Neova interim report January-March 2025
Growing media business’ sales developed positively on the first quarter.
January-March 2025 in brief:
- The Group’s net sales amounted to EUR 143.6 million (EUR 155.3 million).
- EBITDA was EUR 24.6 million (EUR 26.9 million), or 17.1% (17.4%) of net sales. EBITDA included a total of EUR -0.3 million (EUR -1.3 million) of non-recurring items relating to efficiency improvement measures.
- Comparable EBITDA was EUR 24.9 million (EUR 28.2 million).
- Operating profit was EUR 17.9 million (EUR 21.3 million), or 12.5% (13.7%) of net sales, including EUR -0.3 million (EUR -1.3 million) in non-recurring items relating to efficiency improvement measures.
- Free cash flow before taxes was EUR -15.0 million (EUR 22.9 million).
- Gross investments totaled EUR 8.6 million (EUR 5.7 million).
- Earnings per share were EUR 501.22 (EUR 668.61).
- The ratio of interest-bearing net debt to EBITDA was 3.5 (2.7)
- Return on invested capital (%, previous 12 months): 2.4 (3.3)
Figures in brackets to the corresponding period in 2024 unless otherwise stated.
CEO Pekka Tennilä:
“Growing media business’ sales developed positively on the first quarter
Neova’s year 2025 started in two ways. The growth programme of the Group’s larger division, Kekkilä-BVB, has got off to a good start, after the completion of the division’s operational efficiency programme last year. On the other hand, Neova Terra’s result was weakened by the weaker-than-expected demand for fuels due to the mild winter.
The preparation of the Kekkilä-BVB division for the spring season had a strong start as the division’s net sales and operating profit increased from the comparison period. Spring is early in Europe and customer deliveries have already begun. We have identified a wide range of opportunities for growth among our current and potential customers in our growth programme, and we have started to take advantage of these opportunities already. Thus net sales in all our business areas increased, and growth was especially strong in business area Global.
Kekkilä-BVB’s profit improved from the comparison period driven by increased sales and improved production efficiency. We have been able to produce the same volume as last year despite closing two production facilities last year. This is an excellent performance by the entire production organisation!
We invest heavily in new circular raw materials in our growing media, and in January, we presented our latest innovation at IPM Essen, the largest horticulture fair in Europe: the use of reed canary grass in growing media. Reed canary grass brings structure to the growing media and improves rooting, which are prerequisites for growing a strong and healthy plant. Reed canary grass is cultivated in the Group’s old peat production areas in Finland.
The Neova Terra division’s net sales and operating profit decreased from the comparison period. This was particularly due to the warm winter’s negative impact on fuel demand, while in the comparison period demand was exceptionally high due to the cold weather. The delivery volumes of energy peat decreased by more than a third, but the decrease in net sales was partly compensated by higher price level. Pellet delivery volumes decreased even more. In the case of pellets, increased imports to the Finnish markets also lowered the price level from previous year.
On a positive note in the quarter of Terra, there was a clear recovery in demand for horticultural peat in export markets. The most significant reason for this was the lower-than-normal production levels of peat in the Baltics in the summer of 2024. Neova Terra’s horticultural peat deliveries increased by 20 per cent. Export prices also developed positively.
Neova Terra’s new business areas developed positively. The planning of solar and wind power projects continued, and the net sales and profitability of Novactor, a manufacturer of activated carbon, increased. The commercialization of Neova Agro’s animal feed and biostimulants businesses are progressing, and the biostimulants are being tested in several new countries, such as Argentina and Peru.
Due to the global trade policy tensions, it is difficult to forecast the market environment development. The possible changes in tariffs and their impacts on economic cycles may affect the markets rapidly.
In 2025, we will focus on actions supporting growth at Kekkilä-BVB and at the same time ensure that the measures taken in the efficiency programme are positively reflected in our profitability level. At Neova Terra, we invest in the production of high-quality horticultural peat and the growth of our new business areas. The demand for energy peat will continue to decline, while investments in renewable energy sources, such as solar and wind power projects, will continue. Despite the uncertain market outlook, we expect the Group’s result to improve from 2024. ”
Outlook for 2025
The megatrends of urbanisation, climate change and sustainable production are in many ways beneficial for Neova, and the company believes them to support positive development of the company’s businesses.
During the current financial period, Kekkilä-BVB will focus on sales growth as well as improving profitability. The efficiency programs of the past two years have created a good foundation for improving profitability and competitiveness of Kekkilä-BVB.
For Neova Terra, the demand for energy peat as a fuel is expected to continue to decrease. The demand for horticultural peat is expected grow along the growing media market itself. The company will continue the commercialisation of new businesses, and the commercialisation of the first new peat-based innovations is proceeding as planned.
Key uncertainty factors affecting the outlook include the development of inflation and interest rates, as well as the success of the grow media sales season and peat production season. International conflicts and unstable world politics also cause uncertainty in the operating environment. These factors may have an indirect effect on demand and financial development.
For further information, please contact:
- Pekka Tennilä, CEO, tel. +358 40 821 5302
- Hannu Nyman, CFO, tel. +358 50 306 9913
- Susanna Inkinen, Chief Communications & Sustainability Officer, tel. +358 50 530 6245