Translation: Original published in Finnish on 7/8/2026 at 8:00 am EEST.

We significantly lowered our earnings estimates for Nurminen Logistics for the coming years following last week's profit warning. The profit warning was due to Russian tariff increases, which impacted the volumes of the high-margin North Rail. For earnings growth, the successful ramp-up of intra-European railway business will become an even stronger focus. With the share price decline, we believe the potential of European traffic offers a sufficient risk-adjusted return. We reiterate our Accumulate recommendation for the share, but lower our target price to EUR 0.80 (from EUR 1.0). Nurminen will publish its Q2 report on July 24.

Russian tariff increases hit North Rail

Nurminen issued a profit warning last week as Russian tariff decisions effectively ended North Rail's fertilizer transports, at least for the time being. We commented on the profit warning here. Based on public statistics, we estimate that fertilizer transports accounted for approximately two-thirds of North Rail's transports, while their exact revenue share is more challenging to estimate (NR revenue 2025: 32.8 MEUR). We estimate that the revenue was significant, even though its share is, in our assessment, smaller than the transport volumes. The company has initiated efficiency measures worth 1.5 MEUR and change negotiations, which could lead to a reduction of up to 25 employees (roughly half of NR personnel). Through the change negotiations, Nurminen aims for additional annual savings of ~3.0 MEUR. Given these actions, we assume the company does not consider it realistic to compensate for the lost volumes in the short term. Instead, according to the company's current assessment, the decisions do not affect other North Rail transports, and it estimates that the business's profitability will remain good. In our view, in the current geopolitical environment, the situation could still change in either direction for the company. More detailed comments will have to wait until the earnings release due to the silent period.

Full-year guidance points to a drop in earnings

The company also issued guidance for the full year 2026, in which it expects revenue to reach or slightly fall below the comparison period's level (2025: 109 MEUR). Nurminen estimates comparable EBIT to decline markedly year-on-year (2025: 18.3 MEUR), but to remain at a good profitability level. The negative impact of tariff decisions on 2026 revenue is estimated to be 4–5 MEUR, which we believe already reflects the decline in North Rail's volumes in June. Despite the headwinds, Nurminen continues to invest in its Central European routes. According to the company, the utilization rates of the block train service between Italy and Sweden have rapidly risen to a high level, and the company aims to double capacity at the turn of Q3 and Q4. In addition, a new connection between Sweden and Spain is scheduled to open in January 2027. We estimate that the ramp-up of European traffic has progressed faster than we expected, and we have raised our growth forecasts for the business. However, this was not enough to offset the earnings gap caused by North Rail's volume losses, which we do not expect to recover at present. As a result of these changes, our earnings estimates for 2026-2028 decreased significantly (16-21%). This year, we now expect the company's revenue to decrease to 105 MEUR (previously 110 MEUR) and adjusted EBITA to be 13.7 MEUR (previously 16.4 MEUR).

Staying on board for the conquest of Europe

In our view, the success of Central European growth is now critical to the investment story, given the decline in North Rail's earnings. International growth would also be valuable, as we believe the geopolitical risks of the European business are clearly lower than those of North Rail, which would also support an acceptable valuation. With our estimates, the P/E ratios for the share, adjusted for PPA amortizations, are 9x and 8x for 2026 and 2027. The earnings-based valuation can be considered moderate, which we believe is somewhat justified given the overall picture. In our view, the current valuation gives reason to follow the development of European traffic while holding the stock. Our positive view is also supported by our DCF model (~EUR 0.9/share), which is above the share price.