Taaleri Q4'24 flash comment: Big earnings beat on non-recurring fees and outlook is clear

Translation: Original published in Finnish on 2/12/2025 at 9:22 am EET.

This morning, Taaleri announced a clearly better-than-expected result, boosted by non-recurring fees from Renewable energy. Operationally, the figures were in line with our forecasts. The company was extraordinarily clear on its outlook, and the outlook seems to be well in line with our previous forecasts. Overall, the report is on the positive side. Taaleri's earnings call can be viewed here starting at 11.00 am EET.

Non-recurring fees led to significant earnings beat

Taaleri’s Q4 EBIT was 9.4 MEUR, far above our forecast of 3.3 MEUR. The overperformance is due to the additional income of around 6 MEUR recognized by Renewable energy in connection with the 2018-2021 development activities in Texas. Operational figures were in line with our forecasts across the board.

The proposed dividend of EUR 0.50 is in line with our estimate of EUR 0.49 and will be distributed in two equal installments. Due to the much better-than-expected Q4 result, the dividend payout ratio is 50% and at the lower end of the company's target (at least 50%). We believe that Taaleri's dividend decision sends a clear message that the focus of future capital allocation will be on investment activities.

Operational development of segments well in line with estimates

For Private Asset Management, the development in the quarter was twofold. In Renewable energy, the SolarWind3 fund grew to 481 MEUR, slightly above our expectations. The result was of course very good, driven by the large non-recurring fees. The company stated in its report that the fund's target size of 700 MEUR would be difficult to achieve. This came as no surprise given the difficult fundraising market, and in our own forecasts we had estimated the final size of the fund at 600 MEUR. For Other private asset management, the report was again a lackluster read. There was no growth in revenue and, as expected, the result was negative. The numbers were marred by a write-down of 1.7 MEUR (probably from an older investment).

Garantia continued its strong performance, and the insurance service result was fully in line with our expectations (3.3 MEUR). As expected, the guaranty insurance portfolio came down by around 4% as demand for residential mortgage guarantees remained subdued. Investment returns were better than expected and as a result, Garantia's result (4.8 MEUR) slightly exceeded our expectations.

Outlook exceptionally clear and in line with forecasts

On the outlook front, Taaleri provided a definite positive surprise by giving a clear outlook for all segments, contrary to our expectations. The outlook is very much in line with our own forecasts, and we see only limited need to revise our projections for the time being. In Renewable energy, growth is expected to continue, and the result will be strongly influenced by the Wind 2 and Wind 3 exits. Other private asset management funds are still in ramp-up mode, which will weigh on their profitability. EBIT will remain negative but will improve year-on-year. Garantia's premium income will decline slightly due to slow market demand. As expected, income from Garantia's investment portfolio is expected to decrease from the heady levels of 2024 as a result of falling interest rates.