Purmo announced sale of Russian operations

Translation: Original comment published in Finnish on 5/2/2023 at 5:00 am.

The transaction still requires approval from authorities, which is expected within three months. The importance of the Russian operations is small for Purmo, so the transaction will not have a substantial impact on the Purmo’s figures.

Russia represented under 2% of Q1 net sales and generated negative adjusted EBITDA

Soon after Russia attacked Ukraine, Purmo announced that it would exit from its Russian business. However, an agreement on the deal was only reached now, over a year after the decision. The company did not report the transaction price, but we estimate it will not be significant, considering, e.g., Purmo's balance sheet situation. The assets of the divested operations were some EUR 10 million at the end of Q1, while the liabilities related to these assets were also about EUR 10 million.

Purmo reported that in Q1 Russian operations generated EUR 3.8 million in net sales, i.e., under 2% of Purmo's total net sales, and EUR -0.4 million adjusted EBITDA. Our view is that Russia barely generated a positive adjusted EBITDA in 2022 and the importance of the business for Purmo has clearly decreased after the beginning of the war. Thus, we believe that the sale of the operations will slightly decrease the company's net sales but will not have a significant impact on earnings.