Neova Group’s first third of the year was characterised by strong sales performance

Interim Report 1 January–30 April 2021  

The first third of the year in brief January–April 2021: 

• Group turnover in January–April was EUR 227.0  million (1 January–30 April 2020: EUR 236.0 million)
• The Group’s comparable turnover in January–April was EUR 215.6 million (EUR 193.5 million), taking into consideration the divestment of the heat and power business on 28 January 2021
• The operating margin (EBITDA) was EUR 539.5 million (EUR 44.1 million), or 237.7% (18.7%) of turnover
• The Group’s comparable operating margin (EBITDA) was EUR 31.9 million (EUR 31.1 million)
• The operating result was EUR 530.4 million (EUR 31.7 million), or 233.6% (13.4%) of turnover, including EUR 507.6 million (EUR 9.2 million) in non-recurring items that were mainly related to the profit recognised on the sale of the heat and power business
• Free cash flow before taxes was EUR 486.6 million (EUR 23.5 million)
• Gross investments totalled EUR -51.4 million (EUR -20.8 million)
• Earnings per share were EUR 17,414 (EUR 697)
• The ratio of interest-bearing net debt to operating margin (net debt/EBITDA) was -0.5 (4.7)
• The equity ratio was 64.8% (41.3%)
• Return on invested capital % (previous 12 months): 64.2% (-1.3%)

 

CEO Vesa Tempakka: 

“Neova Group’s first third of the year was characterised by strong sales performance” 

“The first third of 2021 was historic in many ways. In January, we completed the divestment announced in November of the previous year by selling our wholly-owned subsidiary Nevel Oy to Ardian. The enterprise value of the Nevel transaction was EUR 656 million and the Group recognised a profit in excess of EUR 500 million on the sale in the first quarter. As a result of the divestment, the Group’s annual turnover will decrease by approximately EUR 100 million and the annual operating margin by approximately EUR 20 million. Nevel’s personnel, totalling 130 employees, were transferred to Ardian in their entirety as part of the transaction. After the completion of the transaction, Neova Group has no net debt. 

The divestment of the heat and power business marked the conclusion of the structural changes implemented over the past few years, which have transformed us into an international operator whose fastest-growing businesses include products that support greenhouse cultivation and gardening, the production of animal bedding, the production of activated carbon for the purification of air and water as well as renewable energy. 

Two other significant events in the first quarter were the completion of the Group’s first activated carbon production facility in Ilomantsi, North Karelia, and the start of the Group’s first wind farm development projects. 

Due to the significant changes in the company over the past few years, the Extraordinary General Meeting held on 29 April 2021 resolved to change the company’s name to Neova Oy. The company’s visual identity was also redesigned in connection with the change of name. Vapo will continue to be used as a sub-brand of the Group and will be used in the fuels and animal bedding businesses. 

The Group’s comparable turnover increased by 11.4 per cent to EUR 215.6 million. This growth was almost entirely attributable to the Grow&Care division, where nearly all profit centres achieved an increase in turnover. The Group’s comparable operating margin and comparable operating profit improved slightly year-on-year. The Grow&Care division’s turnover grew by 11 per cent year-on-year and the Energy division’s comparable turnover increased by 2 per cent year-on-year thanks to the strong demand for biofuels. The Group’s profitability remained good in spite of the sales of higher-margin energy peat being replaced by lower-margin products. In addition, increased logistics expenses and the higher prices of packaging materials, for example, led to increased costs during the first third of the year. 

Outlook for the remainder of the financial year, to 31 December 2021 

For the Group’s continuing businesses, the favourable development seen in the first third of the year is expected to continue during the financial year. Comparable turnover is estimated to increase somewhat from the previous year and the comparable operating margin is expected to remain relatively stable. While the development of the COVID-19 pandemic is very difficult to predict, the Group has prepared various alternative scenarios pertaining to the potential development of the pandemic. 

Consolidated key figures
MEUR	1–4/2021	1–4/2020	1–12/2020
Turnover	227.0	236.0	544.9
Operating profit (EBIT)	530.4	31.7	-95.3
% of turnover	233.6	13.4	-17.5
Operating profit (EBIT) before impairment	530.4	31.7	7.4
% of turnover	233.6	13.5	1.4
Profit/loss for the period	525.2	23.9	-108.1
Operating margin (EBITDA)	539.5	44.1	53.8
+/- Change in working capital	-4.7	-5.4	44.8
– Net investments	-48.2	-15.2	-59.1
Free cash flow before taxes	486.6	23.5	39.6
Gross investments	-51.4	-20.8	-76.6
Return on invested capital % *	64.2	-1.3	-14.0
Return on invested capital % before impairment *	80.6	4.4	1.1
Return on equity % *	96.4	-2.2	-34.9
Balance sheet total	1,135.9	888.4	758.5
Shareholders’ equity	730.8	363.3	207.4
Interest-bearing net debt	-283.3	294.9	327.7
Equity ratio %	64.8	41.3	27.9
Interest-bearing net debt/operating margin	-0.5	4.7	6.1
Gearing %	-38.8	81.2	158.0
Average number of employees	952	1,009	1,031
*) Previous 12 months
**) In calculating the equity ratio, the capital loan on the balance sheet was calculated as shareholders’ equity

Interim Report 1 January–30 April 2021

For further information, please contact: 

• Vesa Tempakka, CEO, Neova, tel. +358 40 072 6727
• Jarmo Santala, CFO, Neova, tel. +358 40 801 9191
• Ahti Martikainen, Director, Group Communications & Public Relations, Neova, tel. +358 40 680 4723