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Dovre - Renewables construction picks up

Dovre Q1 EBIT, excluding the write-off, was a bit below our estimate but we raise our Renewable Energy estimates for the rest of the year. Our FY ’25 estimates are almost intact.

We make relatively small changes to our estimates

Dovre Q1 revenue declined 8% y/y to EUR 42.3m, below our EUR 45.6m estimate mostly due to Renewable Energy. The EUR -4.9m EBIT included the EUR 5.8m write-down due to a single project; without it Renewable Energy EBIT was relatively close to our estimate, but Project Personnel’s EUR 0.3m EBIT miss meant total came in a bit lower than we estimated. We upgrade our EBIT estimates for the rest of the year by EUR 1.3m, in line with guidance; our estimate changes for Project Personnel and Consulting are small; the gains are due to Renewable Energy.

EBIT should stay around EUR 8m without write-downs

Dovre has restructured within Project Personnel and Consulting (in Norway and Finland) to safeguard earnings. Meanwhile Northern Sweden has many confirmed green industrial investments to be built in the coming years, and although the region already has very competitive energy prices based on plentiful renewables there should still be demand as the plans to develop the region extend until at least the end of this decade. The Finnish side of the Bothnian Bay has somewhat similar story but, unlike on the Swedish side, it’s still unclear how much more energy demand there will be in the coming years as the region lags in terms of new industrial manufacturing plants. In our view Suvic’s recent expansion into solar farms makes sense from this perspective due to the more incremental nature of the business.

Earnings multiples remain low assuming flat underlying EBIT

We estimate FY ’25 EBIT to remain flat, excluding the EUR 5.8m one-off, and our respective estimate is almost unchanged at EUR 8.2m assuming a moderate 200bps pick-up in growth to slightly below 4%. We assume all three segments to grow at mid-single-digits next year. We don’t expect large earnings gains in the short-term but note our FY ’25 estimates are undemanding in the light of the segments’ long-term potential. Dovre is valued some 5.5x EV/EBIT (excluding 49% of Suvic EBIT) on our FY ’25 estimates and on this basis peer multiples would suggest an FV closer to EUR 0.60. Our new TP is EUR 0.50 (0.65) as we retain our BUY rating.

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