Taaleri Q2'24 flash comment: Cost development generated a positive surprise

Translation: Original comment published in Finnish on 08/20/2024 at 9:18 am EEST

Taaleri’s result published this morning exceeded our expectations, as the operating cost level of Renewable Energy was clearly lower than expected. No actual new information on the sales development of the spearhead product was received, but Taaleri expects investment commitments to increase toward the end of the year. Taaleri’s earnings call can be viewed on InderesTV starting at 11.00 am EEST.

No significant surprises in income

Taaleri's Q2 EBIT was 4.4 MEUR, exceeding our 3.9 MEUR estimate. The forecast overshoot is mainly explained by the Renewable Energy segment, whose cost level was well below our expectations. The profitability of Garantia’s insurance business also developed favorably, as claims rates remained very moderate. In other respects, the earnings figures of the report were fairly well in line with expectations and no significant one-off income occurred in the quarter. Like EBIT, EPS also exceeded our forecast, even though the minority share was lower than expected.

Renewable Energy's profitability improved clearly

In Renewable Energy, recurring fees fell slightly short of our estimates, but personnel costs that were much lower than we expected resulted in a clear earnings overshoot. Based on the report, the decrease in personnel costs is explained by the fact that during the comparison period, the first closure of the latest SolarWind 3 fund involved higher one-off fees paid to the personnel than we expected. The Q2 EBIT for Renewable Energy was 1.6 MEUR, which clearly exceeded our 0.8 MEUR estimate. It was particularly positive that, in the absence of significant one-off fees, profitability based on recurring income flows continued to improve.

The revenue from Other private asset management, on the other hand, was more subdued than we expected. The segment’s recurring income was a tad below our forecast, and negative investment income also depressed income. On the expense side, the development was slightly better than we expected, but overall the -1.3 MEUR EBIT was deeper in the red than our -1.1 MEUR expectation

The report did not provide any concrete information on the sales of the SolarWind 3 fund, but Taaleri said that investors had initiated new due diligence processes during the quarter. In Real Estate funds, the company is still aiming to establish at least one new product during the current year.

Garantia’s profitability remained strong

Garantia’s insurance revenue remained almost at the level of the comparison period. Our forecasts expected a slightly bigger decline, as the guarantee portfolio is still well below the level of one year ago. The guarantee portfolio did grow a bit during the quarter, although the demand for mortgages has remained very modest in the overall market.

Investment income at fair value exceeded our forecast (1.6% vs. 1.3% forecast), but due to accounting practices, only part of this was recognized through profit or loss. Claims costs were, in turn, lower than we expected, so overall Garantia’s EBIT was quite well in line with our forecast.