Meriaura Group Q4 on Friday: Growth ahoy!

Translation: Original comment published in Finnish on 2/27/2024 at 6:00 am EET.

Meriaura Group will report its Q4 business review on Friday March 1. We expect Renewable Energy to grow significantly, mainly driven by a large project delivery. The company's earlier comments would also point to an improvement in demand for Marine Logistics in Q4, following a significant decline in revenue in Q2-Q3.

Growth will come especially from Renewable Energy

We expect Q4 revenue to be 20.2 MEUR. The comparison period (Q4'22: 5.7 MEUR) includes Marine Logistics' revenue only for December, so a significant part of the growth is due to structural change. However, we also forecast organic growth. We expect Renewable Energy's revenue to grow to 4.5 MEUR (Q4'22: 0.8 MEUR), as the major 9 MEUR solar thermal system delivery to Bad Rappenau, Germany, won in summer 2023 and started in fall, should already be visible in the growth figures. In addition, we have included 0.5 MEUR of revenue from Rasol Oy, a supplier of photovoltaic systems, in Renewable Energy's Q4 figures, the acquisition of which was announced by Meriaura on November 30, 2023. In Marine Logistics, we estimate Q4 revenue to be 15.7 MEUR (comparable development -2% y/y). The cautious revenue forecast reflects the weak performance of the previous quarters (-24% in Q3 compared to a strong comparison period). However, it is noteworthy that the company said in connection with the Q3 report that it expects demand for Marine Logistics to pick up towards the end of the year thanks to the dry cargo backlog and new project orders.

We expect Q4 performance level to be quite low

We predict Meriaura Group’s EBIT to be 0.3 MEUR in Q4, of which 0.8 MEUR from Marine Logistics and -0.5 MEUR from Renewable Energy. The Group’s EBITDA is likely to be clearly positive, 1.8 MEUR being our forecast. We estimate that the profitability of Marine Logistics has weakened compared to the strong comparison period due to the decline in the price level of the sea freight market (EBIT Q4'23e: 0.8 MEUR, Q4’22 pro forma: 2.0 MEUR). The operating result of Renewable Energy is forecast to improve from the comparison period (EBIT Q4'23e: -0.5 MEUR vs. Q4’22: -0.8 MEUR) and the improvement will depend, among other things, on how much revenue is generated from the Bad Rappenau delivery and at what margin. However, we believe achieving a neutral or positive EBIT in Renewable Energy requires even higher delivery volumes. After our forecast net financial expenses of 0.3 MEUR, the net result would land at 0.0 MEUR. We do not expect the company to pay a dividend for 2023.

We expect earnings to improve in 2024

To date, Meriaura Group is not in a position to provide numerical guidance, but the company typically describes its near-term outlook in verbal terms. We expect revenue to grow to 76.1 MEUR in 2024. Of the total growth of 13%, approximately 7% will come from the acquisition of Rasol Oy and the rest from the projected growth in solar thermal projects, which assumes new orders during 2024. We forecast revenue in Marine Logistics to be stable compared to 2023. Global freight rates have started to rise again due to, e.g., the unrest in the Middle East, but we do not expect this to have a direct impact on prices or demand in the Baltic Sea region. In 2024, we forecast EBIT to increase to 2.8 MEUR (2023e: 0.5 MEUR). Most of the profit improvement (1.7 MEUR) will come from Renewable Energy and a smaller part (0.5 MEUR) from Marine Logistics.

Meriaura Group will report its Q4 business review on Friday March 1. We expect Renewable Energy to grow significantly, mainly driven by a large project delivery. The company's earlier comments would also point to an improvement in demand for Marine Logistics in Q4, following a significant decline in revenue in Q2-Q3.

Growth will come especially from Renewable Energy

We expect Q4 revenue to be 20.2 MEUR. The comparison period (Q4'22: 5.7 MEUR) includes Marine Logistics' revenue only for December, so a significant part of the growth is due to structural change. However, we also forecast organic growth. We expect Renewable Energy's revenue to grow to 4.5 MEUR (Q4'22: 0.8 MEUR), as the major 9 MEUR solar thermal system delivery to Bad Rappenau, Germany, won in summer 2023 and started in fall, should already be visible in the growth figures. In addition, we have included 0.5 MEUR of revenue from Rasol Oy, a supplier of photovoltaic systems, in Renewable Energy's Q4 figures, the acquisition of which was announced by Meriaura on November 30, 2023. In Marine Logistics, we estimate Q4 revenue to be 15.7 MEUR (comparable development -2% y/y). The cautious revenue forecast reflects the weak performance of the previous quarters (-24% in Q3 compared to a strong comparison period). However, it is noteworthy that the company said in connection with the Q3 report that it expects demand for Marine Logistics to pick up towards the end of the year thanks to the dry cargo backlog and new project orders.

We expect Q4 performance level to be quite low

We predict Meriaura Group’s EBIT to be 0.3 MEUR in Q4, of which 0.8 MEUR from Marine Logistics and -0.5 MEUR from Renewable Energy. The Group’s EBITDA is likely to be clearly positive, 1.8 MEUR being our forecast. We estimate that the profitability of Marine Logistics has weakened compared to the strong comparison period due to the decline in the price level of the sea freight market (EBIT Q4'23e: 0.8 MEUR, Q4’22 pro forma: 2.0 MEUR). The operating result of Renewable Energy is forecast to improve from the comparison period (EBIT Q4'23e: -0.5 MEUR vs. Q4’22: -0.8 MEUR) and the improvement will depend, among other things, on how much revenue is generated from the Bad Rappenau delivery and at what margin. However, we believe achieving a neutral or positive EBIT in Renewable Energy requires even higher delivery volumes. After our forecast net financial expenses of 0.3 MEUR, the net result would land at 0.0 MEUR. We do not expect the company to pay a dividend for 2023.

We expect earnings to improve in 2024

To date, Meriaura Group is not in a position to provide numerical guidance, but the company typically describes its near-term outlook in verbal terms. We expect revenue to grow to 76.1 MEUR in 2024. Of the total growth of 13%, approximately 7% will come from the acquisition of Rasol Oy and the rest from the projected growth in solar thermal projects, which assumes new orders during 2024. We forecast revenue in Marine Logistics to be stable compared to 2023. Global freight rates have started to rise again due to, e.g., the unrest in the Middle East, but we do not expect this to have a direct impact on prices or demand in the Baltic Sea region. In 2024, we forecast EBIT to increase to 2.8 MEUR (2023e: 0.5 MEUR). Most of the profit improvement (1.7 MEUR) will come from Renewable Energy and a smaller part (0.5 MEUR) from Marine Logistics.