Earnings call transcript: Multiconsult AS Q3 2025 misses earnings forecast

Multiconsult AS reported its third-quarter earnings for 2025, revealing a notable miss in both earnings per share (EPS) and revenue compared to market forecasts. The company posted an EPS of 1.41 NOK, falling short of the expected 1.89 NOK, representing a negative surprise of 25.4%. Revenue also came in below expectations at 1.2 billion NOK, compared to the forecasted 1.22 billion NOK, marking a 1.64% shortfall. In response, the stock saw a decline of 0.89% in pre-market trading, reflecting investor disappointment. This continues a concerning trend, as InvestingPro data shows the stock has already fallen over 11% in the past six months, with two analysts recently revising earnings estimates downward for upcoming periods.

Key Takeaways

• Multiconsult’s Q3 2025 EPS missed expectations by 25.4%.
• Revenue fell short by 1.64%, impacting investor sentiment.
• EBITDA decreased significantly by 39.6% year-over-year.
• The company aims to restore its EBITDA margin to 10% by 2026.
• Market conditions remain challenging, particularly in the building sector.

Company Performance

Multiconsult AS faced a challenging third quarter, with significant declines in key financial metrics. The company’s EBITDA fell by 39.6% to 62.1 million NOK, and the EBITDA margin decreased to 5.2% from the previous year. Despite these setbacks, the company reported a 4.2% increase in net operating revenue to 1.196 billion NOK, driven by a 6.7% organic revenue growth.

Financial Highlights

• Revenue: 1.196 billion NOK, up 4.2% year-over-year
• Earnings per share: 1.41 NOK, down from the forecast of 1.89 NOK
• EBITDA: 62.1 million NOK, down 39.6%
• Year-to-date net operating revenue: 4.135 billion NOK

Earnings vs. Forecast

Multiconsult’s Q3 2025 earnings fell short of expectations, with an EPS of 1.41 NOK compared to the forecasted 1.89 NOK, a negative surprise of 25.4%. Revenue also missed the mark, coming in at 1.2 billion NOK against a forecast of 1.22 billion NOK. This shortfall marks a significant deviation from previous quarters, where the company has generally met or exceeded expectations.

Market Reaction

Following the earnings announcement, Multiconsult’s stock experienced a 0.89% decline in pre-market trading, reflecting investor disappointment with the earnings miss. The stock’s current price is 169.5 NOK, positioned closer to its 52-week low of 156 NOK than its high of 221 NOK, indicating a cautious market sentiment.

Outlook & Guidance

Looking ahead, Multiconsult aims to restore its EBITDA margin to 10% by the end of 2026. The company plans to focus on cost management and efficiency improvements to achieve this target. It also expects stability from its framework agreements and is engaged in ongoing CEO succession planning.

Executive Commentary

CEO Grethe Bergly emphasized the need for change, stating, "We are not in a crisis situation, but we’ve seen a tendency over three quarters that we need to change." She also noted that "the pricing level in the backlog is satisfactory," despite the current competitive market conditions. Bergly acknowledged the pressure on margins and price sensitivity across the architectural and engineering services sectors.

Risks and Challenges

• Competitive market pressures impacting margins
• Challenges in the building and property market
• Need for effective cost management to improve profitability
• Potential delays in investment decisions affecting project timelines
• Execution risks associated with restructuring and management changes

Q&A

During the earnings call, analysts focused on Multiconsult’s cost-cutting measures and the rationale behind its recent acquisition of Vianova. The management addressed concerns about margin pressures in the Nordic markets and confirmed that pricing in the backlog remains satisfactory.

Full transcript - Multiconsult AS SE (MULTI) Q3 2025:

Grethe Bergly, CEO, Multiconsult Group: Good morning and welcome to this presentation of the results for Multiconsult Group. Third quarter 2025. My name is Grethe Bergly. I am the CEO, and together with me today, I also have our CFO, Ove Haupberg. Before I look into the details of the figures, just a brief reminder of who Multiconsult is. Multiconsult is a Norwegian consulting and architecture firm. Our primary operations are in Norway, but we also have a presence in Sweden, Denmark, Poland, and the U.K. Additionally, we are involved with projects across Europe, Africa, and Asia. Our business is divided into four segments. Regions Oslo, which is where the headquarter is in Oslo. Regions Norway, which cover all the engineering offices outside of Oslo. The segment architecture. That contains the four architect companies, and international, where you find our engineering subsidiary Iterio in Sweden and Multiconsult Polska in Poland.

In the market, we operate in four business areas, and all segments and subsidiaries address market opportunities within these four business areas. In our portfolio, we have a 50-50 balance between public and private customers. In recent years, we have delivered profitable growth based on a robust business model with a diverse portfolio and a strong professional environment that can assist our clients with their challenges across business areas and geographies. We are more than 4,000 employees. We execute more than 15,000 projects on an annual basis for more than 5,000 clients. Let’s move on to the figures. In summary, the third quarter is a stable performance in a competitive market. Adjusted organic revenue growth year over year is a solid 6.7%. The billing ratio of 70.1% is also a satisfactory level for the third quarter in our business.

The increased competitive landscape means maintaining growth and profitability in line with our ambitions is more challenging. While we have sustained strong performance over an extended period. Certain areas of the business are now facing more challenging market conditions, and overall hourly rates have not increased sufficiently to match the development in salaries and other costs. The results of this quarter reflect this mixed picture. With overall performance somewhat below our targets and expectations so far this year. To address this, we strengthen our ongoing initiatives and are launching additional measures to improve billing ratio and restore momentum. I will go more into detail of this later in the presentation. We maintain a strong order backlog and continue to win assignments that align with our strategy. Comparing the figures for the third quarter with the third quarter 2024.

Bear in mind the one-time settlement related to a contractual dispute that lifted the results with NOK 31.1 million. Last year. Looking at market and sales, we have achieved good sales in the quarter with continued strong sales in the energy and industry business area, stable sales in building and property. Variations are within normal fluctuations. In the quarter, we strengthened our position within defense with a new frame agreement. Assigned to LINK Architecture and Multiconsult Norge from the Norwegian Defence Agency. The reduction in order backlog that we have seen for some time has been expected but is still at a high level and provides a good foundation going forward. The current portfolio of large projects provides for a steady production into the first half of 2027. We are working to secure sales on new large projects, both within defense, infrastructure, and hospitals, and carefully consider pricing strategies.

There are some very large projects waiting to be decided, but we are experiencing some slowdown in decision-making to invest. The high production in the new projects is not due until the second half of 2026. This means sales in smaller and medium-sized projects, which shorter lead time is required for the time being. Please remember that frame agreement volumes do not get registered in the order backlog until call-offs are made. We are currently in a position where the large frame agreements with the Defence Agency are at a starting-up phase, and only small volumes have been included. Now, looking at measures to improve profitability and take us back on track. The challenges in the group vary across business areas and geographies. This means the measures to improve margins and maintain efficiency also have to vary.

We are facing a more competitive market, and recovery in some business areas is not expected in the short term, at the same time as we are experiencing strain on rates. We have identified areas where we need to adapt the organization to the expected market situation. This will require restructuring within some areas. To address costs, we are looking at several initiatives, one of which is to create a more efficient business support organization across the whole group. In the short term, we are also scaling down internal activities. The measures will handle both cost out and operational improvements, and the effects are within Multiconsult delivering on targets as expressed in the Capital Market Day. It is worth noticing that activity levels remain strong across many areas of the organization with promising prospects ahead.

The third quarter is the period when we welcome a number of new graduates, and this quarter we have welcomed 69 new graduates, a reduction compared to last year. The turnover remains stable. The growth in employees is related to areas where we see the need for capacity building. We have also made a change to the top management team, strengthening the management of Multiconsult Norge and making a more defined accountability to EVPs to follow up on all segments in the group. With that, I hand you over to Ove.

Ove Haupberg, CFO, Multiconsult Group: Thank you, Grethe. Good morning. We have a closer look at the numbers for Q3 2025 and also the year-to-date numbers. We are starting with Q3. Net operating revenue for the quarter ends at NOK 1,196 million. That is an increase of 4.2% from the same quarter last year. The organic revenue growth was 3.8%. On top of that, you need to build M&A activity. That is Life Tech that came in the second quarter, 0.2%, and the positive calendar effect of 0.2% as well. We had the same number of working days year on year this quarter, but a difference in the value between the working days. This one-time settlement last year gives a corrected organic revenue growth of 6.7%. The main driver behind this growth is a high number of employees. That is 169 and 204 full-time equivalents. We see this in the graph underneath as increased capacity.

We also have increased billing rates. A comment on the growth of FTEs, that is above the number of fixed employees, is caused by the calendar effect of our operations outside of Norway. This growth is offset by lower billing ratios. We see differences in the billing ratio between the different segments, the different geographies, and business areas. We had a very positive effect on the billing ratio in the third quarter last year on high activity on our larger projects. In Q3 this year, that is somewhat influenced by that some of these projects have passed their peak performance. We are waiting the start-up of the new frame agreements, and that means that a relatively higher proportion of smaller and middle-sized projects is in our portfolio.

Also, as reported previous quarters, is the normal level of net project write-downs unchanged from last year and below 1% of net operating revenue. In this quarter, we have a cost effect of NOK 5.1 million due to legal costs and write-downs on the Sultra project, adding to a total of NOK 18.9 million year-to-date. These are costs that were spent due to preparations for the court case that started on the 22nd of September this year, and it still continues. Our accounting risk on this project is unchanged and at a low level. EBITDA in the third quarter, NOK 62.1 million, a decrease of 39.6% from last year. The margin is 5.2%, also a reduction from last year, but an adjusted margin, NOK 9.6 million below last year or 1.2% at that point.

EBITDA is affected, as we had commented, on the lower billing ratio, but we also have increased employee benefit expenses caused by the growth in the number of employees and normal salary adjustments. We have a general cost increase, and especially in the IT area. This is also seen in the graph drawn to the right in the picture. We have also commented in previous quarters that the discontinuation of this temporary employer’s contribution has resulted in reduced costs, NOK 5 million per quarter compared to the two last years. Grethe, as you mentioned, and we also mentioned last quarter, we are strengthening our initiatives to restore the momentum in the business. Order intake, a positive NOK 1.2 billion and a very strong order backlog.

On the reported profit, we have to mention that we made a re-evaluation last year on a put option obligation to the rest of the share in RLAB, and that had a positive effect on net finance income of NOK 10.6 million. Earnings per share, NOK 1.41 for the quarter. We are ready to move on to the year-to-date figures. Organic growth positive by 4.1%. Reaching then a net operating revenue of NOK 4,135 million. We had M&A activity of 0.9%. The four acquisitions. We had a research site partner, Petter Jens Rasmussen, and Life Tech. The calendar effect between the years is insignificant. The corrected growth for this one-time settlement on year-to-date figures is 4.9%. Also, year-to-date figures on the drivers for growth are a higher number of employees and FTEs, that is, increased billing rate, and we also see the offset effect on the lower billing ratio.

The effects year-to-date are the same as the third quarter, and on top of that, we have commented that we had higher competence networks activities the first half and also a low activity and few available hours the first days of January. EBITDA year-to-date, NOK 319.9 million, decrease of 24.8%. The margin, 7.7, a decrease of 3.1, and an adjusted decrease of 2.4 percentage points. To sum up then, the EBITDA is impacted by these higher employee benefit expenses, the decreased billing ratio, and also increased operating expenses. Also on these year-to-date figures, we have this effect on the re-evaluation of this put option on RLAB, and the year-to-date figure is NOK 36 million, and that is influenced on the finance income and also then on the profit for the period.

Okay, we see the results over time, and bear in mind that the results are influenced by the number of available working days. Starting top left, we see the third quarter results in black, and we see the increase in the net operating income of 4.2%, and also that a positive effect on the rolling 12 months shown in the blue line. Billing ratio to top right is a decrease of 1.1%, but it is a solid level compared to the previous years. We have an increase in permanent fixed employees of 4.3%, and all this in combination with the cost change and also the rates gives a margin EBITDA for the period of 5.2 that we see down to the left. Some comments on the four segments, and all numbers are Q3 compared to Q3 last year. We start to the left with the region Oslo.

Net operating revenue, a small growth of 1.3%. Corrected for this one-time settlement, the growth is 7.9%. As we have seen on the total pictures, the growth is the same here with improved billing rates, increased capacity in the region Oslo, it is 61 FTEs or a growth of 5.4. We also see a lower billing ratio, and we also have approximately half of this Sultra legal cost in this segment. There is also a technical correction in the segment that we have moved 15 FTEs from region Oslo to non-allocated. Operating expenses, increase of 9.2%, a combination of increased employee benefit expenses and increase in other operating expenses, especially on IT costs. EBITDA ends at 7.3 compared to a corrected number for last year of 8.4. Moving one step to the right to region Norway, more or less the same picture as for Oslo.

We have a net operating revenue growth of 8.5%. Also improved rates. We have 70 new FTEs or a 5.5 increase, but also a lower billing ratio in this segment and the rest of the cost due to these Sultra legal proceedings. Operating expenses increased on 10.9 and the split the same, increase in employee benefit and other costs, especially IT. EBITDA has done a reduction from 8.2% last year to 6.2% this year. Segment architecture, net operating revenue NOK 163.4 million, that is an increase of 9.1% from last year. EBITDA also improved around NOK 2.1 million from last year. The currency effect slightly positive in this segment by NOK 0.9 million on net operating revenue and negative on EBITDA on NOK 0.5 million. A short comment per company and starting with LINK Norway.

Underlying performance is in line with last year, but following a bit more positive market sentiment after this summer, the market is now flatter for most of the regions and we see delay in project startups. Total number of FTEs also unchanged from last year. LINK Sweden, we are still faced with the weaker results this quarter due to changes in the project portfolio in Northern Sweden. This is causing a reduced billing ratio, but we are able to keep favorable rates in the remaining portfolio and we have very good performance in the very demanding Stockholm market. LINK Denmark, still improvement both in billing ratios, in number of personnel and also keep cost under control. RLAB, still a very good story, significant improvement in this quarter, increased billing ratios, increased number of FTEs and also very good cost control. There is no temporary layoffs here either.

RLAB is also faced with a more demanding market after some few months with a more positive tailwind, and they state that the market is characterized by high competition and focus on rates. In total in this segment, an increase in the number of FTEs by 30 and no temporary layoffs. Last segment is international. Net operating revenue increased on 2.2% from last year. The currency effect is positive by NOK 1.7 million on net operating revenue and the calendar effect is negative on NOK 0.9 million. EBITDA is NOK 1.7 million, that is NOK 3.1 million below last year, and the margin has been decreased from 5.1% to 1.8%. The performance level is lower both in Iterio and Multiconsult Polska compared to last year and no currency effect on EBITDA. Our financial position, and we start to the left.

We see the positive cash at the beginning of the year of NOK 165 million. We have cash flow from operations NOK 414 million year-to-date. A negative change in working capital that is due to high invoicing at the end of Q3. Bear in mind that this is paid back now during October and we have no increase in bad debt provisions. Cash flow from investment is including the M&A activity on Life Tech and the negative cash flow on financing is due to the dividend payout in April and the purchase of our own shares to be used over employee program now later in November. In combination with IFRS 16, we have a negative NOK 299 million in cash, and this adds to the right on the interest-bearing debt, but we are still below our target of 2. The debt level is 1.77.

The last on cash from me, the free cash flow. This quarter we see in the light blue column that operational cash flow is negative NOK 133 million. That is mainly due to the negative change in working capital. Investment of NOK 29 million with the exception of M&A activity. That is a total negative effect this quarter of NOK 161 million, but the free cash flow last 12 months still positive at NOK 289 million. With that, Grethe, I hand it back to you. Thank you, Ove. Looking at the market structure, we see that the gross revenue is in line with what we’ve seen in the market for a while. Continuous high activity within energy and industry and stable in the other three business areas. The distribution between the business areas is also stable.

The strategy ambitions define clearly areas where we seek to assist our clients in the journey to development and improving our environment. The sales this period support this ambition and as climate-related events influence the news and our specialists deliver both solutions and develop methods to meet these challenges. We have a leading position across several domains, and in this quarter, we have won a number of projects that demonstrate our path to deliver on the strategy. Looking in more details at some good examples, this new factory for Alginor is a great example of how the client relations and market position of the recent addition to the group, Petter Jens Rasmussen, now creates opportunities for the whole group. The frame agreement for the Norwegian Public Roads Administration is a great recognition of our expertise within the area of safeguarding biodiversity and climate.

We are selected to develop new methodology for nature capital accounting and set the national standard to enable us to measure the development on the track to nature neutrality as set out by the EU and the United Nations. We are starting now with accounting methods for road projects. On the international arena, we have had a long history of presence in Africa, and we see a growing pipeline within renewables in the region. We have been involved under the umbrella of Get Fit since 2013, where the overall objective is to assist African nations in pursuing a climate-resilient, low-carbon development path resulting in growth, poverty reduction, and climate change mitigation. In the first phase of Get Fit Mozambique, we worked on building the institutional capacity and design programs.

For the second phase that we have now been allocated, we are looking at how we can realize the market-ready projects for the country. We are also very proud to have played a role in making real an ambitious vision from our client on this landmark building, Construction City in Oslo, that brings together the entire construction, infrastructure, and real estate industry under one roof. With around 103,000 sq m and space for 4,500 workers, Construction City is one of Norway’s most extensive commercial projects and among the most ambitious in terms of collaboration. It holds a BREEAM-NOR Excellent certification, an A rating for energy, and it is made with future reuse and recycling in mind. We have also increased our engagement in the defense sector during this quarter, and we are now a solid supplier in all of Scandinavia within a variety of projects.

Going to the outlook, the overall market remains stable in the sense that there are a number of projects identified in our pipeline. At the same time, there is some increased uncertainty when it comes to the timing of execution of this. Investment decisions remain slow in several areas. Areas where we have a position like defense, energy, industry, and infrastructure remain key drivers. Interest rates may boost investment as we are a very price-sensitive sector. The building and property market is expected to remain challenging while defense and hospital projects are a positive exception in this business area. The competitive landscape is expected to remain challenging with pressure on margins and price sensitivity across architectural and engineering services. Leaving the quarter, we have a healthy pipeline. We have several framework agreements that will support stability going forward.

Before I finish, I will just give some information on the ongoing recruitment of my successor. From the board, they are informing that they are currently working on the recruitment. They have had several candidates that they have considered, but they have not yet concluded the process. The focus remains on finding the right candidate, and I have confirmed that I will continue in the role until my successor is appointed. A conclusion is expected in the coming months and will be communicated as soon as the actual circumstances allow it. With that, we finish the presentation. Here is the financial calendar, and then Ove will join me on stage and we open up for questions. Thank you. We start with Martin Kvernet. These questions were made during the Norwegian presentation and translated to English.

Martin Kvernet Nordea, could you please provide some more information about the cost cuts you are planning to make and which areas you intend to make more efficient? How do you view the pricing level in the backlog now, given the cost levels going forward? I think cut, they said it’s okay. Yeah. Looking at cost cuts, we will really take a deep dive into all parts of the organization, and there will be a variety of things. We are looking at how we purchase these days. We will look at some of the IT that, if there is a potential there, we will look at the housing, the offices, spaces that we have. The second part of the question? How do you view the pricing level in the backlog?

The pricing level in the backlog is satisfactory as a lot of it has been won on a less competitive market situation than we are experiencing right now. The third one was the... Given the cost level going forward. Basically you answered that. Yeah. Yeah, but it’s also as we answered in the Norwegian presentation that adjusting the capacity and bear in mind that we are recruiting 180 people in a normal quarter. It is only equivalent to some weeks with lower recruitment. Good. Bengt Jonassen in ABG Sundal Collier, you mentioned, Ove, that the billing ratio has improved towards the end of the quarter. Has that continued so far in the fourth quarter? Yeah. I think it was the question on the cash that we are able to send out the invoicing and do the invoicing.

Yes, there’s been a positive development and that the bad debt situation is at a lower level than it was at the end of Q3. Bear in mind, it’s a very, very low level, just a few millions in total in our balance sheet. Good. Next question was, it is often mentioned that large projects make up a certain share of the production each year. Is it possible to give a rough indication as a rule of thumb how much this is? Yes, I can at least give you the historic figures. We have been up to 30. It will be for us to run at the rate that we want. It should be somewhere between 20-30% of the revenue. Good. Last question from Bengt regarding the acquisition of Vianova. You have now carried out the due diligence.

Could you say something about how Vianova looks in 2025 compared to 2024? Can you also comment on the order backlog and the allocation of purchase price to the amortizations? Yes. Overview is that the value is within the same range as we communicated on the LOE before summer. The order backlog is solid and at the same levels as we see in Multiconsult. We allocate, as we normally do in purchases, most of this value to goodwill, but some is also on the project portfolio that is depreciated or actually amortized over two to three years. Thank you. We go to Simon Mortensen in DNB Carnegie. You point out that the result was somewhat below expectations. Could you elaborate on which cost or revenue drivers were most negatively surprising this quarter? Yes.

We were not surprised by the results of the third quarter because we are experiencing the same tendencies that we’ve been seeing for a while now, that costs are running faster than income. That is why we are now going out and expressing even more activity to try and stop this. It’s important to say we are not in a crisis situation, but we’ve seen a tendency over three quarters that we need to change. The follow-up question is, do you see opportunities for pricing or price adjustments in existing contracts, or must this be offset through better mix or utilization? No, there’s definitely an opportunity for rate adjustment. It follows the same rules that we have always had. We had a somewhat weaker index in 2024, but we’re seeing now that the index has also got a bit larger.

Third question, can you quantify the measures included in the custom billing ratio initiatives you’re launching now or the program? Yeah. We are stating that our target is to get back at the level that we have stated, the capital market state, that is 10%. That is within the end of 2026. That covers the whole business, both on the billing ratios and also cost, across both operations and support functions. Thank you. Fourth question, it’s over to your latest acquisition, Vianova, which historically had Oz Jacobsens as one of the largest clients. Now that they are becoming a part of a competitor, how do you assess the implication of future assignments and the customer base in the Vianova portfolio? Also, can you elaborate on how you view synergies and margin contributions from Vianova in 2026? Yes.

The decision to buy Vianova was based on a pure rationale that they can fill in where we had previously needed to have sub-consultants. They fit very well with both the competencies that we have and the portfolios that we have. Going forward, this is going to be our strength. When it comes to the agreements that they have with Oz Jacobsen, we are very clear that we stand on the deals that are made, so that any commitments that. Vianova has towards Ås Jacobsen, we will honor that. In dialogue, we know that it also works the other way, that Multiconsult and Ås Jacobsen will honor the contracts that we have already agreed on. When it comes to synergies, it is operational synergies. It’s how we can take a larger part of the market, how we can enter other segments of the market.

Vianova, as an organization, did not have a large administration, so we are not expecting a large sum of synergies in that respect. Yeah. The synergies will potentially come on top of what we have calculated as the purchase price. That will basically potentially give us a better business case. Good. Thank you. Last question. Can you comment on where price pressure is greatest? Is it in Norway or other markets that you operate? And elaborate on which segments or regions you find most challenging. What we’re finding is that the pressure on margin, high competitiveness, is in the whole of the Nordics. We are based mainly in the Nordics. In Poland, I would say it’s a continuous competitive market. We see that there are still less sensitive areas of less price sensitivity, in particular maybe at the moment within energy and industry. Thank you.

That sums up all the questions. Okay. Thank you. From us, thank you for listening in and have a nice day. Thank you.

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