MANAGEMENT REPORT
Consolidated net sales for Q3 2024 were € 1.94 million, which was a 8% increase compared to the same period last year (Q3 2023: € 1.79 million). The main business area is the production and wholesale of softboard, which recorded sales in Q3 2024 of € 1.94 million, (Q3 2023: € 1.78 million). The remaining business area is real estate management of the property owned in Suur-Jõe street in Pärnu, who recorded sales of € 2 thousand in Q3 2024 (Q3 2023: € 11 thousand).
Sales revenue in 2024 Q3 increased mainly due to increased orders from industrial customers and partly due to increased sales volumes in the construction materials market. The Finnish market brought the largest growth, while sales volumes in the Baltic countries and other Scandinavian countries remained unchanged in Q3 2024 compared to the same period last year.
Pärnu Riverside Development OÜ's real estate management revenue on the Suur-Jõe street property decreased in Q3 2024 compared to the Q3 2023. The decrease in sales revenue was due to the termination of rental agreements in August 2024. The rental agreements were terminated due to the specific characteristics of the production building complex, which caused high communal costs that could not be covered by rental income.
The consolidated EBITDA of Nordic Fibreboard for Q3 2024 was negative € 19 thousand, the EBITDA margin was negative 1% (Q3 2023: EBITDA was positive € 238 thousand and the EBITDA margin was positive 13%). Compared to the Q3 2023 the Group`s gross margin decreased from 27% to 16% in the Q3 2024, which indicates that the Group`s profitability in the Q3 2024 has decreased compared to the same period last year.
The negative EBITDA in the Q3 2024 compared to the Q3 was primarily driven by an increase in the unit cost of production, caused by higher input costs as well as increased marketing and product development expenses. The rise in marketing and product development costs reflects a strategic investment aimed at strengthening sales activities to support revenue growth in future periods.
Financial expenses for the Q3 2024 were € 113 thousand, of which € 53 thousand were loan interest costs and € 60 thousand were losses from the revaluation of Trigon Property Development (TPD) shares. Financial expenses for the Q3 2023 were € 79 thousand, of which € 55 thousand were loan interest costs and € 24 thousand were losses from the revaluation of TPD shares.
Group`s consolidated net loss for Q3 2024 was € 263 thousand (Q3 2022: profit € 37 thousand).
DIVISIONAL REVIEW
Revenue by business segments
| € thousand | € thousand | |||
| Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | |
| Fibreboards production and sales | 1,936 | 1,775 | 6,055 | 6,358 |
| Real Estate Management | 2 | 11 | 23 | 34 |
| TOTAL | 1,938 | 1,786 | 6,078 | 6,392 |
Profit by business segments
| € thousand | € thousand | |||
| Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | |
| EBITDA by business units: | ||||
| Fibreboards production and sales | (19) | 246 | 271 | 383 |
| Real Estate Management | (6) | (2) | (21) | (19) |
| Group transactions | 6 | (6) | 1 | (30) |
| TOTAL EBITDA | (19) | 238 | 251 | 334 |
| Extraordinary other operating expenses | 0 | 0 | 0 | (406*) |
| Depreciation | (131) | (122) | (390) | (367) |
| TOTAL OPERATING PROFIT/ LOSS | (150) | 116 | (139) | (439) |
| Net financial income/ costs | (113) | (79) | (219) | (128) |
| NET PROFIT/ LOSS | (263) | 37 | (358) | (567) |
* consists of the one-time loss received from the resale of electricity to the electricity company.
Nordic Fibreboard Ltd: fibreboard production and sales
Fibreboard sales in Q3 2024 were € 1.94 million (Q3 2023: € 1.78 million). The growth in sales revenue was mainly supported by increased orders from industrial customers and improved sales volumes in foreign markets. The Finnish market showed the highest growth, while sales volumes in the Baltic countries and other Scandinavian countries remained at the same level compared to the Q3 2023.
The EBITDA of the fiberboard segment for the Q3 2024 was a negative € 19 thousand (Q3 2023: positive € 246 thousand). The net loss of the fibreboard segment for the Q3 2024 was € 262 thousand (Q3 2024: profit € 46 thousand). The negative EBITDA in the Q3 2024 compared to the Q3 was primarily driven by an increase in the unit cost of production, caused by higher input costs as well as increased marketing and product development expenses. The rise in marketing and product development costs reflects a strategic investment aimed at strengthening sales activities to support revenue growth in future periods.
Fibreboard sales by geographical segments
| € thousand | € thousand | |||
| Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | |
| European Union | 1,789 | 1,537 | 5,588 | 5,855 |
| Africa | 89 | 40 | 255 | 133 |
| Middle East | 41 | 68 | 96 | 96 |
| Asia | 17 | 48 | 102 | 102 |
| Other | 0 | 82 | 14 | 172 |
| TOTAL | 1,936 | 1,775 | 6,055 | 6,358 |
Pärnu Riverside Development: real estate management
Pärnu Riverside Development owns the property located at Suur-Jõe 48 in Pärnu. Rental income from property management was € 2 thousand in Q3 2024, (Q3 2023: € 11 thousand). Pärnu Riverside Development OÜ property management revenue from the Suur-Jõe Street property decreased in the Q3 2024 compared to the Q3 2023 due to the termination of rental agreements in August 2024. The decision to terminate the rental agreements was due to the specific characteristics of the production building complex, which caused high communal costs, and which could not be covered by rental income.
The real estate management EBITDA for Q3 2024 were negative € 6 thousand and net loss € 6 thousand (Q3 2023: EBITDA negative € 2 thousand and net loss € 2 thousand).
OUTLOOK
Nordic Fibreboard Ltd
As we approach the end of 2024, we turn our attention to 2025 and its growth opportunities. While the construction market in Estonia, the Baltic States, and Scandinavia remains historically weak and short-term forecasts show no significant recovery, we are instead focusing on the opportunities brought by changes in building materials and construction methods.
The market for natural and biodegradable materials is growing rapidly. To respond to this trend, Nordic Fibreboard has invested in product development and production process improvements and we plan to further increase these efforts. Close cooperation with key customers from different industries allows us to understand the needs of the market, and in 2025 we plan to launch new products and services aimed at both the construction sector and other industries. In this way, we expand market opportunities and create a competitive advantage for our customers by offering high-quality and valuable solutions that meet our customers' needs.
We will also focus on marketing in 2025. The plan is to initiate innovative collaboration projects, develop marketing platforms, and find new ways to engage with the construction and industrial sectors, where demand for sustainable fiberboard solutions is rapidly growing.
In addition, we are preparing to meet the environmental requirements that will soon come into force. Environmental Product Declarations (EPDs) and compliance with the requirements of the European Union Deforestation Regulation (EUDR) are increasingly important for both our industrial customers and other potential partners.
Pärnu Riverside Development
The development of the property at Suur-Jõe Street 48 in Pärnu continues. The property has an existing detailed plan, which allows for the development of a complete residential quarter on the property. At the moment, we are engaged with land related operations (dividing the property and changing the intended purpose) and in addition to that we are working on the design of roads, communications and new residential buildings.
FINANCIAL HIGHLIGHTS
| € thousand | ||||
| Income statement | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
| Revenue | 1,938 | 1,786 | 6,078 | 6,392 |
| EBITDA | (19) | 238 | 251 | 334 |
| EBITDA margin | (1%) | 13% | 4% | 5% |
| Operating profit | (150) | 116 | (139) | (439) |
| Operating margin | (8%) | 6% | (2%) | (7%) |
| Net profit | (263) | 37 | (358) | (567) |
| Net margin | (14%) | 2% | (6%) | (9%) |
| Statement of financial position | 30.09.2024 | 31.12.2023 | 30.09.2023 | 31.12.2022 |
| Total assets | 8,780 | 8,505 | 8,897 | 9,408 |
| Return on assets | (4%) | (8%) | (6%) | 13% |
| Equity | 4,044 | 4,402 | 4,517 | 5,084 |
| Return on equity | (9%) | (16%) | (13%) | 24% |
| Debt-to-total assets ratio | 54% | 48% | 49% | 46% |
| Share | 30.09.2024 | 31.12.2023 | 30.09.2023 | 31.12.2022 |
| Last Price* | 0.93 | 0.90 | 1.00 | 1.60 |
| Earnings per share | (0.11) | (0.15) | (0.04) | 0.27 |
| Price-earnings ratio | (8.84) | (5.93) | (24.78) | 5.83 |
| Book value of a share | 0.90 | 0.98 | 1.00 | 1.13 |
| Market to book ratio | 1.03 | 0.92 | 1.00 | 1.42 |
| Market capitalization, € thousand | 4,184 | 4,049 | 4,499 | 7,198 |
| Number of shares, piece | 4,499,061 | 4,499,061 | 4,499,061 | 4,499,061 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITIONS
| € thousand | 30.09.2024 | 31.12.2023 | 30.09.2023 |
| Cash and cash equivalents | 8 | 7 | 46 |
| Receivables and prepayments (Note 2) | 921 | 534 | 776 |
| Inventories (Note 3) | 872 | 728 | 971 |
| Total current assets | 1,801 | 1,269 | 1,793 |
| | | | |
| Investment property (Note 4) | 2,309 | 2,269 | 1,859 |
| Financial assets at fair value through profit or loss (Note 7) | 431 | 491 | 674 |
| Property, plant and equipment (Note 5) | 4,236 | 4,475 | 4,570 |
| Intangible assets (Note 6) | 3 | 1 | 1 |
| Total non-current assets | 6,979 | 7,236 | 7,104 |
| | | | |
| TOTAL ASSETS | 8,780 | 8,505 | 8,897 |
| | | | |
| Borrowings (Note 8) | 652 | 556 | 119 |
| Payables and prepayments (Note 9) | 1,109 | 756 | 1,109 |
| Short-term provisions (Note 10) | 5 | 21 | 3 |
| Total current liabilities | 1,766 | 1,333 | 1,231 |
| | | | |
| Long-term borrowings (Note 8) | 2,859 | 2,659 | 2,883 |
| Long-term payables and prepayments (Note 9) | 0 | 0 | 139 |
| Long-term provisions (Note 10) | 111 | 111 | 127 |
| Total non-current liabilities | 2,970 | 2,770 | 3,149 |
| Total liabilities | 4,736 | 4,103 | 4,380 |
| | | | |
| Share capital (at nominal value) (Note 11) | 450 | 450 | 450 |
| Statutory reserve capital | 45 | 45 | 45 |
| Retained earnings (loss) | 3,549 | 3,907 | 4,022 |
| Total equity | 4,044 | 4,402 | 4,517 |
| | | | |
| TOTAL LIABILITIES AND EQUITY | 8,780 | 8,505 | 8,897 |
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
| € thousand | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
| Revenue (Note 13) | 1,938 | 1,786 | 6,078 | 6,392 |
| Cost of goods sold (Note 14) | 1,766 | 1,433 | 5,235 | 5,497 |
| Gross profit | 172 | 353 | 843 | 895 |
| | | |||
| Distribution costs (Note 15) | 249 | 133 | 725 | 536 |
| Administrative expenses (Note 16) | 69 | 100 | 260 | 374 |
| Other operating income (Note 18) | 0 | 0 | 8 | 0 |
| Other operating expenses (Note 18) | 4 | 4 | 5 | 424 |
| Operating profit (loss) | (150) | 116 | (139) | (439) |
| | | |||
| Finance income (Note 19) | 0 | 0 | 0 | 31 |
| Finance costs (Note 19) | 113 | 79 | 219 | 159 |
| Profit (loss) before income tax | (263) | 37 | (358) | (567) |
| | | | ||
| Net profit (loss) for the period | (263) | 37 | (358) | (567) |
| | | | ||
| Basic earnings per share (Note 12) | (0.06) | 0.01 | (0.08) | (0.13) |
| Diluted earnings per share (Note 12) | (0.06) | 0.01 | (0.08) | (0.13) |
CONSOLIDATED STATEMENT OF CASH FLOWS
| € thousand | 9M 2024 | 9M 2023 |
| Cash flows from operating activities | ||
| Operating profit (loss) | (139) | (439) |
| Adjustments: | | |
| Depreciation charge (Notes 5; 6) | 390 | 367 |
| Profit/loss from disposal of fixed assets (Note 18) | (387) | (217) |
| Change in trade and other receivables (Note 2) | (144) | 701 |
| Change in inventories (Note 3) | 353 | 234 |
| Change in trade and other payables (Note 9) | (16) | (15) |
| Change in provisions (Note 10) | 57 | 631 |
| Cash generated from operations | ||
| (153) | (135) | |
| Interest payments (Notes 8; 19) | (6) | (24) |
| Net other financial income and expense | (102) | 472 |
| Net cash generated from operating activities | | |
| | | |
| Cash flows from investing activities | (153) | (215) |
| Purchase of property, plant and equipment and intangible assets (Notes 5; 6) | (40) | 0 |
| Purchase of investment property (Note 4) | (193) | (215) |
| Net cash used in investing activities | | |
| | | |
| Cash flows from financing activities | (157) | (357) |
| Repayment of loans received (Note 8) | 200 | 200 |
| Loans received from related parties (Note 8) | (17) | (39) |
| Finance lease payments (Note 8) | 270 | (17) |
| Change in overdraft (Note 8) | 296 | (213) |
| Net cash (used in)/from financing activities | | |
| | 1 | 44 |
| NET CHANGE IN CASH | 7 | 2 |
| OPENING BALANCE OF CASH | 8 | 46 |
| CLOSING BALANCE OF CASH | (139) | (439) |
Enel Äkke
Member of Management Board
+372 55525550
group@nordicfibreboard.com
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