Tallinna Vesi (TVE1T) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenues reached €16.22 million, driven by tariff changes effective July 1, 2024, with net profit at €3.93 million and investments into assets totaling over €15 million for the quarter and €33.4 million for the first nine months.

• Drinking water quality compliance was 98.9%, with only 8 out of 700+ samples non-compliant, all resolved after maintenance; wastewater effluent quality was 100%.

• 57% of customers now have smart meters, with a target of 60% by year-end.

• Major infrastructure investments included near-completion of methane tank and ongoing secondary clarifiers projects, and 36 km of pipelines reconstructed by Q3.

• Customer satisfaction improved to 4.2 in Q3, higher than last year.

Financial highlights

• Q3 2024 sales increased by 3.9% year-over-year to €16.22 million, with private customer sales up 7.5% and business customer sales stable or slightly down.

• Net profit for Q3 was €3.93 million, down €0.12 million year-over-year due to higher interest costs and income tax on dividends.

• Cost of goods and services sold rose by 3.8% to €9.31 million, with direct production costs down 21.5% due to lower electricity costs and increased self-production.

• Administrative and marketing expenses increased by 18.6% or €0.27 million year-over-year.

• Q3 gross profit margin was 42.6%, operating profit margin 31.6%, and net profit margin 24.2%.

Outlook and guidance

• Full-year asset investment is expected to reach €50 million, revised down from €60 million due to project timelines, with about 17% of projects (€10 million) to be completed in 2025.

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

• Q4 is expected to be slightly better due to seasonality in costs and revenues.

• Continued focus on infrastructure investment and harmonization of water tariffs by July 2026.

• Macroeconomic forecast: slow economic growth, inflation at 3.5-4% for 2024-2026.