CFO Insight into Q2 2024

The first half of the year was marked by active origination. Finnfund made 13 new investment decisions, reaching a value of EUR 116 million. Our portfolio grew by EUR 34 million from the year-end of 2023, landing at EUR 756 million.

The USD and EUR reference rates continued to remain at a high level. This generated higher interest income and interest expenses than last year, resulting in an increase of 15% to the net interest income compared to Q2/2023. The total gross interest income increased by 24% compared to Q2/2023 (EUR 18.9 million vs. EUR 15.3 million), whereas the interest expenses increased by 36% compared to Q2/2021 (EUR -8.2 million vs. EUR -6.0 million). Interest expenses also include part of the hedging costs. In addition, we issued a new 100-million green bond at the end of last year, which explains the significant relative increase in interest expenses.

The two first quarters resulted a total net financial income of EUR 8.1 million. Compared to last year, the decrease was -43% (EUR 14.1 million in Q2/2023). This negative development is driven by decreased dividend and fund income as well as the exchange rate net loss.

Administration, depreciation, and other operational expenses decreased -3% compared to last year. This is a result of Finnfund’s strive to develop operational efficiency further. For the same reason, the costs are slightly below the budget.

The profit/loss before the reduction in the value of investments and sales gains and losses was EUR -1.3 million (EUR 4.5 million).

The profit for Q2 2024 was EUR 7.2 million (EUR 0.8 million in Q2 / 2023).

As said in June, the outlook for the financial year 2024 remains optimistic. However, it is good to note, that many of our investee companies are dealing with an increasing number of difficulties. For example, the prices of raw materials are volatile, and the demand remains relatively low as many buyers are more cautious than expected.

Russia’s invasion of Ukraine, high inflation in many of our mandate countries, and high interest rates worldwide will affect the global scenarios. If the situation continues as such, the business environment, especially in our mandate countries, may become worse over the year.

Again, we keep on monitoring the situation, work closely with our investee companies – and are prepared to react accordingly.

Olli Sinnemaa
Chief Financial Officer, Finnfund

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Olli Sinnemaa Chief Financial Officer (CFO) olli.sinnemaa@finnfund.fi