Dovre - Looking for profitable growth
Dovre’s project challenges have been extended, but Sweden and Finland should offer more opportunities for profitable growth as additional renewable energy capacity is needed.
More losses found, H1’25 results ruined
Dovre found more losses in its two Swedish wind projects to the tune of EUR 5m, on top of the EUR 18.7m already recorded for the projects last year. This was yet another hit as Q1 also suffered from losses due to a Finnish solar project. Dovre and Suvic have taken many measures to correct the problems, but the losses have been so extensive that Suvic has additional financing needs (yet Dovre’s cash should still be sufficient to cover it). We thus lower our Q2 earnings estimates by EUR 5m (we previously expected a slightly positive EBIT). Q1 losses were in our view already big enough so that Dovre’s FY’25 EBIT would have remained negative in any case, but now H1’25 seems so bad that we estimate the figure at EUR -7.3m. We would expect these to have been the last of the losses so that H2’25 earnings would already be modestly positive (driven especially by Q3 as it tends to be by far the most profitable quarter).
Long-term growth drivers haven’t disappeared
Suvic has had big profitability challenges recently and hence hasn’t been able to earn much from the increasing demand trend for renewable energy in Sweden and Finland. There should still however be opportunities, assuming Dovre manages to correct course. Sweden has long had a competitive renewable energy mix and prices, owing especially to hydro but also to wind and solar, yet the data center boom should continue to support incremental investments. Finland still lacks similarly large industrial energy demand drivers, yet solar power in particular continues to grow fast as Finnish industrial-scale solar capacity doubled over the first six months of this year.
EBIT should start to recover towards EUR 2m from H2’25
We estimate EUR 0.8m EBIT for H2 and just below EUR 2m for FY’26, assuming Dovre grows at a double-digit rate then. Dovre is valued some 7x EV/EBIT on our FY’26 estimates. This isn’t arguably yet a very low multiple considering the serious recent profitability challenges, which however should be possible to correct. The valuation requires patience as even mildly positive H2 results might not yet be enough to drive upside. The multiples are nonetheless low so long as earnings recover from now on. Our new TP is EUR 0.19 (0.21) as we retain ACCUMULATE rating.