Translation: Original published in Finnish on 04/29/2025 at 09:25 am EEST

Taaleri published a clearly weaker-than-expected result this morning. The earnings shortfall was almost entirely attributable to investments and one-off items, and, therefore, its significance is limited. Operationally, Garantia’s performance was once again excellent, but SolarWind 3 fund sales seem to be falling short of the target. Nothing concrete was said about the strategy, but based on the company's comments, it seems that the current group structure will remain in the future as well. This would naturally be a disappointment, as the current structure is not optimal for bringing out the value of the parts.

The earnings miss is largely explained by one-off items

Taaleri's revenue was 9.3 MEUR, clearly missing our forecast of 11.4 MEUR. The forecast miss is explained by the weak development of investment income (recorded in revenue at Taaleri). Weak investment income combined with non-recurring expenses related to the CEO change depressed EBIT to a weak level of 0.5 MEUR (Q1’25e: 3.0 MEUR).

SolarWind3 sales are falling short of expectations, Garantia performed strongly

In Private equity funds, Renewable Energy's revenue was somewhat weaker than we expected, as sales of the SolarWind3 fund did not increase as we anticipated. In its report, the company stated that the asset management market had become even more difficult and considered it likely that the fund size would fall short of the original target (600 MEUR). This is not surprising considering the current market situation. Despite slightly weaker-than-expected revenue, Renewable Energy's earnings were fully in line with expectations, as expenses were lower than anticipated. For Other private equity funds, revenue remained subdued, while the investment rate under the Keva mandate was still low. The segment was loss-making.

Garantia's operative performance was good considering the circumstances, and insurance revenue was better than we expected. The insurance service result also exceeded expectations, but the return on the investment portfolio was somewhat weaker than expected. Overall, Garantia's performance turns to positive despite the earnings miss, due to the strong operative performance.

The largest earnings misses were seen in the Other segment and Own-balance-sheet investments. The Other segment included a 0.7 MEUR non-recurring item related to the CEO change, and Own-balance-sheet investments were negative, contrary to our expectations, mainly due to the impact of exchange rates.

It seems the current structure will be maintained in the strategy update

As for the outlook, the big picture remains unchanged, although, like other players in the sector, the company highlighted the uncertainty in the markets created by the trade war. Concerning the strategy update, Taaleri stated that it is well under way. However, we feel clear interpretations can be made from the wording of the report regarding the guidelines of the future strategy. First, the company uses the term “strategy review” in the report, which we feel refers more to streamlining the current strategy than to significant changes. The company also states: "In line with the new segment reporting, our business operations focus on Private Asset Management, Investments and Garantia. We will refine the role of these segments further in our strategy." Based on this, the strategy does not seem to include, e.g., structural changes, but rather the acceleration of the implementation of the current strategy. If our interpretation is correct, this is a clear disappointment, as we do not see the current conglomerate structure offering a path to unlocking the value of the parts.