Earnings call transcript: Elmera Group Q2 2025 sees revenue dip, stock declines

Elmera Group ASA reported its Q2 2025 financial results, showing a decrease in net revenue and EBIT compared to the previous year. The company’s stock price fell by 1.69% following the announcement. According to InvestingPro analysis, Elmera appears undervalued compared to its Fair Value, with a robust dividend yield of 8.57%. Despite the financial dip, Elmera continues to expand its market presence in Sweden and Finland and remains optimistic about its long-term growth prospects.

Key Takeaways

• Net revenue for Q2 2025 was NOK 370 million, down from NOK 389 million in 2024.
• EBIT adjusted decreased to NOK 93 million from NOK 106 million in the previous year.
• The company has launched new products and expanded into the Swedish B2B market.
• The stock price fell by 1.69% after the earnings release.

Company Performance

Elmera Group’s performance in Q2 2025 reflected challenges in the energy market, with a notable decrease in net revenue and EBIT compared to the same period last year. While InvestingPro data shows relatively weak gross profit margins at 15.53%, the company maintains a moderate debt level and strong liquidity position. The company has been actively expanding its footprint in the Nordic region, particularly in Sweden and Finland, despite the financial setbacks. The strategic shift towards a capital-light business model and optimization of its financing structure are part of Elmera’s efforts to maintain competitiveness. For deeper insights into Elmera’s financial health and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Financial Highlights

• Revenue: NOK 370 million, down from NOK 389 million in 2024.
• EBIT: NOK 93 million, a decrease from NOK 106 million in the previous year.
• Operating expenses remained stable at NOK 277 million.

Outlook & Guidance

Elmera expects its 2025 net revenue and EBIT to fall below targeted levels but maintains its 2026 financial targets. The company plans to launch its Fjordkraft brand in the Swedish B2C segment later this year and is exploring acquisition opportunities in Norway, Sweden, and Finland. InvestingPro analysis reveals 8 additional key insights about Elmera’s valuation and growth prospects, available to subscribers.

Executive Commentary

Rolf Baumann, Head of Elmera Group, expressed satisfaction with customer development, stating, "We are particularly satisfied with the customer development in the quarter." Hanning, the CFO, confirmed, "Our outlook for 2026 is maintained," highlighting the company’s confidence in its strategic direction.

Risks and Challenges

• Market volatility: Fluctuating energy prices and regional price differences due to grid congestion pose ongoing challenges.
• Competitive landscape: The expansion into new markets like Sweden and Finland brings increased competition.
• Economic conditions: Rising bankruptcy trends in the Swedish market could impact business operations.

Q&A

During the earnings call, analysts inquired about the impact of the Nordisk support scheme on Elmera’s electricity retail operations, which remain unchanged. The company also addressed concerns about credit risks in the Nordic segment, with expectations for growth stabilization in 2026.

Full transcript - Elmera Group ASA (ELMRA) Q2 2025:

Rolf Baumann, Head of Almera Group, Almera Group: My name is Rolf Baumann, Head of the Almera Group. Our CFO, Hany Nougjul, is, as usual, with me and will take us through the financials. Morten Uptal, our Head of Investor Relations, is also with us and will take questions during the presentation and address them to Henning and myself in our Q and A session. In the second quarter, we continued our strong operational development from the first quarter. We are particularly satisfied with the customer development in the quarter, which obviously is a key aspect to long term profitability.

The customer growth accelerated across all of the group’s reporting segments in the quarter, a testament to the activity of our portfolio of brands and our distribution power. As for May 2025, the group’s in house power trading function became fully operational. Among its new responsibilities is daily volume forecasting, where accuracy directly impacts balancing costs. Since the insourcing, forecasting accuracy has improved significantly and is contributing to more efficient operations and reduced cost of goods sold, eventually leading to better revenue margins. We look forward to further capitalize on insourcing, especially through participation on the intraday markets.

The dividend for 2024 was distributed in May and represents an attractive dividend yield for our shareholders, underpinning our capitalized business model and dividend capacity. Let us move to the operational development in the segments. As mentioned, the customer growth in the quarter was strong. Building on the very strong momentum from the first quarter, the Consumer segment delivered its strongest quarterly organic growth since fourth quarter twenty twenty two, adding 6,000 deliveries in the period. As in the first quarter, both the Fjordkraft brand and the Gudbustal Anashi brand contributed positively to the growth.

In addition to the organic growth, we have successfully increased both adjusted EBIT and the net revenue margin per kilowatt hour in the quarter through our product management and the pricing strategy. The combination of customer growth and increased net revenue margin is one that is hard to pull off, and I’m particularly proud of the commercial craftsmanship in the segment this quarter. In the Business segment, the stable development continued. We are reporting the fifth consecutive quarter of organic growth in the segment, and net revenue margin was stable year on year. All in all, we are very satisfied with the business segment’s strong performance this quarter as we have been for many quarters now.

Within the group’s new growth initiatives, the mobile business continued to trend from first quarter, reporting growth in number of subscribers also in the second quarter. And in fact, we also see an increase in average revenue per user that is ARPU in the segment. The pipeline for new partners in the group’s alliance concept in the Oil Red brand is strong in the 2025, and we have more than 20,000 deliveries signed and ready for migration during the second half of the year. During the quarter, we have changed the business model when it comes to handling the volume purchase on behalf of our partners in the Alliance concept From offering our partners paid credit lines when purchasing volume through our model, we now offer a more capital light model where our partners pay volume as consumed or pay in advanced. This reduces net revenue, but it also reduces the group’s finance costs.

The Nordic segment recording underlying growth in B2C spot contracts with a revised product portfolio aimed at capturing B2C spot customer, the spot portfolio achieved year on year growth of 13,000 deliveries in Finland, marking an interrupted monthly growth in the portfolio since January 2022, currently constituting approximately 60,000 deliveries. The product portfolio turnaround has derisked the portfolio exposure to price and volume risk significantly in Finland. In Sweden, we have also successfully launched Fjorkraft Fjordag in the quarter, where we are capitalizing on our B2B market know how. Product portfolio, IT platform under the Fjorkraft brand. And we have already reached agreements with distribution partners, a very promising start.

When it comes to counterparty risk, we continue to report strong credit metrics on group level, but have experienced credit and hedging losses in the Nordic segment this quarter. This due to weakening SME Horeca customers in Sweden. Hanning will give you more details on his part of the presentation. To summarize, we are very satisfied with the strong customer growth across all segments. And of course, we are also very satisfied with the strong profitability, both in the Consumer and the Business segment this quarter.

I will come back later to present our outlook, but first, Hanning will take you through the financials. Hanning, the floor is yours.

Hanning, CFO, Almera Group: Thank you, Rolf, and good morning to you all. Financially, this was a solid quarter for our largest and most important segments, Consumer and Business. The Nordic segment had a challenging quarter due to credit and hedging losses, which also affected group figures year over year. Net revenue adjusted ended at NOK $370,000,000 in the quarter compared to NOK $389,000,000 in the 2024. EBIT adjusted was NOK 93,000,000 compared to NOK 106,000,000 in Q2 last year.

The last twelve months net revenue was NOK 1,725,000,000.000, a reduction from NOK 1,762,000,000.000 in Q2 twenty twenty four, while last twelve months EBIT was NOK 500,000,000, a decrease from NOK $546,000,000 in Q2 twenty twenty four. Operating expenses at group level were NOK $277,000,000 compared to NOK $282,000,000 in the 2024 and in line with the group’s stable nominal OpEx guidance. Cash spend to secure new contracts amounted to $39,000,000 in the quarter, in line with Q2 twenty twenty four. Over the last twelve months, cash spend was $137,000,000 a level which has been quite stable over the last years, but significantly below historical levels. Amortization of contract acquisition costs still exceeds cash burn, but it will align with the spend level over time.

As Rolf mentioned, we have optimized our Power Trading operations as well as our financing structure and sourcing model. This has included replacing interest bearing supply credit with bank financing, and this started to have effect from the April. While this adjustment does not change the group’s overall leverage, it does impact the reporting of net working capital and net interest bearing debt, which I will get back to. Over to market development and starting with the Elspot prices on the left hand side of the slide. Prices were higher and more volatile in April before easing through the remainder of the quarter.

The chart illustrates the system price, but note that we experienced significant regional price differences due to grid congestion. To the right, you can see that monthly supply changes in Norway continued to be more or less on track with the trend from 2024 and remain at the historical low level. This is in part the enabler for continued moderate cash spend on customer acquisition. Then over to the segments and starting with Consumer, where we delivered strong results this quarter. The growth in the segment continued at an accelerated rate with an increase of 6,000 deliveries quarter over quarter.

As in Q1, the growth was distributed across both the Fuel Craft and Gudbarsal Energy brands. The net revenue margin per kilowatt hour was successfully increased year on year, and we implemented price changes on part of the portfolio also during the second quarter. This led to an increase in net revenue of million year over year and the corresponding EBIT adjusted growth of $9,000,000 year over year. Volume sold was stable year over year, while reduced average consumption led to a 4% volume decrease seen on the last twelve months basis. Variable contracts continued the slow churn out and represented approximately 4% of the segment’s deliveries at quarter end.

Over to the business segment, which also delivered solid results this quarter, albeit a reduction in net revenue from the historical all time high $123,000,000 in Q2 twenty twenty four to January in the 2025. With relatively stable operating expenses, EBIT adjusted correspondingly ended at NOK 53,000,000, a decrease from NOK 62,000,000 in Q2 twenty twenty four. The robust track record of organic growth in the segment continues. And at quarter end, the segment comprised 132,000 deliveries. Volumes sold decreased by 0.1 terawatt hour compared to the second quarter last year, partly driven by the temperature and partly by phasing out a few larger customers with close to zero margin.

Considering this backdrop and the tough comparables in the second quarter of last year, where we also had some tailwind in the market, we managed to recreate the underlying results year over year. The average net revenue margin per kilowatt hour also remained stable year over year. In the Nordic segment, we experienced underlying growth in the B2C spot portfolio in the quarter, while the phase out of legacy fixed price contracts contributed to a slight net decrease in the volume of deliveries. The growth trend on spot contracts has continued into the third quarter. And in combination with the fuel cut Fertag B2B initiative, we have a positive outlook on growth in the segment going forward, and Rolf will get back to this in the outlook section.

Year over year, the changes to the product portfolio is significant with the growth of 13,000 B2C spot contracts compared to the 2024. This change in product mix also represents a significant derisking of the portfolio. Volumes sold decreased 7% year over year, primarily driven by reduced average consumption. Net revenue decreased from $51,000,000 in Q2 twenty twenty four to $34,000,000 in this quarter, and EBIT adjusted ended as a negative of $23,000,000 Credit and hedging losses from bankruptcies and contract terminations in the Swedish B2B market represented a negative effect of approximately $25,000,000 on the segment’s result this quarter. And I will elaborate on credit risk on the following slide.

Overall, the group’s current metrics remain attractive, evidenced by the settlement rates on the charts to the left. We monitor payment behavior closely. Settlement rates remain at a very strong level across all segments, all markets, all three countries and stable over the last year. We have recently performed a customer analysis and have documented that the credit granting process is also sound and appropriate. However, we experienced a weakening trend in behavior and credit worthiness in a sub segment of SMEs in Sweden, primarily within the Horeca sector.

And we have also observed an increase in the general bankruptcy trend in Sweden in 2025. The negative impact in the Nordic segment this quarter is primarily related to settlements and losses from hedges, where the customer have entered into hedging contracts at higher price points than the current price levels, which means that the financial position is negative. The customers own their positions, but when they are unable to settle the contractual obligations, the counterparty risk materializes. Given the uncertainty in this portfolio, we consider that increased risk in the Nordic segment may impact the segment’s performance negatively also in the coming quarters. The provisions are considered appropriate for quarter end, and we monitor the situation very closely.

Within the new growth initiatives, both number of mobile subscribers and the average revenue per users or the ARPU increased. Volumes sold in Alliance concept was up 9% year over year, while the last twelve months volume was stable. As Rolf said, the pipeline of all rate deliveries is strong with 21,000 deliveries signed and ready for implementation in the 2025. Net revenue and EBIT decreased year over year, and the decrease was distributed across the various initiatives. Corresponding with the change of the sourcing model in the quarter, we have also changed the Alliance business model when it comes to handling volume purchased on behalf of our partners.

From offering our partners paid credit lines when purchasing through our model, we have shifted to a capital light approach, where partners either pay in advance or as volumes are consumed. This reduces the credit component in net revenue, but also reduces the group’s finance cost and frees up available credit lines. Accordingly, year over year performance comparisons should be viewed in light of this adjustment. The net working capital at quarter end was NOK608 million. And following the changes in the sourcing model, we have replaced interest bearing supplier credit with bank facilities.

Historically, supplier credit has been included in net working capital, thus both net working capital and net interest bearing debt increased in the revised sourcing model versus the historical figures. However, the underlying leverage remains unchanged as we communicated in our Capital Markets Day in June and we have reiterated in subsequent earnings releases. I’ll then give the floor back to you, Rolf.

Rolf Baumann, Head of Almera Group, Almera Group: Thank you very much, Hanning. Let me begin with a brief comment on Norges, please, when I now commence my outlook. Nordisk, please, is the proposed addition to Norway’s electricity support scheme. The proposal has been approved by the Norwegian parliament And regardless of the result of the election on the September 8, we find it likely that an August piece is implemented as from the October 1. The role of the electricity retailer will not change.

Customer will still need to maintain a relationship with a retailer. Industry experts anticipate that Norgespace will lead to an increase in energy consumption, potentially up to 10. This would likely result in a positive impact on the group’s revenues. And for that reason, we view the introduction of Nordisk piece as a net positive development. Next, the power trading function has been successfully in sourced and has now been fully operational since May.

As outlined during our Capital Market Day in 2024, this move enhances our ability to improve consumption forecasting accuracy, directly impacting the group’s electricity costs. Additionally, it enabled us to engage in intraday trading, which is together with forecasting accuracy, a key measure in managing the balancing costs of currently affecting all participants in the Nordic power markets. Fjorkauf Vertag was also launched in May. This is the Fjorkauf brand’s official entry into the Swedish B2B market. We have already secured, as I stated earlier, a distribution partner with strong market presence and extensive reach, positioning us well for growth.

Building on the success of our Norwegian business segment, which over the last decade or so has transformed from a breakeven business to a key contributor to the group’s results, we are confident in the potential for growth in both Sweden and Finland. We are also planning on launching Fjorkoft as the main brand in the B2C segment in Sweden from late twenty twenty five to further capitalize on our Pan Nordic platform. Lastly, we are actively pursuing acquisitions where we observe that the activity has taken up and we see increased market opportunities across Norway, Sweden and Finland. Next, our financial targets where we reiterate the target communicated on our first quarter presentation. Given the very mild start of the year and correspondingly low volumes and increased credit risk in the Eureka Sweden, we expect that our net revenue and EBIT adjusted would likely be below targeted levels for 2025.

Targets for 2026 remains unchanged. So now I invite Hanning up again, and we are ready for the Q and A session. Morten, do you have any incoming questions for us?

Morten Uptal, Head of Investor Relations, Almera Group: Thank you, Rolf. We have received some questions, and we will start with the following. There have been rumors about grid companies taking over the role of electricity retailers as they will administer Norgespris. What is your view on this?

Rolf Baumann, Head of Almera Group, Almera Group: The introduction of Norgespris will not change the role of the electricity retailers. Customers will manage their choice between the different support schemes models directly in LHUB, which is Norway’s centralized data platform for the electricity market, which handles the secure and efficient flow of data between retailers, grid operators and end users. For retailers, this means business as usual. We remain the spearhead of the value chain closest to customers. Our role will continue to be purchasing and selling electricity, providing advisory services, give market insights, managing all the invoice services, including invoicing of the Gridrant, tailored digital solutions.

And of course, not to forget, providing innovative offerings that help customers navigate this steadily evolving energy landscape. Particularly important in the future will our app be when it comes to monitoring the grid rent as household, actually can save hundreds of kroner a month using electricity in a way that optimize the grid rent. So for our own purpose, we really are needed in this market and we nothing has changed actually. We are even more important now than ever.

Morten Uptal, Head of Investor Relations, Almera Group: Thank you. We have a question on the Nordic segment. Do you expect that losses in this segment will likely affect figures also going forward?

Hanning, CFO, Almera Group: Well, as mentioned in the presentation, we monitor the situation closely, and the current provisions are considered adequate per quarter end. We are, of course, doing our utmost to limit the potential negative impact going forward. We have implemented several measures to ensure this. But we cannot and will not speculate in quantitative effects going forward as it is very difficult to provide a sufficiently reliable estimate based on current data points. As Rolf said, our outlook for 2026 is maintained, meaning that we do not see this as an issue that will negatively affect our financial targets and ambitions for 2026.

Morten Uptal, Head of Investor Relations, Almera Group: Another question on the Nordic segment. You maintain your ambitions for this segment. What are the key drivers supporting your ambitions?

Rolf Baumann, Head of Almera Group, Almera Group: As for this year, we implement the IT platform in Sweden. And first half next year, we implement the IT platform in Finland. And this obviously gives us the opportunity to centralize vital tasks as product management and distribution management, credit granting as such, which we have had great success with in the Norwegian market. So we strongly believe that we will able to both grow our business and also do it in a profitable way in The Nordics throughout the next couple of years, of course, values to our shareholders.

Morten Uptal, Head of Investor Relations, Almera Group: Thank you. We have a question on the insourcing of power trading. How much does the company save on insourcing of power trading on an annual basis?

Rolf Baumann, Head of Almera Group, Almera Group: That is too early to answer actually. And I don’t think that we will disclose that number. But it is I think it is very important to say that balancing costs for all the participant in this market that has really followed the market. They’ve seen that the balancing cost has really increased due to this new algorithm that Statenet have implemented. But of course, when we then can reduce the imbalance when it comes to our prediction, that is extremely vital.

So this has already been a success, and it will contribute to a robust business model going forward.

Morten Uptal, Head of Investor Relations, Almera Group: Thank you. We have another question, which goes on growth in the Nordic segment. When do you think the growth in spot customers in The Nordics will surpass the churn of fixed price customers? In other words, when will growth pick up in the Nordic deliveries in total?

Rolf Baumann, Head of Almera Group, Almera Group: I think it’s fair to say that we have to wait some time yet, but hopefully, we will see this during next year. But let’s have some patience.

Morten Uptal, Head of Investor Relations, Almera Group: Okay. And final question. You are reporting very strong customer growth this quarter. Do you expect this trend to continue into next of two quarters?

Rolf Baumann, Head of Almera Group, Almera Group: So far, it looks good. But you never know. But so far, it looks good. We definitely see that our main brands, Fjordkraft and Gielmarsal and the Schihe in Norway perform very well. And also actually, Trondla Kraft, the local brand in Trondlaug in the mid part of Norway, is also performing well.

So we have great hopes for future customer growth, particularly in Norway, yes.

Morten Uptal, Head of Investor Relations, Almera Group: Okay. That concludes the Q and A session. So we would like to thank you all for your attention and wish you all a nice day.

Rolf Baumann, Head of Almera Group, Almera Group: Okay. Bye.

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