Aspo Group Interim Report January-March 2024

Successful strategy execution in a challenging operating environment

CEO Rolf Jansson

May 7, 2024

Successful strategy execution in a challenging operating environment

  • Net sales from continuing operations decreased by 6% in Q1 2024
  • Comparable operating profit from continuing operations amounted to EUR 4.8 million in Q1 2024 (EUR 8.4 million in Q1 2023)
  • Operating cash flow of EUR 5.5 million (12.2) and balance sheet equity ratio of 38.6% (34.8%)
  • Solid strategy execution in Q1 2024
      • OP Infra and Varma invested in a minority stake in ESL Shipping
      • ESL Shipping signed transaction to sell its Supramax vessels
      • Telko expands into Western Europe by acquiring Optimol and Greenfluid
    • Continued key events during April
      • Telko acquires Swed Handling to double its total chemicals business (closing expected during the third quarter of 2024)
      • Kebelco, acquired as part of the Swed Handling acquisition, will strengthen Leipurin's position as a distributor of specialty ingredients to the Nordic Food Industry

Note: Because the future estimates presented in this report are based on the current situation and knowledge, they involve significant risks and other uncertainties, due to which actual future outcomes may differ from the estimates

Q1 2024

Net sales, continuing operations

EUR 132.7 million (141.6)

Comparable operating profit, continuing operations

EUR 4.8 million (8.4)

Return on equity, adjusted by items affecting comparability, continuing operations

4.9% (18.6%)

EPS, Group total

EUR -0.16(0.21)

Comparable EPS, Group total

EUR 0.09 (0.20)

Operating cash flow, Group total

EUR 5.5 million (12.2)

Free cash flow, Group total

EUR -3.5 million (9.1)

Gearing, Group total

74.0% (117.6% at year-end)

Aspo Q1 2024 results

May 7, 2024

2

Emission intensity increased due to challenging weather conditions, the positive development in employee safety continues

  • Aspo's key target is to reduce emission intensity, CO2 (tn) per net sales (EUR thousand), by 30% by 2025
    • Starting level (2020) was 0.44
    • Q1 2024 rolling 12 months: 0.39 (1-3/2024: 0.41)
    • Target level for 2024: 0.33
    • Target level for 2025: 0.30
  • Extremely cold winter in Northern Scandinavia impacted ESL's emission intensity negatively during the first quarter of 2024

Emission intensity, LTM

0.39 (0.37 in 2023)

Target 2024:

0.33

  • Aspo aims to create an accident-free working environment with TRIF (Total Recordable Injury Frequency) developing towards zero
    • Starting level (2022) was 8.1
    • Q1 2024 rolling 12 months: 4.3 (1-3/2024: 3.8)
    • Target level for 2024: 6.0
  • Increased attention for safe operating models, developing safety culture, launching preventive measures and enhanced communication continue to have a positive impact on safety

Incident frequency (TRIF), LTM

4.3 (4.8 in 2023)

Target 2024:

6.0

Aspo Q1 2024 results

May 7, 2024

3

We expect a total price tag of EUR 4.4 million in Q1 and Q2 for the political strikes and exceptional winter conditions on Aspo Group level

  • The political strikes and exceptional ice conditions, impacted negatively
    ESL Shipping's profitability with some EUR 3.5 million in Q1 2024
    • Reduced production volumes of clients
    • Closures as well as slow operations in harbours
    • Disturbances in train traffic
    • Longer transportation distances (closures of key fairways)
    • Increased fuel consumption
    • Overall decline in cargo flow efficiency
    • Increased ballasting, extended waiting, stoppages and re- scheduling
  • Also, Leipurin's and Telko's profitability were negatively impacted by the political strikes with an estimated EUR 0.1 million each during Q1 2024
    • Lost volumes
    • Increased supply chain costs
  • We still expect some negative impact from the strikes that took place during Q1 2024 still during Q2 until operational efficiency and availability of products is again fully normalized
    • ESL Shipping: negative impact estimated to be EUR 0.5 million
    • For Telko and Leipurin in the same magnitude as during Q1 2024

Negative profitability impact from the strikes and exceptional winter conditions on Aspo Group level

MEUR

ESL

Telko

Leipurin Total

ESL

Telko Leipurin Total

Shipping

Q1

Shipping

Q1-Q2

Aspo Q1 2024 results

May 7, 2024

4

Net sales of Aspo for the first quarter in 2024 declined with 6%

MEUR

Net sales

Growth %

200

35%

• In Q1 2024, Aspo's net sales from

180

30%

continuing operations decreased by 6%

to EUR 133 (142) million. The sales of all

160

25%

Aspo's business segments were in

140

20%

decline:

- ESL Shipping (-5%): Strong negative

120

15%

impact of political strikes and

exceptional winter conditions,

100

10%

despite overall healthy demand and

Target 5-10 %

contract volumes

80

5%

- Telko (-8%): Overall soft demand

60

0%

and market prices lower than

40

-5%

previous year in combination with

positive market share development

20

-10%

and positive impact from M&A

0

-15%

-

Leipurin (-6%): Deflation and

product mix shifting away from

Q1/22

Q2/22

Q3/22

Q4/22

Q1/23

Q2/23

Q3/23

Q4/23

Q1/24

Net sales

128,8

136,2

142,8

152,9

141,6

132,6

130,0

132,2

132,7

commodity categories

Growth %

17%

17%

20%

17%

10%

-3%

-9%

-14%

-6%

Net sales growth compared to the same quarter in the previous year.

Aspo Q1 2024 results

May 7, 2024

5

As expected, Aspo's profitability for the first quarter in 2024 was weak

MEUR

Comp. oper. profit

Comp. oper. profit %

14,0

14%

• In Q1 2024, comparable operating profit

from continuing operations was EUR 4.8

12,0

12%

(8.4) million and the comparable

operating profit rate was 3.6% (5.9%)

10,0

10%

- ESL Shipping: political strikes and

exceptional ice conditions causing a

Long-term target 8 %

EUR 3.5 million negative profit

8,0

8%

impact in the quarter

- Telko: negative impact from soft

6,0

6%

market and M&A related costs, incl.

fair value allocations. Positive effect

4,0

4%

from cost efficiency improvement

efforts

2,0

2%

-

Leipurin: Improvement efforts and

development of product mix result

0,0

0%

in positive development

Q2/22

Q3/22

Q4/22

Q1/23

Q2/23

Q3/23

Q4/23

Q1/24

Q1/22

- Comparable Aspo Group level costs in

Comp. oper. profit

8,7

11,7

12,4

11,1

8,4

3,6

7,4

6,8

4,8

decline in the first quarter EUR -1.2(-1.3)

Comp. oper. profit %

6,7 %

8,6 %

8,7 %

7,3 %

5,9 %

2,7 %

5,7 %

5,1 %

3,6 %

million.

Operating profit from continuing operations was EUR -3.2 (8.6) million in Q1 including items affecting comparability totaling EUR -8.0 (0.2) million. Operating profit rate from continuing operations was -2.4% (6.1%).

Aspo Q1 2024 results

May 7, 2024

6

Items affecting comparability, totaling at EUR -8.0 million in Q1 2024, mostly relate to impairment of the supramax vessels

• In Q1 2024 Items affecting comparability totaled

EUR -8.0 (0.5) million on Group total level

MEUR

Operating profit 1-3/2024

- In ESL Shipping segment EUR -7.2 million

was due to the impairment loss and other

expenses relating to the planned sale of the

supramax vessels and EUR -0.5 million

related to the sale of the minority stake in

ESL Shipping Ltd

- In Aspo Other operations EUR -0.2 million

related to corporate restructuring expenses

and EUR -0.1 million was expenses for the

sale of the minority stake in ESL Shipping Ltd

4.8

-8.0

-3.2

Comparable

Q1 2024 items

Operating

operating

affecting

profit

profit

comparability

Aspo Q1 2024 results

May 7, 2024

7

Negative free cash flow in Q1 2024, driven by the acquisitions of Optimol and Greenfluid

MEUR

Cash flow development, Group total

70

60

50

40

30

20

10

0

-10

Q1/22

Q2/22

Q3/22

Q4/22

Q1/23

Q2/23

Q3/23

Q4/23

Q1/24

Operating cash flow (cum.)

15,2

34,3

45,7

67,7

12,2

18,7

35,0

47,6

5,5

Free cash flow (cum.)

13,8

27,6

17,9

34,4

9,1

15,0

27,0

27,3

- 3,5

Operating cash flow (cum.)

Free cash flow (cum.)

  • Net cash from operating activities was EUR 5.5 (12.2) million
    • Decline in cash flow particular for ESL Shipping
    • Change in working capital was EUR -3.9(-0.6) million, primarily driven by increased inventory in Telko and prepayments for the green coasters of ESL Shipping
    • The operating cash flow was also negatively impacted by increasing interest rates and paid interest amounted to EUR -2.6(-1.5) million
  • Free cash flow was EUR -3.5 (9.1) million
    • Investments of EUR 0.6 million mainly in ESL Shipping (green coasters and smart fleet optimiser)
    • The advance payment for the supramax vessels amounted to EUR 3.4 million
    • Payment of EUR 12.1 million for acquiring Optimol, Greenfluid and the paraffin business
    • Other cash inflow of EUR 0.3 million
  • The cash flow from financing activities during Q1 2024, included ESL Shipping's share issue of
    EUR 45 million

Aspo Q1 2024 results

May 7, 2024

8

Return on equity adjusted by items affecting comparability at 4.9%

ROE %

Rep. ROE (cum.)

Adj. ROE (cum.)

40

•

34,0

32,3

30,1

30,8

30

20

18,6

Long-term target >20%

14,3

13,6

12,8

10

•

4,9

0

-10

-20

Q2/22

Q3/22

Q4/22

Q1/23

Q2/23

Q3/23

Q4/23

Q1/24

Q1/22

Rep. ROE (cum.)

21,2

23,4

23,7

15,2

19,7

2,2

4,9

1,2

-15,2

Adj. ROE (cum.)

34,0

32,3

30,1

30,8

18,6

14,3

13,6

12,8

4,9

Return on equity adjusted by the items affecting comparability was 4.9% (18.6%). The decline came particularly from ESL Shipping's negative profitability development

Reported ROE was -15.2%

(19.7%). ROE was negative due to the impairment loss related to the planned sale of the supramax vessels

Aspo Q1 2024 results

May 7, 2024

9

Minority investment completed to drive ESL Shipping's green transition

  • OP Finland Infrastructure LP together with Varma Mutual Pension Insurance Company invested a total of EUR 45 million in Aspo's subsidiary ESL Shipping
    • Made against issuance of new shares in ESL Shipping with an agreed pre-money equity valuation of EUR 165 million, corresponding to a 21.43% ownership stake in ESL Shipping
    • This implies an enterprise value of approximately EUR 300 million for ESL Shipping
  • This additional equity further accelerates implementation of ESL Shipping's low-carbon growth strategy to provide fossil-free sea transportation in the future

Aspo Q1 2024 results

May 7, 2024

10

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Aspo Oyj published this content on 07 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 May 2024 07:55:04 UTC.