Arco Vara (ARC1T) Q4 2024 earnings summary

Executive summary

• Q4 2024 saw a stabilization in Estonia's real estate market, with increased apartment transactions and record sales in new Tallinn developments, signaling a market bottoming and gradual recovery.

• Arco Vara sold 14 Rannakalda apartments in H2 2024, doubling H1 sales, and achieved €4.2M turnover; Botanica Lozen in Bulgaria reached 85% readiness with 9 of 16 houses sold.

• Construction of Kodulahe Soodi 6 was postponed to end of Q1 2025, with pre-sales ongoing; Lammi 6 planning continues, targeting 175 apartments.

• The Kuldlehe luxury project sold 2 of 5 boutique apartments for €1.2M; focus for 2025 is on selling completed Kodulahe and Kuldlehe units (~€14M value) and Botanica Lozen houses (~€8.4M value).

• Market outlook for 2025 is stable but cautious, with moderate growth expected in H2 2025, supported by easing interest rates and improved buyer sentiment.

Financial highlights

• Q4 2024 revenue was €3.39M, down from €17.69M in Q4 2023 due to the prior year's completion of Kodulahe Rannakalda; full-year 2024 revenue was €7.48M, 2.5x lower year-over-year.

• Q4 2024 net profit was €220K (Q4 2023: €4.48M); full-year 2024 net loss was €624K (2023: €3.55M profit).

• Operating profit (EBIT) for 2024 was €68K, down from €3.94M in 2023.

• Cash and cash equivalents at year-end were €1.72M, up from €1.47M; net loans increased to €13.5M from €8.6M.

• 23 apartments sold in 2024 (vs. 63 in 2023); 28 apartments remained in stock at year-end.

Outlook and guidance

• 2025 revenue is forecast at €19.8M with a profit of €0.6M, a significant improvement from 2024's €7.5M revenue and €0.7M loss.

• Construction of Arcojärve is planned to start in H2 2025, with Botanica Lozen S1 completion expected by mid-2025.

• Broader market growth is anticipated by end-2025, driven by increased construction and favorable financing.