Baltic Market: Earnings Recap (Feb 07)
The Baltic market (OMX Baltic) fell -0.15% this week, reflecting investor caution in the midst of earnings season. The picture is mixed: while Merko is struggling with a sharp decline in the construction sector, Nordecon managed to increase its sales revenue. Meanwhile, Tallinna Vesi is showing slowing growth.
What happened: Results released on February 5th were disappointing: Q4 sales revenue fell by 56.9%, and net profit plummeted by a staggering 83.7%.
Why: The cause was the completion of major construction projects and a drastic decrease in apartment sales (from 129 to 43), which pushed the real estate segment into a loss.
Market reaction: The stock reacted to the news with a sharp decline, ending the week -7.0% lower.
What happened: On February 5th, the company announced a 34.1% increase in sales revenue, supported by new infrastructure projects and a 30% rise in its order backlog.
Why: However, the company posted a narrow loss (€-43,000), and the decline in gross margin from 9.0% to 5.9% is a concern for investors, despite the growth in orders.
Market reaction: The stock fell -4.1% over the week.
What happened: The report published on February 6th showed stable but slowing growth. Sales revenue increased by 5.9% and net profit by 8.0%.
Why: The slowdown is due to the diminishing positive impact of previous price hikes and faster growth in operating expenses (+7.0%) compared to revenue, suggesting a decline in efficiency.
Market reaction: The stock finished the week up +0.45%.
What happened: The dairy group's results reflect pressure on margins. Although sales revenue grew strongly (+17.9%), expensive raw materials reduced profitability.
Why: Growth was driven by industrial cream sales, but a 25.1% rise in raw milk prices ate into a large portion of the revenue. Investors are awaiting a recovery in profitability.
Market reaction: The stock fell -0.9% over the week.
What happened: The tour operator continues its optimization efforts. Sales revenue fell by 18.8%, but this helped to reduce the loss.
Why: The decline was caused by scaling back the travel program and a decrease in the number of clients (-25.5%), as the company focuses on restoring profitability at the expense of volume.
Market reaction: In the absence of news, the stock price fell -2.4%.
Situation: Trading in the stock remains suspended following the bankruptcy of a major Lithuanian subsidiary.
Context: The situation remains unclear and risky for investors, as the company has not disclosed a detailed action plan or provided explanations for resolving the crisis. The share price remains unchanged.
Conclusion
This week's results confirm a cooling economic environment: construction volumes are declining, and rising costs are pressuring profits across several sectors. Investors have become more selective, punishing weak results with selling pressure. The focus in the coming weeks will be on whether companies can keep costs under control. Follow RYTM's latest analyses to stay on top of market changes.
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