Translation: Original published in Finnish on 10/24/2025 at 08:20 am EEST

Source: Inderes

We reiterate our Accumulate recommendation for Nurminen Logistics, but lower our target price to EUR 1.1 (EUR 1.2)  The Q3 figures were, unsurprisingly, quite clearly below our estimates, reflecting the profit warning issued earlier in the week. The weaker-than-expected performance was influenced by the Baltic operations and, we believe the sluggish development of international rail logistics. However, relative to the revenue development, we find the margin development encouraging. Reflecting the profit warning and current market situation, our estimates for the coming years decreased significantly, but with the share price drop, we see the share's valuation for the coming years as attractive.

With the profit warning Q3 was below estimates as expected

Nurminen's revenue fell by good 1% to 23.8 MEUR, despite inorganic growth brought about especially by Essinge Rail. The development was clearly below our estimates, as expected with the profit warning issued earlier in the week. This was due to the development in the Baltics highlighted in the profit warning, as well as the performance of the Swedish business (formerly Essinge), whose organic revenue we believe has been under pressure as improvements to Central European rail infrastructure affected transport times, and due to weak consumer demand in Sweden. The development of the Finnish businesses was stable. New information was that the comparison period's revenue and EBIT were affected by a 1.3 MEUR one-off income item for North Rail. This was due to a contractual tonnage fee based on transport volumes, the terms of which had not been met, and which Nurmnenrecorded for a longer period in the comparison period. The company has switched to continuous periodization for these, and bookings of a similar magnitude should not occur in the future. Adjusted EBITA was 3.8 MEUR, which was clearly below our expectations, reflecting revenue development and a higher depreciation level. The margin level also fell short of our expectations, but we find the margin development relatively good considering the magnitude of the revenue miss (-21%).

Estimates under pressure, especially in the Baltic region

In connection with the Q3 report, Nurminen reiterated its guidance that it downgraded earlier in the week and expects its 2025 revenue (2024: 105 MEUR) to grow, but comparable EBITA (2024: 19.1 MEUR) to be slightly below or at the same level as the previous year. Reflecting the profit warning and Q3 results, we clearly cut our estimates for the coming years. We cut our revenue estimates, especially for the Baltic region, and also for international rail logistics. We expect these to remain at around Q3 levels for the rest of the year, and in the coming years, we expect only moderate growth from the Baltics. For international rail logistics, we expect revenue levels for intra-European freight car transport to be lower than before, but the decrease in estimates was offset by the launch and ramp-up of Nurminen's new container train connection between Sweden and Italy from the beginning of next year. In other respects, however, our forecasts for the Railway business remained largely unchanged. We now expect the company's revenue for the current year to land at 111 MEUR (was 122 MEUR) and adjusted EBIT to be 18.5 MEUR (was 21.8 MEUR). Our operational earnings estimates for the coming years decreased by around 10%.

Valuation is still attractive enough

With our updated estimates, the P/E ratios for Nurminen, adjusted for PPA amortizations, are approximately 11x and 8x for 2025 and 2026. Relative to our accepted multiple range (P/E 9x-12x), we believe there is upside in earnings-based valuation when looking at next year, even though we see the acceptable valuation weighing on the lower end of the range due to the profit warning and North Rail's large share of earnings. We estimate that the expected return is also supported by profit-sharing enabled by strong cash flow (2025e-27e dividend yield of ~4-6%). Our positive view is also supported by our DCF model, which is set at approximately the target price level.