Translation: Original published in Finnish on 10/12/2026 at 07:40 am EEST

On Friday, Koskisen held a call ahead of the Q3 silent period and published an associated Q&A summary. The company's message regarding the market situation was unusually poor: the deep slump in (residential) construction continues, customer buying behavior is cautious, and the high price of wood, together with other cost pressures, is squeezing margins. On the other hand, the company's own operational projects and production ramp-ups after the summer shutdowns have progressed as planned. We painted a cautious overall picture for the company for the near term in connection with the Q2 report, but in light of the conference call and recent macroeconomic data, the company's short-term outlook may be even weaker than we expected. We will update Koskisen's estimates if necessary ahead of the company's Q3 report to be published in November. We expect the seasonally slow Q3 to be the company's weakest quarter of the year.

The demand environment has remained difficult in almost all product groups

According to Koskisen, demand for sawn timber has followed normal seasonality in Q3, but demand generally remains weak due to the struggling global residential construction sector. The use of wood products in data centers is low, so Koskisen will benefit from data center construction at most indirectly and to a limited extent from an overall perspective. Weak demand has made it difficult to pass on increased costs into prices. Sawn timber prices fell slightly in Q3 from the Q2 level despite inflation, which was a weaker outcome than we estimated. In the Panel Industry, birch plywood prices increased slightly, but according to the company, the uncertain market is slowing down the full transfer of cost increases to customers. Demand for chipboard, which is heavily dependent on Finnish residential construction and renovation, has remained steadily weak.

Macro-level positive economic expectations for 2027 have not yet materialized in Koskisen's sales channels, and demand following the Central European holidays has been more moderate than usual as customers are only purchasing to meet immediate needs. This reinforces our view that no significant cyclical tailwind is in store for Koskisen in the near term, but recent macro news flow (i.e., accelerating inflation and rising market interest rates) has already cast dark clouds over expectations for a gradual recovery in construction sector demand next year.

Operational steps are progressing, but cost inflation is weighing

Koskisen suffered from operational challenges early in the year, but in Q3, production ramp-ups after the summer shutdowns proceeded as planned across the various units. We view the on-schedule ramp-up of the new channel kilns at the Järvelä sawmill as particularly positive, as it helps alleviate production bottlenecks. In terms of daily production volumes at the Järvelä sawmill, the company also lagged behind its targets in Q3, meaning there is still work to be done in tuning the sawmill. However, in the Panel Industry, the ramp-up of previously implemented technology continued to slightly weigh on volumes and increase costs in Q3.

On the cost side, the tense situation in the Middle East has increased logistics and raw material costs (e.g., glues). The costs of wood harvesting and transport have increased by around 10% over the year. The tightness and dynamics of the Finnish timber market have kept log prices at a very high level relative to the prices of final products, which is a key challenge for Koskisen's profitability, especially in the Sawn Timber Industry. The company also announced a change in the head of the Panel Industry as part of ongoing productivity and efficiency measures. This underlines the need to improve operational efficiency in a difficult market where no external support is available in either business.