Skip to content

Solteq - Leaving behind a year to forget

Solteq’s Q4 was as expected weak, earnings improvement in Utilities a positive. We expect improvement across the board in 2024 driven by cost savings measures taken in Utilities.
A quarter of cleaning up in-house figures
Solteq reported slightly weaker than expected Q4 figures. Net sales amounted to EUR 14.2m (Evli EUR 14.6m), in comparable terms at previous year levels. Net sales in Retail & Commerce were a slight disappointment, showing a minor y/y decline, while Utilities showed slight growth. The operating profit and adj. operating profit amounted to EUR -9.1m/-1.0m respectively (Evli EUR -7.1m/-0.8m), with the difference in the former mostly due to additional write-offs along with those previously communicated. Solteq expects the comparable revenue to grow in 2024 and the operating result to be positive. Solteq’s BoD proposes that no dividend be paid for FY2023 (Evli EUR 0.00).

Expecting improvements across the board
With the cost savings measures implemented in Utilities, the impact of which was partly visible already in Q4 (comparable EBIT + ~EUR 0.6m y/y), Solteq’s profitability is set to improve significantly in 2024, with our EBIT estimate at EUR 2.1m. A key factor for 2024 and Solteq’s investment case lies in Utilies’ ability to capitalize on the favourable market conditions. With the product-related challenges tackled and a key customer delivery nearing completion, we expect new sales to start to pick up during H1 and growth to accelerate during H2. Near-term growth is supported by potential in Finland while longer-term growth needs to be sought abroad. The market conditions remain shaky for Retail & Commerce but we remain optimistic about growth in 2024 given the assumed easing of macroeconomic uncertainties. 

HOLD with a target price of EUR 0.85
Despite expected clear EBIT improvements, earnings should remain weak due to financial expenses. The 2024e P/E as such remains unappealing, but much less so on 2025e should the company get closer to its financial targets. With the turnaround uncertainty we retain our TP of EUR 0.85 and HOLD rating.
Open Report