures. The positive non-recurring items for the reference period are mainly related to the revaluation of previously written down energy peat stockpiles 
  • Comparable EBIT excluding non-recurring items and divested businesses was EUR 16.5 million (20.5) 
  • Earnings per share were EUR -274.2 (487) 
  • The pre-tax return on invested capital (pre-tax ROIC) was -8.3% (6.4) 
  • Free cash flow before taxes was EUR 3.4 million (-41.5) 
  • Investments amounted to EUR 40.2 million (167.5) 
  • The equity ratio on 31 December 2023 was 40.1% (38.7) 
  • Interest-bearing net debt was EUR 144.4 million (140.0) on 31 December 2023 
  • The ratio of interest-bearing net debt to operating margin on 31 December 2023 was 4.9 (3.0) 

CEO’s review: Pekka Tennilä

Improving competitiveness

For Neova Group, 2023 was a challenging and unpredictable year in many respects. Russia’s invasion of Ukraine in the previous year affected our customers more than we had anticipated. Inflation, higher interest rates and higher energy prices reduced the purchasing power of Grow&Care customers, while Fuels&Real Estate Development benefited from the increased demand for fuels.

Kekkilä-BVB was able to maintain a reasonable level of profitability in 2023, mainly thanks to realised price increases and various internal efficiency measures. However, the growing media market continued to decline during the year, and our sales volumes fell to almost the pre-pandemic levels. For these reasons, we launched an extensive efficiency programme at the beginning of 2023, both in Finland and in our other main markets. The cooperation negotiations were completed by the end of 2023, and the new, leaner and more cost-effective organisation was introduced at the beginning of 2024. We are now better equipped, closer to our customers and financially stronger to face the challenges of the coming year in the highly competitive market. In the new operating model, Kekkilä-BVB’s business has been divided into accountable business areas according to geographical markets so that we can respond better and faster to the changing market and customer needs. Kekkilä-BVB’s new accountable business areas are Central Europe, Global, Nordics and Materials. 2023 was financially disappointing for Kekkilä-BVB. In addition to the decline in sales, the deterioration in profit was due to front-loaded non-recurring costs related to various efficiency measures. However, as a result of these efficiency measures, we believe we will significantly improve our profitability during 2024.

Neova’s subsidiary Vapo Terra is responsible for the Group’s fuel business and real estate development. The fuel business in particular performed better than expected due to the effects of the Russian invasion of Ukraine on the fuel market even though the sales volumes of energy peat per cubic metre remain far from the peaks of past decades. Both our energy peat and pellet business performed financially well thanks to the higher fuel prices. The cooperation with the National Emergency Supply Agency, which started during the crisis, has also gone well and has brought entirely new business to Vapo Terra. Vapo Terra has sold energy peat to security of supply stockpiles and is responsible for the ongoing maintenance of the stockpiles.

We concentrated all the land owned by Neova Group in Finland into Vapo Terra, which was tasked with developing the value of the land through various projects. The most visible new business in this field is the development of former peat production sites into wind and solar farms. Dozens of projects are underway, and the first solar power projects have already progressed from planning almost to the construction stage. The second major new business in 2023 was the start of reed canary grass cultivation as a sustainable raw material for growing media. We are now growing more than 1,000 hectares of reed canary grass, which will be mixed with other growing media raw materials as a new renewable component.

Previously, Vapo Terra focused on selling land that was no longer needed for peat production. Land sales have now been discontinued, and the main focus is on using the land to benefit the company and increase the value of the land. The Ilomantsi activated carbon facility manufactures activated carbon from Finnish peat to be used in water and air purification, for example. The facility’s quality level has been stabilised at the target level, and market demand for high-quality European activated carbon continues to be strong. We are also exploring other possibilities of bringing new high value-added products to the market. Peat has been found to be an excellent raw material for organic biostimulants that are used in outdoor cultivation instead of fertilisers, especially in southern Europe. Peat also has many positive properties as an additive to animal feed.  In 2024, we will continue to develop these two new product areas in particular.

I started as the CEO of Neova in December 2023. I would like to take this opportunity to thank my predecessor and all the employees of Neova Group for the valuable work they have done for the company. We will continue to serve our customers based on the selected strategy. Despite the turmoil in the world, one thing remains unchanged. Sustainable business will continue to be at the core of our strategy and our business.

Events after the review period

At the end of December, Neova announced that Neova Oy’s subsidiary Vapo Terra Oy and Versowood Oy had agreed on an acquisition where Vapo Terra would sell its Turenki pellet factory to Versowood Oy. The transaction was completed on 1 January 2024. The eight employees of the Turenki pellet factory were transferred to the new owner as old employees. The parties have agreed that the transaction price will not be made public. The parties have also tentatively negotiated a deal whereby Vapo Terra would sell the Vilppula pellet plant’s production machinery to Versowood in 2025, should the plant run out of raw materials and drying energy.

On 2 February 2024, Neova announced that the company has decided to change its reported segment information to reflect the new organisational structure. The reportable segments under the new organisational structure effective from the beginning of the financial year 2024 are Kekkilä-BVB and Neova Terra. Due to the change in segments, the company will publish comparable data in compliance with the new reporting structure for the financial year 2023 on a quarterly basis in connection with the publication of the financial statements.


Neova Group is one of the world’s largest producers of growing media. Nevertheless, political decisions have a material impact on the profitability of nearly all of the company’s businesses and therefore affect the company’s ability to invest in higher-added-value production. The company will continue its strong transformation from a former conglomerate and energy company into Europe’s leading producer of growing media through Kekkilä-BVB and a facilitator of cleaner water and air through the Novactor activated carbon business.

During the current financial period, the Kekkilä-BVB subgroup will invest in more efficient operations, an increase of its product portfolio and a profitable increase of its international sales in the professional, consumer and landscaping businesses. The Group intends to expand its distribution network into new markets in line with its strategy while increasing its cooperation with its existing comprehensive network of customers in its home markets in Europe.

Neova will continue to implement measures in line with its strategy to increase the competence of its personnel and achieve market-leading customer service. At the same time, the company will continue to increase the efficiency of its business processes in order to improve profitability. The demand for energy peat as a fuel is expected to continue to decline in spite of the temporary rise caused by the war in Ukraine, while the demand for bioenergy is expected to see strong growth.

Neova will continue the commercialisation of new business operations in the Activated Carbons business, as well as researching further new business initiatives in the Innovation business. The operation of Activated Carbons’ first production plant suitable for the production of technical carbon products started at the beginning of 2024. Innovation has a strong focus on cooperation with other industry participants to promote its project as effectively as possible in collaboration with interested partners. 

During the past three financial years, Neova has also been successful in the development of its own wind and solar power projects. Further progress will be made in 2024 on selected projects.

Board of Directors’ proposal for the distribution of profits

In line with its dividend policy, Neova distributes dividends amounting to an average of 50% of the profit for the year. On 31 December 2023, the parent company’s distributable assets amounted to EUR 258.4 million. There have been no substantial changes in the company’s financial position after the end of the financial year.

The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 134 (300) per share be paid on the basis of the adopted balance sheet for 2023, amounting to a total of EUR 4.02 million (9.0). The rest of the distributable assets shall be carried forward in retained earnings.

Consolidated key figures 

EUR million October–December 2023 October–December 2022 January–December 2023 January–December 2022 
Net sales 122.4 123.6 495.9 544.9 
Operating profit (EBIT) -5.8 10.6 -5.3 29.2 
% of net sales -4.7 8.5 -1.1 5.4 
Operating profit (EBIT) before impairment -4.7 -1.5 -0.7 17.2 
% of net sales -3.9 -1.2 -0.1 3.2 
Profit/loss for the period -4.9 16.0 -8.2 18.6 
   Operating margin (EBITDA) 1.5 8.5 29.2 46.8 
+/- Change in working capital -4.8 15.7 5.4 48.4 
   – Net investments 9.0 21.8 31.2 -136.7 
Free cash flow before taxes -12.2 -0.2 3.4 -41.5 
Gross investments 15.1 31.1 40.2 167.5 
Return on invested capital % * -8.3 6.4 -1.3 6.4 
Return on invested capital % before impairment * -11.4 3.8 -2.4 3.8 
Return on equity % * 0.0 5.1 -2.7 5.1 
Total assets   737.3 810.3 
Shareholders’ equity   293.1 311.2 
Interest-bearing net debt   144.4 140.0 
Equity-to-assets ratio %**   40.1 38.7 
Interest-bearing net debt/EBITDA   4.9 3.0 
Gearing %   49.3 45.0 
Average number of employees   936 958 
*) Last 12 months     

For further information, please contact:

  • Pekka Tennilä, CEO, Neova, tel. +358 40 821 5302
  • Jarmo Santala, CFO, Neova, tel. +358 40 801 9191
  • Ahti Martikainen, Director, Group Communications & Public Relations, Neova, puh. +358 40 680 4723