Welcome to the Q3 financial reporting of Aspo 2026. If I start with the short update on the planned demerger of Aspo. Today, we have all the financing agreements signed, and we have also received the consent of the lenders to the demerger. We are making preparations for the general meeting that will be held on December 7th, where the final decision will be taken regarding the demerger. Prior to that, we are then aiming to launch a prospectus, and we will also have a Capital Markets Day on November 24th with Telko in the morning and then ESL Shipping in the afternoon to present the investment cases. To the Extraordinary General Meeting, the following proposal will be made regarding the board compositions.
ESL Shipping Group, myself as a chair, and then we have Mikael Laine , Kaarina Ståhlberg , and Andreas Remmer, familiar faces to you. Andreas Remmer is a new gentleman from an Aspo perspective, has an extensive shipping background, strong CFO experience, and also extensive board experience. Then on Telko Group, only familiar faces from an Aspo perspective, Tapio Kolunsarka as chair, proposed chair, and then Patricia Allam, Annika Ekman, Tatu Vehmas, and Mikael Laine . This is the proposal to the general meeting on December 7th. All actions regarding preparing for the demerger aim to completion on December 31st, and that will then mean that on January 4th, the shares would be traded on the Helsinki Stock Exchange.
As I said before, we believe that by creating two standalone companies, both ESL Shipping and Telko will have a better opportunity to execute their strategy and also execute growth. Via demerger, we will simplify the group structures. We will be able to tailor the financing setups of both of the companies. We will create more focus and then hopefully also a lower hurdle for investors to engage and more transparency as the investment stories become more simple. Typically, I tend to start with safety in these quarterly reports. I have good news. We have clearly improved in safety compared to last year, and that goes for both ESL Shipping as well as Telko. We have, though, quite a lot of work still to do in order to secure the targets, reaching the targets of this year.
There are four accidents happened totally in ESL and Telko during this year. Two smaller accidents while opening containers in Telko, and then one gentleman in ESL who slipped and hurt his back, and then one other employee got a small particle in his eye, and that was also reported as an accident. No serious accidents, though, during this year. If I then jump to the numbers and then start with the first three quarters of this year, we have a total of EUR 26.4 million EBITA. ESL Shipping close to EUR 10 million, Telko close to EUR 20 million. That's comparable EBITA. If we look at the group total EBITA, that's even better due to the sale of Leipurin to Lantmännen.
If we look at key financial indicators, they have actually all improved. Free cash flow, EUR 33 million. Leverage, a lot lower than last year, now at 3.2x versus 3.9x. We have a return on equity, 16.8%, and also the earnings per share, both the comparable EUR 0.65 against EUR 0.33 last year. If we look at group total, including the sale of Leipurin, we are close to EUR 1 against EUR 0.43 last year. Then to Q3, EUR 8.5 million. Here you can see from the graph a bit of a historical perspective. Last quarter was better, primarily due to Telko's sale of cheap inventory in a market where prices increased. This EUR 8.5 million, it's the second-best profitability during this three years period.
We had though quite a polarized picture, so a bit of a disappointing profitability of ESL Shipping, weak demand, and hence quite low capacity utilization. ESL's EBITA was EUR 2.5 million, a EUR 1 million dip compared to last year. Quite strong performance of Telko, EUR 6.5 million, close to EUR 2 million of performance improvement. Quite strong net sales growth, improving sales margin, and then successful actions to improve profitability. If we take a bit of a longer perspective and 12 months rolling figures, you can see from the graphs that ESL Shipping, the EBITA is in decline. The positive news though is that in the coaster business, profitability is doing good, showing that the Green Coasters are delivering results.
Also, the profitability improvement actions, which are primarily related to the coaster business, capacity utilization, fill rate are yielding results. That's good news. Also, the contracted traffic is on a positive trend. But still, considering the market circumstances, overall demand, the trend is in decline. Telko, on the other hand, very strong longer term development. If we look at it from a strategic perspective, it seems to be a quite good market environment for chemical distributors. We see a quite strong trend of suppliers and producers of chemicals outsourcing their sales to distributors, the reason being that they want to minimize their OpEx costs.
Also, I would say in this type of market where you have quite a lot of volatility, this kind of light balance sheet business model of Telko works very well. On the right-hand side, you can see the summary on an Aspo level, so gradually improving profitability as a result of both ESL's and Telko's graphs. If we jump to the specifics of ESL, as said, EUR 2.5 million of EBITA. Sales in strong growth, in average 18% if you disregard the sale of one of the Green Coasters to the pool of investors. However, this growth is primarily related to increasing fuel prices, which are then shifted, passed through to the customers, and ton mileages were in clear decline.
Project cargo, though, adding nicely to sales growth. What is then the reason for the profitability development? It was also a dual picture within ESL. Coaster business doing very well, and Handysize business not performing as expected. The reason for that is low demand, with the exception for Handys in the steel industry where demand was quite good, but the low demand then generated quite bad low pricing in the spot market and also low utilization rate with a lot of idle time for the vessels. On the coaster side, project cargo developing very positively, and that relates particularly to the Green Coaster fleet. And also a dual picture if you look at spot market versus contracted traffic, contracted traffic having strong profitability and spot market quite weak in EBITA.
From a strategic perspective, we announced a major win, which is the Stegra deal, where we have a contract to transport both raw materials as well as finished steel products. Along with this, and actually as important, is that the investor base of Stegra has been strengthened over the past year. Maybe final remark on Stegra is that it seems that we have quite a good setup with the Green Handys entering the market end of next year and beginning of 2028, which should be fairly aligned with the timetable of Stegra's production ramp-up. If we jump to Telko, quite strong performance, EUR 6.5 million, close to EUR 2 million of EBITA improvement. We had 9% of sales growth. If you look at the demand, the demand was actually fairly poor.
In Q2, due to the war of Iran, customers created some buffer stock to secure supply, and during Q3, we saw some de-stocking of this supply. That means that this 9%, it really is generated from market price increases. If we then look at EBITA development, a couple of key drivers behind the positive trend, sales growth clearly adding to the picture. We had increasing sales margins, and despite the fact that due to inflation and also us investing in additional OpEx to pursue organic growth, we were still able, via various profitability improvement actions, to substantiate the profitability development. Aspo Group level costs, they gradually keep declining. Now the 12 months rolling amount is EUR 3.8 million. They will continue to decline as communicated before.
During this quarter, we only had EUR 0.5 million of Aspo Group level cost compared to EUR 700,000 last year. Net debt, and this is on a group perspective, we have close of EUR 190 million of net debt, and that is then divided between ESL Shipping, closer to EUR 150 million, and then Telko Group, which is EUR 42 million. So here, you see two different figures for Telko. Telko segment, EUR 55 million, but then when you exclude the internal debt between Telko and Aspo, then you arrive at the EUR 42.5 million. During the third quarter, we made an equity injection of EUR 10 million into ESL Shipping, basically optimizing the balance sheets. That was EUR 7.9 million coming from Aspo, and then new equity of EUR 2.1 million coming from the minority owners.
The leverage down to 3.2x compared to 3.9x last year. Then if we drill down into ESL, as said, EUR 145 million of net debt, and that gives you a leverage of 4.6x. If you then deduct from that approximately EUR 50 million, which is debt related to vessels that are not yet in traffic, but they are under production, then you would have a leverage ratio of 2.9x. We still have some EUR 120 million of undrawn loan arrangements, and these will be used to finance the Green Handy vessels that has not been paid for yet. We have approximately EUR 150 million, which will be due over the next couple of years, particularly next year, 60% out of that, and 30% for 2028.
Good cash and liquidity in the company, so EUR 35 million of unused RCF commitment. Then the similar picture of Telko, net debt of Telko Group, EUR 42 million. That gives you a leverage of 1.8x, and the situation quite strong, so we have interest-bearing debt of EUR 75 million, and then cash, EUR 38 million, giving us opportunities to do acquisitions. In addition to that, we have an RCF which is unused of EUR 10 million. Then finally, guidance for this year. It is unchanged. We expect the comparable EBITA from continuing operations to exceed previous year, and that was EUR 29.4 million. That fully excludes the Leipurin business, and can be compared with the 12 months rolling EBITA of EUR 33.3 million for Q3 this year.
Assumptions behind this guidance, we expect the economic kind of macro level growth to slowly revive. However, there are also a lot of risks and uncertainties, the war in Iran, geopolitical uncertainty, et cetera, and that might short term also affect economic growth. From where does then the EBITA profit improvement come when it comes to Aspo? Various profit improvement actions of Telko and ESL. For Telko, also synergy capture and benefiting from the new operating model which was launched in May this year. ESL fleet renewal and better fleet utilization, and then as also mentioned today, we have an ambition to reduce Aspo level costs. If you look at the outlooks for the two companies, ESL Shipping, we see demand to slowly grow, and also the spot market pricing to improve.
For Telko, underlying volume demand is either stable or slightly increasing, and price levels also are expected to be stable on previous year's level. However, rapid changes in this kind of volatile market are possible. Then to wrap up, Q3, EBITA of EUR 8.5 million. Quite a polarized picture. Telko, strong growth, good margins, and good profit improvement actions. ESL, strong performance in the coaster segment, and profitability quite weak in the Handys. We are making the preparations for the completion of the demerger by year-end 2026. Thank you.
Thanks for the presentation. This is Pasi from Nordea. When looking at the shipping segment, what is the kind of underlying reason or the root problem in the segment? From which customer segment is actually coming this recent weakness you have witnessed in the ESL Shipping?
If we first kind of look top-down, we have the coaster business performing quite well, and they serve several industries, primarily project cargo in strong growth. Then if we look at the Handysize business, we were very dependent on the steel industry during Q3. Basically, all other customer industries were quite weak, and due to different reasons. There were some production stoppages, there were some decline in volumes due to the high oil prices, et cetera, but fairly weak. If I then look still on an overall picture, I would say that the pulp and paper industry is still quite weak from ESL's perspective.
You mentioned the very weak spot market. What is the share of contract sales on ESL Shipping compared to the spot market sales on the shipping segment?
It's still quite close to the kind of historical average, which is 80% contract and 20% spot. But what happens is that immediately when the contract volumes are a bit lower, then more vessel capacity in the market are shifted to the spot market. If demand in the spot market also is fairly weak, then you easily have a surplus of capacity in the spot market, which kind of destroys the price level in this market segment.
I fully understand. What is going to happen when you are receiving or getting new ships? I mean, you are not able to find customers for your current fleet, and you are going to get a huge amount of ships in near future. Are all these new vessels going to the Stegra project or the deliveries for the site, or do you still have other unsold capacity there on the coming fleet?
I wouldn't draw any kind of fundamental conclusions based on one quarter's performance. I still think that the long-term vision that we've described, which is, in summary, that the market demand will grow with some 50% over the next couple of years, and at the same time, capacity will go down. That remains to be our view of the future. It's not only Stegra, it's also other companies in the steel industry, also actually in the forest industry, making investments in fertilizers, et cetera. It's a much broader picture than a single event or a single client, which will create the new demand.
Regarding the Telko segment. In the second quarter, you had a kind of a positive effect coming from the inventory. You sold cheap inventory with the higher prices. Was that effect already or at least included into your 9% growth in the segment in the third quarter?
Yes. In Q3, we estimated that the benefit of this market trend was EUR 0.5 million. When you bring all of that together for the three first quarter, we had an additional benefit of EUR 2.5 million- EUR 3 million, which benefited EBITA. But even if you disregard that, you have a kind of solid profit improvement trend for Telko this year.
Lastly, what is the kind of expected run rate for the group overhead costs? What could be the figure for the new Telko segment going forward for 2027?
I will not guide next year as of yet, but if you see the trend over the past two years or so, we had maybe EUR 5 million of group level cost. Now they are down to EUR 3.8 million. I see that there are still opportunity, and these costs will, to some extent, harm Telko's profitability short term, but we are on a good track to take out overlapping structures, so I do not see any serious problem with this.
Is your financial guidance, long-term guidance for the Telko, including these group overhead costs or not?
It includes the group level cost, and the guidance, as we said, that is EUR 500 million and 8%. The good news is that if you look at the first three quarters of this year, we already made above 8%, so we are on a good track.
Excellent. Thanks. That was all from my side.
Thank you.
Matti Kaurola, OP Markets. You mentioned that you accelerated the planning of Telko's inorganic growth, so what does that mean?
In very practice, we add more people. We add people in sales to gradually take advantage of a positive market or a positive market share trend. We are clearly adding OpEx costs to Telko currently, in addition to the inflation.
What about the inorganic growth, like the M&A side? I think there was also one line at least in the report that you have been proceeding well in that side, so something new maybe happening in near future?
We have had a bit of a break on the M&A side this year and last year, but we are working hard on this topic, and we're still kind of bullish when it comes to M&A and see great opportunities. We come back to the kind of problem that it takes two to tango, so you need to find a partner where you have opportunity to pursue, and we want to, in the looking at the acquisition targets, we want to find the right companies to kind of continue on the successful M&A track that we have had over the past couple of years.
What would be like the ideal, let's say, target, when it comes to first the company characteristics, but secondly, like the ownership setup, et cetera?
If I just kind of throw out a typical company that we would be interested in, revenue of EUR 20 million, good profitability on the same level as Telko, and ideally in the Nordics or very much neighboring markets, Poland, et cetera. That would be kind of an ideal candidate for the acquisition.
The problem has been that those companies do exist, but there is no willingness to sell this property or?
No, we have a lot of opportunities going on, so no problems as such, but it takes some time sometimes to execute.
All right. Thank you.
Kasper Mellas, Inderes. One more question about the group costs. How much do you expect additional continuous cost for ESL after the demerger that currently don't show in the segment EBITA?
ESL has recruited some capabilities in, for example, communication, et cetera, et cetera, and there will be some additional costs when kind of forming the final setup, but at the same time, from an Aspo group level perspective, there will be a reduction in costs. Time will tell what the final setup will be, but I see a fairly efficient platform. So, for example, financing is another area where we strengthen quite a lot of the resources and capabilities already, and these you can see in the profit and loss of ESL Shipping already today.
All right. You don't expect any major increases in total group costs, taking both the ESL cost share and Telko?
No, Telko, there will be. Everything kind of left on an Aspo level will be integrated into Telko, but these are definitely capabilities also that are needed for being a listed company, and there are opportunities to take out overlapping structures.
All right. Cash from Leipurin sales seem to go to ESL's investments, given that group cash stands only at EUR 26 million at the end of Q3. Isn't this in contradiction with your previous message that Leipurin sale gives Telko more room for M&A?
We got some cash of close to EUR 60 million from the Leipurin acquisition, and these are earmarked for Telko. However, we paid this EUR 10 million of equity injection into ESL to kind of optimize the balance sheets, and of that, some EUR 7.9 million come from Aspo, and the rest is new equity. I think this is a fairly kind of undramatic change. It's just kind of balancing between the balance sheets of ESL and Telko to optimize the end result. This is the last time we can do it prior to the demerger, so that was the background.
Telko doesn't have any receivables from ESL, for example?
No receivables, and if you look at the service level agreements between the two companies that are being developed, it's very minor. It can be some, for example, some legal advice or some specific function within finance where we can continue to support in both directions actually between ESL and Telko going forward. But these are really minor.
Oh, yeah. Maybe receivables was a bit wrong wording. I'm talking about any short-term loans that will be paid back after the demerger.
No, we were aiming to have totally clear balance sheets between the two companies.
All right. Then about the EUR 10 million investment that you made together with the other owners of ESL. Why was this necessary?
No, it was not necessary. It was just, as said, optimizing the two balance sheets. So now we have leverage in Telko Group of 1.8x, and we have a leverage of ESL when considering the extra net debt, which is related to the upcoming vessels of approximately 3x. So we think this is quite a balanced situation, and therefore this was made.
All right. Makes sense. Then why did you increase the number of time-chartered vessels during this low demand?
It's more a question of what type of time-chartered vessels we have. We have these kind of three years contracts with some newer, very competitive vessels that we want to introduce. At the same time, we have now, when we're coming towards the year end, we have a lot of opportunities to cut capacity with these kind of shorter term time-chartered vessels. It's only a question of what setup is most competitive for ESL Shipping. That's the reasoning behind this.
All right. It's just short-term management of the capacity. All right. My last question. When we look at Telko's customer industries, there are some mixed signals going forward. For example, engineering order books are improving, while the chemical output is still down. Where in Telko's customer base do you see volume growth opportunities over the next 12 months?
I think these are a bit of the kind of usual suspects. We have defense, which have some polymer demands, specific polymers. We see data centers which have need for chemicals for the cooling systems. Mining doing great, medical industry doing great. I would say that on a quite broad basis, we see kind of positive trending in the requests for offers made to Telko, which might of course be related also to our activity levels. If you do look at where demand is still low, again, I would say paper and pulp industry, it's fairly low demand also for Telko.
All right. Thanks for the answers.
Thank you. Any questions online?
Yes. We have a few questions. If we start from the acquisitions, a question, what has been the return of invested capital of them?
We have made seven acquisitions of Telko during the past couple of years, and as you know, we have a return on equity target of 20%. All of the acquisitions have not reached this target, but in general and in average, I would say that we are fairly close.
Okay. Then another one. If both businesses are strategically strong, why do their returns on capital and cash flow not yet reflect your growth ambitions?
We had a return on equity for the past nine months of 16%. At least it has developed in a positive direction. I think there are still things to do. Being more focused, executing profitability improvement opportunities, taking out overlapping structures, investing in the organic growth of Telko, taking the advantage of the new fleet of ESL, et cetera, et cetera. There's a lot of opportunities still to reach the targets.
Okay. Then to demerger related, if there is still more, just keep on typing. From Lauri, what is the financial benefit for shareholders of splitting Aspo into two separately listed companies?
The financial benefit, if we talk about value, then time will tell. We believe that two standalone companies will perform better than one conglomerate structure of Aspo. There are a lot of benefits, as mentioned, overlapping structures, easier investment profile to understand. You can tailor the financing. For example, the leverage level of Telko ought to be lower than the leverage level of ESL. Focus of management and the board. These are examples of the possible drivers that will benefit the owners also financially.
In the long term. Then maybe an easy one. Will the name Aspo disappear?
It will disappear. Aspo will become Telko Group. From that perspective, we are living quite a historical moment today. If the demerger will take place, this is the last and final quarterly reporting of Aspo. Of course, the Aspo heritage will live in both ESL Shipping and Telko going forward.
Okay. I think that was all. Maybe we could take the opportunity to remind that we will host our Capital Markets Day in about three weeks. Please sign up if you already haven't, and looking forward to see you there. What are your expectations for these events?
I hope that a lot of people will join us, and hopefully we have a lively discussion around the two companies. I really hope we are able to create some interest here.
Yeah. Hope to see you there.
Definitely. Thank you.