Translation: Original published in Finnish on 10/16/2026 at 8:20 am EEST.

We have lowered our estimates for Nurminen Logistics mainly with regard to North Rail. Based on public statistics, North Rail's transport volumes have decreased sharply, which was expected as such, but the decrease has been steeper than we previously estimated. Due to the elevated risk associated with the estimates and North Rail's important role in generating short-term earnings, we do not consider the stock's risk-adjusted expected return attractive, despite the decline in the share price. Therefore, we reiterate our Reduce recommendation for the share but lower our target price to EUR 0.60 (previously EUR 0.70). Nurminen will publish its Q3 report on October 22.

We forecast the result to decline significantly year-on-year

We have revised our Q3 operational estimates downward. This is driven by North Rail's transport volumes, which decreased even more than we expected due to Russian railway tariffs. Based on public statistics, transport volumes decreased by a good 70% year on year in Q3. We had previously estimated that fertilizer transports accounted for approximately two-thirds of North Rail's transports, and that their revenue impact was slightly below half of North Rail's revenue (North Rail revenue 2025: 32.8 MEUR). However, we note that the impact of the decline in transport volumes on the figures is highly uncertain at this point. We still expect the company's revenue to have grown by about 5% during the quarter (previously +8% y/y), reflecting stronger contributions from the Baltic region and intra-European traffic than in the comparison period. Driven by North Rail's lower volumes and the ramp-up costs of European traffic, however, we estimate that the company's operational earnings decreased sharply and settled at 2.0 MEUR (previously 2.5 MEUR). On the bottom line, earnings were weighed down by a financing arrangement with North Rail at the beginning of Q3, for which the company reported that it would recognize 3.7 MEUR in financing expenses for the quarter. In light of this, we estimate that reported EPS for fell into the red.

Estimates for the coming years also lowered

Similarly, we adjusted our revenue forecasts for North Rail to reflect actual developments over a longer time frame, as well as the downward trend observed in Q3. However, visibility regarding volume trends is limited, and the risks associated with business forecasts are high in both directions due to the geopolitical situation. In contrast, we made only minor adjustments with regard to our forecasts for other businesses. Overall, our 2026 estimates decreased slightly, and we expect Nurminen’s revenue to be 106 MEUR (was 108 MEUR) and adjusted EBIT to be 10.6 MEUR (was 11.3 MEUR). For the coming years, however, our revenue forecasts declined by about 4% and our earnings forecasts by 6–14%. Nonetheless, we still estimate that the company's revenue and earnings will return to slight growth next year, though forecast uncertainties are exceptionally high at present (incl. North Rail's volume declines and earnings development, the ramp-up rate of European traffic, and the historically volatile development in the Baltics).

Valuation is unappealing due to high estimate risks

In our view, the success of growth in European traffic is currently at the core of the company's investment story. The geopolitical risks of this business are also clearly lower and the market potential greater than for North Rail and the Baltic business, which currently account for the majority of the company's earnings. Thus, success in this growth would support an acceptable valuation for the stock. Even in a fairly positive scenario, we estimate that clearer positive earnings impacts from the European domestic business at the group level will not be seen until 2028. However, if the company succeeds in international growth, the company and the share’s valuation could look quite different in 3-5 years. Considering the current estimate risks and earnings distribution, however, we find it difficult to see any material upside in the current valuation (2027e P/E 9x).