Componenta Q1'25 flash comment: Profitability improvement despite challenging market conditions

Translation: Original published in Finnish on 5/9/2025 at 9:30 am EEST.

Componenta published its Q1 business review this morning. Revenue was in line with our forecasts, but profitability exceeded our expectations, driven by production efficiencies and pricing changes. The guidance for revenue and adjusted EBITDA growth remains unchanged, and after a strong first quarter, there is no reason to be concerned about achieving the guidance.

Revenue at the expected level

Componenta's Q1 net revenue increased by 22% to 28.8 MEUR, which was in line with our expectations. The main driver of revenue growth was the new businesses acquired at the end of 2024, but the company did not disclose their exact impact on growth in the report. For Q1, we estimate organic growth to have been around 5%. In addition, the company said it has temporarily changed its pricing to reflect lower production volumes and order levels, which in practice should mean price increases. Therefore, after adjusting for the effect of the transaction, there is unlikely to have been a significant year-on-year change in production volumes.

The order book at the end of Q1 was at 17.4 MEUR, which corresponds to a growth of just under 11% compared to the prior-year period. We estimate that the growth is almost entirely due to the completed business transaction, which suggests that the weak volume development will continue at least in Q2.

Production efficiency and pricing changes strengthened profitability

Componenta's EBITDA came in at 2.4 MEUR in Q1, corresponding to an EBITDA margin of 8.3%. This exceeded our forecast of 1.9 MEUR in EBITDA and a 6.7% margin. In our view, the profitability achieved is an encouraging sign of Componenta's resilience, especially as the agricultural machinery market, which is important for the company, was very weak in Q1. According to the company, the improved profitability was due to better production efficiency and quality in addition to pricing changes, which we estimate to be due to a different revenue mix than in the comparison period. There were no surprises in depreciation or financial expenses, so the adjusted EPS of EUR 0.05 exceeded our forecast of EUR -0.01, reflecting the forecast beat at the EDITBA level.

The outlook for the end of the year seems neutral

Componenta's guidance, which indicates improved EBITDA and revenue compared to the previous year, remained unchanged. After a Q1 that clearly exceeded the comparison period, falling short of the guidance would require very weak development for the rest of the year, which we do not consider likely. In its comments regarding the end of the year, the company noted that economic uncertainty (tariffs) has lengthened customers' decision-making time, but that demand is brisk, especially in the energy and defense sectors. This is in line with our expectations for market development in the second half of the year, and on the earnings day, we will focus on factors related to the sustainability of the recently achieved higher profitability level.