Baltic Market: Weekly Results Summary (Feb 14)
The Baltic stock market (OMX Baltic) fell by -1.22% this week. The earnings season offered sharp contrasts: the technology sector surprised with explosive growth, while banks are grappling with pressure from interest expenses. RYTM analysis shows that investors are currently rewarding revenue growth and a recovery in efficiency, at times overlooking profit risks.
A true Cinderella story – operating profit jumped 9125% from a low base, and revenue more than doubled (+120.6%). The success was driven by the European market, where sales grew by a staggering 250%. The project-based business once again proved its ability to deliver positive surprises, although costs grew faster than revenues. The stock made a powerful +21.0% jump for the week, reacting euphorically to the results.
The bank managed to return to operating profit growth of 4.0%, ending the previous quarter's downward trend. Net profit grew by 12.5%. The key to success was the strength of business loans and a decrease in interest expenses (-€2.4 million), which improved margins. Although fresh January data points to renewed cost pressure, investors welcomed the turnaround positively, lifting the stock by +4.7% for the week.
The profit decline is slowing (-17.6%) but has not yet stopped. Net profit decreased by 15.3% year-over-year. The main drag is the rapid growth in interest expenses (+38.1%), which is eating into margins. However, the UK business line and the new financial plan offer hope for long-term growth. The share price remained unchanged for the week (0.0%), awaiting a clearer recovery in growth.
A mixed picture: sales revenue grew briskly by +20.3%, but net profit fell by -28.6% due to loan losses. Expansion in Africa is bringing in revenue, but credit risks have increased, putting pressure on profitability. Nevertheless, a reduction in operating expenses helped improve the picture. Despite the drop in profit, the stock remained strong, rising +1.2% for the week and staying near its peak.
Conclusion
The week's results painted a clear divergence: the technology sector managed to deliver a positive shock, while the financial sector is searching for a balance between rising costs and interest income. Investors are willing to reward growth, but risks to profitability remain. Follow RYTM to see if these trends continue in the upcoming reports.
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