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Etteplan Oyj reported its second-quarter earnings for 2025, revealing a decline in both revenue and earnings per share (EPS) compared to the same period last year. The company’s revenue reached €91.4 million, down 1.3% year-over-year, and EPS fell to €0.10 from €0.13. Following the announcement, Etteplan’s stock price decreased by 3.7%, reflecting investor concerns over the company’s performance and market conditions.
Key Takeaways
- Revenue decreased by 1.3% year-over-year to €91.4 million.
- EPS declined from €0.13 to €0.10.
- Stock price fell by 3.7% post-earnings announcement.
- AI-driven revenue doubled from Q1, now at 4% of total revenue.
- Strategic target set for 35% AI-driven revenue by 2027.
Company Performance
Etteplan’s performance in Q2 2025 was marked by a slight decline in revenue and profitability. The company is navigating a challenging market environment, characterized by trade wars and weak investment in traditional industries. Despite these challenges, Etteplan is making strides in AI-driven solutions, which have shown significant growth.
Financial Highlights
- Revenue: €91.4 million, down 1.3% year-over-year.
- EPS: €0.10, down from €0.13 in the previous year.
- EBITA: 6.6% (7.6% excluding restructuring costs).
- Operating cash flow: €6.9 million.
- Personnel count: 3,870, a 0.8% decline.
Earnings vs. Forecast
Etteplan’s reported EPS of €0.10 fell short of the forecasted €0.1847, marking a significant miss. Revenue also came in below the forecasted €92.54 million. This underperformance compared to expectations likely contributed to the negative market reaction.
Market Reaction
Following the earnings announcement, Etteplan’s stock price dropped by 3.7%, closing at €10.4. This decline reflects investor concerns about the company’s ability to meet financial expectations amid market uncertainties. The stock remains closer to its 52-week low of €9.8 than its high of €13.1, indicating cautious investor sentiment.
Outlook & Guidance
Etteplan revised its 2025 revenue guidance to a range of €365-385 million, with an operating profit expected between €19-24 million. The company anticipates potential improvements in demand as market conditions become clearer.
Executive Commentary
CEO Johan Nakki emphasized the company’s strategic focus, 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."
Risks and Challenges
- Market uncertainty due to ongoing trade wars.
- Weak investment environment in traditional industries.
- Geographic challenges, particularly in Europe.
- Potential project postponements and cancellations.
- Dependence on successful AI-driven transformation.
Q&A
During the earnings call, analysts inquired about market demand variations and the impact of project postponements. The management noted that while some projects have been delayed, AI-driven solutions are creating new value propositions and could increase wallet share through enhanced efficiency.
Full transcript - Etteplan Oyj (ETTE) Q2 2025:
Johan Nakki, President and CEO, Eteplans: Welcome to this webcast presentation for Eteplans Q2 results for 2025. My name is Johan Nakki. I’m the President and CEO. And after the presentation, there will be a Q and A session where you will be also able to ask questions from our CFO, Helena Kukkonen. Previously, we’ll go through the presentation with the following content.
So first, at the highlights and overview of the situation, a little bit more detailed on the financial development of the company, a bit on the service areas and then we’ll look at how we’re doing against our targets and how we’re progressing and then, of course, followed by the Q and A session. But if I start with the sort of highlights of the second quarter, so it was clearly difficult quarter for us. We had positive side was clearly our strategy implementation and our progress in the strategy work. We have been systematically and consistently investing into our service offering, especially around AI and building our AI driven service solution offering and this work continued. We are gradually moving within our organization to different kinds of AI based business models and also working a lot with internal processes where we are improving our efficiency through AI.
So this work is progressing, which is good. Of course, now it starts to be also visible in the numbers and we were very pleased to see that our AI driven revenue from Service Solutions was raising up to 4%, which is basically then doubling from Q1. So now we are moving really forward, very early days yet and very small numbers, but still we are moving forward and it’s starting to show. Also in the past quarters, we have had quite significant costs for restructuring and reorganizing our operations. And now we feel that after this quarter, we are with a structure where we can move forward and maneuver even in this kind of very uncertain and unpredictable market environment.
And we expect that in the coming quarters and in H2, we don’t need to do similar operations. We will, of course, continue to make sure that we are efficient. So if there are situations where we need to adjust capacity, we will still do that. But still, on a structural level, we see that we are now fit to the market. But then, of course, on the negative side, market uncertainty unfortunately increased during the quarter.
Of course, the trade war, The U. S. Tariffs made it or the sort of unclarity within this situation made it impossible for our customers to take decisions, and this then affected our demand. So we had projects that were already agreed that were delayed or even canceled or postponed. And then decisions on new project starts, new investments were very, very slow.
So of course, in this kind of highly uncertain situation where you don’t know which rules you’re playing with, it is difficult to take decisions. And this had a clear impact on our business as well. And we didn’t really see this impact in Q1. But in Q2, it became evident that our demand is dropping. And for that reason, we also needed to issue a profit warning, which was, of course, very, very unfortunate, but we did take our financial guidance down.
I’ll return to that later on in the presentation. And of course, we also had high nonrecurring costs in the demand situation we are facing. We needed to do still some restructuring and adjustments of our capacity, and this had profitability and was visible in the numbers. But as said earlier, we now see that we are with a structure where we can move forward even if the uncertainty continues. So we expect that levels where we have seen during the past two quarters will not continue.
If I look a little bit more in detail in operating environment, so as said, we’re very much highlighted by the escalation of the trade war and The U. S. Tariffs. This had a tremendous impact. Of course, the war in Ukraine continues, which also has an impact and the world is highly uncertain at the moment.
This has a negative impact on overall the demand situation, and this had an impact on our business. In the customer industries, investments were quite low on most of the sort of traditional industries where Etepland is operating. However, our DFAST industry continues strong, which is also visible in our numbers and investments in the energy industry, where at a quite good level. And we also had quite decent intake in the automotive sector, which is visible in the coming slides. But electrification was driving things, digitalization to certain extent, very few new investments were started.
If we look at the different geographies, so Europe was basically all countries were facing the same issues and the situation was fairly similar, slight differences between the different customer industries. And of course, our scope in different countries is slightly different, so slight differences. But overall, the picture in Europe is unfortunately very similar in all the countries. Customer specific variation is very high as well. There might be some customers who have a good project here and there, but overall, it’s still quite slow.
China is, of course, affected by this trade war as well. We can see that slightly more cautious decision making, but still the development in China was positive, and we were able to increase the number of hours sold to the Chinese market. And as said earlier as well, as mentioned in the previous quarters, the demand for us is mainly driven by the trend of buying more services and purchasing more services rather than employing own people. So this is this kind of development in this trend is helping our demand. And if we look at then the numbers overall, so revenue was dropping by 1.3%.
This was a shorter quarter than last year by two days, and that had an impact as well, but still a declining small decline in this kind of prevailing market. EBITA was at 6.6%. EBIT was at 4.8% and EPS at €0.10 per share. If we look at then the revenue and personnel split, so revenue by service areas of Engineering Solutions at 56%, increasing due to the Novakon acquisition that we completed in January. Software and Embedded, 23% and Technical Communication Solutions, 20%.
Revenue by area, Finland, 46% Scandinavia, 27% Central Europe, 24 and China, 3% and also the Novakorn acquisition visible here in this split. And then personnel, Finland, 48% Scandinavia, 18% and Central Europe, 24% and China, 10%. So a similar picture there. If we then look at the revenue by customer segment, so Automotive is still growing for us and almost catching up to Energy, which is the largest segment for us today. Then the traditionally large segments, Industrial Machinery, Forest Industry, Metal and Mining are still continuing to drop.
Aerospace and Defense at 7%, so increasing clearly from last year with the high demand from the defense sector. And also in Marine and Transport, we see a small increase, all the others are going down. If we then look at a little bit more in detail the financial development. So almost all the sort of key numbers are pointing a little bit downwards, which is, of course, disappointing. But the one positive thing here is the share of AI driven revenue, which is at 4% currently.
We don’t have a comparison figure from last year. But in the last quarter, it was 2%. So clearly, now we have been able to win new cases with customers with our new offering. And also, we have been able to convert some of our existing business into AI driven business models, which is helping us with the margins and also our efficiency and also providing more value for our customers, which is very important. Revenue was at €91,400,000 so minus 1.3% drop, as I said earlier.
Short and a weak demand situation had an impact on the demand and thus the revenue. Organic revenue development was minus 6.2%, which is clearly visible through the weaker demand situation. Revenue from key accounts was dropping less, so that was minus 1.6%. And this is due to the fact that we have some more key accounts in the better performing sectors. And perhaps we can also see that the drop from certain key accounts is not as high as it has been before.
So it seems that it is stabilizing a little bit with certain key accounts. So this is hopeful and gives a good sort of view, a little bit better view for the future. But still, it is dropping and it’s unfortunate. On EBITA, we had SEK 6,000,000 and corresponding to 6.6% EBITA. We did have the €900,000 restructuring costs and other reorganizing costs in the organization.
And without these costs, would have been at 7.6% for the group, which is not, of course, good, but somewhat reasonable for the given market conditions anyways. But high costs still on the sort of restructuring and organizational adaptation measures. EBIT was at €4,400,000 and amortizations in Q2 related to acquisitions were at 1,600,000 and of course, EBIT percent at €4,800,000 which is disappointing. EPS, of course, as well impacted by the lower profitability, so €0.10 per share compared to €0.13 last year. And then operating cash flow at 6,900,000 still fairly okay, but of course, the one offs or the nonrecurring costs that we incurred during the quarter had an impact here.
And of course, then there is fluctuation between the different quarters, but still fairly solid cash flow given the weak situation in the market. Personnel at the end of the period stood at 3,870, a slight decline compared to last year and basically 0.8% less. And there were in Finland, we have the temporary layoff possibility. So there are 121 temporary layoffs compared to 111 or none last year. There’s also there’s a slight drop throughout the previous quarter in the temporary layoff employees, but also there is a fairly high attrition with the sort of prolonged temporary layoffs.
And this also creates slightly higher cost when people are leaving after a longer temporary layoff period. That had an impact on the one offs as well. On the income statement, there is no major changes. Of course, the impacts of the profitability and revenue development are visible. And on the balance sheet, NovoCon has been added, but no other major changes in the balance sheet either.
If we then move on to the Service areas a little bit more in detail. So Engineering Solutions, the overall picture remains the same: a weaker demand situation, less investments from our customers and a lower number of delivery projects had an impact on our demand, which then had an impact on the operational efficiency and revenue development. Novakon powertrain acquisition, of course, increased the revenue and we ended up with a plus 3.9% revenue development, but organically, of course, then a lower number. And the adaptation measures that we took in this service area were quite wide. We had to do certain things in many countries and in different areas of the organization, so there is no one single source for it.
But the total amount amounted to €500,000 which is fairly high. And without that, the EBITA percent would have been 8.5%, so slightly better performance compared to the previous quarters where our previous restructuring efforts and our turnaround efforts are starting to show a little bit. But given the weak market, this is the level of which we were now able to reach. In the Software and Embedded Solutions, we saw also a weaker market situation. And here, especially in the investment side, in the R and D investments of our customers, we saw quite many postponements and even cancellations of projects that had already been agreed on.
And the demand situation remains on a very moderate level. We also had restructuring here, so €100,000 in Q2. And without this, the Service Area profitability would have been 8.1%. We also made a change here in the leadership of the service area. So Hari Saikonen has been appointed the new SVP for Software and Embedded Solutions service area.
He will start in the September 1. And with this change, we would like to have higher or accelerate the development of the service area and accelerate the pace of change that we need to see in the service area to be successful in the future. Revenue was down by 13.9% in the weak market condition, and EBITA was at 7.5% and then 8.1% adjusting with the one off. So decent, but we can do better. Technical Communication and Data Solutions was performing operating profit wise, EBITA wise still on a weak level.
There is clearly weaker demand due to the fact that there are less project deliveries from our customers and we start to suffer a little bit from the volume drop. But then we are winning market share in certain countries and especially with our AI driven service solutions where we are making good ground. We have been mainly driven by this service area. We have been able to increase the AI driven revenue to 4%. And here, we have had in most of our new cases, we have the AI components very visible in the market.
This makes us highly competitive in the market, and we can bring a lot more value to our customers. So this development in the service area is encouraging, and we are looking forward to that helping us to improve the profitability and also growth going forward. But also here in the weak market, we still had some nonrecurring costs and about €100,000 And without those, we would have been at 5.3%, which is not an acceptable level, not something we want to see, and we have work to do. But still, with the AI driven revenue development, we feel confident that in the coming quarters and moving forward with the strategy implementation, we will be in a position to improve on that. If we then look at to end with a look at a little bit the strategy, just to remind you of our ambition levels and what we want to do.
Our transformation with AI strategy is driven by the AI technology and powered service solutions. And now we are starting to clearly see also progress. Small numbers, early days, but still progress is clearly visible. And if we look at the sort of financial and strategic targets, now AI driven Solutions share of revenue where our target in 2027 is 35%. We are now at 4%, so a small number, but starting to move.
And that’s a good sign and encouraging to see. With this development, once we are able to move forward, we anticipate that with that, we are also able to improve on our Managed Services share of revenue, which is currently at 66%. And that should also help in our growth, so moving towards the target that we have. And also, we expect that to be visible in the profit once our converted business starts to exceed or the higher margins of the converted business starts to exceed the investment levels that we have to put in to build the new demand and train our people to utilize the new demand. But overall, I would say that we are now moving.
The market is still weak, but we are now moving with the strategy, and this should help our business development going forward. And in prevailing market, of course, then we did issue the profit warning. And now the new range that we have given for our revenue is SEK $365,000,000 to SEK $385,000,000, where it was a drop we dropped the top from SEK $395,000,000 to SEK $385,000,000. And the operating profit range is SEK 19,000,000 to 24,000,000. And here, we clearly see the uncertainty, the development of the demand affecting our operational efficiency and thus the operating profit.
And the range is fairly high given the fact that we only have half a year left, but it’s really, really difficult to estimate what will happen now with the trade war, how will that impact our customers’ decision making, when will these decisions take impact on demand, etcetera. So the uncertainty is high, especially now driven by the trade war and the development there. But we, of course, will continue to work with our strategy despite the market conditions. And if we’re able to move forward as we now saw in Q2, we do believe that we have a good potential to move forward with our business and improve on our numbers as well. So that’s the presentation part.
So now I’ll be open for any questions that you may have.
Moderator: The next question comes from Jortica from Evli. Go ahead.
Abtehrtik, Analyst, Evli Research: Good afternoon. This is Abtehrtik from Evli Research. Thank you for taking my questions. First on the market, so looking at some of your public customers, it seems that their order flow is quite strong. How you see that momentum will translate into your demand going forward?
Johan Nakki, President and CEO, Eteplans: Well, it’s very much varying between different customers. There are certain customers where there is quite strong order intake. Then there are some customers where there are one single large orders that are pulling the numbers up. And there’s quite many customers where the sort of service business order intake is increasing quite well. But we don’t see that much, this kind of new projects, large projects, which would bring more demand to us from our customer order perspective.
Of course, then the R and D investments and so on, if our customers’ business starts to move forward, if there will be clarity on the sort of rules of the game, then we, of course, hope that the other investments will also move forward and there could be a better situation. But it’s at the moment, it’s hard to tell. There are certain customers where we see the demand situation is improving and will have an impact, but there are still customers where demand situation is extremely low and there is very little in new investments. So it’s really hard to say how it will move forward. We certainly hope it will move forward.
How exactly and when that is the million dollar question at the moment.
Abtehrtik, Analyst, Evli Research: Yes. Got it. Then on the market share, I think you said something about winning market share at least in Technical Communications. But obviously, the market is challenging, but how did you see your performance against the market in Q2?
Johan Nakki, President and CEO, Eteplans: I think that with the new offering that we have now been developing, and especially in the Technical Communication Solutions area, we see that there is clear progress. We have developed a very good AI offering into the service area in particular, others as well, but there we are the furthest. And we see that that’s highly attractive for our customers, easy to take into use and bringing huge benefits. So we do believe that we have one market share, and we do believe that we will continue to do that with our new offering. This is, of course, our guess, but we have won nice cases.
We have a strong pipeline of cases. And once the demand starts to improve, this will contribute to our revenue development. But especially in the sort of Technical Communication Solutions service area, that is very much volume driven, delivery volume driven from our customers. So until those move up, it’s difficult to say that there would be clear increase. But winning market share is, of course, good.
And once the deliveries really start, we do believe that we are in a stronger position.
Abtehrtik, Analyst, Evli Research: Yes. Thank you. Then on the automotive sector, you made the Novakon acquisition in January. And I think in Q1, mentioned that you’re doing relatively well in the industry. Now I think I saw that you put into the report that the demand is weakening.
Is it just related to the uncertainty? Or was there something else in that industry?
Johan Nakki, President and CEO, Eteplans: Well, I think that some of our customers are cautious at the moment with a very clear uncertainty of the tariffs. It’s been moving from 1% to another on a daily basis basically for a period of time. Now there seems to be some kind of clarity. But is that firm? No one knows.
So it is it has been difficult for our customers, and they have been dropping their investment levels a little bit. But with the example of Novakon, yes, we did see some kind of slowing down on certain activities. But then on some other activities, there’s we also saw more potential. So we feel that the investments will continue. There might be a slight dip, has been a slight dip with certain customers.
But overall, the electrification and the new development in that area continues, and we do see opportunities going forward. In Novakon, we have now completed the integration. It’s going according to our expectations. So we feel that, yes, there might be some bumps on the road now in the near term. But for the longer term, we see that there is a good possibility to move forward.
Abtehrtik, Analyst, Evli Research: Okay. Then on the project cancellations. You mentioned cancellations of projects that were already agreed upon. To what extent did you see these cancellations compared to just suspensions or postponements of projects?
Johan Nakki, President and CEO, Eteplans: Well, not that many cancellations. Some, yes, that this will be canceled, it will not be done, but lots of postponements. Quite many customers were saying that now it’s completely impossible. We don’t know. So let’s see after summary if the situation has clarified.
So this is the majority of it. But of course, there were also cancellations that customers are saving money to be more profitable and so on. And there were clear cancellations as well, especially in the software side, but also in some other areas. So this is unfortunately how it is at the moment in the market.
Abtehrtik, Analyst, Evli Research: Yes. Then I think now that the trade uncertainty has at least somewhat decreased, has any of these previously delayed projects been already started or talks have started about them?
Johan Nakki, President and CEO, Eteplans: Well, it’s very early to say. Many of our customers are still on vacation and just now returning, and we are starting to talk to them and meet with them. So there are, of course, some projects that have been decided that, okay, this will now start. But it’s too early to tell. We need to go a couple of weeks further so that people have really truly returned from vacation and they have assessed the situation and taken new decisions.
We don’t know yet exactly how this will play out. We’re hopeful, but we don’t know exactly how this will play out. And that’s why we have a long or sort of wide range for the H2 as well.
Abtehrtik, Analyst, Evli Research: Yes, understood. Then lastly from me. You said that the temporary layoffs in Finland have had an impact on the employee turnover. Do you see that you have lost any talent to your competitors?
Johan Nakki, President and CEO, Eteplans: Don’t know competitors, maybe some, yes. Of course, there is always a little bit of movement. But there have been people moving to other industries, even changing their occupation entirely, and that’s unfortunate. And it’s understandable due to the prolonging temporary layoffs that it’s understandable, very unfortunate. But I don’t think that the majority of the attrition is going to competitors, but because for them, the market situation is equally difficult.
Abtehrtik, Analyst, Evli Research: Yes. Thank you. That was all from me.
Johan Nakki, President and CEO, Eteplans: Thanks.
Moderator: The next question comes from Emil Imonen from DNB Carnegie.
Emil Imonen, Analyst, DNB Carnegie: Maybe I’d like to start on the new guidance of €365,000,000 at the lower end. What makes you confident that you can reach the guidance? Because when I look at the figures, it seems that organically, the sales is declining faster now in Q2, especially in Software and Embedded Services. So we need quite a clear trend change for you to actually reach the lower end of the guidance, if I calculate correctly.
Johan Nakki, President and CEO, Eteplans: Yes, that is correct. And of course, there is pressure and possibility that we don’t reach that. But we are now coming into, hopefully a slightly better sort of clarity on the market. Have a longer quarters coming ahead of us. And then we also had a quite difficult time last year on especially Q3 and also in Q4.
So the sort of comparison quarters are fairly weak. So with the restructuring measures that we’ve done, with the new things that we have acquired, with the new offering, we do believe that we have a good possibility to be clearly within the range.
Emil Imonen, Analyst, DNB Carnegie: Okay. Thanks for that. Then I’d actually like to jump to the AI revenue. Could you first start with describing a little bit more in detail what do the AI driven business models exactly mean? And how do they differ from previous business models?
Johan Nakki, President and CEO, Eteplans: Well, with the AI driven solutions, we mean service where we have as in Etepland, we have developed our own AI component that has a clear impact on the delivery for the customer, thus creating totally new kind of value for the customer. So it does not mean that all the revenue comes from AI related services, but it means that the services that are rendered towards the customer have an AI component, which significantly improves the value creation that Etepland is providing. So that is what it means. But we have been working with it quite a lot. We have been investing money and time into it for quite a while now.
And now the development has started to also finally show in the numbers and especially in the Technical Communication Solutions service area. We have been able to really move forward. There’s a highly competitive offering that we have developed. We are more efficient with the new offering and new tools. These are Eteplants proprietary tools that we are using, which make us more competitive in the market.
And that helps us to win market share and move forward. So that’s been highly appreciated by our customers and also giving us good opportunities going forward. Part of the business is winning new customers, new cases, new outsourcings. But part of the business of this 4% is also converting our existing businesses into AI driven models. And it’s clearly visible that with these new solutions that we’ve developed, we can provide more value for the customer.
And with that, we do expect that we will be able to improve on our business as well.
Emil Imonen, Analyst, DNB Carnegie: That’s clear. But could you then specify if you convert the customer from one service to an AI driven service, does that mean more revenue for you? Or does it mean higher profitability? Or what does it mean economically speaking?
Johan Nakki, President and CEO, Eteplans: If we look at converting an existing business, so of course, depending on what kind of a customer, but if we’re able to provide higher value, so of course, our share of wallet can increase. If it’s a fully outsourced service, so then it may mean that our margins can improve because we have higher value for the customer. But we are more efficient, so our revenue might actually or the number of people that are used to deliver the services might decrease. So the cost per customer might decrease. So an individual account where we are doing all the services, there are such customers.
So there the revenue might slightly drop and then we improve on the margins. But then we do expect that with this highly competitive offering, we are then able to win market share and get new customers to compensate for the efficiency gain that we have within a certain customer.
Emil Imonen, Analyst, DNB Carnegie: That’s great. And of the 4%, that’s almost double what it was then as a share from Q1. Is that mostly converting existing customers? Or is that actually having new customers?
Johan Nakki, President and CEO, Eteplans: It’s a combination of these two. So it’s converting some of the customers, but it’s also new customers. So it’s a combination of these two.
Emil Imonen, Analyst, DNB Carnegie: That’s clear. That’s all from me. Thank you, Johan.
Johan Nakki, President and CEO, Eteplans: Thanks.
Moderator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
Johan Nakki, President and CEO, Eteplans: Okay. Thank you. So yes, it was a difficult quarter for us, and we did need to issue a profit warning, which was very, very, very, very disappointing. But however, we are now progressing with our strategy. We do feel that the work and investments that we’ve done in the past one year or even slightly more than that will have a positive impact on our business, and we are extremely pleased to see that now finally also in the numbers, we are seeing an increase in the AI driven revenue.
That’s encouraging. And with this kind of continuing on this trend, continuing on this development, we are confident that we will be able to move forward. We certainly hope that the trade war will somehow get at least there will not be this turbulent environment. And we certainly hope that it will help us also with the demand side. But it’s too early to tell what is the impact and especially for this year.
The uncertainty remains, but with solid strategy execution, we are able to move forward, and that’s what we are working hard with. Of course, if you have any questions outside this meeting, so feel free to contact us at any time to myself or our CFO, Helena Kukkonen or our SVP of the Tornjianen of Marketing and Communications. So thank you very much for tuning in, have a great day.
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