Neova Financial Statements release January-December 2024
Progress of transformation programme improved profitability
Operational efficiency improvement actions improved the fourth quarter profitability from the previous year.
October-December 2024 in brief:
- The Group’s net sales amounted to EUR 96.4 million (EUR 122.4 million).
- EBITDA was EUR 9.1 million (EUR 1.5 million), or 9.5% (1.3%) of net sales. EBITDA included a total of EUR -0.1 million (EUR -11.1 million) of non-recurring items.
- Comparable EBITDA was EUR 9.2 million (EUR 12.6 million).
- Operating profit was EUR -0.8 million (EUR -5.8 million), or -0.9% (-4.7%) of net sales, including EUR -2.4 million (EUR -11.8 million) in non-recurring items.
- Free cash flow before taxes was EUR 1.2 million (EUR -12.2 million).
January-December 2024 in brief:
- The Group’s net sales amounted to EUR 469.0 million (EUR 495.9 million).
- EBITDA was EUR 48.8 million (EUR 29.2 million), or 10.4% (5.9%) of net sales. EBITDA included a total of EUR -8.1 million (EUR -17.6 million) of non-recurring items relating to efficiency improvement measures.
- Comparable EBITDA was EUR 56.9 million (EUR 46.8 million).
- Operating profit was EUR 14.0 million (EUR -5.3 million), or 3.0% (-1.1%) of net sales, including EUR -11.1 million (EUR -21.8 million) in non-recurring items that were mainly related to the restructuring of operations.
- Free cash flow before taxes was EUR 45.1 million (EUR 3.4 million).
- Gross investments totalled EUR 38.7 million (EUR 40.2 million).
- Earnings per share were EUR 287.81 ( EUR -272.17).
- The ratio of interest-bearing net debt to EBITDA was 2.6 (4.9)
- Return on invested capital (%, previous 12months): 3.2 (-1.3)
Figures in brackets to the corresponding period in 2023 unless otherwise stated.
CEO Pekka Tennilä:
“Progress of transformation programme improved profitability
The year 2024 was challenging for the Neova Group in many ways, as turnover and production volume slightly decreased from the previous year, but profitability and cash flow developed favourably thanks to determined development measures.
The rainy and cold gardening season in Central Europe significantly reduced the sales and profitability of Kekkilä-BVB’s consumer products in Central Europe during the spring and summer. On the other hand, sales outside Europe increased significantly. The turnover for the last quarter of the year was lower than the comparison period, mainly due to lower fuel sales volumes of Neova Terra, as the quarter was clearly warmer than the previous year.
EBITDA and operating profit were clearly at a higher level than the previous year, assisted by efficiency measures.
During 2024, a significant organisational reform was implemented in the Group. The company’s operations were divided into two more independent divisions: Kekkilä-BVB and Neova Terra.
Kekkilä-BVB’s profitability programme yielded results
The business of Kekkilä-BVB, which focuses on growing media, is divided into profit-responsible business areas according to geographical markets, so that we can respond to the rapidly changing needs of the markets and customers. The current organisational model has proven to be effective and has accelerated decision-making and strategy implementation in different business areas.
During 2023 and 2024, we have implemented structural reforms to improve financial performance in the future. These measures included the closure of four growing media plants and the concentration of production into larger units, the sale of assets, streamlining the organisational structure, improving procurement, and reducing staff by nearly 100 employees. Our goal has been to significantly improve Kekkilä-BVB’s profitability during 2024, which we succeeded in. The improvement in our profitability was not due to an improvement in the general market situation but a combination of the aforementioned efficiency measures, which have improved Kekkilä-BVB’s cost competitiveness, leading to stronger financial results in the coming years as well.
Kekkilä-BVB’s markets developed differently. The Global and Materials business areas performed very well and clearly better than the previous year. This indicates successful business, supported by the growing demand for professional growing media products in Asia and South and North America. The professional growing media business of our largest business area, Central Europe, achieved its goals, but the sales volumes of consumer products decreased significantly due to the cold and rainy spring in the Netherlands. Also, in the Nordic countries, the sales of consumer products developed poorly, but on the other hand, green construction grew as expected, and its profitability improved.
The year was overall good for Kekkilä-BVB. We streamlined and rationalised production and reorganised to improve customer service. Our organisation is now ready for the new year, and we believe we will succeed in it.
Neova Terra facing new challenges
Neova Terra’s year was twofold: the division exceeded its targets in a challenging market situation, although sales were lower than the previous year as expected. Improved profitability is the result of many different measures. The significant reduction in fixed costs from the previous year had a significant impact on improving profitability. The achievement was excellent, as the sales volumes of the division’s most profitable product, energy peat, decreased as expected. Although the sale of energy peat is rapidly decreasing, energy peat has maintained its position as a blend fuel better than expected for security of supply reasons, and customers also buy energy peat to prepare for exceptional situations. The pellet market was in decline after its previous record year.
The peat production in 2024 was successful. In Estonia and Finland, production targets were exceeded, and thanks to the production season continuing well into the autumn, also Sweden came close to its target. Successful peat production provides a good foundation for 2025.
Neova Terra manages the Group’s land assets in Finland and develops new business related to them. The most visible business opening is the development of former peat production areas into solar and wind power parks. In November 2024, Neova and the Swedish Rabbalshede Kraft AB signed an agreement under which Neova sold 50 percent of its nine solar and wind power projects to Rabbalshede Kraft. Neova prepares the projects in the planning phase, but Rabbalshede Kraft makes the actual power park investments and buys the completed power parks entirely into its ownership, and Neova will remain as the land lessor for the sites. The agreement had a positive impact on Neova’s profitability in 2024.
The commissioning of the Novactor activated carbon production plant in Ilomantsi has progressed during 2024, and the quality level has been stabilised to target values. The demand for high-quality European activated carbon is still growing.
Neova Terra’s strategy is to bring high value-added products based on peat to the market. During 2024, two significant successes were achieved. The marketing and sales of the biostimulant, a natural growth stimulator made from peat, began in Southern Europe under the NeoCore brand. Another new product brought to the market is a peat-based animal feed product that improves the intestinal well-being of animals, for which Neova is cooperating with the large feed manufacturer Hankkija. For both products, the goal is to achieve international commercialisation in the best possible way.
The importance of renewable raw materials and new products will increase in 2025
Kekkilä-BVB’s strategic goal to increase the share of renewable and circular raw materials in growing media is progressing determinedly. There is a strong demand for development in this direction, especially from customers in Central Europe. As part of the Group’s offering, Neova is growing over 1,500 hectares of reed canary grass for this purpose, which is mixed with other growing media raw materials as a new renewable component. During 2024, the Group also invested in its first wood fibre production line in the Netherlands.
In recent years, we have done significant work to improve our competitiveness, which I believe will enhance our operations already in 2025. The coming years will be more challenging for Neova Terra as the demand for energy peat decreases, and new products do not yet fully replace it. From Kekkilä-BVB, positive profitability development and increasing volumes can be expected as the global demand for growing media increases. Even amidst all the changes, one principle does not change: Responsible business will continue to be the key factor in our strategy and operations.”
Event after the review period
There were no significant events after the review period.
Outlook 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. Inflation has slowed down, improving also households’ purchasing power, which will improve demand as economy recovers. Demand growth is supported by wage increases and reasonable employment situation.
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.
Board of Directors’ proposal for the distribution of profits
On 31 December 2024 the parent company’s distributable assets amounted to EUR 257,5 million. There have been no substantial changes in the company’s financial position after the end of the financial year.
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 1,165 (134) per share be paid on the basis of the adopted balance sheet for 2024, amounting to a total of EUR 35.0 million (4.0). The rest of the distributable assets shall be carried forward in retained earnings.
Consolidated key figures
| EUR million | 10-12/ 2024 | 10-12/ 2023 | 1-12/ 2024 | 1-12/ 2023 |
| Net sales | 96.4 | 122.4 | 469.0 | 495.9 |
| Operating profit (EBIT) | -0.8 | -5.8 | 14.0 | -5.3 |
| % of net sales | -0.9 | -4.7 | 3.0 | -1.1 |
| Operating profit (EBIT) before impairment | 1.4 | -4.7 | 16.9 | -0.7 |
| % of net sales | 1.4 | -3.9 | 3.6 | -0.1 |
| Result for the period | -0.9 | -4.9 | 8.8 | -8.2 |
| EBITDA | 9.1 | 1.5 | 48.8 | 29.2 |
| +/- Change in working capital | -6.3 | -4.8 | 23.3 | 5.4 |
| -net investments | 5.2 | 9.0 | 27.1 | 31.2 |
| Free cash flow before taxes | 1.2 | -12.2 | 45.1 | 3.4 |
| Gross investments | 9.7 | 15.1 | 38.7 | 40.2 |
| Return on invested capital %* | 3.2 | -1.3 | ||
| Return on invested capital % before impairment | 2.6 | -2.4 | ||
| Return on equity %* | 2.9 | -2.7 | ||
| Total assets | 599.7 | 737.3 | ||
| Total equity | 296.6 | 293.1 | ||
| Interest-bearing net debt | 129.0 | 144.4 | ||
| Equity-to-assets ratio %* | 49.8 | 40.1 | ||
| Interest-bearing net debt/EBITDA | 2.6 | 4.9 | ||
| Gearing % | 43.5 | 49.3 | ||
| Average number of employees | 817 | 936 | ||
| *) Previous 12 months |
For further information, please contact:
- Pekka Tennilä, CEO, Neova, tel. +358 40 821 5302
- Hannu Nyman, CFO, Neova, tel. +358 50 306 9913
- Ahti Martikainen, Director of communications and Public Affairs, Neova, tel. +358 40 680 4723