Welcome to the financial reporting of Aspo, Q1 2026. Stable performance in a challenging operating environment is the heading. If I start with some highlights, our profitability development was flat against last year, a small decline. We made some EUR 7.1 million of EBITA compared to EUR 7.3 million last year. The divestment of Leipurin to Lantmännen was completed in March, and that has had a significant impact on the financial KPIs of Aspo. The reported EBITA was close to EUR 20 million. We had a strong free cash flow of EUR 50 million, and the leverage was in clear decline to 2.8. That's net debt divided by EBITDA.
The earnings per share EUR 0.10 per share based on a comparable profitability and EUR 0.5 If you include also the one-offs in the profit. A bit more about the profitability development. As said, EUR 7.1 million against EUR 7.3 million. ESL Shipping had a decline in the profitability, EUR 3.3 million. That was because of overall weak demand and then due to fuel costs due to the war in Iran. Basically, the fuel prices were double during March, and there's a certain lag before we can transfer these costs to the customers, and hence, it had a negative impact on profitability of ESL during Q1. Telko then again continued its good profitability development, EUR 4.7 million against EUR 4.4 million last year. There was a couple of reasons.
One is, again, good development in sales margin, driven by active management and then due to the growth in specialty products. Overall demand was, fairly weak, but, for Telko, actual volume development was very positive, again, particularly in specialty chemicals. We saw a bit of stock build-up among the customers due to the war in Iran, during March. Price levels below the prices of Q1 last year, but still a positive trend, driven by positive oil prices development during March. If we then take an overall picture of the war in Iran and how that impacted our businesses, it was actually quite different impact on ESL Shipping versus Telko.
ESL Shipping, negative impact on fuel prices increasing significantly and, as said, a certain time lag before these are transferred, based on the customer contracts, to the customers and hence negative profitability impact. However, if we look over time, this negative impact will be mitigated by the contracts. Telko, again, I would say a positive impact, so partly due to the stock build-up, so customers securing supply, building up their stocks and a positive volume impact therefore. Then market prices started to increase during March, so some positive impact from the fact that, by selling old, cheaper inventory at a higher price, some positive impact from that.
If we look kind of overall, some risks, of course, with the war in Iran, if we look at kind of direct impact on Aspo, there are risks regarding the supply chain. Also some availability question marks regarding some products could also be a risk. I would though say that all of these will kind of be mitigated over time, but the major risk and indirect impact, that is if the economic growth is in decline due to the war in Iran. That's both for ESL, of course, particularly looking at the Nordic industry and for Telko if we look at particularly in Europe and economic development in Europe.
If the war will continue for a long time, this is a major indirect risk also for Aspo. As said, EUR 20 million of EBITA, group total. That then includes the profitability development of Leipurin for the approximately two first months of the year, and also includes the sales gain. Some one-off items, particularly regarding Telko, so we pulled out of one market segment with a small writedown. Therefore, the reported EBITA of continuing operations is EUR 6.5 million against EUR 7.1 million, which is the comparable EBITA. Safety and sustainability, good development during the first quarter. We only had one accident in ESL Shipping, and both companies were below the safety frequency target.
No accidents in Telko against the target frequency of 3.2. ESL Shipping, due to the one accident, 4.2 as a frequency against the target of 6.7. We continue to work hard to achieve these targets. I said Leipurin now divested, which means that we are fully focusing on how to separate ESL Shipping and Telko. Still two options on the table. We have a possible partial demerger of Aspo, creating two listed entities out of ESL Shipping and Telko, or then alternatively, a sale of ESL Shipping. I said before what drives us here is the value creation and how the businesses will develop in the future. The sale of Leipurin had a significant impact on our financial KPIs. Here's a couple of examples.
Net debt declined to somewhat EUR 160 million compared to about EUR 210 million, and the leverage down from 3.3 to 2.8. The enterprise value was EUR 63 million, and the sales gain, this is now a corrected figure, so it's EUR 12 million, against the previous reported EUR 50 million, and the purchase price EUR 62 million. This will impact particularly Telko's opportunities to do acquisitions going forward. To our strategic vision, we are still on a dual track, looking at both the demerger as well as a potential sale of ESL. Currently ongoing financial, discussions with financial institutions to secure financing of ESL Shipping.
ESL Shipping, as also Telko, is very much focusing on profitability improvement and for ESL that really means getting on board four next Green Coaster vessels and then fully leveraging the capacity of vessels of ESL. There's also a lot of activities to improve commercial performance. On the Telko side, there's a similar profitability improvement program going on. A lot of synergies that still can be captured from the acquired companies and also actions to improve operational efficiency and also commercial excellence.
We're in the process of launching a new strategy for Telko and, as of 1st of May this year, also a new organization will be in place, structured around two business units: Essential Solutions, which is really focused on volume chemicals and these value-added services with the ambition to take synergies, particularly with the Nordic countries, and that's approximately 1/3 of net sales. Then we have a second business unit, Advanced Materials, putting all the specialty products under the same umbrella to serve the customers with a broad product range, and that's approximately 2/3 of net sales. Then I would like to hand over to Erkka Repo, our CFO, to go through in more detail the financials.
Thank you, Rolf. Looking first the big picture on the rolling 12 months basis, ESL continues relatively stable over the last two years. The latest slightly down, but on big terms, stable performance. Whereas Telko continues improving the performance over this time. On ESL, on the quarter one faced fairly low demand in the early part of the quarter and the contractual demand clearly strengthened towards the end of the quarter.
Also, the project cargo contracts that especially on the windmill projects in the coaster segment, they increased also the demand for the business. The steel industry activity continued at a good level throughout the quarter. Like Rolf mentioned, the profitability was also negatively impacted through the price adjustment lack on the fuel price movements passed through to the customers. This is a temporary, and then it will be evened out on longer terms as the pass-through kind of corrects, then the pricing for the fuel price movements.
Also in the second quarter, we acquired a second-hand handysize vessel to ensure sufficient capacity until the Green Handy investment the new fleet is coming in in 2027 and 2028. This is filling the hole in the capacity since we, on the second half of last year, sold one handysize vessel. On Telko, the market demand overall remained modest.
While for the specialty products, the volumes increased clearly towards the end of the quarter, we saw a clear pickup in the volumes with the customers increasing the inventories in anticipation of the higher prices and for supply security. The average prices were lower than last year in the first quarter. However, the price level during the quarter were stable in the early part of the quarter, and then prices started to increase in March, impacted by the increase in the oil price.
The profitability improvement in Telko are coming from the sales margin management and then some positive impact from the increasing prices on the inventory impact from that. The group level costs continued going down during the quarter and then we see a clear trend on decreasing cost level on the rolling 12 months basis. The Leipurin divestment decreased our net debt by EUR 63 million. We see a EUR 161 million net debt at the end of the quarter and 2.8 net debt to EBITDA ratio. The net debt by businesses is EUR 138 million for ESL Shipping.
For Telko, assuming that the rest of the net debt belongs to Telko being EUR 24 million. Tomorrow we have a dividend payout of EUR 0.25, about EUR 7 million going for the shareholders. Our liquidity. We have very strong liquidity with the EUR 50 million in cash and then EUR 40 million of unused credit facilities. We have also secured the committed funding for the Green Handy investments for EUR 92.5 million. We are currently working on now setting up the funding for the standalone companies going forward.
Looking at the maturity profile of ESL Shipping, continues very good with the funding with the long maturities out there. For ESL Shipping, there is no further net cash outflow for Green Coaster investment than on this year. We do have a investment payment going out, but that at the same time we will have a positive cash flow from the sale of the old Green Coaster vessels. For the Green Handy investment of EUR 158 million remaining on that, about 10% of that cash flow is expected to happen during this year. Handing back to Rolf for the guidance.
Thank you, Erkka. The guidance is unchanged, and we expect the EBITA to increase from previous year. On previous year, it was EUR 29.4 million, and that then excludes Leipurin. If you look at the assumptions behind the guidance, it's very much focused on our own actions. Various profit improvements both in ESL Shipping and Telko. Particularly in ESL, we have fleet renewal and the Green Coasters coming in during the year, and then improved fleet utilization. On the Telko side, synergy opportunities from the acquisitions completed, and then we have still cost reduction opportunities at an Aspo level, which are to some extent already can be seen in the Q1 figures.
If you then look at the assumptions behind the markets for ESL Shipping, we expect demand to slightly improve during the year. Again, Telko, we expect a fairly stable development. Basically, volumes and prices normalizing during the year. Highlights from Q1. Approximately flat profitability development, EUR 7.1 million of EBITA. Big progress when it comes to strategy execution, sale of Leipurin to Lantmännen. We continue to strengthen both ESL Shipping and Telko as standalone companies to be ready for executing Aspo's vision, either a demerger or a divestment of ESL Shipping. That is to conclude the Q1 reporting, and I would ask Erkka to join me on the stage, and we're ready for possible questions. Maybe then starting here in the audience if there are some questions. Please, Kasper, go ahead.
All right. Thanks. Do you expect that Telko will see a more distinct positive impact from price increases during Q2?
It of course very much depends on the war in Iran and how that evolves. There is some spillover effect from March also going into Q2 as a positive effect. I would still emphasize that over time, these kind of price fluctuations, it's a zero-sum game. If the prices are developing in a favorable direction, there's a small positive impact, and then in a decline, there's a slight negative impact, so no major effect of this.
All right. How would you describe the short-term demand outlook for ESL going into Q2?
When we look at year 2026, we forecast kind of slightly improving volumes for ESL. If we look at purely kind of Q1, the demand was very weak in the beginning of the quarter and then gradually picking up during the quarter. There was a couple of drivers behind that. One was the increasing project cargo deliveries for the Coaster business, and then we had good demand in steel products or steel cargos, and that goes both for the Coaster and the Handy segment.
How significant an impact on earnings is expected from the dockings in Q2? Do you expect ESL's EBITDA to come down in Q2 compared to Q1 because of this?
There's a negative effect. Some of the vessels needs to be docked, and that typically is done during the summertime when demand is still weaker in general during the summer. Of course we try to mitigate any negative profitability impact, that's a fact that we have a kind of reduced fleet for Q2.
What about the EBITDA expectations? Do you expect the EBITDA be way lower in Q2 compared to Q1, or should we expect to see better margins?
We don't guide on a quarterly basis.
All right. Lastly, what kind of costs have you been able to reduce within group expenses since this came down quite significantly compared to previous year?
It's a good question. I would say partly it's projects, but also it's kind of a reduced number of project. Partly it's also taking out the kind of structures that we have both on the business level as well as on the Aspo level. It goes for all the kind of activities. It's IT, it's finance, management, and gradually taking out kind of double costs.
All right. Thank you very much.
Thank you.
This is Pasi from Nordea. Can we start with the Telko segment and looking at the kind of demand in the first quarter and probably the effect seen in the second quarter. Would it be possible that you are going to see a highly negative effect in the second quarter if all your customers have actually filled up the inventories due to kind of expected price increases in the first quarter. Would it be fair assumption that volumes will be kind of definitely negative trend in the second quarter on a Q on Q basis?
I would not expect any drastic impact from this. I would still say that the big impact which caused the increase in volumes for Telko, that is a good development in specialty products. Then we assume that there's some stock build up due to the war in Iran. I wouldn't expect any major kind of negative impact from this.
Well, I would still assume that this inventory build up cannot actually continue in the second quarter because it has already been made.
That's true, but my point is that I think during Q1, the major impact from the volume increase comes from our success in specialty products and the stock build up is a minor part of the development. You're right. The inventories, when they go up at some point in time they will normalize again, and that is likely to happen then during the year.
Maybe the bigger impact is that, is this going to have an impact on overall economy and on overall demand, that is the major question for Telko.
Yeah. I truly understand that. When looking at the kind of money you actually received from the Leipurin divestment, obviously it's going to be used for the acquisitions in the Telko segment. What is your kind of magnitude of firepower you are going to use for M&A activity in this year in the Telko segment?
We communicated that we definitely target to complete some acquisitions this year, so that's clearly the target. Now we have the firepower to do that. Of course, that also requires that we have good targets on the table. We're not aiming to do any poor acquisitions. We will stick to the plan of making sure that we drive some positive synergies and have quality targets with good financial profitability above all.
Yeah. Assuming that you would actually find a target, would it be kind of EUR 10 million, EUR 20 million, EUR 30 million, EUR 50 million, like, in terms of deal size?
We're looking at fairly small targets, maybe starting around EUR 5 million-EUR 10 million of net sales, and then it goes up to targets of similar size of Swed Handling, which is already kind of EUR 50 million of sales. This is the magnitude. Looking at both type of acquisitions opportunities. Both the stuff of add-ons and then kind of new platforms for growth.
Excellent. When looking at the shipping segment, well, this one, the problems and effect we have seen from the Middle East coming to the shipping market, what is your outlook for the shipping yields in the second quarter or third quarter? Is this global effect for pricing actually even visible on your fleet here in the Nordic area or not?
If we look at fuel prices, as mentioned, we don't see that to have over time a big effect on the profitability of ESL Shipping. What can have a big effect, that is the kind of indirect impact and that comes then from overall economic development and how that impacts the demand for ESL Shipping. So that's the question mark. We are forecasting for this year kind of slightly improving demand also for ESL Shipping.
When you compare these indices for shipping market, those indices obviously include also fuel price impact. Obviously, for our contracts, the fuel prices are kind of rolling into the prices as well.
Excellent. Do you have any figure for us to offer regarding the capacity increase in the shipping segment? It would be very nice to see kind of your capacity growth against kind of net sales growth or the earnings growth. Is there any kind of difference on that front?
The capacity utilization comes from a couple of different sources. One is that we will get more Green Coaster vessels during this year, four vessels. Then a second view on capacity is kind of fill rates, so that making sure that for every leg you are using the full capacity of the vessel. Then there's a third source, which is the kind of cargo planning. To what extent you have kind of ballast legs in the traffic.
To what extent you are able to maximize the share of commercial traffic. In all of these areas, starting with the vessel capacity, we will get four more vessels this year. Then we have by end of the year 12 Green Coasters in the fleet. When it comes to fill rates and then ballast ratios, we have kind of continuous performance improvement going on and following these KPIs and making the most of improving that.
On the longer term, we still see the same what we have communicated earlier, that the demand in the ice class area is increasing significantly towards the end of this decade. Currently we don't see the new builds on a size that matches the demand increase.
Yeah. I just thought that. Are you still happy with your plan regarding your investment and earnings growth? No negative, incrementally negative triggers on the expected yields you expect to kind of gain from this new ship or new investments?
No, i f you look at the earnings of our fleet, so both when it comes to the Green Coasters that we have in the balance sheet, and then the Green Coasters that are pooled, so investments made by a pool of investors, both are kind of high-quality earnings, so good profitability compared to the old fleet.
The same on the handysize, that the newest vessels are earning much better than the older ones. The new fleet is much more kind of cost effective than the older ones. We still believe in the kind of the earnings growth that we have communicated earlier.
Excellent. Lastly regarding the shipping segment, are you going to run a dual track until end of this year in terms of kind of to find a decent pricing and valuation for the ESL Shipping segment? Or should we still need to wait until kind of December to see kind of the full outcome from it, from this kind of possible divestment or the demerger?
In practice, yes, because the demerger of Aspo, it's a very kind of formal process which has certain steps and that process aims for a demerger by year-end. In parallel, we are looking at the divestment scenario. It is still open in there which scenario is preferred for us.
Yeah, would it be a right assumption that you would actually still prefer the divestment of the segment rather than demerge?
That is too early to tell. We have both options on the table.
Okay, excellent. Thanks.
Great. We have a few questions from Joonas Ilvonen, Evli. You already discussed the inventories of Telko, but another one. Are customers for Telko still building up their stocks, and what are the inventory levels of Telko? If we start from those.
The inventory levels of Telko are fairly normal. We have inventories of a bit more than EUR 40 million in Telko, fairly normal level. When it comes to stock buildup of the customers, it really depends on kind of market signals and the war in Iran, how all that will evolve. That is still a question mark.
Okay. Related to the new business units of Telko, any comments on the relative profitability levels of Essential Solutions and Advanced Materials? Advanced Materials should have more potential for long-term value creation. What kind of organic investment opportunities do you see there beyond M&A?
Good, good questions. If we look at Advanced Materials, it's basically specialty products. By definition, they have a bit of a higher margin. We have good opportunities for M&A, but we also can invest in building up the sales force and gaining market share and growing with the market. When it comes to the other business unit, the Essential Solutions, actually the profitability level is very similar to the ones of Advanced Materials. The reason is that despite we have volume products, here we have a lot of value-added services. We blend the products, we package the products, we store the products, and by doing that we add value.
Here again, the big opportunity is to capture synergies across, particularly the Nordic countries, to basically leverage the knowledge of Swed Handling outside Sweden, but also the knowledge and know-how of Telko Chemicals outside particularly Finland.
Okay. One more. Besides higher fuel prices, has the war and the Hormuz Strait situation had any logistical spillover effects on the Baltic Sea dry bulk cargo market?
I would say that we haven't seen such, at least so far. There's naturally a risk of kind of supply chain disturbances and maybe also maybe particularly then for Telko that the supply can be restricted in certain products. These are risks going forward.
Also for Telko so far, we haven't seen any supply chain constraints.
Great. I think that was all from the line. We're ready to conclude.
A big thank you for joining Aspo's Q1 2026. Thank you.
Thank you.