Translation: Original published in Finnish on 7/27/2026 at 8:00 am EEST.

Nurminen Logistics' Q2 print was clearly below our expectations, pressured by margins. In our view, the company is progressing nicely in ramping up intra-European railway business, and Baltic volumes also showed signs of recovery. However, the decline in North Rail's volumes and the ramp-up of European traffic are weighing on margins more than we expected. Reflecting the overall picture, our earnings estimates for this and next year were subject to downward pressure. We believe successful international growth would be a clear driver for the stock, but given the forecast risks and neutral valuation, we will await more concrete evidence of the conquest of Europe. Thus, we lower our recommendation to Reduce (was Accumulate) and our target price to EUR 0.70 (from EUR 0.80) in line with the estimate changes. 

Earnings missed our expectations

The company's Q2 revenue was flat year-on-year, which narrowly exceeded our expectations. This was supported by the Baltic business, where volumes rose from the levels of previous quarters. However, the development of the Railway business was slightly below our expectations. We estimate that this was particularly impacted by the development of the international wagon group and single wagonload business (Essinge Rail) and, in part, North Rail. We estimate that the international block train service grew roughly in line with our expectations. The company's adjusted EBITDA was 3.0 MEUR, which was clearly below our forecast of 3.9 MEUR. The margin fell heavily below our expectations. We estimate that this was particularly impacted by the decrease in North Rail's volumes, a possible weakening of the gross margin, and higher-than-expected costs from the ramp-up of the block train service. Reported earnings were weighed down by 1.1 MEUR in non-recurring costs, which were higher than we expected.

Earnings forecasts down, driven by margins

As expected, Nurminen reiterated its guidance for the current year, in which it expects revenue to reach or fall slightly below the comparison period's level (2025: 109 MEUR). Nurminen estimates comparable EBIT to be clearly below the comparison period (2025: 18.3 MEUR), but remaining at a good profitability level. The company's outlook was largely unsurprising in the big picture, due to declining North Rail volumes and investments in the European block train service. Based on the actual development, we still made significant changes to the estimates we updated after the profit warning. We raised our medium-term revenue forecasts for European traffic. However, in line with actual developments, we lowered our margin assumptions for North Rail. In addition, we increased the cost impact of the planned ramp-up of European routes. As a result, we estimate the adjusted EBITA margin for the coming years to be in the range of 10-11% (was 12-13%). Overall, due to the changes, our absolute earnings forecasts for this year and next decreased significantly (adj. EBITA 14-18%), while the 2028 forecast remained almost unchanged. We expect the company's revenue to reach 108 MEUR this year (previously 105 MEUR) and adjusted EBITA to reach 11.3 MEUR (previously 13.7 MEUR).

Valuation is neutral given the forecast risks

In our view, the success of growth in European traffic is currently at the core of the company's investment story. The geopolitical risks of this business are also clearly lower and the market potential greater than for North Rail and the Baltic business, which currently account for the majority of the company's earnings. Thus, success in this growth would support an acceptable valuation for the stock. Even in a fairly positive scenario, we estimate that clearer positive earnings impacts from the European domestic business at the group level will not be seen until 2028. However, if the company succeeds in international growth, the company and the share’s valuation could look quite different in 3-5 years. Currently, we believe the stock is quite correctly priced (2027e P/E 10x) given the current earnings distribution and elevated forecast risks.