CEO’s review Q4/2023

During 2023, Taaleri strongly promoted its strategy based on renewable energy, bioindustry and real estate business, despite the challenging operating environment. We can be pleased with the Group’s profit development over the entire year. The Group’s continuing earnings for the financial year grew by 8.4%. Income increased by 12.5% to EUR 66.3 million and operating profit by 16.8% to EUR 31.9 million. The operating profit margin was 48.1. 

The Group’s continuing earnings fell in the last quarter of the year, mainly due to the inter-quarter volatility caused by the valuation and recognition principles of IFRS 17 standard applied to the figures of Garantia Insurance Company Ltd. The Group’s income in the last quarter grew but operating profit fell from the corresponding period due to, among other things, performance fees recorded in the corresponding period.

In the Private Asset Management segment, continuing earnings grew by 19% in the last quarter, but income and operating profit fell from the corresponding period, during which earnings were boosted by considerable performance fees. No performance fees were recognised in the last quarter of 2023.

At the end of the last quarter, the renewable energy business announced that it had raised EUR 430 million in investment commitments for its sixth fund, Taaleri SolarWind III, at the second close. We consider the result a success in the current operating environment, and we will continue active fundraising at least until the end of 2024. Our goal is to raise EUR 700 million from investors in the fund. During the review period, we continued preparations to exit the Taaleri Wind II and Taaleri Wind III Funds, which are at the end of their lifecycle. In addition, the renewable energy business recorded an operating profit of EUR 4.1 million related to development activities in Texas between 2018 and 2021.

In the bioindustry business, we focused in the last quarter on supporting the growth of the portfolio companies of the Taaleri Bioindustry I Fund and mapping and evaluating new potential investees. We also continued the preparations for the venture capital fund and started the construction work for a torrefied biomass plant to be built in Joensuu. We launched several recruitment processes to support direct investments and international growth in line with the updated strategy.

In the real estate business, the new business director started in early 2024, and we are currently working on an updated strategy for the business. During the review period, we continued to develop new investment products and optimise the profitability of the real estate portfolios owned by the funds. The business also continued the preparations to exit funds at the end of their lifecycle.

In the Strategic Investments segment, the development of Garantia’s key figures in the last quarter reflects the inter-quarter profit fluctuation characteristic of the IFRS 17 standard. The insurance service result was EUR 2.7 million and the combined ratio was 42.0%. However, the profitability of Garantia’s insurance operations remained at a good level, although the insurance service expenses grew and revaluation of insurance contract liabilities during the quarter decreased insurance revenue from the comparison period. The insurance service result for the entire year was EUR 13.5 million and the combined ratio was excellent at 28.7%. Garantia’s net income from investment operations increased to EUR 1.4 million in the last quarter and to EUR 4.7 million in the whole year as the investment market strengthened from the corresponding period.

One of our priorities during the year was a strategy update, which we published in November. The biggest changes to our strategy are bringing direct bioindustry investments to the forefront of the business alongside the private asset management business and seeking strong international growth.

Our vision is to become a leading investment manager operating internationally in bioindustry and renewable energy. Our goal is to increase the assets under management to EUR 4 billion and the Group’s direct industrial investments to at least EUR 100 million by the end of 2026. The goals are ambitious, but I believe we have every opportunity to achieve them.