NYAB Q2 on Friday: Key operational lines known, comments on outlook are of interest

Translation: Original comment published in Finnish on 8/23/2023 at 7:22 am EEST.

NYAB will publish its Q2 report on Friday. With the preliminary information provided in the August profit warning, the general direction of operational development is already known before the report. With the key operational lines known, our main focus in the report is on the potentially more detailed background to the profit warning and comments on the market outlook.

Revenue and EBIT known, earnings supported by one-off payment

Based on preliminary data, the company's revenue increased by around 17% to EUR 65 million in Q2. We expect growth to be supported by a strong order book (235 MEUR), especially in Q1'23, although there is some uncertainty about the exact order backlog. In contrast, the company reported an EBIT margin of 6.2% in Q2, and in line with this, we expect the reported EBIT for Q2 to be EUR 4.0 million. However, the result was supported by an one-off payment of EUR 3.6 million and adjusted for this, operational profitability was at a moderate level in line with the seasonality (i.e. ramp-up costs of projects started in the spring). On the bottom line, we expect that the result will be weighed down by small losses in associates and financial expenses and taxes at around normal levels. Reflecting this overall picture, we expect a net result of EUR 3.2 million.

We expect guidance to be reiterated, attention on the background and outlook to the profit warning

We expect NYAB to reiterate the guidance given in its August profit warning, according to which it expects revenue of EUR 290-315 million and an EBIT of EUR 16-24 million. According to the company, the downgrade in guidance was due to macroeconomic factors (inflation and rising interest rates) that have affected the build-up of the order backlog for H2 in the summer and the profitability of projects. NYAB also expected these factors to further delay investment decisions in the Swedish infrastructure and Finnish energy construction markets. We will therefore continue to monitor the background to the profit warning, which may be further elaborated in the report, as well as comments on the market outlook (including the competitive situation) in view of the cool outlook for the overall construction market. In addition, we focus our attention on the sustainability of the profitability turnaround of the Finnish businesses.