Koskisen Q1’25 flash comment: Excellent business level in Sawn Timber Industry and earnings leverage in high gear

Translation: Original published in Finnish on 5/9/2025 at 9:22 am EEST.

Koskisen's Q4 result published this morning was well above the comparison period and all consensus forecasts, thanks to very strong volume-driven growth in the Sawn Timber Industry. The company reiterated its guidance for the current year, very much as expected, and a strong Q1 provides an excellent starting point for achieving it. We expect Koskisen's stock to react positively today compared to the general market on the back of the strong Q1 result. 

Performance took a big leap forward in Q1

In Q1, Koskisen's revenue grew by 35% to 86 MEUR from a weak strike-affected comparison figure, above consensus and also our forecast. The growth was mainly driven by higher volumes in the Sawn Timber Industry, but the development of average prices in both businesses also seems to be positive. The company was very successful in finding reasonably priced deals in the Sawn Timber Industry, as demand driven by the construction sector remains sluggish. However, the exact drivers of the very strong growth in Q1, even compared to peers in the Sawn Timber Industry, still need to be investigated.

Koskisen's adjusted EBITDA increased by more than 70% year-on-year to 9.5 MEUR in Q1, well above our forecast, which was at the upper end of the consensus range. The earnings improvement and estimate outperformance came primarily from the Sawn Timber Industry, where volume growth and improved production efficiency as a result of investment ramp-ups multiplied the operating result, even though log prices remain high. The Panel Industry's performance deteriorated, mainly due to higher birch log prices and other inflationary factors, but the decline was less than we had estimated. The slight loss in the Other segment was broadly in line with our expectations. On the lower lines, the net burden of depreciation, finance costs and tax rate in Q1 was marginally higher than our expectations, but the strong operating performance lifted EPS above all forecasts to EUR 0.18. In terms of cash flow, the report was significantly below earnings, as very strong volume growth and probably also the seasonal nature of Q1 drove working capital sharply higher. This pushed Koskisen's operating cash flow into the red at the beginning of the year. However, we expect the company's cash flow to improve as the year progresses.

Guidance remained unchanged quite as expected

Koskisen reiterated its guidance for 2025 according to which revenue will grow from last year (2024: 282 MEUR revenue) and the adjusted EBITDA margin will be 7-11%. In our view, the reaffirmation of the guidance was in itself fully expected, as it should be noted that the acquisition of Iisveden Metsä, which will take place within H1, will dilute Koskisen's profitability in H2. In addition, the overall market situation is very uncertain, especially due to possible indirect burdens from the tightening trade policy situation, although the Sawn Timber Industry's Q1 performance was encouraging and the Panel Industry had also shown cautious signs of recovery in Q1. However, the strong Q1 provides an excellent basis for the company to achieve guidance in various types of market scenarios.