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Dovre - Stabilizing results across segments

Dovre Q4 results topped our estimates due to Project Personnel. We expect the segment to soften a bit this year, while Consulting and Renewable Energy have easier time to improve due to new orders and soft comparison periods.

Project Personnel supported profitability last year

Dovre’s Q4 revenue grew 5.6% y/y to EUR 50.8m, compared to our EUR 45.2m estimate, as Project Personnel continued to grow 27% y/y. The segment also helped Dovre’s EUR 1.5m EBIT above our EUR 1.2m estimate, and its results were high throughout last year. The 4.5% EBIT achieved wasn’t yet exceptionally high as we see a margin of 5% to be a relevant long-term target, however a decrease in demand may soften its EBIT a bit this year. PP has achieved a CAGR of 20% in the past few years; we estimate its revenue to decline by 5% in FY ’24. Meanwhile Renewable Energy remains the segment with uncertain near-term results as the Finnish wind power construction market is still quite challenging.

Consulting and Renewable Energy to gain this year

Suvic has recently signed contracts to build wind and solar farms in Sweden and Finland, respectively, worth ca. EUR 90m over the next two years or so, while Consulting has signed additional public project quality assurance contracts in Norway. We had previously estimated Project Personnel’s FY ’24 EBIT at EUR 4.5m, and we make only small revisions as our new estimate is EUR 4.4m. We estimate Dovre FY ’24 EBIT to be flattish as our estimate remains at EUR 7.3m. For Project Personnel we estimate an EBIT decline of EUR 0.5m, whereas we see upside potential for Consulting as the 10% EBIT margin recorded last year was relatively soft. Renewable Energy has plenty of scope for earnings gains, especially in the long-term, while EBIT should at least stabilize this year due to the volume attributable to the new Swedish and Finnish orders.

Valuation doesn’t demand much earnings growth

Dovre is valued 7x EV/EBIT (excl. 49% of Renewable Energy EBIT) on our FY ’24 estimates, whereas segmental peers are trading around 11-13x now that their multiples have increased in the past few months. The valuation is thus by no means challenging as we estimate flat EBIT at a margin of 3.5%, from which level plenty of upside exists as we estimate Dovre’s long-term potential to be closer to 5%. We retain our EUR 0.65 TP and BUY rating.

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