Welcome to the Q2 2025 Financial Reporting of Aspo. This time you have an opportunity to place questions. There's a question formula on the screen. If you have any questions, please type them there, and we will try to address these at the end of this session. Q2 and first half of 2025, we report that under the header "Continued Profit Improvement in a Challenging Market." We have an agenda at Aspo this year focusing on improving profitability year 2025. We also have the long-term financial targets set for each of the businesses. We communicate the vision to form two separate companies out of Aspo, namely Aspo Infra and Aspo Compounder. Year to date 2025, I think we made good progress against this agenda. Clear performance improvement during Q2 and H1 2025.
Last week on Friday, we announced the sales of "Leipurin to Lantmännen," which then means progress regarding our vision to change the structure of Aspo. If I start with the first half of 2025, just capture the key figures: 10% growth, EUR 18 million of EBITDA compared to EUR 12.4 million last year. This performance in a quite challenging, uncertain market. ESL Shipping was able to improve its profitability during the first half of 2025, EUR 9.1 million of EBITDA compared to EUR 8.8 million. Telko more than doubled its EBITDA, EUR 8.7 million compared to EUR 4.2 million. Leipurin, record high profitability, EUR 3.1 million against EUR 2.5 million. From a management perspective, good to see that despite the challenging market, it's clear that what we are doing, all the programs regarding profit improvement, are hitting the bottom line currently.
In sustainability, in emissions, we made good progress, 0.23 kg, and this is kilograms per year of sales compared to the target of 0.3 kg. Two drivers behind this: Aspo level growth and the new electric hybrid vessels gradually taking a bigger share of the entire fleet of ESL and having a positive impact on emissions. When it comes to safety frequency, we still have quite a task to go in order to reach the target. Safety frequency is six, and that includes all deviations, also those who will not impact on the sick leave. We're continuing to work on the safety frequency, and that goes for ESL and Telko in particular. From an Aspo perspective, I'm happy to say that all the businesses have made good progress on the ESG agenda.
Telko was awarded a gold medal by EcoVadis rating, which means that it's ranked among the top 2% of companies within its industry. As we communicated earlier on, ESL already achieved a platinum level ranking, which was published this year in January. We're also making progress when it comes to science-based targets. We committed to this initiative already last year, and currently we're detailing the KPIs and the targets and also the actions in order to reach the commitments done in the Paris Agreement. If I then jump to Q2 and start with net sales, as you see, this quarter Q2 has the highest net sales of the reported quarters in near-term history. We had growth of 6%. ESL Shipping, though, in a decline with some 13% due to the very weak spot market pricing we had.
Particularly when it comes to the forest industry, the contractual volumes were fairly low. On the positive side, steel industry on a healthy level from an ESL perspective, and also good opportunities in the project cargo market. That means windmills, etc., where we are transporting blades and structures. Telko, solid 21% growth, primarily driven by the acquisitions. Organic sales growth in a small decline during Q2. However, positive development during the first half of this year. Prices show small growth driven by the product and service mix of Telko. Leipurin, 15% growth driven by organic sales growth in Sweden and the acquisition of Kebelco in 2024. If we look at profitability, EUR 9.2 million of EBITDA, the best quarter in the near-term history of Aspo. ESL , EUR 5 million, a decline from the EUR 6.1 million, impacted by the slow market development.
Positive, though, impacted by the green coaster s, clearly having a strong profitability compared to the old fleet and the time-chartered fleet. During Q2, we had quite a lot of dockings, approximately 130 days compared to 30 days last year, which had a negative profitability impact. Telko, EUR 4.3 million compared with EUR 1.8 million, driven primarily by the acquisitions made, improved margins, and the absence of M&A costs. Leipurin, record high profitability, best quarter ever in Leipurin's history, EUR 1.7 million. This was really Sweden who made the difference this time. Acquisition of Kebelco and a strong organic growth. We won some big tenders in Sweden and also supply chain efficiencies, clearly hitting the bottom line already in Q2 but even further in Q2 this year. If we go to one-time items, as expected, some EUR 300,000 during Q2.
This is still related to the fraud case, basically legal costs of the fraud case, adding up then to EUR 1.4 million for the first half of one-time costs. However, we will be compensated at least with close to EUR 1 million, EUR 0.9 million in Q3 from insurances from this specific case. We see a figure in the other direction. Last year, these one-off items were primarily related to the Supramax vessels and to the sale of a minority stake in ESL . What is good to see in these two graphs is that the dark blue bars are growing significantly, whereas the light blue bars are in clear decline, showing a lot stronger development this year compared to last year. Cash flow, operative cash flow, better than last year, EUR 23.5 million. All the businesses contributing positively to cash flow.
Looking at working capital, also a positive impact to cash flow because of the fact that we sold one green coaster vessel to the pool of investors. Secondly, also Telko's inventories in clear decline. Free cash flow still positive, EUR 8.8 million, negatively then impacted by green coaster vessel investments of close to EUR 16 million. We also still had some cash outflow from the acquisitions made, including Kartagena in Q1, and cash inflow from the fact that we sold one coaster, which was at the end of its life cycle of ESL . To the big news that we announced on Friday last week, we signed an agreement to sell Leipurin to Lantmännen, enterprise value EUR 63 million, and purchase price, which will be paid in cash, of approximately EUR 60 million. This will then give us a sales gain of EUR 16 million.
That is expected to happen during the first quarter next year. This transaction has no impact on the guidance of Aspo as Leipurin's profitability is still included in this guidance. This transaction gives us a clear step forward, good rationale based on the fact that we will strengthen our balance sheet. We will enable Telko to grow further via acquisitions. I think this is also a clear step forward when it comes to our vision to form two separate companies out of Aspo, namely Aspo Infra and Aspo Compounder. We've invested a lot in ESL , in the green coaster s, in the green handies . We've done a lot of acquisitions when it comes to Telko, and now we announce the sale of Leipurin. These are the big kind of game-changing items when it comes to this vision so far. How was this then possible?
I think during the four years, the four past years, Leipurin has made tremendous progress. We had a profitability level of close to zero back a couple of years back. Now the profitability of Leipurin is basically all-time high, close to the 5% EBITDA target. We sold the equipment-related businesses, Vulganus and the equipment trading business of Leipurin. We fully exited East, and at the same time, we invested in West via acquisitions. The biggest one, Kobia, but also very important, Kebelco and Kartagena, enabling us to expand into the food industry. Kobia actually was a market entry into Sweden, which is nowadays the largest market of Leipurin. We also sold the real estate in Sweden and Lithuania, financing the growth. Leipurin has executed a substantial number of activities to improve profitability in commercial supply chain and also sourcing and strengthen management practices over the past couple of years.
Big, big thank you to all of the Leipurin personnel for making this substantial transformation happen. What does this then mean to our vision to form two separate companies out of Aspo? The financial ambition, the financial targets remain unchanged. ESL, more than EUR 300 million of net sales, EBITDA of 14%, and Telko, more than EUR 500 million of sales and EBITDA of 8%. These are the target figures for 2028. When it comes to the vision of restructuring Aspo, this really simplifies the kind of future assessment. Now it boils down to what is the most, from a shareholder value perspective, the best alternative for separating Telko and ESL to form two separate companies. We still have all the scenarios on the table, being a demerger, an IPO, or a full or partial sale of one or two of the businesses.
This vision of restructuring Aspo boils down to this question, how to separate Telko and ESL from each other to create value. I would ask Erkka to go through the business-specific financials.
Thank you, Rolf. Going to ESL, ESL sales decreased 13% in the second quarter. The spot market was very weak, both from the pricing and the volume point of view. Also, the contractual volumes were weak, especially in the forest industry, whereas on a healthy level in the steel industry. We made progress on the project cargo, especially for windmill projects. Our green coaster vessels are really cost-efficient and capable on the project cargos, and we have good expectations also going forward on those. From the performance point of view, the profitability of the second quarter declined compared to the second quarter last year. On a year-to-date basis, slightly higher than last year. Last year was quite specific with the strikes and the harsh ice conditions impacting the first quarter.
We are seeing very high demand in the second quarter, and the quarterly development was quite different than it is this year. We had a high amount of dockings this year. In general, we have two dockings for each vessel for every five years, and they are not distributed evenly between the years. This year, we had high dockings compared to the previous year. We sold one old, the oldest coaster vessel as part of our planned renewal of the fleet. Our fleet renewal continues with the new green coaster investment proceeding and also the green handy investment proceeding. We are simultaneously optimizing the fleet of our own and time-chartered vessels. Telko grew 21%, mainly driven by the acquisition. Acquisitions, the organic sales volumes were lower than last year. Especially in April, we saw low volumes with the high uncertainty at that time, driven with the uncertain duty environment.
That impacted our customers' kind of planning horizon and willingness to commit for the volumes. Since then, we have seen the market more normalizing, and the volumes have grown towards the end of the quarter. Sales prices were moderately higher compared to last year and rather stable compared to the previous quarter. Telko's profitability significantly increased compared to last year, mainly driven by the acquisitions done last year and also the improved margins in the businesses. Also, in this year, we didn't have the acquisition-related expenses, while last year we had EUR 1.6 million acquisition-related expenses in the second quarter. In Leipurin, we saw 15% sales growth driven by the Kebelco acquisition and the organic growth in the Swedish market. Overall, the organic volume and price development was stable. The integration of the food ingredients business acquired in Lithuania progressed well during the quarter.
In Leipurin, we saw a record high profitability now on the second quarter at EUR 1.77 million. It was driven by the acquisition, the organic growth in Sweden, and the supply chain optimization. While we saw the improvement in Sweden, there has been significant profit improvement efforts throughout the business. When we are looking a bit on a longer perspective, these figures are now on the 12 months rolling basis. We see that ESL Shipping, the performance is stable on a lower level than previously, with the EBITDA percentage around 9%, but fairly stable there at the current level. Whereas in Telko and Leipurin, we have seen significant profit improvement, both based on the acquisition and margin improvement in both businesses. That has resulted on the Aspo group level profitability turning to a positive growth trend. Our liquidity continued strong on the second quarter.
We had EUR 41.3 million cash at the end of the quarter. We have now secured the funding for the green handy investment with a EUR 70 million loan from Svenska Skeppshypotekskassan that is undrawn and is expected to be drawn in 2027 and 2028. Also, the EUR 45 million loan from Nordic Investment Bank, where half of that has been drawn, and the rest is expected to be drawn in 2026 and 2027. In April, we also participated in the [multi-issuer bond] guaranteed by Garantia for EUR 15 million. In June, we repaid the EUR 30 million hybrid bond as communicated earlier. Our average loan maturity has increased now to 4.9 years with the long maturities of the new loans, and the average interest rate has declined with the market rates coming down.
Our net debt to EBITDA ratio was 3.7, mainly increasing due to the repayment of the hybrid bond, as the hybrid bond was accounted as equity, and now it is visible in our net debt. The Leipurin sale is expected to decrease our net debt to EBITDA ratio by 0.6 when also deducting the EBITDA of Leipurin. In the beginning, obviously, the reported net debt to EBITDA will decline more as the historical EBITDA is still in our figures. We also have low CapEx commitments for 2025 and 2026, which support our maintaining the strong balance sheet. Our equity ratio was impacted by the repayment of the hybrid bond. The impact was 5.8% to the equity ratio. In addition to that, we had temporary impacts from the unrealized currency hedges and the fairly high cash balance that we had at the end of the quarter.
These are temporary, the unrealized currency hedges. Once the hedges are rolled over, the realized part will be booked to the investment and will not impact the equity. We still see the current hedges at the end of the third quarter. In the fourth quarter, we should not expect to see a similar impact in the equity anymore. In the kind of the normalized run rate, you can assume to be around 31% on the equity ratio currently. The gain on Leipurin sale is expected to improve the equity ratio by 3.6%. Back to Rolf.
Thank you, Erkka. A summary of year to date 2025. Good profitability in Q2 and also good growth. EBITDA of EUR 9.2 million. If we look at the first half of this year, all business improved their profitability, total EUR 18 million against EUR 12.4 million. We did EUR 0.31 per share. That's our earnings per share KPI. The big news from last week, we signed an agreement to divest Leipurin to Lantmännen, making progress on this vision to restructure Aspo. If we look at the guidance, first the assumptions behind the guidance, ESL 's demand is expected to continue quite weak during the second half with low spot market pricing and fairly low contractual volumes. We see the soft market continuing during Q3, gradually picking up towards the end of the year. Telko, stable overall development, and considering the acquisitions made, will focus on integration, organic growth, and profitability development.
The acquisition-related expenses will be clearly lower this year compared to last year. Stable market development expected for Leipurin with good opportunities to grow and good opportunities to improve profitability going forward. The guidance unchanged, EUR 35 million - EUR 45 million of EBITDA, and that is including the total group EBITDA, i.e., also including Leipurin's profitability. We expect the market to remain challenging overall. We have geopolitical uncertainty. We have trade tensions driving down economic growth on the positive side in Europe. Possibly increased defense spending, as well as spending on infrastructure, will revive the economic development in Europe. Our profit improvements are based on three items. The green coaster vessels, we have six in commercial traffic already, and the seventh will come during Q3. The acquisitions done both by Telko, three substantial acquisitions during last year, and also Leipurin, specifically Kebelco and Kartagena.
As mentioned, we have a lot of profit improvement initiatives, specifically in operations and supply chain, and in the commercial side, which gradually will impact Aspo's profitability going forward. In order to reach the upper range of this guidance, the market needs to have a clear recovery during the second half of this year, and we need to be very successful in our profit improvement measures. In case we will reach only the lower range of the guidance, that will mean that the economic recovery is further delayed. I would like to welcome Erkka back on the stage, and we are ready for questions. I propose we start here in the audience for questions.
Jonas Ilvonen from Evli. Telko saw some volume challenges, but I think its margins still developed quite well, and also Leipurin recorded record high earnings for the quarter. Wouldn't you say that Telko and Leipurin have developed this year maybe in line or even better than you would have expected still, like say three to six months ago, whereas your comments regarding ESL's H2 demand outlook seem maybe a bit more cautious than it would have been some months back?
I think that if you look at Telko, what is very positive is the increase in sales margins. I think that's clear evidence that the strategy is paying off. Moving from volume products to more specialty products and increasing the service content of Telko as well, selling basically processed products and services. When it comes to Leipurin, what is really positive is the profit improvement in Sweden, which then delivered this record high result. I also see ESL as kind of a positive story from the perspective that our strategy is paying off. We see very solid profitability of the green coaster vessels, and that is basically these green coasters and green handies. That is the future of ESL.
You're right that during the first half of this year, the market of ESL has been quite challenging, and you can see that specifically in the contractual volumes for the forest industry and also on the spot market, which has very low pricing.
Both ESL and Telko are impacted by the industrial demand, which has been on the market fairly low during the first half. It is still impacting both businesses.
Is ESL 's H2 customer demand outlook quite similar to these competitive Q2 trends, that forest industry is still quite soft and then maybe steel is a bit better?
I think you are right, but at the same time, we're expecting some revival when we move towards the end of the year. Quite a soft still Q3, but then Q4 gradually picking up.
Okay. A question related to the timing of the Leipurin divestment. I guess the price seems quite fair, but now we saw, I mean, I think Leipurin still has quite a lot of nice earnings margin upside left. Now we saw a record high Q2 earnings from it. I understand that you can't perfectly time the exit of any of these businesses, but any comments on the timing of this sale?
I'm very happy with the timing. If you look four years back, we were close to zero profitability, and now we're fairly close to the 5% of EBITDA. The strategic value for us to strengthen the balance sheet and allow further compounding of Telko and then simplifying this vision for restructuring Aspo is of clear value. I think you're right. There's a lot of opportunities for Leipurin when it comes to growth and performance improvement. I also would like to see those similar opportunities when it comes to Telko and ESL .
Thank you.
[This is Basel] from Nordea. Can I start with regarding your guidance for the whole year? I mean, you have steadily reported roughly EUR 9 million in the quarter in the first half, and you are guiding a kind of stable development for the second half. That ends up roughly EUR 36 million on an annual basis, but your guidance midpoint is actually EUR 40 million. That means that you're supposed to get done EUR 11 million per quarter going forward, regardless you are guiding a stable development and practically quite weak market in shipping segments. Is there some mismatch here, or have you actually taken down your expectations, and are you still confident regarding the midpoint of your guidance? Thanks.
We're comfortable regarding the midpoint, and maybe a couple of comments. One is that typically the profitability of Aspo's second half is better than the profitability of the first half. Secondly, if you look at the performance improvement measures that we have ongoing, these are likely to give more and more over time, also then supporting more the H2 performance.
Yeah. The second topic regarding your guidance, if you usually have a rather stable EBITDA per quarter, let's say EUR 9 million, EUR 10 million, EUR 11 million, how come you can still have a EUR 10 million kind of spread on your guidance, which is actually 25%? Regardless, we have four to five months left for the 2025. There is a very wide range and uncertainty is coming.
It's to me very clear that this geopolitical uncertainty, and then the kind of tariffs war or tensions that we have ongoing, creates a lot of uncertainty. I think the outcome of these could have quite a significant impact on overall economical development, also short term. That being said, also quite a lot of impact for Aspo for the remainder of the year.
Yeah, I do understand. Regarding your vision to create value and to kind of divest operations, if that actually creates more value than the listed entity Aspo share price could indicate, is it realistic? I mean, can it even happen that you are going to sell both Telko and Shipping, and then you are going to be a listed entity with operations regarding the net cash position without any other kind of operational activity? Is this a realistic kind of outcome from your value creation plan?
What is then realistic and what is not? Now this vision, it boils down to the question that how to separate ESL and Telko. We are continuing to do that assessment as we did for Leipurin from a pure perspective of creating value to the shareholders. We still have all the scenarios on the table: sale, technical demerger, or an IPO. I wouldn't exclude at this point of time any scenario. We're looking to find the best kind of viable options for the owners of Aspo, and that is what makes sense.
When creating value, you mean kind of giving back to maximum cash from the operations for the owners, or are you going to invest another, let's say, new entity or new segment with the cash you might have after the second divestment?
It's not purely about giving back cash to the shareholders. It's also about the assets you own. We don't have on the agenda currently to invest in a new business of Aspo. What we're aiming for is to create two separate companies, Aspo Infra, which equals then to ESL Shipping, and then Aspo Compounder, which equals to Telko, and then to find the kind of best possible homes of these entities, either as a listed company or as part of some other structure. We then assess that from a value perspective.
Excellent. I hear you. Thanks.
Thanks.
Hi, this is Kasper from Inderes. Norwegian press reported that there's been fire in one of ESL vessels. Does this have an impact on ESL 's profitability in the short term?
You're very right. There was a fire on one of our vessels. Luckily, we have insurances in place, and the foremost luck is that no persons were injured in this occasion. There's, of course, a certain cost which we need to pay prior to the insurance compensating. My estimate for the downside of this incidence on a profitability basis is, let's say, approximately EUR 200,000.
Okay, you expect the vessel to go back live pretty soon?
Pretty soon, as I said, we have insurance compensating also for some lost days after a certain time period.
Okay, that makes sense. You adjusted downwards the expected earnouts from Telko's past acquisitions. Have some of your acquisitions developed below your own expectations?
On an overall basis, these are extremely sensitive, these earnout models, particularly when you come closer to the end of the earnouts. I would say that we are overall very happy, satisfied with the development, specifically regarding Swed Handling and Optimol, which have been the major acquisitions that we made. Polyma is to some extent, it was a smaller acquisition in Germany. There we are a bit struggling with the performance, but that's still of a much more minor importance compared to Optimol and Swed Handling.
Okay, thank you very much.
Thank you.
Maybe a couple of questions first. What is kind of the expected timeline for this ESL and Telko demerger or whatever is the best way to separate the two companies? Kind of what could we expect? Because I think this labor was a bit, I don't know, surprised, but kind of the timing was earlier than probably market expected.
The only thing we communicated is that we will aim to do this, execute this vision prior to 2029. No further kind of tighter schedule communicated than that.
All right, then about Telko and volumes, you said that organic volumes were slightly lower. What is slightly?
I think they were on a fairly stable basis. If you look at the first half of the year, we had organic net sales growth, prices developing a bit positively driven by the portfolio of products and services, and volumes during Q2 coming a bit down. Overall, I would consider that kind of stable development.
When we communicate slightly, it in our vocabulary means that low single digits.
All right, thank you. One more regarding ESL. You mentioned that especially forest industry had a kind of challenging quarter. Was it kind of temporary due to, because I think there were a couple of major downtimes due to maintenances on factories, or was it due to the soft market conditions with these client industries?
I would say that actually both, and the forest industry demand from ESL 's perspective has been fairly weak, weaker than expected during Q2. I think you're at the same time right that there are certain incidences and drivers behind this, but that does not say that kind of the overall market cycles are not in the favor from ESL 's perspective looking at the forest industry currently.
If we think about Q4, what is the industry you're expecting to make the kind of the recover or improve the volumes if Q3 is still going to be kind of soft?
Slow, gradual revival of the overall economies. I can't specify it by industry, but as we mentioned, there's a significant opportunity in project cargo. Steel industry is already a kind of on a healthy level, and forest industry has still a lot to hope. Seeing that during Q4, there's a positive impact from the market on volume development overall, looking at ESL .
Seasonally, summer is clearly a weaker period for us than the winter.
Thank you. No further questions.
[Basel] from Nordea. One follow-up regarding the shipping segment and utilization ratio. You said that volumes were slightly up, but what's the net effect to utilization ratios when taking into account your capacity? How is the utilization ratio actually now negative on a year-to-year basis? Looking forward, you are going to get quite many new ships still on your fleet. We're looking at the expectations for the steel and forest sector. Do you still have the same volume expectations on the long term that you made to order for these new vessels? Would it be possible that you are gradually actually operating with lower utilization ratios than you previously thought before you made some kind of investment decision for the new fleet? Thanks.
When it comes to the coaster segments, we have some capacity, time-chartered capacity that will come to an end during Q3. At the same time, we will get new coasters into the fleet, basically two still during this year. Overall, I see quite a balanced situation. Of course, depending on what specific traffic we are then producing, because that then impacts the ballast ratios, etc., and how efficient total transportation system you can create. Overall, I think it's according to plan on an overall picture.
In quarter two, as we had very high dockings, our utilization while ships online were kind of on a normal level.
Great, thanks.
Jonas from Evli. You're probably going to activate with Telko acquisitions again soon, going towards next year. Any hints as to what kinds of deals you might be looking for next, like in terms of size, something quite similar to the past acquisitions, or maybe something larger, or geographies, products? Anything you could say at this point?
I think we're pretty happy with the acquisitions that we have made. We would use the same criteria for these. In case expanding into a new geographical market, we would not consider a too small acquisition. Secondly, I would rather make acquisitions closer to our kind of existing core market compared to too much widening the geographical scope at this moment, just to focus on synergies and profitability. Any questions online?
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. There are no questions at this time, so I hand the conference back to the speakers.
I would like to ask Susanna Hietanen on the stage to place any questions that we got from the audience.
Yes, we actually got two. Maybe you already mentioned these a bit, but also as a recap. Here we go. Where exactly will the proceeds from Leipurin sale be allocated? Debt reduction, Telko's growth investments, or potential new acquisitions?
Strengthening Aspo's balance sheet and then making further acquisitions of Telko. I think that these would be the kind of two main topics for the released capital.
Okay. The second one, should investors expect further divestments as part of simplifying Aspo's structure, or is Leipurin sale a one-off decision?
As I said, we're considering different alternatives for Telko and ESL . Also, sale is one scenario. In addition, we also look at a more technical kind of demerger of the two companies, creating then in that case two listed companies. Also, sale is on the table for our existing businesses.
Okay, that is all we have from the line.
Thank you. Thank you all for participating today, and highly also appreciate the questions.