Tallinna Vesi (TVE1T) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales reached €15.55 million, up 1% year-over-year, with net profit at €2.19 million, despite a slight year-over-year decrease due to higher financial expenses.

• Major investments continued, totaling €18 million in H1 2024, focusing on pipeline reconstruction, water and wastewater treatment plants, and energy efficiency projects, with over €60 million planned for 2024.

• Water quality and wastewater treatment remained excellent, with 100% of samples meeting regulations and a water loss rate improvement to 12.96%.

• Regulated water price change effective from July 1, 2024, is expected to increase H2 2024 revenue.

• Over 11,500 smart water meters installed, covering 52% of customers.

Financial highlights

• Q2 2024 revenue: €15.55 million (+1% YoY); net profit: €2.19 million (-5.2% YoY) due to higher interest expenses.

• Operating profit increased by 8% to €4.46 million; gross profit: €6.33 million (+9% YoY); gross margin: 40.7%.

• Cost of goods sold decreased, mainly due to lower electricity prices, while staff, administrative, and depreciation costs increased.

• Cash position at end of Q2 was €3.9 million, down €10.6 million from previous quarter, reflecting investment outflows and dividend payments.

• Dividend payout of €10.2 million in June 2024, representing 80% of 2023 earnings.

Outlook and guidance

• Total 2024 investments are expected to exceed €60 million, with over 40 km of pipelines planned, depending on project completion in Q4.

• New regulated water and wastewater prices effective from July 2024 are expected to add up to €1.6 million in H2 2024 revenue, subject to actual volumes.

• Electricity prices are anticipated to rise in coming quarters.

• No significant increase in water service sales expected for 2024; consumption expected to remain stable.