Release Date: May 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Elmera Group ASA (STU:1ZK, Financial) experienced strong customer growth in both the consumer and business segments, with an accelerating trend throughout the quarter.
- The company distributed an attractive dividend for 2024, reflecting a strong capitalized business model and dividend capacity.
- The business segment achieved a milestone of 130,000 deliveries, demonstrating stability and consistency.
- The power trading function has been successfully insourced, enhancing consumption forecasting accuracy and enabling intraday trading.
- Elmera Group ASA (STU:1ZK) is actively pursuing acquisitions, with increased market opportunities observed across the Nordic region.
Negative Points
- Mild weather led to a 9% decrease in volume sold year over year, impacting net revenue.
- Net revenue adjusted ended at 502 million NOK, down from 550 million NOK in Q1 2024.
- Operating expenses increased slightly to 327 million NOK compared to 320 million NOK in Q1 2024.
- The Nordic segment experienced a 30% reduction in volume due to the phase-out of legacy fixed contracts and mild weather.
- The company's financial targets for 2025 may not be met due to the mild start of the year and lower-than-expected volumes.
Q & A Highlights
Q: The volume in the business segment seems low compared to the Ehab data. Can you comment on this?
A: Yes, the Ehab data for the non-household segment is relatively flat, but it doesn't break down average consumption and customer growth. Our customer base is sensitive to temperature changes, which affects consumption. We've also reduced exposure to large tender customers, impacting average consumption slightly without significantly affecting earnings. Additionally, we've strengthened margins, partly offsetting the volume reduction caused by temperature changes. (Respondent: Head of Mera Group)
Q: You mentioned increased opportunities for M&A. Can you elaborate on this?
A: We see more retailers struggling in smaller markets, creating acquisition opportunities over the next 12 months. The activity has increased across the Nordic region, including Finland, Sweden, and Norway. (Respondent: Head of Mera Group)
Q: What is the status of your new trading or power purchase division?
A: Our power trading function is fully operational with approximately 20 people working continuously. We are now the balancing responsible party for 46 parties, including six of our own companies. Our forecasting accuracy is promising, and we will report more in our Q2 presentation. (Respondent: Head of Mera Group)
Q: How do you expect NorPeis to impact the margin in the consumer segment? Do you expect increased competition in 2025?
A: We haven't seen signs of increased competition yet, and the switching rate remains low. We are prepared to invest more to compete if necessary. The introduction of NorPeis might also positively impact our M&A agenda. (Respondent: Head of Mera Group)
Q: How should we think about depreciation of acquisitions for 2025 and 2026?
A: Depreciation has been reducing over time. This year, it will amount to approximately $85 million, and next year it will decrease to about $35 million. (Respondent: CFO)
Q: You state that you expect 2025 EBIT below guidance. Is this only due to the Q1 miss, or do you expect the coming quarters to also be below expectations?
A: The lower EBIT is primarily due to warmer temperatures, which are hard to predict. If the second half of the year is colder, we might mitigate some losses from Q1. (Respondent: Head of Mera Group)
Q: The consumer margin was slightly down year over year despite price increases. Can you explain this?
A: The composition in the consumer segment has changed, with variable contracts affecting margins. We've successfully repriced core products and increased both margins and monthly fixed prices to compensate for reduced variable portfolios. (Respondent: CFO)
Q: The market seems stable with low market share changes. Can you share insights on the competitive situation?
A: The competition remains stable, with most players needing to increase margins due to rising costs. We don't expect a significant change in the competitive situation in the next 6 to 12 months. (Respondent: Head of Mera Group)
Q: You have increased the fixed charge for existing customers. When will this have full effect on earnings?
A: The change will have a partial effect in Q2 and a full effect in Q3. (Respondent: CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
