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Introduction & Market Context
Etteplan Oyj (HEL:ETTE) presented its second quarter 2025 results on August 6, revealing a challenging operating environment marked by increased market uncertainty and weakened customer demand. The engineering services company reported that geopolitical tensions and an escalating trade war have significantly impacted customer investment decisions, with projects being suspended, postponed, or canceled.
The company’s stock closed at €10.4 following the presentation, down 3.7% from its previous close of €10.8, reflecting investor concerns about the company’s performance and revised guidance. Etteplan’s shares are now trading closer to their 52-week low of €9.8 than their high of €13.1.
"Increased uncertainty has slowed customer investment decisions, with projects being suspended or cancelled," noted the company in its presentation, highlighting that while defense industry investments are increasing and energy industry investments remain moderate, other customer industries are showing low investment levels with decisions primarily focused on direct cost savings.
Quarterly Performance Highlights
Etteplan reported revenue of €91.4 million for Q2 2025, representing a 1.3% decrease compared to the same period last year. The company’s operating profit (EBITA) fell to €6.0 million with a margin of 6.6%, down from 7.4% in Q2 2024. Basic earnings per share declined by 27% to €0.10 from €0.13 a year earlier.
As shown in the following key financial figures:
The company’s performance was negatively impacted by non-recurring costs of €0.9 million related to adaptation measures implemented in response to the challenging market conditions. Organic revenue declined by 6.2%, while revenue at comparable exchange rates decreased by 1.9%.
Despite the overall challenging quarter, Etteplan highlighted a positive development in its AI-driven solutions, which doubled their share of revenue to 4%, demonstrating progress in the company’s strategic transformation.
Detailed Financial Analysis
A closer examination of Etteplan’s financial performance reveals varying trends across different metrics. The company’s comprehensive financial data shows deterioration in most key indicators compared to both the previous quarter and the same period last year:
Operating cash flow for Q2 2025 came in at €6.9 million, down from €9.0 million in the same period last year. For the first half of 2025, operating cash flow totaled €12.0 million compared to €17.0 million in H1 2024, reflecting the impact of lower profitability on cash generation.
The revenue breakdown by service area and geography shows that Engineering Solutions accounts for the largest portion of revenue at 56%, followed by Software (ETR:SOWGn) and Embedded Solutions at 23% and Technical Communication Solutions at 20%. Geographically, Finland remains the company’s largest market, representing 46% of revenue:
Service Area Performance
Performance varied significantly across Etteplan’s three service areas, with Software and Embedded Solutions experiencing the most pronounced decline.
Engineering Solutions showed modest growth with revenue increasing by 3.9% to €51.6 million, primarily due to the acquisition of Novacon Powertrain at the beginning of the year. However, EBITA margin declined slightly to 7.6% from 7.9% as the escalation of the trade war impacted operational efficiency:
Software and Embedded Solutions faced the most challenging market conditions, with revenue declining by 13.9% to €21.5 million. The company noted that very few new projects were started, and some previously agreed projects were postponed or canceled. EBITA margin decreased slightly to 7.5% from 7.6%:
Technical Communication and Data Solutions was the bright spot, with revenue increasing by 2.3% to €18.4 million. This growth was attributed to the successful implementation of AI-driven service solutions, which helped the company increase its market share. However, EBITA margin declined to 4.6% from 6.9%:
Strategic Initiatives & Future Outlook
Despite the challenging quarter, Etteplan remains focused on implementing its 2025-2027 strategy, which aims to boost customers’ sustainability, productivity, and digital business. The company has set ambitious financial and strategic targets for 2027:
In light of the current market conditions, Etteplan lowered its financial guidance for 2025 on July 28. The company now expects revenue to be in the range of €365-385 million (previously €361.0 million in 2024) and operating profit (EBIT) to be between €19-24 million (previously €18.4 million in 2024):
CEO Juha Näkki emphasized the company’s strategic focus during the earnings call, stating, "We are now moving. The market is still weak, but we are now moving with the strategy." He also highlighted progress in developing new offerings: "With the new offering that we have now been developing... we see that there is clear progress."
The appointment of Harri Saikkonen as the new SVP for Software and Embedded Solutions, effective September 1, 2025, signals the company’s commitment to strengthening its leadership in this challenging but strategically important service area.
While Etteplan faces significant headwinds from market uncertainty and weak customer investments, its progress in AI-driven solutions and managed services indicates potential for improved performance as market conditions stabilize. However, investors will likely remain cautious until clearer signs of market recovery emerge, as reflected in the stock’s negative performance following the earnings announcement.
Full presentation:
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