SATO Corporation Interim Report 1 January – 31 March 2025: Tight competition continues – The rental market remains oversupplied

Core Viewpoint - SATO Corporation's interim report for Q1 2025 indicates a slight improvement in economic occupancy rates and net sales, but challenges remain due to market oversupply and weak consumer confidence in Finland's economy [3][4][10]. Financial Performance - Economic occupancy rate improved to 95.0% from 94.9% year-on-year [4][7]. - Net sales increased to EUR 77.2 million from EUR 74.7 million [7][9]. - Net rental income rose to EUR 46.8 million from EUR 43.7 million [7][9]. - Profit before taxes decreased to EUR 18.3 million from EUR 19.6 million [7][9]. - Unrealised change in the fair value of investment properties was EUR 1.4 million, down from EUR 1.7 million [7][9]. - Housing investments significantly decreased to EUR 3.9 million from EUR 12.8 million [7][9]. - Invested capital at the end of the review period was EUR 4,687.6 million, down from EUR 4,807.5 million [7][9]. - Return on invested capital improved to 3.3% from 3.0% [7][9]. - Earnings per share decreased to EUR 0.17 from EUR 0.23 [7][9]. Market Conditions - The construction of new rental homes is expected to have bottomed out, but recovery is slow due to an oversupply in the market [3][12]. - Competition for tenants remains intense, with a high supply of rental homes relative to demand [4][12]. - Urbanization and immigration trends indicate a long-term need for new housing, with estimates suggesting a requirement for up to 35,000 new homes in the coming decades [13][14]. Sustainability Initiatives - SATO continues to invest in renewable energy sources, including solar and geothermal energy, and has signed a EUR 150 million sustainability-linked loan facility [5][17]. - The company aims to enhance energy efficiency through lifecycle-based repairs [5]. Company Recognition - SATO was ranked third in Finland's Best Workplaces 2025, reflecting improvements in company culture and employee experience [6]. Outlook - The Bank of Finland forecasts a gradual exit from recession, but economic recovery is expected to be slow due to global economic uncertainties [10][11].