EU and US could reach trade deal this weekend - Reuters
Raute Oyj reported its Q1 2025 earnings, highlighting a record-high EBITDA and substantial growth in earnings per share, despite a challenging market environment. The company achieved net sales of €52 million and saw its EPS increase more than threefold compared to last year. According to InvestingPro data, the company maintains impressive gross profit margins of 49.84% and has demonstrated strong revenue growth of 40.69% over the last twelve months. However, the stock price fell by 7.06% following the announcement, reflecting investor concerns over the significant drop in order intake and broader market uncertainties.
Key Takeaways
- Raute Oyj reported record-high quarterly EBITDA.
- Earnings per share increased over three times year-over-year.
- Order intake fell significantly to €15 million.
- The stock price dropped by 7.06% post-earnings announcement.
Company Performance
Raute Oyj delivered a strong financial performance in Q1 2025, with net sales reaching €52 million and a notable increase in earnings per share. The company attributed its success to robust execution in its Wood Processing business and continued growth in its Services segment. However, a marked decrease in order intake and ongoing market challenges, such as trade tensions and a depressed global construction market, pose potential risks.
Financial Highlights
- Revenue: €52 million
- Earnings per share: Increased more than 3x compared to last year
- Cash flow: €2.8 million, up from -€7 million last year
- Equity ratio: 53.7%
- Order intake: €15 million, significantly lower than previous years
Market Reaction
Raute’s stock experienced a 7.06% decline following the earnings release, closing at €15.8. This movement contrasts with its 52-week high of €17.4, reflecting investor concerns over the company’s reduced order intake and the broader market uncertainties affecting the construction sector. Despite the recent decline, InvestingPro analysis suggests the stock is currently undervalued, trading at an attractive P/E ratio of 7.93x. The company has demonstrated strong performance with a 58.83% return over the past year and maintains a healthy balance sheet with a low debt-to-equity ratio of 0.11.
Outlook & Guidance
Raute provided a positive outlook for the remainder of the year, expecting net sales between €190 million and €220 million, with comparable EBITDA projected to be between €20 million and €27 million. The company anticipates market recovery towards the end of 2025 and sees potential for growth through mergers and acquisitions. InvestingPro subscribers have access to 10 additional ProTips and comprehensive financial analysis, including detailed insights into Raute’s growth potential and market position. The company’s strong financial health score of 3.39 (rated as "GREAT") supports management’s optimistic outlook.
Executive Commentary
CEO Micah Sari expressed confidence in Raute’s ability to deliver strong results, stating, "We are in a good position to deliver a good result and good financial year for Raute in 2025." Sari also noted the company’s proactive approach to resource management amid complex global trade dynamics.
Risks and Challenges
- Decreased order intake could affect future revenue streams.
- Global trade tensions and tariffs may impact investment decisions.
- The depressed global construction market poses ongoing challenges.
- Soft plywood market conditions could hinder growth.
- Geopolitical tensions add uncertainty to market conditions.
Q&A
During the earnings call, analysts raised questions about the sustainability of margins in the Wood Processing business, the impact of global trade tensions on investment, and the company’s resource management strategies. CEO Micah Sari addressed these concerns, emphasizing Raute’s adaptability and proactive management approach.
Full transcript - Raute Oyj (RAUTE) Q1 2025:
Micah Sari, CEO, Rautess: Good afternoon. Welcome to this Rautess Q1 business review briefing. My name is Micah Sari, I’m Rautess’ CEO. I will go through some of the highlights of our performance during the first quarter. We also have our CFO, Wille Haltonen here.
He will go through in a little bit more detail some of the financials and balance sheet numbers. And then at the end, I will give some views on the outlook for 2025 and recap our guidance for this year. You have also possibilities during this presentation to post questions in the chat, so please do so. We will reserve some time at the end to go through those questions together with Will. Very good.
Let’s get started. So if we look at some of the highlights first for Route during Q1, I would say that overall, we can say that we had a good quarter, good start of the year. We had a good strong operational performance, which then resulted in good net sales and, I would say, even more so very good profitability on our comparable EBITDA, which is the key thing we are guiding to the market as well. Maybe as a reminder, I want to say that we had quite good high order backlog starting 2025. That was very much thanks to the peak order intake we had earlier in 2023.
We won big mill sized mill delivery orders. And now the focus has been very much on successfully delivering those projects to our customers. And in terms of that execution of those projects, the performance was very good during Q1. We had also quite good order intake during Q4 last year, but now in Q1, and I will come back to that, we can see that the market is quite challenging and the new order intake has been on a low level. But if we look at the financial performance itself, very good performance in the Wood Processing business unit, which is the biggest business unit we have and which is mostly responsible for delivering these large projects to our customers.
Services had also, I would say, reasonable good quarter. We’ve been growing in the Service business during the recent years and this growth also continued in Q1 this year. Analyzers also showed profit in Q1 compared to last year’s comparison period loss that we made, I would say that last year was a challenging start of analyzers business and this year was a more normal start. But overall, I would say good performance. We are happy on the financial performance itself, and this is providing good start of the year to really reach good result overall in 2025.
Then moving to the other side of the coin, which is that this was exceptionally challenging market environment. We’ve seen downturn in the construction housing market globally during the past couple of years already, and there was maybe an expectation that this recovery would take place quite soon. But I think now the latest turbulence in the global trade environment, the tariffs, the counter tariffs that have been introduced has caused more uncertainty in the market. So we are clearly seeing that we our customers are postponing some of their decisions on new investments and that was visible in Q1 as well. So we got €15,000,000 of new orders in Q1.
The good thing is that this was mostly Service order intake, so Service business itself is actually doing relatively well, but then when it comes to Wood Processing and also partly analyzers, the order intake was on a low level. I think anyway we are in a good position to capture these opportunities with our customers when the market turns, but it’s quite clear now that this turn of the market is postponed towards the end of this year, assuming that there’s not further escalation in the world trade environment. I should also say that we have not really we don’t feel that we have lost cases, but things have really been postponed. So of course, at certain point, when there’s more certainty in the market, I’m sure we are in a very good position to capture also new order intake with our customers with whom we have a very long term relationship. In terms of the financial performance, which was very good, we also then, a couple of weeks ago, changed our full year guidance in terms of the comparable EBITDA, and I will come back to that later.
So here are some of the numbers I already mentioned. The comparable EBITDA on a very good level. Net sales close to €52,000,000 also a good level, in line with what we are expecting or were expecting comparable EBITDA, as I said, over the expectation. Order intake, 15,000,000. Order book still at the end of quarter one at, I would say, reasonable level, hundred and 46,000,000 If we look at the history of Raude, this is the typical level of order book that we’ve had looking at the plan for the next twelve months or so.
It’s maybe exceptional time now that our order book has been much higher than anticipated or guided net sales for the next year. So this is a more normal situation. But as I said, of course, the expectation is that we get back getting new orders when the market recovers. Equity ratio of 53.7%, so this is a good ratio for us. We have a strong balance sheet.
This is over our long term guidance as well, and we want to keep a good strong balance sheet when we move forward. Personnel roughly on the same level than a year ago, 70 Routians. Order intake, as an illustration, over the last six years, five years or so, we can see 2023 really there as the peak year for new orders, euros $350,000,000 of new orders. Last year was lower, 121,000,000, although the last quarter of last year was good. And now this €15,000,000 of course, is kind of low looking at the normal quarterly order intake that we have received.
There was quarter three also last year on the same order of magnitude. So it’s very typical, of course, for our business that there’s a quite big variation between the different quarters. And now, as I said, our customers have postponed investment decisions, so that’s the result of that. Orders coming, big part in Europe and then North America also big, but this is mostly service related orders, which is, of course, good for us. Order book, putting things into perspective, euros 146,000,000 at the end of Q1 is still a reasonable number, reasonable level.
It’s even a bit high level if you look at the earlier years where a big part of orders order back loss for Russia, and we have now totally gone out from Russia market, so this is from other regions. So this is where we are at the moment when we continue the year. Net sales, good growth in net sales, good €52,000,000 of net sales, good realization. And a big part of that is coming now from Europe. We need to remember that we have some of the big or the biggest projects we have in our still in our backlog to be completed.
They are based here in Europe. We have a project in France. We have projects in Paldek area and in Finland. So of course, Europe is dominating from the net sales realization point of view and that is visible in Q1 as well. Comparable EBITDA, so this was the highest all time highest quarter for comparable EBITDA.
So of course, we are happy with this result and really the project execution proceeded very well, no hiccups on the main projects and that is visible as a good result as well. And then on operating profit, this is a cumulative operating profit for the different quarters. Now in Q1, of course, we made more operating profit than quarters one and two together last year. So of course, this is a good start of the year and provides good certainty for our outlook for this year as well. Personnel, no big changes, as I said, maybe on this picture, we can see how in 2023, we did reduce the workforce in Route.
When I joined end of twenty twenty two, we had some change negotiations and the workforce was reduced and there has been some increase from that time, but now during the last year roughly or so, there hasn’t been further increase. Actually, we’ve been even going down slightly. Okay. Then moving to the three key segments, business units that we have. Wood Processing, this is the biggest business unit we have.
We are particularly happy on the performance of Wood Processing business unit, strong growth on the top line, 18.7% growth on top line, good revenue recognition, net sales recognition. And then even more so, we are happy with the profitability, so 14.5 percentage point comparable EBITDA after net sales. So this is a good figure for our Wood Processing business, even more so taking into account the past years and the turnaround that we have been working on and we’ve been realizing now, as shown by this result as well. Services also on a growth path, growing steadily, from that point of view. And profitability on a, I would say, reasonable level.
In our accounting, we are allocating a bit more overhead costs to services and that was a little bit taking down the comparable EBITDA for services compared to last year’s figures, for example. So that is a little bit behind this, but I’m overall quite happy with the service performance, and it’s important that we are able to grow this also in this quite difficult market environment. I can maybe say that we have seen now among our customers during Q1, of course, the investment decisions have been maybe postponed, but we are seeing that they still are producing a bit more. Overall, volume is higher than a year ago for our customers globally, but the prices of plywood and LVL products have been going down a bit. So our customers are, of course, they still need service from us and they need spare parts and they want to keep up the operation.
Volumes are even slightly increasing and that is helping services even if then the investments are now more require more time for decision making. Analyzers, good growth from last year, although I would say that last year’s number was not very good, so comparison period was a bit weak, but we see that there’s a good growth on the net sales side on analyzers and also the profitability is on positive side, which wasn’t the case a year ago. I think in analyzers, we have potential to much better profitability and much better net sales realization when we move forward, but this has been also this business hit by this market uncertainty and decision making has been more challenging to our customers, and therefore, we haven’t been realizing such a top line growth that we hoped. We have actually also looked at the cost side on the analyzers to make sure that even with this lower volume, we are profitable and we have a good sustainable business. Okay.
That was the overview on how we are doing, and I would hand it over to Will to go through a little bit more the financial numbers.
Wille Haltonen, CFO, Rautess: Okay. Thank you, Micah. So I’ll highlight some of the key numbers from our Q1 from router’s perspective. So starting from the earnings per share, our increased operational execution and increased profitability was reflected also in the earnings per share, which increased more than three times against last year. Below EBITDA level, we had some negative impact coming from the FX and then somewhat higher effective tax rate now during the Q1, but overall can be very happy about the EPS level.
And looking into the cash flow, we had 2,800,000 of cash flow during the first quarter, higher than last year of minus €7,000,000 In our business, it’s typical that the cash flow fluctuates quite a bit because of the payment cycles that we have in our project business. But overall, cash flow has been very strong now during the past few years already. And now during the Q1, net working capital had some negative impact into the cash flow, but not so negative as it was in the comparison period. Then detailing into the net working capital level, we were able to maintain negative net working capital at minus 20 6 million at the end of Q1, close to last year’s level. Some capital was now tied into the net working capital of €4,000,000 during Q1 due to projects going forward and not so much new orders coming in.
Overall, net working capital level is at a very good level. Then looking into the balance sheet more, we have a strong balance sheet to execute our growth strategy. Balance sheet further strengthened based on our improved and good profit generation. Equity ratio close to 54%, clearly higher than last year level and liquidity also has been increasing and clearly higher than last year based on high cash generation. Still further looking into the investment level, there we had somewhat higher investments than last year, euros 700,000.0 now during Q1 versus 400,000.0 last year.
Overall, the investment level is somewhat lower than our depreciations when we exclude the lease depreciation, so called right of use from a right of use asset. So overall, strong cash generation also from this perspective. And then finally, the R and D expenditures. There, we continue to maintain the current level of R and D at €1,300,000 versus 1,400,000.0 last year. So to summarize, we have a strong financial position, and it’s a good position to move forward.
And I’ll hand back to Micah to close with the outlook.
Micah Sari, CEO, Rautess: Okay. Thank you, Will. And I will summarize the outlook for 2025 and how we see the rest of the year. After that, we can look at the questions, if there are any. You can post the questions, by the way, in Finnish or English and we will then answer accordingly also when we go those through.
Okay. So overall on the business environment, as I said, we have seen that this investment sentiment has become increasingly uncertain during the first quarter. This shouldn’t be a big surprise to anybody. We see what is in the news every day, So of course, these tariffs, counter tariffs and this discussion has caused our customers to consider their investment and what is the right timing for the investment. We have seen from our customers’ business point of view that the soft plywood business has continued to suffer from the slow construction market.
And even there’s been now some downturn in the interest rates, we still haven’t seen the really market recovery from that point of view. There are nevertheless segments for our customers like hard plywood and LVL, which have actually remained more stable. And we, of course, as a route, have a special competitive edge even in those areas. Are, relatively speaking, even stronger on the LVL than maybe on the plywood. And on the plywood, we are, relatively speaking, even stronger when it comes to these most advanced applications of plywood and the hardwood, plywood qualities, for example.
And of course, in Europe, we still have this Ukraine impact, what is happening. So politically, is causing still also here some turbulence. It’s also an opportunity for our customers and therefore for us also, of course, if there’s a right kind of a peace, for example, in Ukraine or something, that direction takes place. And this geopolitical tension is also causing turbulence in Asia Pacific region and China. So quite a volatile environment, I would say.
And then if I look at our sales funnel, what we are following up and what we have in the pipeline, I would say that there’s a good amount of sales cases in our funnel. During Q1, we clearly saw postponement of the decisions on some of those cases further into the future. Whether further into the future is the next quarter or even more further, nobody really knows because the situation is quite volatile. But I would say that we are in a very good position to capture those opportunities when they emerge. I would also say that, at this very moment, we have a good, healthy backlog for this year.
And of course, we hope that towards latest towards the end of the year or very early next year, we see more normal operating environment for us also as a technology provider. So that’s the market outlook. A lot of volatility. We are, of course, following the situation very closely. We are also following the tariff development very closely.
We do have global footprint in our own operations. We have operations on manufacturing in Finland, China, Canada, U. S. A. So we are constantly, of course, looking what is the latest global footprint implication of the tariff discussion, for example.
I should say that at this very moment, for example, there’s no tariff from Canada to U. S. For our deliveries. It’s zero at the moment. It’s excluded from any tariffs, so it’s not an issue at all.
At this very moment, there is a tariff from Europe to U. S. A, Ten Percent as we know for everything there is a 10%, almost everything. This is not true for our customers’ products, however. I understand plywood and LVL does have a zero tariff to U.
A. So the devil is in the details, I should say, and this is I would say that for us, the challenge is not so much the current level of tariffs, it’s more the overall uncertainty, which is leading to customers not being able to decide on the future investments. That’s the situation at the moment. So but we expect the recovery hopefully then rather sooner than later and towards the end of the year, if that’s the best guess at the moment. And we did change our guidance for this year, so that was on April 25, we see the net sales.
We stayed with the original earlier guidance, 190,000,000 to €220,000,000 as a net sales and comparable EBITDA, we increased from 17,000,000 to €24,000,000 to new range, which is from 20,000,000 to €27,000,000 And the rationale for guidance is what I basically went through good progress in the project delivery and despite this low new order intake, we are in a good position to deliver good result and good financial year for Route in 2025. Very good. So I will maybe try to still wrap up with a couple of sentence and then we go into possible Q and A. So I’m happy, very happy on the financial performance of Route in Q1. It even exceeded our own expectations.
We are in a good position to deliver a good year in 2025. I’m particularly happy that we are seeing very clear turnaround now consistently realizing the turnaround in the Wood Processing business unit, which is our biggest business unit. Services is doing fine even in this environment, and I think we have further potential in the analyzers, which we have not yet been fully able to realize partly also because of the market turbulence. And then in terms of the outlook for the year, as I said, we will have a good year and we expect the market recovery now in our financial and business planning towards the end of the year, which would be quite okay for us actually. Very good.
That’s my summary. Maybe I invite Wille on the stage. If there are any questions, we’ll have a look at those. Are there anything there or maybe in the audience here?
Wille Haltonen, CFO, Rautess: We have questions, but maybe we take from the audience first, if you have here.
Johan Sjerdijn, Analyst, Kepler: Johan Sjerdijn from Kepler. First of all, congratulations on the very strong Wood Processing margins. I mean you described the 14.5% margin as good. I might say that seems a bit of an understatement maybe. Were there like any like sort of one off type like items there?
I mean when I look at your detailed financial information, I see you did a lot of revenue in Finland, obviously, due to the Metzek Group LVL project. And I think usually, such large orders have been associated maybe with somewhat smaller margins. So was there anything like special going on in Q1 in Wood Processing? I mean because the Wood Processing top line wasn’t really that high, I might say, in Q1, but still 14.5% seems very high on that amount of revenue.
Micah Sari, CEO, Rautess: Okay. Thanks, Jonas. I would say that maybe I’ll start a little from the distance. In our project work, of course, there’s always, all the time, every month there’s pluses and minuses. I would not describe that there was something specifically plus now during Q1.
Also, there wasn’t anything specifically minus. So I think overall it went very smoothly and that’s what we were able to then achieve. So this I can say that this was not because of a onetime good profit from one project or anything like that. It was overall good progress. And I think we have maybe good is an understatement.
Would say it was even excellent for wood processing, very good for whole route overall, I would say. And in the Wood Processing, I think we overall still have some potential to be even better if all the stars are in the right order, but this already is a very, very good performance. And yes, it’s true that the volume wasn’t that high, so if it’s even higher, I mean, could be some leverage from that point of view. But I would then, on the other hand, say that it’s not maybe the expectation for every quarter that we have something like that. So it was particular that there’s no challenge in any project and everything goes smoothly.
That’s also a bit exceptional.
Johan Sjerdijn, Analyst, Kepler: That’s clear. And so would you get a comment would you say that you might be able to do double digit food processing margins with even like relatively lower levels of annual revenue?
Micah Sari, CEO, Rautess: I think that should be possible. Now we are 14.5% comparable EBITDA relative figure and that was with 30 if I remember, 38 something million. So it can be lower. And I think that’s also, if you look at the long term ambition, which is we have to reach 12% overall over cycle. So I think I’ve said earlier that maybe in the low cycle, then the expectation is that Wood Processing is a little bit below that those numbers and then normally analyzers and services should be over that number.
But it cannot go significantly below those figures even in the downturn. It should be to reach this ambition that we have.
Johan Sjerdijn, Analyst, Kepler: Okay. That’s clear. And you already mentioned that these tariffs shouldn’t be like any significant direct issue for your operational and delivery perspective. But if we talk about The U. S.
In general, I mean, think already last year, it was discussed that you saw like relatively high demand in The U. S. But now it hasn’t really been reflected in your order intake in the past quarter. So would you say that there’s like even like they’re of building up like this pent up demand there now?
Micah Sari, CEO, Rautess: Well, it may be, maybe. As I said in the pipeline, now Europe has a bigger role both in the, let’s say, net sales realization. It was close to 75% in Q1, of course, because of the big projects that we have. Now if we look at the order intake for Q1, it was quite even, but that’s because the overall number was so low and it was mostly service. It basically demonstrates that we have good okay service business in North America, including U.
But overall, the investments into new bigger modernizations and bigger projects have been missing from Q1. And I think the postponement from our customers’ decisions are true globally, I would say. This situation is impacting with a little bit different dynamics, both our customers in The U. S, Canada, in Europe, in Asia Pacific as well. So when and if this certainty becomes more clear, think the orders can come from any of these regions, that is possible, and that is the normal sales pipeline that we have.
Johan Sjerdijn, Analyst, Kepler: Okay. That’s clear. Maybe final question. Do you I think you have been or could you like describe your, I don’t know, M and A pipeline? Or what have you been maybe been a little bit more active on that front on screening targets?
Micah Sari, CEO, Rautess: Yes. I think we it’s a normal course of business that we look at the opportunities. And yes, we continue that work, of course, all the time. And of course, it takes two to tango, so difficult to say whether and if and when something like that may realize. But the rationale for M and A has not disappeared anywhere from our point of view.
It still is part of our 2028 ambition as well that part of that growth should be coming from inorganic bad as well. So it still is there and we have a couple of more years to go there, so let’s see when we are able to realize something. And of course, the world economic development overall has an impact on what makes sense and when to realize. So I know not a very clear answer, but that’s what it is.
Johan Sjerdijn, Analyst, Kepler: Okay. That’s clear. Thanks. That’s all for me.
Micah Sari, CEO, Rautess: Good. Thanks, Jonas. Any other questions?
Antti Villa Kannen, Analyst, Inderes: Antti Villa Kannen from Inderes. How is your capacity utilization or resource utilization in different part of organizations as we speak? I mean, backlog is down, and it remains down, looking at your guidance and demand outlook. When do you need to start reacting at some parts of organization?
Micah Sari, CEO, Rautess: Okay. Good question. And maybe, again, to take a little bit distance from that, we already took actions last year. For example, last year, of course, which we have discussed, was a very good year for Aute overall, but we still, despite the high net sales and good profits, we actually, during the fall time, we had layoffs, temporary layoffs throughout the organization because the workroom mode was not balanced equally through our internal supply chain. We are constantly looking at that all the time.
And of course, if need be, we will take the actions. I think maybe looking at the history of Raute, we are nowadays more proactive than maybe in the past. We, of course, do this in a very good cooperation with our personnel, and we explain what it is, but if needed, we take the actions. At the moment, we have actually best workload in our Finland operation, so there’s workload overall good there. We do have, at this very moment, temporary layoffs in our Canada operations, which we have not announced.
I tell it now, it’s not something I couldn’t say. Yes, we have, but that’s normal course of business of balancing the resources to the need that we have in particular moment. And the same way, we have layoffs in China as well. But I would say that this is almost like normal course of business, and we are doing this very proactively all the time.
Antti Villa Kannen, Analyst, Inderes: And secondly, what should happen that clients would stop postponing these investment decisions? I mean, do we need rules for global trade or good rules for global trade or something else that they could make decisions?
Micah Sari, CEO, Rautess: That’s a difficult question. Of course, there has to be a certainty that some outcome is now there for a more sustained period. I mean, this volatility is the worst. So yes, I can say that very literally there were customers who were already agreeing with us that let’s do something, let’s place the order, that was during Q1, but they said that let’s wait until the April 2 because then Trump will come up with something. And then what came up from that was not easing any of the uncertainty, rather the other way around.
So it’s an example, and I’m not saying that this was a big case or small case, it was a case, real case, which happened. And these kind of things are happening at the moment, so there has to be some kind of a certainty. And as we know how fast the world changes nowadays, maybe the certainty becomes quite fast. Of course, we have maybe, globally speaking, there’s some destruction of the trust now in the systems overall, but of course, we also know that it can recover quite fast. For example, the trust in the stock market recovered quite fast and after even quite turbulent times.
So I don’t have a good answer, but we are, of course, very closely following those. And when the recovery happens, there’s all rationale for those customers and those cases to take place. I mean, there’s a need for the product that we would be our customers would be producing for our technology. They just want to have more certainty that it’s not going to be turbulent like this has been now during Q1.
Antti Villa Kannen, Analyst, Inderes: Thank you.
Wille Haltonen, CFO, Rautess: All right. Then we can take a couple of questions from the chat. So first one comes here like, can you shed any light on the business environment for the April? You had pretty substantial impact already on Q1 intake, although the situation really escalated in the beginning of Q2.
Micah Sari, CEO, Rautess: Okay. So of course, we are not guiding other than the full year. The official guidance is what it is, what I was saying. So I can’t go now specifically to April. We will go back to that.
Of course, if something in April and during Q2 happens, which is not in line with our guidance for the full year, we will make a statement on that. But I would say, what I was explaining was what it was and that was and we say even in our report now that this situation escalated towards the end of Q1 in particular. And we know what happened then in the global environment. So that’s what it is. And as I said, things can also change to other direction quite fast.
And actually, to a certain extent, I think this might even happen because now there’s quite a bit of backlog of things that should happen from our customers’ investments point of view and they have been just postponed. So at some point, there might be good things happening from that point of view for the technology provider as well.
Wille Haltonen, CFO, Rautess: Okay. Thank you. We have another question. How would estimate if construction sector wakes up this year? Could it offset the current uncertainty or postponing of investments caused by tariffs?
Micah Sari, CEO, Rautess: I’m not sure if we can think away that if the construction market would recover and that would offset the tariffs because it’s in my logic, they are a little bit the same thing that the construction market is still depressed also because of this tariff and overall uncertainty in the market that what is the wealth of people to buy the housing and all this. So it’s part of the same equation, so it’s not one thing and then it would help on the other thing. It’s part of the same equation, which definitely can recover. We know, for example, in North America, U. S.
And U. S. South, there’s definitely big need for new housing. There’s no question about that. Everybody agrees on that one.
So it’s more like just to have the pieces right way in place in terms of interest rates, the certainty and security that people have in their mind and the construction companies taking the initiative. So these have to be together. And it will happen, of course, at some point. That’s for sure.
Wille Haltonen, CFO, Rautess: Okay. And then we have a question on wood processing. Is the wood processing growth just a project blip that vanishes next quarter?
Micah Sari, CEO, Rautess: Unlikely to vanish next quarter because we are guiding to full year result. From that, one can maybe make conclusions on what it should be because it’s the biggest business we have. Of the €51,900,000 of net sales, that was more than €38,000,000 So obviously, it cannot disappear like that. And we have €146,000,000 of order backlog at the end of Q1, so that will be delivered. A big part of that, of course, is wood processing related work.
So there’s a good amount of work. Historically looking, it’s a normal level of good work in relation to the roughly €200,000,000 plusminus guidance that we have for this year as a net sales. So it’s a normal level compared to that.
Wille Haltonen, CFO, Rautess: I have a question on the profitability. Is this level of profitability truly repeatable? Or was Q1 just a lucky break?
Micah Sari, CEO, Rautess: I of course, to reach a very good profitability, sometimes you also need luck, but as I was explaining, I think there wasn’t such an exceptional things, for example, in wood processing that we would know that it was because of that. It was good execution. It’s typical for our business, if I still rephrase it, that it’s very typical for our business in project type of business that there are pluses and minuses. And that’s a constant even daily discussion in different projects that this is now going better, this is going worse. And these pluses and minuses sometimes then normally they equal to zero, but then if you are, of course, not having a lot of minuses, you could say that it was a little bit on the plus side, but it still wasn’t anything exceptional.
It was something such that the minuses did not realize. So it is possible to repeat that definitely, I truly believe that, but I would consider this as an excellent performance on the Wood Processing side and on the router level overall, a very good performance, taking all the businesses into account.
Wille Haltonen, CFO, Rautess: And we have one more question from the chat. Do you see investment uncertainty being especially high in some region or just high overall in all the markets?
Micah Sari, CEO, Rautess: That also varies. It is particularly high now in North America. It’s clear. So that is our customers in Canada and U. A.
They are really impacted by the uncertainty, but then we need to realize that many of our customers are totally are very much operating globally. So even if they are European if they are one of the European bigger producers, they most likely have North America as their target market for the export of their products. So therefore, it only also impacts like European players, same even for Asia and other players. So it is quite interconnected, this global plywood market and there’s flows between the different regions, so therefore it’s impacting everybody. Latin America, for example, they have been maybe more successful through the past couple of years in terms of being able to export into U.
S. A. Quite good volumes, but now they also even have this global 10% tariff in their picture and it’s impacting a little bit everybody all the time and a little bit different every day. It is impacting all the investments, I would say.
Wille Haltonen, CFO, Rautess: All right. That was the last one from the chat. Do we have still from the audience?
Micah Sari, CEO, Rautess: Okay. Hey, very good. Thank you very much for active participation for the good questions. If I still summarize from my point of view, we are happy with the Q1. Yes, the market is volatile.
We are following up that very, very closely and we are proactively taking actions to secure that we are able to deliver a good year in 2025 as we are guiding. Thank you very much. See you in the next review briefing. Thank you. Thank you.
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