Earnings call transcript: Raute Q3 2025 sees EPS beat, stock rises

Raute reported its Q3 2025 earnings, showcasing an EPS of €0.69, surpassing the forecast of €0.5917. The company’s net sales reached €44 million, although they were lower than the previous year. Following the announcement, Raute’s stock price rose by 4.51%, closing at €15.05. This positive market reaction was driven by the company’s strong EBITDA margin and strategic innovations in AI-enabled analyzers.

Key Takeaways

• Raute’s EPS of €0.69 exceeded expectations, boosting investor confidence.
• Net sales declined year-over-year, but EBITDA margin improved to 15%.
• The stock price increased by 4.51% in response to the earnings beat.
• Strategic focus on AI and new business models in the service sector.
• Exit from China manufacturing operations as part of cost management.

Company Performance

Raute’s overall performance in Q3 2025 showed resilience despite a challenging market environment. The company achieved an EPS of €0.69, exceeding analyst expectations and reflecting a strong operational performance. While net sales of €44 million were lower than the previous year, the company improved its EBITDA margin to 15%. The strategic exit from China and focus on AI innovations contributed positively to the results.

Financial Highlights

• Revenue: €44 million, down from the previous year.
• Earnings per share: €0.69, surpassing the forecast of €0.5917.
• Comparable EBITDA: €6.5 million, with a 15% margin.
• Operating cash flow: Approximately -€1 million.
• Equity ratio: Close to 65%.
• Liquid assets: Nearly €30 million.

Earnings vs. Forecast

Raute’s EPS of €0.69 beat the forecast of €0.5917, representing a positive surprise of approximately 16.6%. This earnings beat underscores the company’s ability to manage costs effectively and innovate, even amid a volatile global business environment.

Market Reaction

The stock price of Raute increased by 4.51% following the earnings announcement, closing at €15.05. This movement reflects investor optimism driven by the company’s earnings beat and strategic initiatives in AI and new business models. The stock’s performance is notable given its position within the 52-week range, indicating strong market confidence.

Outlook & Guidance

For 2025, Raute has provided net sales guidance of €170-€190 million and EBITDA guidance of €22-€27 million. The company anticipates gradual market improvement into 2026 and is exploring potential for inorganic growth. Continued investment in AI and technology is expected to enhance operational efficiency and market competitiveness.

Executive Commentary

CEO Mika Saariaho emphasized the company’s commitment to innovation: "We do strongly believe in our offering in this area and the new innovations we are doing in Analyzers." CFO Ville Halttunen highlighted the company’s financial strength: "We have a strong balance sheet, which enables us to execute our strategy." Saariaho also noted, "We expect that the market to remain to improve going into 2026."

Risks and Challenges

• Volatile global business environment affecting overall demand.
• Prolonged recession in the construction industry impacting sales.
• Uncertainty around U.S. import tariffs influencing investment decisions.
• Potential challenges in maintaining R&D and innovation capacity amid cost management.
• Adapting to market changes following the exit from China operations.

Q&A

During the earnings call, analysts inquired about the impact of exiting China operations and the volatility in order intake. Raute’s management clarified their strategy for the service and analyzer businesses and addressed concerns about their capacity for R&D and innovation.

Full transcript - Raute Oyj (RAUTE) Q3 2025:

Mika Saariaho, CEO, Raute: Good afternoon and welcome to Raute’s third quarter business review. My name is Mika Saariaho, I’m Raute’s CEO. I have also here Ville Halttunen, who is our CFO. Together with him we’ll go through the highlights of Raute’s third quarter events, financial performance, and then we have some time at the end for questions and answers. If you have any questions during the presentation, you can use also the online tool Chat to post questions and we’ll go through those at the end. You can post your questions in English or in Finnish. We’ll handle those accordingly at the end. Okay, very good. Let’s get started. If we look at the overall performance of Raute during third quarter, I would say the highlight is that we were able to continue on a strong profitability path.

This was another solid quarter in terms of our profitability and especially the operational execution has been successful during this year and also continued in the third quarter. This was then reflected on a good profitability of our operations. All of our businesses were profitable, but especially the biggest business unit, wood processing, was, I could say, very, very profitable. Doing excellent job during Q3. Q3 delivering still these big mill sized orders that we received some time ago. Already in 2023 and 2024, those orders were booked in Raute. Good profitability. Our comparable EBITDA was 15%, €6.5 million increase from last year’s figure. Last year figure was already a very good number and this was a further improvement from those figures. As a consequence of this good profitability that we have seen this year, we actually changed before this Q3 announcement a week ago we actually upgraded our guidance.

We revised upwards, a little bit upwards, the lower limit of our comparable EBITDA guidance. On the other hand, we actually took a little bit down the net sales guidance for this year. I’ll come back to this later. What are all the reasons behind that? I would also say the other highlight is that we did have increased order intake during Q3. This was something we did anticipate after Q2 announcement. Also that there is improving sentiment and prospects from that point of view. We did book now €33 million of new orders during the third quarter, which I would consider is a reasonable level of new orders, taking into account that there were no mill size orders during this quarter. This is a good, I would say good or normal, very, very reasonable level of orders.

However, one has to highlight that this is following the very low start of the year. During H1, we really had low order intake and this means that still the year to date order intake for Raute is only around €66 million. It’s clear that for the full year so far it’s been low in order intake. We did experience still the turbulence in the market. Our customers are still experiencing the global turbulence. We remain somewhat positive on the outlook for the technology orders. We expect that going into 2026 we do see improving prospects and improving demand. From that point of view, I would still say that it’s likely that we experience quite a big volatility during the quarters to come. For Raute this could also mean low order intake or high order intake. This may vary quite a bit when we move forward.

The global uncertainty is also behind this type of development. Overall, I think we have been successful in improving our efficiency, also commercial capabilities. This does provide good basis for us to navigate through these different business cycles when we move forward. Okay, looking at the numbers a bit more in detail, net sales a little bit behind last year’s net sales, comparable EBITDA as I said, even more than a year ago, a very good level. Order intake, €38 million. I would say we can say that we have a very strong balance sheet as a company. It increased now the equity ratio to close to 65% which is way above our target level, which we want to maintain, which is 40%. This is a good strong balance sheet for our type of a company. Order book, we have €108 million of order book at the end of quarter.

It has been going down during the last two years or so since we booked these big mill size orders. We can look a little bit later how this compares to the historical level where we normally have been operating and personnel a little bit under 700 people. It has also been going down recently. Okay, here’s the view of the order intake I already mentioned. €66 million. It is a low level at this point of year. Q3 was a good number, €38 million. If you look at the different quarters during the last year, five years or so, this is a good, good okay level but still year to date a low number. Now during Q3 we did book orders both from Europe and North America. Both markets were somewhat activating. Definitely activating compared to the first part of first half of the year, much more, more activity.

This is of course a good sign. There is some light in the tunnel I would say at least. We believe that this improving sentiment may be realized in the quarters to come, especially going into 2026 order book. This is the view of our order book over the last six years or so. Still as a reminder, there’s this dark blue colorist orders we booked from Russia earlier some years ago which is obviously not there anymore in our backlog. We see from 2023 peak when we had €266 million of order book we’ve come down now to €108 million, which still if we look at these historical years it’s not unheard of, but it’s not of course on the level that we were now some time ago.

Obviously new orders and booking new orders is a high priority for us to be able to continue on our strategy and the growth path that we have set for ourselves. Net sales €44 million. This was coming very much from Europe. We have this big middle sized project, there is one in Uruguay, but many of these are in Europe. Obviously net sales realization is coming from those projects and those are mostly in Europe. 73% coming from Europe. Net sales a little bit came down from year ago figures. I would say that due to the fact that early part of this year 2025 we have booked very low amount of new orders, there has not been so much realization from those orders and these are mostly coming really from the old orders we got for middle size orders. There hasn’t been. Maybe that’s also the reason why.

I would say that this is the reason why we are now guiding our net sales to be a little bit lower than we anticipated earlier. Comparable EBITDA. This is on a good level, €6.5 million. We see here putting things into perspective the challenging times we had 2021, 2022 in particular, and now we’ve been making some money as a company and this is a good level for our type of company at this point of development. Operating profit also reflecting the same story, I would like to highlight that the €12.9 million year to date operating profit does include quite significantly costs related to exit from our China operations. If we were to talk about comparable operating profit it would be more than €16 million and that would be more comparable to the earlier years operating profit numbers that we are posting here. This is a good level.

I’m happy with this level of profitability. Operating profit for Raute at this point, personnel has actually dropped quite a bit from a year ago figures, so almost 100 persons less, so let’s say 90. This is partly explained by the fact that we’ve exited now the China operations, own manufacturing operations, that’s about 50 people, but the other 40 or so is coming from all over the operations and throughout the globe, so to speak. We have been very strict on new recruitments and also finding and trying to find continuously efficiencies and way to be more efficient in our operations. Now we are a little bit less than 700 people in Raute. Looking at the different segments, wood processing, this is the biggest business unit we have. I’m really happy with the performance and the development over the past couple of years on wood processing.

We’ve been able to really turn the business around. We were actually making losses in this business. Now as the biggest units, obviously it’s very important that this is good, profitable business for us. This is what also the third quarter numbers are showing. About €32 million of net sales and more than 15% comparable EBITDA. It happened this time, maybe even a bit surprisingly, that this was the most profitable business unit, relatively speaking, also in Raute. Very happy with this level of performance. I would almost say that this is maybe a little bit exceptionally high profitability. We’ve been very successful on the project execution and the big middle sized projects are coming or are in the phase now that we’ve been more comfortable in looking at the cost, overall cost aspects of this project.

That has maybe then enabled us to release some of the reservations we’ve had for some of these projects. It is truly operational result. This is now good timing for that and that partly is helping now the third quarter numbers when we look at those. Despite a little bit lower net sales, profitability is on a very high level. Good operational performance behind that. Services have been developing in a very nice way over the last couple of years also. Now third quarter was a little bit low in terms of the net sales. We went down from year ago figures almost 14% and I would say consequently also there is this kind of a volume leverage on service business as well. Our profitability was a bit on a low end, I would say.

We haven’t been able to book so much of these small upgrades as we maybe anticipated. What’s typical for services, the reasons are a little bit the same as for the other orders, getting the other orders in. The market uncertainty has also blocked decisions on those orders. Even if we got good orders in Q3, obviously those are not reflected in the net sales of Q3. There is some delay on upgrades and those, when they are realized, I’m not overly worried about service development. I think we are moving in the right direction. There are also new business concepts, new earnings models coming that we are offering to our customers, and there are good prospects for our service business going forward. Analyzers, I would say, had an okay quarter. We were going down quite a bit on the net sales.

Profitability also went down, but I think we were able to defend the profitability in a kind of okay way by doing some cost savings, being very, very careful in what we do and how we operate this business. The savings were helping to maintain profitability on a somewhat okay level. I think this challenging order intake during the first nine months of the year will have and have had an impact on Analyzers. There is also, relatively speaking, low order backlog for Analyzers. Business prospects for this business are, I think, very good. We do strongly believe in our offering in this area and the new innovations we are doing in Analyzers when it comes to AI-enabled analyzers and also new business models that we are offering to our customers. That was the sort of overview and a little bit of highlights on the different businesses as well.

I’ll hand it over to Ville to go through some of the finances in a little bit more detail.

Ville Halttunen, CFO, Raute: Thank you Mika, hello on my behalf as well. My name is Ville Halttunen and I’m CFO of Raute. I’ll start from the earnings per share development of Raute in Q3. Our EPS decreased compared to last year despite an increase in our operating profit. There were two reasons for this. Our finance net came down a bit from last year and taxes were higher. Finance net, there’s two reasons behind that. One, interest income has decreased and then on the other hand the FX was impacting negatively on the finance net and the tax rate was exceptionally low in the comparison period. Overall, we delivered €0.69 EPS in the quarter. Looking into our cash flow performance, which is typically quite volatile compared to our P&L profitability, net working capital changes can be quite significant.

There was now a -€7 million net working capital change, negative, which decreased our operating cash flow to roughly -€1 million, and the comparison period on the other hand was impacted positively by €13 million. In any case, cumulatively we have been performing and generating strong cash flow. Looking into the whole strategy so far, we have made €30 million of operating cash flow since the beginning of 2023 already. When we look into the net working capital development, we ended now at roughly €6.5 million on the positive side in the net working capital. There are typical fluctuations in our business on this side and we have been quite long already on a negative side. This is very normal that it can be at some phases also on the positive side. No worries from this point of view.

Our balance sheet strengthened further when measured with the equity ratio, close to 65%, based on higher equity amount compared to total balance sheet. This enables us strong execution of our growth strategy. We have liquid assets close to €30 million and no interest-bearing debt in our balance sheet when we exclude the lease liabilities that we have in the balance sheet. Investment level, we have been increasing this year according to our plans. Our investment level, although still, the investments are below the depreciation level. We have done some renewal of some machinery in our production facilities and some other targeted investments which we believe will improve our efficiency as we move forward. Finally, the R&D development that we have maintained broadly on last year’s level, close to €4 million in total, we continue to believe is an important investment for our type of company as we move forward.

Overall, we have strong profitability, strong balance sheet, which enables us to execute our strategy as we move forward. With these words, I’ll hand back to Mika to summarize our business environment and outlook for Raute.

Mika Saariaho, CEO, Raute: Okay, thank you Ville. If I try to summarize the market business environment where we operate, I would overall say that it remains quite volatile. We have experienced, our customers are experiencing the turbulence in the global business environment and the prolonged recession in the construction industry is not over. We did see, and we think our customers did see some pickup in some areas on the end products demand also in Europe according to some statistics and we know that the demand for certain special products and also overall for birch plywood and LVL has remained more stable. There are some signs also in our customer industries demand that, you know, are at least a little bit positive. On the other hand, from Raute’s point of view, I think this uncertainty still related to, for example, the U.S.

import tariffs and the global trade politics related to that have postponed some investment decisions of Raute’s customers into new technologies. The uncertainty is not over. We see that even in this situation now and proven by the third quarter order intake that we got some of our customers both in Europe and North America are really taking now the actions to start investing again into technology of the operations. It’s both on the process efficiency and additional capacity that is in the scope of consideration. That is positive. We did see that happening in Q3. As I said, we got reasonable amount of new orders and we do think that looking at our sales funnel and the activity of discussions with our customers, that despite these global uncertainties which clearly are still there, we expect that the market to remain to improve going into 2026.

We did anticipate a little bit of this already in Q2 after that release. I think that’s what we experienced. We think that of course one has to realize the starting point. From our point of view, it’s a very low demand in the first half. Improvement from that level is not so much. I think we are probably moving towards more normal operating environment gradually when we are going into 2026. In terms of our guidance for 2025, we updated this roughly a week ago. I already mentioned we took down a little bit the net sales expectation which is now €170 to €190 million. The EBITDA guidance, we narrowed a little bit the guidance moving the lower limit a little bit upwards. Now it’s €22 to €27 million in 2025.

If we still look at the guidance a little bit more, it really is like even that we got now new orders in Q3. They are not fast enough turning into net sales in this year so that we would reach the original guidance. That’s why the top line went down. On the other hand, the profitability really has been more than we expected and we’ve been maybe even more successful than we expected in the project delivery. That’s why we a little bit were able to at the same time take upwards the EBITDA guidance. I would like to just mention one more thing which is not part of Q3, but right after the Q3 or today announcement we also announced that we are continuing or starting new change negotiations in Finland related to our operations in wood processing, analysis and parts of service business as well.

I would just comment at this point that this is unfortunate of course to all routines, but this is part of the proactive cost based management that we consider and we are taking actions proactively when needed and continue to do that so that we secure both short term and long term profitability and prospects of Raute’s business. Very good. Those were the highlights, key observations from our point of view on Q3. I would actually like to open it for possible questions and answers or if there’s online questions. Ville, if you join me here also.

Ville Halttunen, CFO, Raute: Yes, maybe we take questions from the audience first. Let’s start from here.

Jonas Ilmoine from Evely. The wood processing business unit did a 15% EBITDA margin. I think that was a new quarterly record high, and even with, I would say, not that high revenues. Does this already reflect the closure of your China operations, or is the explanation more similar to what you said during the previous quarters, that everything just went very smoothly?

Mika Saariaho, CEO, Raute: Maybe I give this to Ville. What is the impact of China closure? It takes some cost down.

Ville Halttunen, CFO, Raute: Overall, I would say now that it did not really materially impact the China closure yet into our Q3 numbers, but it starts to gradually impact. Of course, there were the indirect costs as we anticipated will be lower by $2 million and will come gradually. Anyway, I think that the result is primarily caused by the good project execution. That’s the primary reason for strong EBITDA performance in wood processing.

Right. Last year Q4 you had this jump in new orders, but that was a bit of a one off. Now I think you seem relatively positive on European demand going forward. Maybe more courses on other areas, maybe Americas. What can you say about, let’s say, Q4 orders at this point.

Mika Saariaho, CEO, Raute: On Q3, Q4 orders, at this point I can’t say much. Obviously it’s not our approach, but I can say what we are guiding, that we do believe that going into 2026, the market is improving. I would say that maybe it’s also typical for Raute that we should expect that there might be quite a big volatility between the quarters. Still, in one quarter, whether something gets realized exactly in this quarter or next quarter, this probably will be quite a volatile and bumpy road when we move forward as well. I can’t promise that something happens exactly in Q4 or even in Q1 next year. I can say that within the next months we clearly see that this is an improving environment and we are moving to that kind of operating environment.

I think overall the prospects we have in the sales funnel are on a, let’s say, good normal level. When I say that, we need to realize that I would have said the same in the beginning of this year, but things have just postponed all the time. The funnel has been all the time quite good and there has been good stuff there. It has not disappeared from the funnel, but still we haven’t been able to realize those in Q1 and Q2. Now in Q3 some of these started to realize and I think the things are there. When the market allows, I’m sure our customers are making the decisions. Maybe there’s even more increasing pressure to make some decisions because there’s been a little bit of a period of no decisions on investments into new technologies.

Ville Halttunen, CFO, Raute: All right.

One question about services. You already talked a bit about it, but it seems like that was maybe the only rather softer part of the report. Is it also partly because of the relatively high comparison figures because services actually grew so much in revenue last year?

Mika Saariaho, CEO, Raute: Yeah, it may be also partly that, but I think our service business includes also these small upgrades, which are like small modernizations, very small ones, and it’s been low order intake on those during this year as well. What we have booked earlier already in Q1 and Q2 has been the normal traditional service business. These small upgrades, which typically have actually quite good profitability, have not been there so much in the final. That was a little bit missing. We had a little bit higher costs, obviously, because maybe we had anticipated higher volumes, and the allocations became a little bit bigger for service business despite the fact that they didn’t realize the top line. There was this kind of a top line impact lever on the profitability as well.

Okay, good, that’s clear. That’s all for me for now.

Ville Halttunen, CFO, Raute: Do you have other questions there?

Ante Velikonen from Inderes, still continuing from Wood Processing margin. I understand that these changes in provisions may fluctuate quite a lot, profitability over time, up and down both. Can you anyhow elaborate how much they supported profitability in Q3?

Mika Saariaho, CEO, Raute: It’s very difficult to say because the way of course we operate is that there’s not maybe daily, but there’s a weekly meeting and review of the project progress by the project management and project team. They evaluate of course in the percentage of completion calculations how much is still cost left and how much have we already delivered. That is changing all the time. It’s not like it changes all of a sudden like that. During the quarter, there was this kind of progress. I don’t think it’s unnormal because it actually truly is operational performance. It truly is operational performance. It went even better than we thought. Some phases of the development typically, however, we do need to reserve more things and have more contingencies at certain phases of the project, which is more towards the end of the project.

When we are then realizing and leaving that phase of the project, there either is then possibility to release something or sometimes you might even need more than what you have booked and if it goes very well, you are able to release some of these things. Maybe that was a little bit more now happening than in some quarters or maybe what you could normally expect on average happening over the project life cycle.

Thank you, that was helpful. Continuing demand and demand of middle size project, could you anyhow elaborate your sales funnel in middle size projects? Are you as confident that the demand of mill size projects in particular is going to improve as well as demand in general?

I think there are, I know we have prospects in the pipeline kind of on a normal level for the mill size project as well. Maybe that’s the short answer. Definitely, I cannot promise that it will come on a certain quarter because I never can, and in this particular moment now it’s more difficult than ever because of the global uncertainty. The customer discussions on some of those bigger projects are, let’s say, if not changing daily, then weekly to making, becoming more profitable, more probable, and then becoming less probable for their decision making. I would say overall we have things in the pipeline. It’s not impossible that we have mill size orders coming in the near future or at least in short term future or medium term future. I can’t promise that.

Normally, of course, if you look at the history of Raute, we normally have the kind of a base order intake without the mill size orders, and then we booked like one or one and a half mill size orders per year, and in 2023, we booked actually four big ones, and then there hasn’t been much anything for a couple of years. From the statistics point of view, there should be also something coming, and that aspect of the world has not changed. I guess that’s my main message.

Do I understand correctly that you have cases in the pipeline in which your clients have financing in place, environmental permits in place, so they are just about making a decision?

There are things like that as well. Of course, these always go hand in hand. Normally, our customers get all the financing completely secured around the same time that all the other things are also fully secured, so all the permissions and all these things. There are things also towards the final stages of decision making and then on the early stages, and very much I’m sure customers are thinking when is the right time to invest and is the market sentiment now right or is it right in one year’s time or one and a half years’ time when actually the new investment will be up and running? This is where our customers have a little bit different risk appetite also in their own thinking.

Finally, about after-sales businesses, you have been executing your strategy two years or something like that. After-sales messages have had a big role in strategy in general, while it has been a somewhat bumpy road also in after-sales side. My question is, do you think that you are on path when it comes to strategy execution until 2028?

I think we are. It’s of course clear that if the market is very challenging, there might be still ups and downs on a path to get there. I think we are doing exactly the right things which are delivering the strategies. Of course, as we also say, we expect certain profitability on average over cycles and things like that. In that sense, profitability, I could almost say that we are already there if this is now a good cycle and good profitability, 15%. If on average we need to be 12% in terms of top line. Clearly, of course, if we don’t get new orders in, there probably will be some kind of a change on the trajectory of the top line growth. Obviously, at some point it will pick up.

Part of the growth ambition we have for 2028 does include, and we’ve said that also, some inorganic steps. It’s clear that something in that area also needs to happen in order to reach the 2028 ambition, which remains valid for us and we believe in it.

Thank you.

Very good.

Ville Halttunen, CFO, Raute: Right, then we have a couple of questions from the chat, starting from if further cost cutting and first workforce reductions continue, how will Raute preserve its innovation capacity, particularly in the areas of analytics and automation technology?

Mika Saariaho, CEO, Raute: It’s a very good question and I think what Ville was actually sharing here is that we have continued our investment into R&D. We are not giving up on that. That would be kind of a short solution, but a short-sighted solution also to start cutting significantly on R&D. We have not done that. I don’t think we are cutting on the future of our company. It’s a very good question and very important question, and we need to obviously continuously balance that. I don’t think there’s an intention to cut on the future prospects for Raute.

Ville Halttunen, CFO, Raute: Okay, then there’s a question on the capital allocation. Does Raute’s high equity ratio reflect efficient capital use or does it suggest a lack of sufficient profitable investment opportunities?

Mika Saariaho, CEO, Raute: This I might give back to Ville to answer.

Ville Halttunen, CFO, Raute: Yeah, maybe I can take that. Obviously, we are in a project business and we need to have a strong balance sheet to execute our business, normal course of business. On the other hand, we are prudently also evaluating other opportunities like M&A, which is part of our strategy and it takes two to tango and we need to, let’s say, have the ammunition in place also. We are carefully evaluating opportunities in our strategy as we move forward from here.

Mika Saariaho, CEO, Raute: Exactly. If you think about our type of company, it’s good, and it’s important that we do have a strong balance sheet because of the inherent volatility of cash flows and projects and prospects. That’s why we want to maintain it also strong.

Ville Halttunen, CFO, Raute: Correct. There was one question on the middle sized audits, but I think that was already coming from Antti. Those were the questions from the chat.

Mika Saariaho, CEO, Raute: Okay, very good. Are there any other comments or questions here? If not, I want to really, really thank you all for following this info call session. We will meet you in the next info call at the latest. Thank you very much. Bye.

Ville Halttunen, CFO, Raute: Thank you.

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