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Introduction & Market Context
Toivo Group Oyj (HEL:TOIVO) presented its Q1 2025 business review on May 7, 2025, revealing substantial growth in key financial metrics despite acknowledging a challenging operating environment. The Finnish real estate developer, whose share price rose 4.17% to €1.00 following the presentation, reported significant year-over-year improvements in revenue, operating profit, and net profit for the January-March 2025 period.
The company, which focuses on residential and social real estate development, construction, and property management, is preparing for a strategic shift with plans to transfer to the Helsinki Stock Exchange’s main list later in 2025. This move comes as Toivo aims to accelerate growth and improve share liquidity while maintaining its core business model.
Quarterly Performance Highlights
Toivo Group reported revenue of €11.5 million for Q1 2025, representing a 12% increase from €10.3 million in the same period last year. More impressively, operating profit jumped 67% to €2.0 million, while net profit surged 978% to €877,000 compared to just €81,000 in Q1 2024. Earnings per share increased to €0.02 from €0.00 a year earlier.
As shown in the comprehensive financial comparison below, the company’s combined revenue and investments metric showed particularly strong growth, increasing 70% year-over-year to €19.7 million:
The company’s balance sheet metrics also improved significantly, with the loan-to-value (LTV) ratio decreasing to 45.6% from 63.2% a year earlier, and the equity ratio strengthening to 46.0% from 36.5%. Total (EPA:TTEF) assets decreased to €155.2 million from €189.9 million, reflecting a more focused approach to the company’s property portfolio.
On the operational front, Toivo signed development contracts for 81 new apartments in Q1 2025 compared to none in the same period last year, and commenced construction on 124 apartments versus none a year earlier. However, only 15 apartments were completed during the quarter, down from 72 in Q1 2024. The economic occupancy rate stood at 91.4%, slightly down from 92.9% in the prior-year period.
The detailed income statement reveals the drivers behind the company’s profit growth, including improved operational efficiency:
Strategic Initiatives
A central element of Toivo’s presentation was the company’s plan to transfer to the Helsinki Stock Exchange’s main list in 2025. This strategic move is driven by multiple factors, including accelerating business growth, strengthening owner value and credibility, expanding share liquidity, and potentially reducing the company’s risk premium.
The following slide outlines the company’s rationale for the main list transfer:
Toivo also highlighted its focus on efficient property development and construction as key to profitability. According to the company, approximately 80% of a real estate project’s profitability is determined before construction begins, with factors such as land purchase price, zoning, and construction efficiency playing crucial roles. The company reported that 94% of its projects were profitable during the 2019-Q1 2025 period, with an average project profitability of approximately 15%.
The company’s business model encompasses the entire real estate value chain, as illustrated in this comprehensive overview:
Toivo also provided an update on its potential acquisition of E-Heat Oy, noting that final decisions have been delayed due to possible changes in Finnish electricity tax classifications. The company continues negotiations to acquire all or part of E-Heat’s share capital but will assess the impact of the new market situation before making final decisions.
Forward-Looking Statements
Toivo Group has updated its financial targets, replacing specific 2026 goals with new medium-term objectives. The company now focuses on achieving 20% average annual growth in both volume (revenue and investments combined) and operating profit, while maintaining an equity ratio above 40%. Toivo also aims for growing dividends with a target payout ratio of 30-50% of net profit.
For the fiscal year 2025, Toivo expects an operating profit in the range of €6-11 million, as outlined in its financial outlook:
The company’s strategic shift also includes changes to its approach regarding volume targets, use of its own balance sheet, and sales strategy. While maintaining its focus on apartments and social real estate, Toivo is adjusting its criteria for these investments to align with its updated medium-term financial goals.
Despite the challenging operating environment, Toivo Group expects a slight improvement over the course of 2025. The company’s strong Q1 performance, combined with its strategic initiatives and updated financial targets, positions it to potentially capitalize on emerging real estate opportunities while navigating market challenges.
Full presentation:
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